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Research Solutions Reports Fiscal First Quarter 2022 Results: Company Reports 33 Percent Increase in Platform ARR to $6.3 Million

November 12, 2021

HENDERSON, Nev., Nov. 11, 2021 /PRNewswire/ -- Research Solutions, Inc. (NASDAQ: RSSS), a pioneer in providing cloud-based workflow solutions for R&D driven organizations, reported financial results for its fiscal first quarter ended September 30, 2021.

Fiscal First Quarter 2022 Summary

  • Total revenue of $7.7 million, unchanged from prior-year quarter
  • Platform revenue up 32% to $1.5 million. Annual Recurring Revenue ("ARR") up 33% to $6.3 million.
  • Gross profit up 9% from prior-year quarter. Total gross margin improved 275 basis points to 34.4%.
  • Loss of $0.01 per share, compared to earnings of nil per diluted share in the prior-year quarter
  • 37 net new platform deployments in the quarter compared to 31 in the prior-year

"Our first quarter fiscal 2022 results reflect the continued focus on the growth of our Platforms business, with 37 net new deployments in the quarter and 158 deployments over the past 12 months," said Roy W. Olivier, President and CEO of Research Solutions. "The combination of product initiatives and more focused sales and marketing efforts is leading to the addition of customers brand new to the company.  With additional products set for launch later this year and the ability to use our strong balance sheet to make strategic acquisitions to supplement our organic growth, we believe we are well-positioned for continued success in fiscal 2022."

Fiscal First Quarter 2022 Results

Total revenue was $7.7 million, unchanged from the same year-ago quarter.

Platform subscription revenue increased 32% to $1.5 million compared to approximately $1.1 million in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments, including 37 net deployments added in the quarter. The quarter ended with annual recurring revenue of $6.3 million, up 7% sequentially and 33% year-over-year (see the company's definition of annual recurring revenue below).

Transaction revenue was $6.2 million, compared to $6.6 million the first quarter of fiscal 2021. As previously noted, some of the decrease is related to the transaction savings that customers experience as they transition to the recurring revenue platform business. Transaction customer count for the quarter was 1,153, compared to 1,090 customers in the prior-year quarter (see the company's definition of active customer accounts and transactions below).

Total gross margin improved 275 basis points from the prior-year quarter to 34.4%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.

Total operating expenses were $3.0 million, compared to $2.4 million in the first quarter of 2021. The increase was primarily due to higher general and administrative costs.

Net loss in the first quarter was ($372,000), or ($0.01) per share, compared to net income of $15,000, or nil per diluted share, in the prior-year quarter. Adjusted EBITDA was ($181,000), compared to $167,000 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 Interim President and CEO Roy W. Olivier and CFO Bill Nurthen will host the conference call, followed by a question and answer period.

Date: Thursday, November 11, 2021
Time: 5:00 p.m. ET (2:00 p.m. PT)
Toll-free dial-in number: 1-844-825-9789
International dial-in number: 1-412-317-5180
Conference ID: 10161728

The conference call will be broadcast live and available for replay until December 9, 2021, by dialing 1-844-512-2921 and using the replay ID 10161728, and via the investor relations section of the company's website at http://researchsolutions.investorroom.com/.

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

 
   

Quarter Ended September 30,

   

2021

2020

Change

% Change

Revenue:

       
 

Platforms

$ 1,509,874

$ 1,141,688

$     368,186

32.2%

 

Transactions

$ 6,232,630

$ 6,606,737

(374,107)

-5.7%

Total Revenue

7,742,504

7,748,425

(5,921)

-0.1%

         

Gross Profit:

       
 

Platforms

1,264,218

937,736

326,482

34.8%

 

Transactions

1,396,157

1,511,840

(115,683)

-7.7%

Total Gross Profit

2,660,375

2,449,576

210,799

8.6%

         

Gross profit as a % of revenue:

       
 

Platforms

83.7%

82.1%

1.6%

 
 

Transactions

22.4%

22.9%

-0.5%

 

Total Gross Profit

34.4%

31.6%

2.7%

 
         

Operating Expenses:

       
 

Sales and marketing

522,951

498,374

24,577

4.9%

 

Technology and product development

821,460

622,961

198,499

31.9%

 

General and administrative

1,497,223

1,161,061

336,162

29.0%

 

Depreciation and amortization

2,896

3,723

(827)

-22.2%

 

Stock-based compensation

171,110

170,790

320

0.2%

 

Foreign currency translation loss

11,243

(24,249)

35,492

146.4%

Total Operating Expenses

3,026,883

2,432,660

594,223

24.4%

Income (loss) from operations

(366,508)

16,915

(383,424)

-2266.7%

         

Other Income (Expenses):

       
 

Other income (expense)

276

235

41

17.4%

 

Provision for income taxes

(5,770)

(2,505)

(3,265)

-130.3%

 

Gain on sale of disc'd operations

-

-

-

 

Total Other Income (Expenses):

(5,494)

(2,270)

(3,224)

-142.0%

Net income (loss)

$   (372,002)

$       14,645

(386,648)

-2640.1%

         

Adjusted EBITDA

$   (181,259)

$     167,179

$   (348,439)

-208.4%

           
   

Quarter Ended September 30,

   

2021

2020

Change

% Change

Platforms:

       
 

ARR (Annual recurring revenue):

       
 

  Beginning of Period

$ 5,880,179

$ 4,446,088

$ 1,434,091

32.3%

 

   Incremental ARR

402,748

295,095

107,653

36.5%

 

  End of Period

$ 6,282,927

$ 4,741,183

$ 1,541,744

32.5%

         
 

Deployments:

       
 

  Beginning of Period

553

401

152

37.9%

 

   Incremental Deployments

37

31

6

19.4%

 

  End of Period

590

432

158

36.6%

         
 

ASP (Average sales price):

       
 

  Beginning of Period

$       10,633

$       11,088

$           (454)

-4.1%

 

  End of Period

$       10,649

$       10,975

$           (326)

-3.0%

         

Transaction Customers:

       
 

Corporate customers

853

805

48

6.0%

 

Academic customers

300

285

15

5.3%

 

Total customers

1,153

1,090

63

5.8%

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 September 30,

   

2021

2020

Change

% Change

Net Income (loss)

$   (372,002)

$       14,645

$   (386,648)

-2640.1%

 Add (deduct):

       
 

Other income (expense)

(276)

(235)

(41)

-17.4%

 

Foreign currency translation loss

11,243

(24,249)

35,492

146.4%

 

Provision for income taxes

5,770

2,505

3,265

130.3%

 

Depreciation and amortization

2,896

3,723

(827)

-22.2%

 

Stock-based compensation

171,110

170,790

320

0.2%

 

Gain on sale of disc. ops.

-

-

-

 

 Adjusted EBITDA

$   (181,259)

$     167,179

$   (348,439)

-208.4%

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 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

 
   

September 30, 

       
   

2021

 

June 30, 

 
   

(unaudited)

 

2021

 

Assets

             

Current assets:

             

Cash and cash equivalents

 

$

10,871,336

 

$

11,004,337

 

Accounts receivable, net of allowance of $47,695 and $51,495, respectively

   

4,702,686

   

4,717,453

 

Prepaid expenses and other current assets

   

207,813

   

270,252

 

Prepaid royalties

   

265,156

   

904,921

 

Total current assets

   

16,046,991

   

16,896,963

 
               

Other assets:

             

Property and equipment, net of accumulated depreciation of $825,050 and $824,123, respectively

   

21,187

   

20,755

 

Deposits and other assets

   

876

   

906

 

Total assets

 

$

16,069,054

 

$

16,918,624

 
               

Liabilities and Stockholders' Equity

             

Current liabilities:

             

Accounts payable and accrued expenses

 

$

6,461,726

 

$

6,687,188

 

Deferred revenue

   

4,438,591

   

4,804,351

 

Total current liabilities

   

10,900,317

   

11,491,539

 
               

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; 26,594,119 and 26,498,215 shares issued and outstanding, respectively

   

26,594

   

26,498

 

Additional paid-in capital

   

27,098,585

   

26,982,052

 

Accumulated deficit

   

(21,833,890)

   

(21,461,888)

 

Accumulated other comprehensive loss

   

(122,552)

   

(119,577)

 

Total stockholders' equity

   

5,168,737

   

5,427,085

 

Total liabilities and stockholders' equity

 

$

16,069,054

 

$

16,918,624

 

 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Operations and Other Comprehensive Loss

(Unaudited)

 
   

Three Months Ended

 
   

September 30, 

 
   

2021

 

2020

 
               

Revenue:

             

Platforms

 

$

1,509,874

 

$

1,141,688

 

Transactions

   

6,232,630

   

6,606,737

 

Total revenue

   

7,742,504

   

7,748,425

 
               

Cost of revenue:

             

Platforms

   

245,656

   

203,952

 

Transactions

   

4,836,473

   

5,094,897

 

Total cost of revenue

   

5,082,129

   

5,298,849

 

Gross profit

   

2,660,375

   

2,449,576

 
               

Operating expenses:

             

Selling, general and administrative

   

3,023,987

   

2,428,938

 

Depreciation and amortization

   

2,896

   

3,723

 

Total operating expenses

   

3,026,883

   

2,432,661

 
               

Income (loss) from operations

   

(366,508)

   

16,915

 
               

Other income

   

276

   

235

 
               

Income (loss) from operations before provision for income taxes

   

(366,232)

   

17,150

 

Provision for income taxes

   

(5,770)

   

(2,505)

 
               

Net income (loss)

   

(372,002)

   

14,645

 
               

Other comprehensive income (loss):

             

Foreign currency translation

   

(2,975)

   

1,165

 

Comprehensive income (loss)

 

$

(374,977)

 

$

15,810

 
               

Income (loss) per common share:

             

Basic

 

$

(0.01)

 

$

 

Diluted

 

$

(0.01)

 

$

 
               

Weighted average common shares outstanding:

             

Basic

   

26,277,116

   

25,898,900

 

Diluted

   

26,277,116

   

26,511,180

 

 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 
   

Three Months Ended

 
   

September 30, 

 
   

2021

 

2020

 
               

Cash flow from operating activities:

             

Net income (loss)

 

$

(372,002)

 

$

14,645

 

Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities:

             

Depreciation and amortization

   

2,896

   

3,723

 

Amortization of lease right

   

   

30,778

 

Fair value of vested stock options

   

71,999

   

77,627

 

Fair value of vested restricted common stock

   

99,111

   

93,164

 

Changes in operating assets and liabilities:

             

Accounts receivable

   

14,767

   

(5,831)

 

Prepaid expenses and other current assets

   

62,439

   

1,366

 

Prepaid royalties

   

639,765

   

(322,191)

 

Accounts payable and accrued expenses

   

(225,462)

   

1,032,896

 

Deferred revenue

   

(365,760)

   

31,072

 

Lease liability

   

   

(33,776)

 

Net cash provided by (used in) operating activities

   

(72,247)

   

923,473

 
               

Cash flow from investing activities:

             

Purchase of property and equipment

   

(3,643)

   

(4,304)

 

Net cash used in investing activities

   

(3,643)

   

(4,304)

 
               

Cash flow from financing activities:

             

Proceeds from the exercise of stock options

   

   

14,100

 

Common stock repurchase

   

(54,481)

   

(58,395)

 

Net cash used in financing activities

   

(54,481)

   

(44,295)

 
               

Effect of exchange rate changes

   

(2,630)

   

903

 

Net increase (decrease) in cash and cash equivalents

   

(133,001)

   

875,777

 

Cash and cash equivalents, beginning of period

   

11,004,337

   

9,311,556

 

Cash and cash equivalents, end of period

 

$

10,871,336

 

$

10,187,333

 
               

Supplemental disclosures of cash flow information:

             

Cash paid for income taxes

 

$

5,770

 

$

2,505

 

 

 

SOURCE Research Solutions, Inc.

For further information: Steven Hooser or John Beisler, Three Part Advisors, (214) 872-2710, shooser@threepa.com; jbeisler@threepa.com

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