EX-99.1 2 tm2315548d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

 

Research Solutions Reports Fiscal Third Quarter 2023 Results

 

Reports 18% Revenue Increase and 24% Increase in ARR to $9.1 Million

 

HENDERSON, Nev., May 11, 2023 — Research Solutions, Inc. (NASDAQ: RSSS), a pioneer in providing cloud-based workflow solutions for R&D driven organizations, reported financial results for its fiscal third quarter ended March 31, 2023.

 

Fiscal Third Quarter 2023 Summary

 

•Total revenue of $10.3 million, an 18.1% increase from prior-year quarter and the Company’s first reported quarter of over $10 million in revenue
•Platform revenue up 26% to $2.2 million. Annual Recurring Revenue (“ARR”) up 24% to $9.1 million.
•Gross profit up 24% from prior-year quarter. Total gross margin improved 190 basis points to 38.9%.
•Earnings of $0.01 per diluted share, compared to a loss of $0.01 per share in the prior-year quarter. Fiscal year to date net income of $0.01 per diluted share, compared to a loss of $0.05 in the same fiscal year to date period in the prior-year.
•Adjusted EBITDA of $559,000 compared to $94,000 in the prior-year quarter
•Positive cash flow from operations of $0.8 million for the quarter and $1.9 million fiscal year to date, compared to negative cash flow from operations of $0.4 million in the same fiscal year to date period in the prior-year

 

“Our third quarter results reflect the continued adoption of our platform by new customers and a 16% revenue increase in our transactions business, due to both organic growth and the successful transition of customer contracts from FIZ Karlsruhe, which took effect on January 1, 2023,” said Roy W. Olivier, President and CEO of Research Solutions. “Platform growth remained challenging in the quarter as our customers continue to extend sales cycles and operate under tightened budgets. Our profitability, however, has allowed us to continue to invest in marketing and product development, with some important product features being successfully released in the quarter. We feel well positioned to execute as the economic environment improves and believe our products will be even more relevant to our research customers.”

 

Fiscal Third Quarter 2023 Results

 

Total revenue was $10.3 million, an 18.1% increase from $8.8 million in the year-ago quarter as both platform and transaction revenue increased from the prior period.

 

 

 

 

Platform subscription revenue increased 26% to $2.2 million compared to $1.8 million in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments, including 25 net deployments added in the quarter, as well as upsells to existing customers. The quarter ended with annual recurring revenue of $9.1 million, up 24% year-over-year (see the company’s definition of annual recurring revenue below).

 

Transaction revenue was $8.1 million, compared to $7.0 million in the third quarter of fiscal 2022. The increase was primarily due to organic growth and higher transaction volumes related to contracts transferred from FIZ Karlsruhe effective on January 1, 2023. The transaction customer count for the quarter was 1,417, compared to 1,193 customers in the prior-year quarter (see the company's definition of active customer accounts and transactions below).

 

Total gross margin improved 190 basis points from the prior-year quarter to 38.9%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platforms business as well as increased margins in the transactions business.

 

Total operating expenses were $3.9 million, compared to $3.6 million in the third quarter of 2022. The increase was primarily due to higher sales and marketing and general and administrative costs, the latter related to recruiting fees expensed in the period.

 

Net income in the third quarter was $237,000, or $0.01 per diluted share, compared to a net loss of ($341,000), or ($0.01) per share, in the prior-year quarter. Adjusted EBITDA was $559,000, compared to $94,000 in the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).

 

Conference Call

 

Research Solutions President and CEO Roy W. Olivier and CFO Bill Nurthen will host the conference call, followed by a question and answer period.

 

Date: Thursday, May 11, 2023

Time: 5:00 p.m. ET (2:00 p.m. PT)

Dial-in number: 1-412-317-5180

Conference ID: 10178138

 

The conference call will be broadcast live and available for replay until June 11, 2023 by dialing 1-412-317-6671 and using the replay ID 10178138, and via the investor relations section of the company's website at http://researchsolutions.investorroom.com/.

 

 

 

 

Fiscal Third Quarter Financial and Operational Summary Tables vs. Prior-Year Quarter

 

   Quarter Ended March 31,   Nine Months Ended March 31, 
   2023   2022   Change   % Change   2023   2022   Change   % Change 
Revenue:                                
Platforms  $2,249,632   $1,786,224   $463,408    25.9%  $6,379,871   $4,900,927   $1,478,944    30.2%
Transactions  $8,092,794   $6,971,128    1,121,666    16.1%  $21,363,864   $19,471,216    1,892,648    9.7%
Total Revenue   10,342,426    8,757,352    1,585,074    18.1%   27,743,735    24,372,143    3,371,592    13.8%
                                         
Gross Profit:                                        
Platforms   1,981,002    1,567,173    413,829    26.4%   5,627,695    4,204,552    1,423,144    33.8%
Transactions   2,046,271    1,671,324    374,947    22.4%   5,152,653    4,531,980    620,673    13.7%
Total Gross Profit   4,027,273    3,238,497    788,776    24.4%   10,780,348    8,736,532    2,043,817    23.4%
                                         
Gross profit as a % of revenue:                                        
Platforms   88.1%   87.7%   0.3%        88.2%   85.8%   2.4%     
Transactions   25.3%   24.0%   1.3%        24.1%   23.3%   0.8%     
Total Gross Profit   38.9%   37.0%   2.0%        38.9%   35.8%   3.0%     
                                         
Operating Expenses:                                        
Sales and marketing   642,624    543,496    99,128    18.2%   1,830,448    1,584,804    245,644    15.5%
Technology and product development   953,677    971,959    (18,282)   -1.9%   2,751,099    2,661,655    89,444    3.4%
General and administrative   1,871,591    1,629,371    242,220    14.9%   5,004,678    4,742,729    261,950    5.5%
Depreciation and amortization   18,332    4,988    13,344    267.5%   30,486    12,144    18,342    151.0%
Stock-based compensation   480,458    399,234    81,224    20.3%   1,264,522    870,883    393,639    45.2%
Foreign currency translation loss (gain)   (72,547)   29,394    (101,941)   NM    (84,210)   52,619    (136,829)   NM 
Total Operating Expenses   3,894,135    3,578,442    315,693    8.8%   10,797,023    9,924,834    872,190    8.8%
Income (loss) from operations   133,139    (339,944)   473,083    139.2%   (16,675)   (1,188,302)   1,171,627    98.6%
                                         
Other Income (Expenses):                                        
Other income (expense)   104,331    237    104,094    NM    218,095    777    217,318    NM 
Provision for income taxes   (628)   (822)   194    -23.6%   (5,543)   (6,592)   1,049    15.9%
Gain on sale of disc'd operations   -    -    -         -    -    -      
Total Other Income (Expenses):   103,703    (585)   104,288    NM    212,552    (5,815)   218,367    NM 
Net income (loss)  $236,842   $(340,529)   577,371    169.6%  $195,877   $(1,194,117)   1,389,994    116.4%
                   NM                   NM 
Adjusted EBITDA  $559,382   $93,672   $465,710    497.2%  $1,194,123   $(252,656)  $1,446,779    NM 

 

   Quarter Ended March 31,   Nine Months Ended March 31, 
   2023   2022   Change   % Change   2023   2022   Change   % Change 
Platforms:                                
ARR (Annual recurring revenue):                                        
  Beginning of Period  $8,776,977   $6,848,613   $1,928,363    28.2%  $7,922,188   $5,880,179   $2,042,009    34.7%
   Incremental ARR   330,704    500,233    (169,529)   -33.9%   1,185,493    1,468,668    (283,175)   -19.3%
  End of Period  $9,107,681   $7,348,847   $1,758,834    23.9%  $9,107,681   $7,348,847   $1,758,834    23.9%
                                         
Deployments:                                        
  Beginning of Period   790    646    144    22.3%   733    553    180    32.5%
   Incremental Deployments   25    34    (9)   -26.5%   82    127    (45)   -35.4%
  End of Period   815    680    135    19.9%   815    680    135    19.9%
                                         
ASP (Average sales price):                                        
  Beginning of Period  $11,110   $10,602   $509    4.8%  $10,808   $10,633   $175    1.6%
  End of Period  $11,175   $10,807   $368    3.4%  $11,175   $10,807   $368    3.4%
                                         
Transaction Customers:                                        
Corporate customers   1,116    904    212    23.5%   986    875    112    12.8%
Academic customers   301    289    12    4.2%   300    300    -    0.0%
Total customers   1,417    1,193    224    18.8%   1,287    1,175    112    9.5%

 

 

 

 

Active Customer Accounts, Transactions and Annual Recurring Revenue

 

The company defines active customer accounts as the sum of the total quantity of customers per month for each month in the period divided by the respective number of months in the period. The quantity of customers per month is defined as customers with at least one transaction during the month.

 

A transaction is an order for a unit of copyrighted content fulfilled or managed in the Platform.

 

The company defines annual recurring revenue (“ARR”) as the value of contracted Platform subscription recurring revenue normalized to a one-year period.

 

Use of Non-GAAP Measure – Adjusted EBITDA

 

Research Solutions’ management evaluates and makes operating decisions using various financial metrics. In addition to the company’s GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. Management believes that this non-GAAP measure provides useful information about the company’s operating results.

 

The tables below provide a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure. Adjusted EBITDA is defined as net income (loss), plus interest expense, other income (expense), foreign currency transaction loss, provision for income taxes, depreciation and amortization, stock-based compensation, gain on sale of discontinued operations, and other potential adjustments that may arise. Set forth below is a reconciliation of Adjusted EBITDA to net income (loss):

 

   Quarter Ended March 31,   Nine Months Ended March 31, 
   2023   2022   Change   % Change   2023   2022   Change   % Change 
Net Income (loss)  $236,842   $(340,529)  $577,371    169.6%  $195,877   $(1,194,117)  $1,389,994    116.4%
 Add (deduct):                                 -      
Other income (expense)   (104,331)   (237)   (104,094)   NM    (218,095)   (777)   (217,318)   NM 
Foreign currency translation loss (gain)   (72,547)   29,394    (101,941)   NM    (84,210)   52,619    (136,829)   NM 
Provision for income taxes   628    822    (194)   -23.6%   5,543    6,592    (1,049)   -15.9%
Depreciation and amortization   18,332    4,988    13,344    267.5%   30,486    12,144    18,342    151.0%
Stock-based compensation   480,458    399,234    81,224    20.3%   1,264,522    870,883    393,639    45.2%
Gain on sale of disc. ops.   -    -    -         -    -    -      
 Adjusted EBITDA  $559,382   $93,672   $465,710    497.2%  $1,194,123   $(252,656)  $1,446,779    NM 

 

About Research Solutions

 

Research Solutions, Inc. (NASDAQ: RSSS) provides cloud-based technologies to streamline the process of obtaining, managing, and creating intellectual property. Founded in 2006 as Reprints Desk, the company was a pioneer in developing solutions to serve researchers. Today, more than 70 percent of the top pharmaceutical companies, prestigious universities, and emerging businesses rely on Article Galaxy, the company's SaaS research platform, to streamline access to the latest scientific research and data with 24/7 customer support. For more information and details, please visitwww.researchsolutions.com and www.reprintsdesk.com

 

 

 

 

Important Cautions Regarding Forward-Looking Statements

 

Certain statements in this press release may contain "forward-looking statements" regarding future events and our future results. All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the markets in which we operate and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "targets," "goals," "projects", "intends," "plans," "believes," "seeks," "estimates," "endeavors," "strives," "may," or variations of such words, and similar expressions are intended to identify such forward-looking statements. Readers are cautioned that these forward-looking statements are subject to a number of risks, uncertainties and assumptions that are difficult to predict, estimate or verify. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Such risks and uncertainties include those factors described in the Company's most recent annual report on Form 10-K, as such may be amended or supplemented by subsequent quarterly reports on Form 10-Q, or other reports filed with the Securities and Exchange Commission. Examples of forward-looking statements in this release include statements regarding additional customers, potential acquisitions and the Company’s prospects for growth. Readers are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements. For more information, please refer to the Company's filings with the Securities and Exchange Commission.

 

 

 

 

Research Solutions, Inc. and Subsidiaries

Consolidated Balance Sheets

 

   March 31,     
   2023   June 30, 
   (unaudited)   2022 
Assets          
Current assets:          
Cash and cash equivalents  $12,132,899   $10,603,175 
Accounts receivable, net of allowance of $49,670 and $94,144, respectively   6,797,240    5,251,545 
Prepaid expenses and other current assets   398,726    276,026 
Prepaid royalties   798,892    846,652 
Total current assets   20,127,757    16,977,398 
           
Other assets:          
Property and equipment, net of accumulated depreciation of $868,324 and $840,996, respectively   53,766    47,985 
Intangible assets, net of accumulated amortization of $11,046 and $0, respectively   430,788    — 
Deposits and other assets   997    893 
Total assets  $20,613,308   $17,026,276 
           
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable and accrued expenses  $7,696,205   $6,604,032 
Deferred revenue   6,524,570    5,538,526 
Total current liabilities   14,220,775    12,142,558 
           
Commitments and contingencies          
           
Stockholders’ equity:          
Preferred stock; $0.001 par value; 20,000,000 shares authorized; no shares issued and outstanding   —    — 
Common stock; $0.001 par value; 100,000,000 shares authorized; 29,500,764 and 27,075,648 shares issued and outstanding, respectively   29,501    27,076 
Additional paid-in capital   29,386,169    28,072,855 
Accumulated deficit   (22,898,395)   (23,094,272)
Accumulated other comprehensive loss   (124,742)   (121,941)
Total stockholders’ equity   6,392,533    4,883,718 
Total liabilities and stockholders’ equity  $20,613,308   $17,026,276 

 

 

 

 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Operations and Other Comprehensive Loss

(Unaudited)

 

   Three Months Ended   Nine Months Ended 
   March 31,   March 31, 
   2023   2022   2023   2022 
                 
Revenue:                    
Platforms  $2,249,632   $1,786,224   $6,379,871   $4,900,927 
Transactions   8,092,794    6,971,128    21,363,864    19,471,216 
Total revenue   10,342,426    8,757,352    27,743,735    24,372,143 
                     
Cost of revenue:                    
Platforms   268,630    219,051    752,176    696,375 
Transactions   6,046,523    5,299,804    16,211,211    14,939,236 
Total cost of revenue   6,315,153    5,518,855    16,963,387    15,635,611 
Gross profit   4,027,273    3,238,497    10,780,348    8,736,532 
                     
Operating expenses:                    
Selling, general and administrative   3,875,802    3,573,454    10,766,537    9,912,690 
Depreciation and amortization   18,332    4,988    30,486    12,144 
Total operating expenses   3,894,134    3,578,442    10,797,023    9,924,834 
                     
Income (loss) from operations   133,139    (339,945)   (16,675)   (1,188,302)
                     
Other income   104,331    237    218,095    777 
                     
Income (loss) from operations before provision for income taxes   237,470    (339,708)   201,420    (1,187,525)
Provision for income taxes   (628)   (822)   (5,543)   (6,592)
                     
Net income (loss)   236,842    (340,530)   195,877    (1,194,117)
                     
Other comprehensive income (loss):                    
Foreign currency translation   (4,149)   1,609    (2,801)   (1,181)
Comprehensive income (loss)  $232,693   $(338,921)  $193,076   $(1,195,298)
                     
Basic income (loss) per common share:                    
Net income (loss) per share  $0.01   $(0.01)  $0.01   $(0.05)
Weighted average common shares outstanding   26,929,314    26,512,195    26,820,557    26,392,949 
                     
Diluted income (loss) per common share:                    
Net income (loss) per share  $0.01   $(0.01)  $0.01   $(0.05)
Weighted average common shares outstanding   29,791,719    26,512,195    28,837,774    26,392,949 

 

 

 

 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

   Nine Months Ended 
   March 31, 
   2023   2022 
         
Cash flow from operating activities:          
Net income (loss)  $195,877   $(1,194,117)
Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities:          
Depreciation and amortization   30,486    12,144 
Fair value of vested stock options   338,973    424,450 
Fair value of vested restricted common stock   925,550    446,433 
Fair value of vested unrestricted common stock   68,272    — 
Changes in operating assets and liabilities:          
Accounts receivable   (1,545,695)   (904,915)
Prepaid expenses and other current assets   (122,700)   (67,984)
Prepaid royalties   47,760    (54,287)
Accounts payable and accrued expenses   947,789    397,088 
Deferred revenue   986,044    538,477 
Net cash provided by (used in) operating activities   1,872,356    (402,711)
           
Cash flow from investing activities:          
Purchase of property and equipment   (29,976)   (34,251)
Payment for non-refundable deposit for asset acquisition   (297,450)   — 
Net cash used in investing activities   (327,426)   (34,251)
           
Cash flow from financing activities:          
Proceeds from the exercise of stock options   57,500    97,688 
Proceeds from the exercise of warrants   —    59,500 
Common stock repurchase   (74,556)   (82,053)
Net cash provided by (used in) financing activities   (17,056)   75,135 
           
Effect of exchange rate changes   1,850    (1,989)
Net increase (decrease) in cash and cash equivalents   1,529,724    (363,816)
Cash and cash equivalents, beginning of period   10,603,175    11,004,337 
Cash and cash equivalents, end of period  $12,132,899   $10,640,521 
           
Supplemental disclosures of cash flow information:          
Cash paid for income taxes  $5,543   $6,592 

 

Contact

 

Steven Hooser or John Beisler

Three Part Advisors

(214) 872-2710

shooser@threepa.com; jbeisler@threepa.com

 

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