Research Solutions Reports Fiscal Third Quarter 2025 Results

Published: 2025-05-08 16:07:11 ET RSSS

Published on 05/08/2025 at 16:07

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 /PRNewswire/ -- 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

"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, 2025Time: 5:00 p.m. ET (2:00 p.m. PT)Dial-in number: 1-203-518-9843Conference 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)

(119,205)

15,059

(134,264)

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

Other Income (Expenses):

Other income

(327,042)

31,228

(358,270)

(2,316,404)

547,965

(2,864,369)

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)

(2,391,220)

465,916

(2,857,136)

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

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

Incremental ARR

506,545

948,885

(442,340)

1,514,797

4,902,975

(3,388,178)

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

1.0 %

Total customers

1,380

1,426

(46)

-3.2 %

1,385

1,407

(22)

-1.5 %

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

2,316,404

(547,965)

2,864,369

Foreign currency translation loss (gain)

(44,519)

22,177

(66,696)

(119,205)

15,059

(134,264)

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 SolutionsResearch 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 StatementsCertain 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,

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

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SOURCE Research Solutions, Inc.