EX-99.1 2 tm2514452d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

 

Research Solutions Reports Fiscal Third Quarter 2025 Results

 

Reports 23 Percent Increase in ARR to $20.4 Million and 43 Net New Platform Deployments,
Positive Net Income and Record Adjusted EBITDA and Cashflow

 

HENDERSON, Nev., May 8, 2025 — Research Solutions, Inc. (NASDAQ: RSSS), the leading AI-powered research workflow platform, reported financial results for its fiscal third quarter ended March 31, 2025.

 

Fiscal Third Quarter 2025 Summary

 

·Total revenue of $12.7 million, compared to $12.1 million in the prior-year quarter.
   
·Platform revenue up 22% to $4.8 million. Platform revenue accounted for 38% of total revenue as compared to 33% in the prior-year quarter.
   
·Annual Recurring Revenue (“ARR”) up 23% to $20.4 million, which includes approximately $13.5 million of B2B recurring revenue and $6.9 million of B2C recurring revenue. Net B2B ARR growth in the quarter was $736,000, a Company record for quarterly B2B growth.
   
·Gross profit up 14% from the prior-year quarter. Total gross margin improved 430 basis points to 49.5%.
   
·Net income of $216,000 or $0.01 per diluted share, compared to net income of $76,000 or nil per diluted share in the prior-year quarter.
   
·Adjusted EBITDA of $1.4 million compared to $961,000 in the prior-year quarter. On a trailing twelve-months (“TTM”) basis, the Company has now generated Adjusted EBITDA of $5.1 million, which represents a 10.4% margin.
   
·Cash flow from operations of approximately $2.9 million in the quarter, which was a Company quarterly record, compared to $2.0 million in the prior-year quarter.

 

“This quarter represents a number of significant milestone achievements for our Company. We are pleased to report ARR above $20 million for the first time in our history. Revenue from our AI-based B2B offerings has grown over 180% in the last year, and we continue to experience strong growth in our B2C offerings and core Article Galaxy platform. These results are due in part to our revamped sales strategy, which better demonstrates to potential customers the improved efficiency and cost savings offered by our products within the research process workflow,” said Roy W. Olivier, President and CEO of Research Solutions. “As we experience strong organic growth in ARR sales, we continue to outperform when it comes to generating operating cash flow and Adjusted EBITDA, which positions us to reinvest in our business or make acquisitions that broaden our product capabilities and enhance our cross-selling opportunities.”

 

 

 

 

Fiscal Third Quarter 2025 Results

 

Total revenue was $12.7 million, a 4.5% increase from $12.1 million in the year-ago quarter as platform revenue growth more than offset a decline in transaction revenue from the prior period.

 

Platform subscription revenue increased 22% to $4.8 million compared to $4.0 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 $20.4 million, up 23% year-over-year (see the Company’s definition of annual recurring revenue below).

 

Transaction revenue was $7.8 million, compared to $8.2 million in the third quarter of fiscal 2024. The decrease was primarily due to lower paid order volume in the period. The transaction customer count for the quarter was 1,380, compared to 1,426 customers in the prior-year quarter (see the Company's definition of active customer accounts and transactions below).

 

Total gross margin improved 430 basis points from the prior-year quarter to 49.5%. 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 and the transaction business.

 

Total operating expenses were $5.7 million, compared to $5.4 million in the third quarter of 2024. The increases were related to additional costs in Sales and Marketing, offset by some reductions in General and Administrative expenses.

 

Net income for the third quarter was $216,000, or $0.01 per diluted share, compared to net income of $76,000, or nil per diluted share, in the prior-year quarter. Adjusted EBITDA was $1.4 million, compared to $961,000 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 8, 2025

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

Dial-in number: 1-203-518-9843

Conference ID: RESEARCH

 

The conference call will be broadcast live and available for replay until June 8, 2025 by dialing 1-412-317-6671 and using the replay ID 11158769, 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, 
   2025   2024   Change   % Change   2025   2024   Change   % Change 
Revenue:                                        
Platforms  $4,839,929   $3,953,403   $886,526    22.4%  $13,770,831   $9,679,179   $4,091,652    42.3%
Transactions  $7,821,434   $8,162,269    (340,835)   -4.2%  $22,849,233   $22,811,206    38,027    0.2%
Total Revenue   12,661,363    12,115,672    545,691    4.5%   36,620,064    32,490,385    4,129,679    12.7%
                                         
Gross Profit:                                        
Platforms   4,229,623    3,382,051    847,572    25.1%   11,993,516    8,239,028    3,754,488    45.6%
Transactions   2,037,457    2,099,881    (62,424)   -3.0%   5,860,533    5,758,272    102,261    1.8%
Total Gross Profit   6,267,080    5,481,932    785,148    14.3%   17,854,049    13,997,300    3,856,749    27.6%
                                         
Gross profit as a % of revenue:                                        
Platforms   87.4%   85.5%   1.8%        87.1%   85.1%   2.0%     
Transactions   26.0%   25.7%   0.3%        25.6%   25.2%   0.4%     
Total Gross Profit   49.5%   45.2%   4.3%        48.8%   43.1%   5.7%     
                                         
Operating Expenses:                                        
Sales and marketing   1,607,678    1,122,365    485,313    43.2%   4,141,172    2,612,308    1,528,864    58.5%
Technology and product development   1,394,936    1,371,754    23,182    1.7%   4,274,543    3,952,891    321,652    8.1%
General and administrative   1,845,411    2,027,074    (181,663)   -9.0%   5,783,788    6,593,791    (810,002)   -12.3%
Depreciation and amortization   312,013    309,898    2,115    0.7%   930,341    525,267    405,074    77.1%
Stock-based compensation   594,639    541,002    53,637    9.9%   1,546,950    1,729,271    (182,321)   -10.5%
Foreign currency translation loss   (44,519)   22,177    (66,696)   NM    (119,205)   15,059    (134,264)   NM 
Total Operating Expenses   5,710,158    5,394,270    315,888    5.9%   16,557,589    15,428,587    1,129,003    7.3%
Income (loss) from operations   556,922    87,663    469,259    535.3%   1,296,460    (1,431,286)   2,727,746    NM 
                                         
Other Income (Expenses):                                        
Other income   (327,042)   31,228    (358,270)   NM    (2,316,404)   547,965    (2,864,369)   NM 
Provision for income taxes   (13,410)   (42,590)   29,180    -68.5%   (74,816)   (82,049)   7,233    -8.8%
Total Other Income (Expenses):   (340,452)   (11,362)   (329,090)   NM    (2,391,220)   465,916    (2,857,136)   NM 
Net income (loss)  $216,470   $76,301    140,169    183.7%  $(1,094,760)  $(965,370)   (129,390)   -13.4%
Adjusted EBITDA  $1,419,055   $960,740   $458,315    47.7%  $3,654,546   $838,311   $2,816,235    335.9%

 

 

 

 

   Quarter Ended March 31,   Nine Months Ended March 31, 
   2025   2024   Change   % Change   2025   2024   Change   % Change 
Platforms:                                        
B2B ARR (Annual recurring revenue*):                                        
Beginning of Period  $12,738,256   $11,614,748   $1,123,508    9.7%  $12,060,201   $9,444,130   $2,616,071    27.7%
Incremental ARR   735,818    38,315    697,503    1820.4%   1,413,873    2,208,933    (795,060)   -36.0%
End of Period  $13,474,074   $11,653,063   $1,821,011    15.6%  $13,474,074   $11,653,063   $1,821,012    15.6%
                                         
Deployments:                                        
Beginning of Period   1,090    942    148    15.7%   1,021    835    186    22.3%
Incremental Deployments   43    41    2    4.9%   112    148    (36)   -24.3%
End of Period   1,133    983    150    15.3%   1,133    983    150    15.3%
                                         
ASP (Average sales price):                                        
Beginning of Period  $11,686   $12,330   $(643)   -5.2%  $11,812   $11,310   $502    4.4%
End of Period  $11,892   $11,855   $38    0.3%  $11,892   $11,855   $38    0.3%
                                         
B2C ARR (Annual recurring revenue*):                                        
Beginning of Period  $6,371,381   $3,954,090   $2,417,291    61.1%  $5,363,129   $-   $5,363,129    NM 
Incremental ARR   506,545    948,885    (442,340)   NM    1,514,797    4,902,975    (3,388,178)   NM 
End of Period  $6,877,926   $4,902,975   $1,974,951    40.3%  $6,877,926   $4,902,975   $1,974,951    40.3%
                                         
Total ARR (Annualized recurring revenue):  $20,352,000   $16,556,038   $3,795,962    22.9%  $20,352,000   $16,556,038   $3,795,963    22.9%
                                         
Transaction Customers:                                        
Corporate customers   1,060    1,105    (45)   -4.1%   1,062    1,087    (25)   -2.3%
Academic customers   320    321    (1)   -0.3%   323    320    3    1.0%
Total customers   1,380    1,426    (46)   -3.2%   1,385    1,407    (22)   -1.5%

 

* Annual Recurring Revenue (Non-GAAP Measure) - the value of contracted platform subscription recurring revenue normalized to a one year period. For B2C, this includes the annualized value of monthly subscriptions, meaning their monthly value multiplied by 12.

 

 

 

 

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 March 31,   Nine Months Ended March 31, 
   2025   2024   Change   % Change   2025   2024   Change   % Change 
Net Income (loss)  $216,470   $76,301   $140,169    183.7%  $(1,094,760)  $(965,370)  $(129,390)   -13.4%
Add (deduct):                                 -      
Other (income) expense   327,042    (31,228)   358,270    NM    2,316,404    (547,965)   2,864,369    NM 
Foreign currency translation loss (gain)   (44,519)   22,177    (66,696)   NM    (119,205)   15,059    (134,264)   NM 
Provision for income taxes   13,410    42,590    (29,180)   -68.5%   74,816    82,049    (7,233)   -8.8%
Depreciation and amortization   312,013    309,898    2,115    0.7%   930,341    525,267    405,074    77.1%
Stock-based compensation   594,639    541,002    53,637    9.9%   1,546,950    1,729,271    (182,321)   -10.5%
Adjusted EBITDA  $1,419,055   $960,740   $458,315    47.7%  $3,654,546   $838,311   $2,816,235    335.9%

 

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

Condensed Consolidated Balance Sheets (Unaudited)

 

   March 31,   June 30, 
   2025   2024 
Assets          
Current assets:          
Cash and cash equivalents  $9,852,007   $6,100,031 
Accounts receivable, net of allowance of $82,026 and $68,579, respectively   7,604,058    6,879,800 
Prepaid expenses and other current assets   625,727    643,553 
Prepaid royalties   755,299    1,067,237 
Total current assets   18,837,091    14,690,621 
           
Non-current assets:          
Property and equipment, net of accumulated depreciation of $944,694 and $922,558, respectively   60,051    88,011 
Intangible assets, net of accumulated amortization of $2,431,738 and $1,535,310, respectively   9,956,378    10,764,261 
Goodwill   16,372,979    16,315,888 
Deposits and other assets   881    981 
Total assets  $45,227,380   $41,859,762 
           
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable and accrued expenses  $8,529,572   $8,843,612 
Deferred revenue   10,355,768    9,023,848 
Contingent earnout liability, current portion   6,019,488    — 
Total current liabilities   24,904,828    17,867,460 
           
Non-current liabilities:          
Contingent earnout liability, long-term portion   9,091,422    12,298,114 
Total liabilities   33,996,250    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; 32,405,120 and 32,295,373 shares issued and outstanding, respectively   32,405    32,295 
Additional paid-in capital   38,728,405    38,089,958 
Accumulated deficit   (27,404,006)   (26,309,246)
Accumulated other comprehensive loss   (125,674)   (118,819)
Total stockholders’ equity   11,231,130    11,694,188 
Total liabilities and stockholders’ equity  $45,227,380   $41,859,762 

 

 

 

 

Research Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

 

   Three Months Ended   Nine Months Ended 
   March 31,   March 31, 
   2025   2024   2025   2024 
Revenue:                
Platforms  $4,839,929   $3,953,403   $13,770,831   $9,679,179 
Transactions   7,821,434    8,162,269    22,849,233    22,811,206 
Total revenue   12,661,363    12,115,672    36,620,064    32,490,385 
                     
Cost of revenue:                    
Platforms   610,306    571,352    1,777,315    1,440,151 
Transactions   5,783,977    6,062,388    16,988,700    17,052,934 
Total cost of revenue   6,394,283    6,633,740    18,766,015    18,493,085 
Gross profit   6,267,080    5,481,932    17,854,049    13,997,300 
                     
Operating expenses:                    
Selling, general and administrative   5,398,145    5,084,371    15,627,248    14,903,319 
Depreciation and amortization   312,013    309,898    930,341    525,267 
Total operating expenses   5,710,158    5,394,269    16,557,589    15,428,586 
                     
Income (loss) from operations   556,922    87,663    1,296,460    (1,431,286)
                     
Other income   78,868    31,228    496,392    279,678 
Change in fair value of contingent earnout liability   (405,910)   —    (2,812,796)   268,287 
                     
Income (loss) before provision for income taxes   229,880    118,891    (1,019,944)   (883,321)
Provision for income taxes   (13,410)   (42,590)   (74,816)   (82,049)
                     
Net income (loss)   216,470    76,301    (1,094,760)   (965,370)
                     
Other comprehensive income (loss):                    
Foreign currency translation   (3,324)   858    (6,855)   6,261 
Comprehensive income (loss)  $213,146   $77,159   $(1,101,615)  $(959,109)
                     
Basic income (loss) per common share:                    
Net income (loss) per share  $0.01   $-   $(0.04)  $(0.03)
Weighted average common shares outstanding   31,033,022    30,020,652    30,597,410    28,377,199 
                     
Diluted income (loss) per common share:                    
Net income (loss) per share  $0.01   $-   $(0.04)  $(0.03)
Weighted average common shares outstanding   32,139,935    33,511,242    30,597,410    28,377,199 

 

 

 

 

 

Research Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

   Nine Months Ended 
   March 31, 
   2025   2024 
Cash flow from operating activities:          
Net loss  $(1,094,760)  $(965,370)
Adjustment to reconcile net loss to net cash provided by operating activities:          
Depreciation and amortization   930,341    525,267 
Stock options expense   146,751    104,502 
Restricted common stock expense   1,400,199    1,603,820 
Modification cost of accelerated vesting of restricted common stock   —    20,949 
Adjustment to contingent earnout liability   2,812,796    (268,287)
Changes in operating assets and liabilities:          
Accounts receivable   (754,258)   (739,883)
Prepaid expenses and other current assets   17,826    (156,026)
Prepaid royalties   311,938    197,888 
Accounts payable and accrued expenses   (338,502)   498,584 
Deferred revenue   1,331,920    768,347 
Net cash provided by operating activities   4,764,251    1,589,791 
           
Cash flow from investing activities:          
Purchase of property and equipment   (11,571)   (57,761)
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   (11,571)   (10,081,507)
           
Cash flow from financing activities:          
Common stock repurchase   (908,393)   (522,024)
Payment of contingent acquisition consideration   (91,174)   (314,960)
Net cash used in financing activities   (999,567)   (836,984)
           
Effect of exchange rate changes   (1,137)   4,791 
Net increase (decrease) in cash and cash equivalents   3,751,976    (9,323,909)
Cash and cash equivalents, beginning of period   6,100,031    13,545,333 
Cash and cash equivalents, end of period  $9,852,007   $4,221,424 
           
Supplemental disclosures of cash flow information:          
Cash paid for income taxes  $74,816   $82,049 
           
Non-cash investing and financing activities:          
Contingent consideration accrual on asset acquisition  $29,394   $36,130 

 

Contact

Steven Hooser or John Beisler

Three Part Advisors

(214) 872-2710

[email protected]; [email protected]

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