EX-99.1 2 tm256526d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Research Solutions Reports Fiscal Second Quarter 2025 Results

Reports 23 Percent Increase in ARR to $19.1 Million and 61 Net New Platform Deployments

HENDERSON, Nev., February 13, 2025 — Research Solutions, Inc. (NASDAQ: RSSS), the leading AI-powered research workflow platform, reported financial results for its fiscal second quarter ended December 31, 2024.

Fiscal Second Quarter 2025 Summary

Total revenue of $11.9 million, a 15.5% increase from the prior-year quarter.

Platform revenue up 47% to $4.6 million. Platform revenue accounted for 39% of total revenue as compared to 30% in the prior-year quarter.

Annual Recurring Revenue (“ARR”) up 23% to $19.1 million, which includes approximately $12.7 million of B2B recurring revenue and $6.4 million of B2C recurring revenue.

Gross profit up 30% from the prior-year quarter. Total gross margin improved 540 basis points to 48.9%.

Net loss of $2.0 million or ($0.07) per share, compared to a net loss of ($54,000) or nil per share in the prior-year quarter. The quarter's results include a charge of approximately $2.4 million related to increasing the projected contingent earnout liability for Scite.

Adjusted EBITDA of $963,000 compared to $318,000 in the prior-year quarter. The result is inclusive of $112,000 in commission fees related to the sale of stock by the Company’s former Chairman. On a trailing twelve-months (“TTM”) basis, the Company has now generated Adjusted EBITDA of $4.6 million, which represents a 9.5% margin.

Cash flow from operations of over $1 million in the quarter, compared to $0.3 million in the prior-year quarter.

“Our second quarter results benefited from the continued recognition of the advantages and savings our products offer within the research process and the conclusion of the election cycle, which removed some near-term economic uncertainty. We experienced strong growth in both B2B and B2C ARR. The 61 net new B2B platform deployments represent our best organic performance ever recorded in a quarter, and we also recorded a nearly $1 million sequential increase in B2C recurring revenue. The reported net loss in the quarter is related to the continued outperformance of Scite, which experienced strong academic B2B sales in the quarter in addition to B2C growth,” said Roy W. Olivier, President and CEO of Research Solutions. “Lastly, I am delighted that during the quarter our former Chairman largely exited his ownership position, eliminating an overhang that had weighed down the stock price for some time, enabling that stock to be diversified across multiple new shareholders.”

Fiscal Second Quarter 2025 Results

Total revenue was $11.9 million, a 15.5% increase from $10.3 million in the year-ago quarter as both platform and transaction revenue increased from the prior period.

Platform subscription revenue increased 47% to $4.6 million compared to $3.1 million in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments and B2C subscribers, as well as upsells to existing customers. The quarter ended with annual recurring revenue of $19.1 million, up 23% year-over-year (see the company’s definition of annual recurring revenue below).

Transaction revenue was $7.3 million, compared to $7.2 million in the second quarter of fiscal 2024. The increase was primarily due to increased copyright revenues. The transaction customer count for the quarter was 1,384, compared to 1,398 customers in the prior-year quarter (see the Company's definition of active customer accounts and transactions below).

Total gross margin improved 540 basis points from the prior-year quarter to 48.9%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platforms business as well as increased margins in that business.

Total operating expenses were $5.7 million, compared to $4.9 million in the second quarter of 2024. The increases were related to additional costs in Sales and Marketing and Technology and Product Development, which include having a full quarter of Scite expenses in the period, compared to one month in the prior-year quarter. There was also an increase in non-cash depreciation and amortization expense associated with the acquisitions completed in fiscal year 2024.

Net loss for the second quarter was $2.0 million, or ($0.07) per share, compared to net loss of ($54,000), or nil per share, in the prior-year quarter. The quarter's results include a provision of approximately $2.4 million related to increasing the projected contingent earnout liability for Scite. Adjusted EBITDA was $963,0000, compared to $318,000 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, February 13, 2025

Time: 5:00 p.m. ET (2:00 p.m. PT)

Dial-in number: 1-203-518-9848

Conference ID: RESEARCH

The conference call will be broadcast live and available for replay until March 13, 2025 by dialing 1-412-317-6671 and using the replay ID 11157678, and via the investor relations section of the company's website at http://researchsolutions.investorroom.com/.

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

	Quarter Ended December 31,												Six Months Ended December 31,
	2024			2023			Change			% Change			2024			2023			Change			% Change
Revenue:
Platforms	$	4,601,257		$	3,125,584		$	1,475,673			47.2	%	$	8,930,902		$	5,725,776		$	3,205,126			56.0	%
Transactions	$	7,312,962		$	7,188,158			124,804			1.7	%	$	15,027,799		$	14,648,937			378,862			2.6	%
Total Revenue		11,914,219			10,313,742			1,600,477			15.5	%		23,958,701			20,374,713			3,583,988			17.6	%
Gross Profit:
Platforms		3,981,415			2,639,399			1,342,016			50.8	%		7,763,893			4,856,977			2,906,916			59.9	%
Transactions		1,839,678			1,844,403			(4,725	)		-0.3	%		3,823,076			3,658,391			164,685			4.5	%
Total Gross Profit		5,821,093			4,483,802			1,337,291			29.8	%		11,586,969			8,515,368			3,071,601			36.1	%
Gross profit as a % of revenue:
Platforms		86.5	%		84.4	%		2.1	%					86.9	%		84.8	%		2.1	%
Transactions		25.2	%		25.7	%		-0.5	%					25.4	%		25.0	%		0.5	%
Total Gross Profit		48.9	%		43.5	%		5.4	%					48.4	%		41.8	%		6.6	%
Operating Expenses:
Sales and marketing		1,343,087			804,927			538,160			66.9	%		2,533,494			1,489,943			1,043,551			70.0	%
Technology and product development		1,506,849			1,336,558			170,291			12.7	%		2,879,607			2,581,137			298,470			11.6	%
General and administrative		2,008,201			2,023,848			(15,648	)		-0.8	%		3,938,377			4,566,717			(628,340	)		-13.8	%
Depreciation and amortization		306,233			155,749			150,484			96.6	%		618,328			215,369			402,959			187.1	%
Stock-based compensation		534,322			596,455			(62,133	)		-10.4	%		952,311			1,188,269			(235,958	)		-19.9	%
Foreign currency translation loss		29,554			(13,738	)		43,292			NM			(74,686	)		(7,118	)		(67,568	)		949.3	%
Total Operating Expenses		5,728,246			4,903,799			824,446			16.8	%		10,847,431			10,034,317			813,114			8.1	%
Income (loss) from operations		92,847			(419,997	)		512,844			122.1	%		739,538			(1,518,949	)		2,258,487			148.7	%
Other Income (Expenses):
Other income		(2,057,887	)		376,426			(2,434,313	)		NM			(1,989,362	)		516,737			(2,506,099	)		NM
Provision for income taxes		(15,194	)		(10,057	)		(5,137	)		51.1	%		(61,406	)		(39,459	)		(21,947	)		55.6	%
Total Other Income (Expenses):		(2,073,081	)		366,369			(2,439,450	)		NM			(2,050,768	)		477,278			(2,528,046	)		NM
Net income (loss)	$	(1,980,234	)	$	(53,628	)		(1,926,606	)		NM		$	(1,311,230	)	$	(1,041,671	)		(269,559	)		NM
Adjusted EBITDA	$	962,956		$	318,469		$	644,487			202.4	%	$	2,235,491		$	(122,429	)	$	2,357,920			-1926.0	%

	Quarter Ended December 31,										Six Months Ended December 31,
	2024		2023		Change			% Change			2024		2023		Change			% Change
Platforms:
B2B ARR (Annual recurring revenue*):
Beginning of Period	$	12,187,834	$	11,020,241	$	1,167,593			10.6	%	$	12,060,201	$	9,444,130	$	2,616,071			27.7	%
Incremental ARR		550,422		594,507		(44,085	)		-7.4	%		678,055		2,170,618		(1,492,563	)		-68.8	%
End of Period	$	12,738,256	$	11,614,748	$	1,123,508			9.7	%	$	12,738,256	$	11,614,748	$	1,123,508			9.7	%
Deployments:
Beginning of Period		1,029		880		149			16.9	%		1,021		835		186			22.3	%
Incremental Deployments		61		62		(1	)		-1.6	%		69		107		(38	)		-35.5	%
End of Period		1,090		942		148			15.7	%		1,090		942		148			15.7	%
ASP (Average sales price):
Beginning of Period	$	11,844	$	12,523	$	(679	)		-5.4	%	$	11,812	$	11,310	$	502			4.4	%
End of Period	$	11,686	$	12,330	$	(643	)		-5.2	%	$	11,686	$	12,330	$	(643	)		-5.2	%
B2C ARR (Annual recurring revenue*):
Beginning of Period	$	5,430,795	$	-	$	5,430,795			NM		$	5,363,129	$	-	$	5,363,129			NM
Incremental ARR		940,586		3,954,090		(3,013,504	)		NM			1,008,252		3,954,090		(2,945,838	)		NM
End of Period	$	6,371,381	$	3,954,090	$	2,417,291			61.1	%	$	6,371,381	$	3,954,090	$	2,417,291			61.1	%

Total ARR (Annualized recurring revenue):	$	19,109,637	$	15,568,838	$	3,540,799			22.7	%	$	19,109,637	$	15,568,838	$	3,540,799			22.7	%

Transaction Customers:
Corporate customers		1,051		1,065		(14	)		-1.3	%		1,063		1,078		(15	)		-1.3	%
Academic customers		333		333		-			0.0	%		325		319		6			1.9	%
Total customers		1,384		1,398		(14	)		-1.0	%		1,388		1,397		(9	)		-0.6	%

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. For B2C ARR, this includes the annualized value of monthly subscriptions, meaning their monthly value multiplied by twelve.

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) including any change in fair value of contingent earnout liability, foreign currency transaction loss, provision for income taxes, depreciation and amortization, stock-based compensation, and other potential adjustments that may arise. Set forth below is a reconciliation of Adjusted EBITDA to net income (loss):

Quarter Ended December 31, Six Months Ended December 31,

2024 2023 Change % Change 2024 2023 Change % Change

Net Income (loss) $ (1,980,234 ) $ (53,628 ) $ (1,926,606 ) NM $ (1,311,230 ) $ (1,041,671 ) $ (269,559 ) NM

Add (deduct): -

Other (income) expense 2,057,887 (376,426 ) 2,434,313 NM 1,989,362 (516,737 ) 2,506,099 NM

Foreign currency translation loss (gain) 29,554 (13,738 ) 43,292 NM (74,686 ) (7,118 ) (67,568 ) 949.3 %

Provision for income taxes 15,194 10,057 5,137 51.1 % 61,406 39,459 21,947 55.6 %

Depreciation and amortization 306,233 155,749 150,484 96.6 % 618,328 215,369 402,959 187.1 %

Stock-based compensation 534,322 596,455 (62,133 ) -10.4 % 952,311 1,188,269 (235,958 ) -19.9 %

Adjusted EBITDA $ 962,956 $ 318,469 $ 644,487 202.4 % $ 2,235,491 $ (122,429 ) $ 2,357,920 1926.0 %

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 visit www.researchsolutions.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 enhanced product offerings, additional customers, 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

	December 31,
	2024			June 30,
	(unaudited)			2024
Assets
Current assets:
Cash and cash equivalents	$	7,701,155		$	6,100,031
Accounts receivable, net of allowance of $129,895 and $68,579, respectively		7,116,055			6,879,800
Prepaid expenses and other current assets		742,166			643,553
Prepaid royalties		589,068			1,067,237
Total current assets		16,148,444			14,690,621

Non-current assets:
Property and equipment, net of accumulated depreciation of $932,773 and $922,558, respectively		63,355			88,011
Intangible assets, net of accumulated amortization of $2,129,868 and $1,535,310, respectively		10,230,439			10,764,261
Goodwill		16,345,888			16,315,888
Deposits and other assets		867			981
Total assets	$	42,788,993		$	41,859,762

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	8,104,118		$	8,843,612
Deferred revenue		8,853,415			9,023,848
Contingent earnout liability, current portion		3,963,956			—
Total current liabilities		20,921,489			17,867,460

Non-current liabilities:
Contingent earnout liability, long-term portion		10,741,044			12,298,114
Total liabilities		31,662,533			30,165,574

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; 32,640,407 and 32,295,373 shares issued and outstanding, respectively		32,640			32,295
Additional paid-in capital		38,836,646			38,089,958
Accumulated deficit		(27,620,476	)		(26,309,246	)
Accumulated other comprehensive loss		(122,350	)		(118,819	)
Total stockholders’ equity		11,126,460			11,694,188
Total liabilities and stockholders’ equity	$	42,788,993		$	41,859,762

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Operations and Other Comprehensive Loss

(Unaudited)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2024			2023			2024			2023
Revenue:
Platforms	$	4,601,257		$	3,125,584		$	8,930,902		$	5,725,776
Transactions		7,312,962			7,188,158			15,027,799			14,648,937
Total revenue		11,914,219			10,313,742			23,958,701			20,374,713

Cost of revenue:
Platforms		619,842			486,185			1,167,009			868,799
Transactions		5,473,284			5,343,755			11,204,723			10,990,546
Total cost of revenue		6,093,126			5,829,940			12,371,732			11,859,345
Gross profit		5,821,093			4,483,802			11,586,969			8,515,368

Operating expenses:
Selling, general and administrative		5,422,013			4,748,050			10,229,103			9,818,948
Depreciation and amortization		306,233			155,749			618,328			215,369
Total operating expenses		5,728,246			4,903,799			10,847,431			10,034,317

Income (loss) from operations		92,847			(419,997	)		739,538			(1,518,949	)

Other income		348,999			108,194			417,524			248,505
Change in fair value of contingent earnout liability		(2,406,886	)		268,232			(2,406,886	)		268,232

Loss before provision for income taxes		(1,965,040	)		(43,571	)		(1,249,824	)		(1,002,212	)
Provision for income taxes		(15,194	)		(10,057	)		(61,406	)		(39,459	)

Net loss		(1,980,234	)		(53,628	)		(1,311,230	)		(1,041,671	)

Other comprehensive income (loss):
Foreign currency translation		2,637			6,349			(3,531	)		5,403
Comprehensive loss	$	(1,977,597	)	$	(47,279	)	$	(1,314,761	)	$	(1,036,268	)

Loss per common share:
Net loss per share, basic and diluted	$	(0.07	)	$	-		$	(0.04	)	$	(0.04	)
Weighted average common shares outstanding, basic and diluted		30,421,808			28,092,945			30,384,339			27,564,404

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	December 31,
	2024			2023
Cash flow from operating activities:
Net loss	$	(1,311,230	)	$	(1,041,671	)
Adjustment to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		618,328			215,369
Stock options expense		88,045			61,714
Restricted common stock expense		864,266			1,105,606
Modification cost of accelerated vesting of restricted common stock		—			20,949
Adjustment to contingent earnout liability		2,406,886			(268,232	)
Changes in operating assets and liabilities:
Accounts receivable		(266,255	)		(681,502	)
Prepaid expenses and other current assets		(98,613	)		(67,986	)
Prepaid royalties		478,169			121,100
Accounts payable and accrued expenses		(737,670	)		349,310
Deferred revenue		(170,433	)		(241,545	)
Net cash provided by (used in) operating activities		1,871,493			(426,888	)

Cash flow from investing activities:
Purchase of property and equipment		(5,404	)		(55,763	)
Payment for acquisition of Resolute, net of cash acquired		—			(2,718,253	)
Payment for acquisition of Scite, net of cash acquired		—			(7,305,493	)
Net cash used in investing activities		(5,404	)		(10,079,509	)

Cash flow from financing activities:
Common stock repurchase		(205,278	)		(68,748	)
Payment of contingent acquisition consideration		(62,560	)		(278,195	)
Net cash used in financing activities		(267,838	)		(346,943	)

Effect of exchange rate changes		2,873			5,666
Net increase (decrease) in cash and cash equivalents		1,601,124			(10,847,674	)
Cash and cash equivalents, beginning of period		6,100,031			13,545,333
Cash and cash equivalents, end of period	$	7,701,155		$	2,697,659

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	61,406		$	39,459

Non-cash investing and financing activities:
Contingent consideration accrual on asset acquisition	$	30,198		$	36,364

Contact

Steven Hooser or John Beisler

Three Part Advisors

(214) 872-2710

[email protected]; [email protected]

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