ENCINO, Calif. – September 19, 2019 – Research Solutions, Inc. (OTCQB: RSSS), a SaaS provider of workflow efficiency solutions for R&D-driven organizations, reported financial results for its fiscal fourth quarter and full year ended June 30, 2019.

Fiscal Fourth Quarter 2019 Highlights vs. Year-Ago Quarter

• Platform revenue up 52% to $804,000, with a 33% increase in total Platform deployments to 301. Annual recurring revenue up 43% to $3.2 million.
• Transaction revenue increased to $6.7 million compared to $6.6 million, with customer count up to 1,090 compared to 1,081.
• Total gross margin up 260 basis points to 29.8%.
• Net loss from continuing operations was $0.2 million, or nil per share, compared to a net loss of $0.1 million, or $(0.01) per share.

Management Commentary

“Fiscal 2019 was another step forward as we continued to grow our SaaS-based Platform business, provide exceptional value through our innovative research tools, and test various sales and marketing strategies,” said Peter Derycz, president and CEO of Research Solutions. “In fact, during the fourth quarter our Platform revenue grew 52% over the year-ago quarter and we continued to maintain a customer churn rate far better than the industry standard, which speaks volumes to the value our Platform provides. We remain committed to driving new user growth and are currently optimizing our marketing strategies to further align with this strategy.

“Each day we get smarter about the ways in which to expand our Platform customer base. We have launched various digital marketing campaigns specifically targeting organizations that we know can significantly benefit from our enterprise offering, and we continue to measure the effectiveness of each campaign and strive for lower costs and better efficiency. We are also intensely focused on nurturing leads through better follow-up practices, which we believe will improve conversion rates.

“As we move into fiscal 2020, we are shifting our marketing efforts to focus on business-to-business campaigns, rather than individual customer campaigns. While individual customers provide a great starting point for enterprise leads, we believe a more focused and direct outreach to potential enterprise customers will be more efficient and accelerate revenue growth. We will also continue to focus on upgrading and enhancing our Platform to ensure we are consistently providing the most innovative and valuable research tools for our customers.”

Fiscal Fourth Quarter 2019 Financial Results

Total revenue increased 4% to $7.5 million compared to $7.2 million in the same year-ago quarter.

Platform subscription revenue increased 52% to $804,000 compared to $529,000 in the same year-ago quarter. The increase was due to upselling current platform customers and to a 33% increase in the total number of paid Platform deployments from 227 to 301. The quarter ended with annual recurring revenue up 43% to $3.2 million (see the company's definition of annual recurring revenue below).

Transaction revenue increased slightly to $6.7 million compared to $6.6 million in the same year-ago quarter. Total active customers also increased slightly from 1,081 to 1,090 as well as transaction count from 213,000 to 215,000 (see the company's definition of active customer accounts and transactions below).

Total gross margin increased 260 basis points to 29.8% from 27.2% in the same year-ago quarter. The increase was primarily driven by a 150 basis point increase in Platform gross margin and the continued revenue mix shift to the higher-margin Platform business.

Total operating expenses were $2.4 million compared to $2.1 million in the same year-ago quarter. The increase was primarily due to greater spending on sales and marketing related to expanding the Platform business.

Net loss from continuing operations was $0.2 million, or nil per share, compared to a net loss of $0.1 million, or $(0.01) per share, in the year-ago quarter. Adjusted EBITDA totaled $(41,000) compared to $(27,000) in the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).

Cash and cash equivalents at June 30, 2019, amounted to $5.4 million compared to $4.9 million at June 30, 2018. There were no outstanding borrowings under the company’s $2.5 million revolving line of credit. Apart from a $0.1 million office lease liability due to new accounting guidance for leases, the company had no long-term liabilities or other debt.

Full Year 2019 Financial Results

Total revenue increased 3% to $28.8 million compared to $28.0 million in 2018.

Platform subscription revenue increased 54% to $2.8 million compared to $1.8 million in 2018. The increase was due to the previously mentioned increase in total paid Platform deployments to 301 and strong growth in annual recurring revenue to $3.2 million.

Transaction revenue was $26.0 million compared to $26.2 million in 2018. Total active customers increased 3% from 1,052 to 1,081, and transaction count was 831,000 compared to 843,000.

Total gross margin increased 280 basis points to 29.0% from 26.2% in 2018. The increase was driven by the continued revenue mix shift to the higher-margin Platform business.

Total operating expenses were $9.6 million compared to $9.3 million in 2018. The increase was primarily driven by the company’s continued investment in technology and product development.

Net loss from continuing operations in fiscal 2019 improved to $1.2 million, or $(0.05) per share, compared to a net loss of $1.9 million, or $(0.08) per share, in 2018. Adjusted EBITDA improved to $(0.4) million compared to $(1.0) million in 2018.

Further details about these results are available in the company’s annual report on Form 10-K, which is available in the investor relations section of the company’s website at www.researchsolutions.com.

Conference Call

Research Solutions President and CEO Peter Derycz and CFO Alan Urban will host an investor conference call to discuss these results and the company’s outlook, followed by a question and answer period.

• Date: Thursday, September 19, 2019
• Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
• Toll-free dial-in number: 1-855-327-6837
• International dial-in number: 1-631-891-4304
• Conference ID: 10007580

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website at www.researchsolutions.com.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through October 3, 2019.

• Toll-free replay number: 1-844-512-2921
• International replay number: 1-412-317-6671
• Replay ID: 10007580

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 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):

About Research Solutions

Research Solutions, Inc. (OTCQB: RSSS) provides workflow efficiency solutions for R&D-driven organizations in life sciences, technology and academia worldwide. Our Software-as-a-Service platform provides tools or “Gadgets” that allow users to discover, access, manage and collaborate around science, technology and medical (STM) content and data. Our customers range from 70 percent of the top 25 global pharmaceutical companies to emerging small and medium-sized businesses. We generate recurring revenue from subscriptions to our SaaS platform and transactional revenue from the sale of STM content. For more information, 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. 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.

Investor Relations:

Gateway Investor Relations
Cody Slach
Tel 1-949-574-3860
RSSS@gatewayir.com

Media Contact:

Research Solutions, Inc. and Reprints Desk, Inc.
Leah Rodriguez
+1 (310) 477-0354
lsrodriguez@reprintsdesk.com