ENCINO, Calif., May 11, 2015 /PRNewswire/ -- Research Solutions, Inc. (OTCQB:RSSS), a pioneer in providing on-demand access to scientific, technical and medical (STM) information for life science companies, academic institutions, and other research intensive organizations, reported financial results for its fiscal third quarter ended March 31, 2015.

Fiscal Third Quarter 2015 Financial Highlights vs. Year-Ago Quarter

• Article Galaxy revenue increased 14% to a record $5.7 million
• Article Galaxy gross profit up 14% to $1.4 million, with gross profit as a percentage of revenue off 20 basis points at 25.0%
• Income from operations totaled $19,000 versus a loss of $446,000
• Diluted income per share from continuing operations of $0.00, compared to a loss of $0.03
• Adjusted EBITDA increased 167% to $208,000
• During third quarter 2015 and since initiating the $250,000 stock repurchase program in November 2014, the company repurchased approximately 55,000 shares of common stock for $50,000. Approximately $200,000 remains under the current stock repurchase authorization.

Fiscal Third Quarter 2015 Operational Highlights

• Officially launched Article Galaxy Widget, a unique time-saving tool that provides web browser access to scientific, technology and medical (STM) research articles indexed by more than 50 popular search sites and discovery databases, like Google Scholar, PubMed, ResearchGATE, Web of Science and Scopus, as well as numerous publisher websites. 
• Increased global sales staff by more than 60% in Australia and the United States.
• Article Galaxy transactions increased 23% to 159,719.
• Active Article Galaxy customer accounts increased 17% to 775, with academic customer accounts increasing 121% to 75.
• Secured purchasing agreement with consortium of 33 academic research libraries through Greater Western Library Alliance (GWLA).
• Expanded reach to more than 200 academic libraries including: University System of Maryland and Affiliated Institutions (USMAI) Consortium of Libraries, Midwest Collaborative for Library Services (MCLS), and the Pennsylvania Academic Library Consortium (PALCI).
• Article Galaxy Widget was recognized for its "ultimate sophistication" by industry advisory firm, Outsell. In a special report, Outsell's lead analyst commented: "What's great about this widget is that it follows the 'Zero Clicks Away' model…users can immediately see their accessibility options, as well as acquire articles with a single click. That, for researchers, is indeed a dream come true."
• Panacea Pharma Projects, a UK-based drug safety regulatory services firm, adopted Article Galaxy Widget for easier literature access, and the company's business development manager provided a strong public endorsement.

Fiscal Third Quarter 2015 Financial Results         

Total revenue in the fiscal third quarter of 2015 increased 30% to $8.8 million, compared to $6.8 million in the same year-ago quarter. The increase is primarily attributable to increased orders resulting from the acquisition of new customers for Article Galaxy, the company's digital, cloud-based, SaaS solution. Article Galaxy revenue increased 14% in the fiscal third quarter of 2015 to $5.7 million, compared to $5.0 million in the same year-ago quarter.

The increase in Article Galaxy revenue was driven by an increase in transactions, which was up 23% to 159,719 in the fiscal third quarter versus 129,954 in the same year ago quarter. The number of active customer accounts conducting transactions increased by 17% to 775 in the fiscal third quarter, versus 665 in the same year-ago quarter (see the definition of transactions and active customer accounts in the section, "Transactions and Active Customer Accounts," below).

Total gross profit in the fiscal third quarter increased 22% to $1.7 million compared to $1.4 million in the same year-ago quarter. Article Galaxy gross profit increased 14% to $1.4 million versus $1.2 million in the same year-ago quarter. Article Galaxy gross margin decreased 20 basis points to a 25.0% in the fiscal third quarter, versus gross margin of 25.2% in the same year-ago quarter. 

Net loss from continuing operations in the fiscal third quarter improved to a net loss of $1,800 or $0.00 per diluted share from a net loss of $460,000 or ($0.03) per diluted share in the same year-ago quarter.

Adjusted EBITDA increased 167% to $208,000 compared to an adjusted EBITDA loss of $307,000 in the same year-ago quarter (see definition and further discussion about the presentation of adjusted EBITDA, a non-GAAP term, below).

Cash at March 31, 2015 totaled $1.4 million compared to $1.9 million at June 30, 2014. The decrease in cash is primarily due to discontinued operations, operating activities from continuing operations, investing activities from continuing operations, financing activities from continuing operations, and the effect of exchange rate changes.

As of March 31, 2015, there were no outstanding borrowings under the company's revolving line of credit with Silicon Valley Bank, which provides the lesser of $4,000,000 or 80% of eligible accounts receivable. This amount equaled approximately $2,560,000 of available credit at March 31, 2015.

At March 31, 2015, the company had net operating loss carry forwards of approximately $7.0 million applicable to federal tax liability expiring in 2030 and approximately $4.6 million applicable to state tax liability expiring in 2020.

Further details about the company's results in fiscal third quarter 2015 are available in its quarterly report on Form 10-Q, available in the investor relations section of the company's website at www.researchsolutions.com.

Management Commentary

"In the fiscal third quarter of 2015, we continued to realize key customer wins and double digit growth in terms of new Article Galaxy customers, transactions and revenue, with this year-over-year growth now sustained for 10 consecutive quarters," said Research Solutions president and CEO, Peter Derycz. "This momentum has continued into the current quarter, highlighted by a major pharma company win that is already on track to becoming our second largest customer based on their strong initial order flow in March."

"With the official launch of our Article Galaxy Widget in the third quarter, this period also represented the beginning of the next stage in our transition from a hybrid digital-print business to a fully digital solution for accessing high-value STM information. While we will always continue to refine the functionality of our breakthrough method for accessing STM content in order meet the evolving needs of our customers, our focus has now shifted more toward sales and deployment, including expanding our global reach. This was demonstrated in the 60% increase in our sales force during the quarter. These sales efforts now include more activity addressing other important end-markets beyond our traditional corporate world, like academia, and a good portion of our sales staff is now dedicated to these 'academic' efforts.

"In contrast to the corporate world, academia has different long-established methods and systems for accessing and budgeting for STM content. So, we have adopted specialized strategies designed to make our technology the defacto standard for accessing STM content in this market. One of these strategies include tapping into existing college research systems, like under our new agreement we signed with the Greater Western Library Alliance, and establishing a unique technology integration with ILLiad.

"These inroads into the academic market significantly contributed to the increase in our customer count during the quarter. In fact, academia accounted for 68% of new Article Galaxy customer signups. While usage and revenue generation from academia is still very much at the nascent stage, it represents a $4.5 billion, greenfield market opportunity that is nine times the size of our traditional corporate market. Given the positive disruptive nature of Article Galaxy and its uniquely capable browser widget, we also enjoy a first mover advantage in the realm of digital information access for STM researchers.

"Other key performance metrics also trended well during the quarter. We maintained our average revenue per Article Galaxy customer and its gross profit as a percentage of revenue, while SG&A decreased primarily due to a decrease in professional service fees. As a result, we expect to sustain or possibly improve our gross profit as a percentage of revenue as we advance toward our fiscal year end.

"While our Reprints and ePrints segment was up as a percentage of revenue, we do not see this as a trend and expect the recurring revenue from Article Galaxy to far eclipse this legacy business revenue over the long term.

"From a technical perspective, during the quarter we made several enhancements to our Article Galaxy Widget and deployed a full ILLiad integration for streamlining the acquisition of full-text journal articles. We believe these new features will help us secure new customers in the corporate and academic market, with other enhancements in the pipeline designed to enhance revenue generation and other key elements."

Fiscal Q4 2015 Outlook

"As we progress through the final quarter in our fiscal year, we see Article Galaxy continuing to gain momentum as our expanded global sales force engages new customers in the corporate and academic markets," said Derycz. "We expect to maintain our double digit growth in Article Galaxy transactions. In fact, we tracked 13% growth in April as compared to the same year-ago period.

"In terms of our push into academia, our new library consortium deals and partnership with the Greater Western Library Alliance continues to build results. This appears to be driven by the increasing demand for critical content from member libraries that cannot obtain this information in a timely manner or when licenses or re-use rights do not exist, and when conventional channels may take too long to source and obtain.

"We also look forward to further improving user experience with our new Reprints Desk website scheduled to go live in May, as well as meeting with existing and potentially new shareholders at the upcoming 16^th Annual B. Riley & Co. Investor Conference being held on May 12 in Los Angeles, California."

Conference Call

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

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 at http://edge.media-server.com/m/p/brhhnang 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 18, 2015.

Fiscal Third Quarter 2015 Financial Summary Tables

The following financial information should be read in conjunction with the unaudited financial statements and accompanying notes filed by the company with the Securities and Exchange Commission on May 11, 2015 in its Quarterly Report on Form 10-Q for the period ended March 31, 2015, and which can be viewed at www.sec.gov.

Transactions and Active Customer Accounts

We define a transaction as an order for a unit of copyrighted content fulfilled or managed in Article Galaxy.

We define active customer accounts as the sum of the average whole and partial customers for the respective quarter or year. A whole customer is one with at least one Article Galaxy transaction in every month of the respective quarter or year. A partial customer is one with at least one Article Galaxy transaction in one or more months, but not every month of the respective quarter or year.

For example, if a customer has at least one transaction in every month of the quarter, they are counted as a whole customer. However, if they have at least one transaction in only one of the three months of the quarter, they are counted as a partial customer (one third of a customer).

On an annual basis, if a customer has at least one transaction in every month of the year, they are counted as a whole customer. However, if they have at least one transaction in only six of the twelve months of the year, they are counted as a partial customer (one half of a customer).

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 attached tables 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 (loss) from 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) and its wholly-owned subsidiary Reprints Desk, Inc. (www.reprintsdesk.com) are pioneers in providing on-demand access to scientific, technical, and medical (STM) information for life science companies, academic institutions, and other research intensive organizations. Our customers include 70% of the top 25 pharma companies in the world. Our cloud based software-as-a-service (SaaS) solution, Article Galaxy, provides customers with access to the over one million newly published articles each year in addition to the tens of millions of existing articles that have been published in the past, helping them to identify the content that is critical to their research. We help our customers create and speed discoveries, save time and money, and remain copyright compliant. We have arrangements with numerous STM content publishers that allow electronic access and distribution of their content. In addition to serving end users of content, we also serve STM publishers by facilitating compliance with applicable copyright laws.

About Reprints Desk®
Reprints Desk improves how journal articles and clinical reprints are accessed, procured, and legally used in evidence-based promotions, medical affairs, and scientific, technical, and medical (STM) research. Organizations fueled by intellectual property choose Reprints Desk because of its collaborative business approach, efficient article supply system and services, and commitment to quality post-sales support. Reprints Desk has ranked #1 in the every Document Delivery Vendor Scorecard from industry analyst and advisory firm Outsell Inc. since 2008.

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; 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 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.

SOURCE Research Solutions, Inc.