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Research Solutions Reports Fiscal Third Quarter 2018 Financial Results

May 15, 2018

ENCINO, Calif. – May 15, 2018 –Research Solutions, Inc. (OTCQB: RSSS), a provider of workflow efficiency solutions for R&D-driven organizations, reported financial results for its fiscal third quarter ended March 31, 2018.

Fiscal Third Quarter 2018 Highlightsvs. Year-Ago Quarter

  • Total revenue increased 10% to $7.3 million.
  • Platform revenue up 81% to $489,000, with a 79% increase in total Platform deployments to 208. Annual recurring revenue was up 76% to $2.0 million.
  • Transaction revenue up 7% to $6.8 million, with customer count up 8% to 1,059. Transaction count up 3% to 219,607.
  • Total gross margin up 240 basis points to 26.3%.
  • Net loss from continuing operations was $0.3 million, or $(0.01) per share, compared to a net loss of $0.8 million, or $(0.03) per share.

Management Commentary

“Our third quarter demonstrates the continued momentum in our strategy to deliver unique workflow efficiency solutions to research-driven organizations in life sciences, technology and academia,” said Peter Derycz, president and CEO of Research Solutions. “This can be seen in our fourth consecutive quarter of approximately 10% total revenue growth and annual recurring revenue in our SaaS Platforms business that has surpassed $2 million.

“We expect our momentum to continue in the remainder of 2018 as we launch version 2.1 and 2.2 of our Platform framework, supported by powerful weekly releases or improvements to smart applications we develop called ‘gadgets.’ This will be supported by a sales and marketing team that we are reconstructing to drive optimum efficiency and investment returns.”

Fiscal Third Quarter 2018 Financial Results

Total revenue increased 10% to $7.3 million compared to $6.6 million in the same year-ago quarter.

Platform subscription revenue increased 81% to $489,000 compared to $271,000 in the year-ago quarter. The increase was due to a 79% increase in the total number of paid Platform deployments to 208. The quarter ended with annual recurring revenue up 76% to $2.0 million (see the company's definition of annual recurring revenue below).

Transaction revenue increased 7% to $6.8 million compared to $6.4 million in the same year-ago quarter. Total active customers increased 8% from 985 to 1,059, and transaction count increased 3% from 213,000 to 220,000 (see the company's definition of active customer accounts and transactions below).

Total gross margin increased 240 basis points to 26.3% from 23.9% in the same year-ago quarter. The increase was driven by a 100 basis point increase in Transactions gross margin and a revenue mix shift to the higher-margin Platforms business. 

Total operating expenses decreased to $2.2 million compared to $2.4 million in the same year-ago quarter. The decrease was primarily due to the continued optimization of sales and marketing resources and open positions.

Net loss from continuing operations improved to $0.3 million, or $(0.01) per share, compared to a net loss of $0.8 million, or $(0.03) per share, in the year-ago quarter. Adjusted EBITDA totaled $(0.1) million compared to $(0.6) million 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 March 31, 2018 were $4.8 million compared to $5.8 million at June 30, 2017. There were no outstanding borrowings under the company’s $2.5 million revolving line of credit. Apart from a $0.2 million office lease liability due to new accounting guidance for leases, the company had no long-term liabilities or other debt.

Further details about these results are available in the company’s quarterly report on Form 10-Q, 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: Tuesday, May 15, 2018
  • 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: 10004686

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 Liolios Group 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 May 29, 2018.

  • Toll-free replay number: 1-844-512-2921
  • International replay number: 1-412-317-6671
  • Replay ID: 10004686 

 

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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, income from discontinued operations, 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):

 

PressRelease-051518-B

 

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+% 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 matters discussed in this press release may be forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the company's products in the market; the company's success in obtaining new customers and new Platform deployments; the company's success in technology and product development; the company's ability to execute its business model and strategic plans; the company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the company's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the company's Securities and Exchange Commission Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q. The company assumes no obligation to update the cautionary information in this release.

 

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