Reports 51 Net New Platform Deployments and 34 Percent Year-over-Year Increase in Platform Annual Recurring Revenue to $5.6 Million.
HENDERSON, Nev., May 13, 2021— Research Solutions, Inc. (NASDAQ: RSSS), a pioneer in providing cloud-based workflow solutions for R&D driven organizations, reported financial results for its fiscal 2021 third quarter ended March 31, 2021.
Fiscal Third Quarter 2021 Highlights Compared to Prior Year Quarter:
- Platform revenue increased 32% to $1.3 million, Annual recurring revenue increased 34% to $5.6 million
- Total gross margin improved 80 basis points to 32.4%
- Net income of $50,000, compared to net income of $12,000 in the prior-year quarter
- Adjusted EBITDA of $238,000, an improvement of $93,000
“Our third quarter results include a pair of records within our Platforms business. We achieved 51 net new deployments for the quarter, and Annual Recurring Revenue increased by $534,000, bringing ARR to $5.6 million at the end of the quarter,” said Roy W. Olivier, Interim President and CEO of Research Solutions. “This quarter’s strong performance within platform deployments reflects the beginning of the payoff of our sales initiatives implemented last year.”
Fiscal Third Quarter 2021 Results
Total revenue increased 4% to $8.3 million, compared to $8.0 million in the same year-ago quarter. Platform subscription revenue increased 32% to approximately $1.3 million compared to $1.0 million in the year-ago quarter. The increase was primarily due to an increase in the total number of paid platform deployments, including 51 net deployments added in the quarter, with upselling existing customer accounts also adding to the increase. The quarter ended with annual recurring revenue of $5.6 million, up 11% sequentially and 34% year-over-year (see the company's definition of annual recurring revenue below).
Transaction revenue was $7.0 million, virtually unchanged from the prior-year quarter. Transaction customers count for the quarter was 1,108, compared to 1,115 customers in the third quarter of fiscal year 2020 (see the company's definition of active customer accounts below). Total gross margin improved 80 basis points from the prior-year quarter to 32.4%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.
Total operating expenses were $2.7 million, a $102,000 increase from the year-ago quarter, primarily driven by greater technology and product development expenses. Net income in the third quarter was $50,000, or $0.00 per diluted share, compared to net income of $12,000, or $0.00 per diluted share, in the prior-year quarter. Adjusted EBITDA was $238,000, a new record and a $93,000 improvement from the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).
Cash and cash equivalents on March 31, 2021, amounted to $11.2 million, compared to $10.2 million as of December 31, 2020. There were no outstanding borrowings under the company's $2.5 million revolving line of credit and the company had no long-term liabilities or other debt.
Research Solutions Interim President and CEO Roy W. Olivier, Executive Chairman of the Board Peter Derycz and CFO Alan Urban will host the conference call, followed by a question and answer period.
Date: Thursday, May 13, 2021.
Time: 5:00 p.m. ET (2:00 p.m. PT)
Toll-free dial-in number: 1-855-327-6837
International dial-in number: 1-631-891-4304
Conference ID: 10014529
The conference call will be broadcast live and available for replay until June 3, 2021, by dialing 1-844-512-2921 and using the replay ID 10014529, and via the investor relations section of the company's website at researchsolutions.investorroom.com/.
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 and Reprints Desk
Research Solutions, Inc. (NASDAQ: RSSS) is a pioneer in providing seamless access and simplifies how organizations and individual researchers discover, acquire, and manage scholarly journal articles, book chapters and other content in scientific, technical, and medical (STM) research. More than 70 percent of the top pharmaceutical companies, prestigious universities, and emerging businesses rely on Article Galaxy, a cloud-based SaaS research platform, for simplified and lowest cost access to the latest scientific research and data. Featuring an ecosystem of app-like Gadgets for a personalized research experience, Article Galaxy offers individual as well as enterprise plans, coupled with unparalleled, 24/7 customer support. For more information and details, please visit www.researchsolutions.com and 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 continued momentum in the Company’s business and sales initiatives. 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.