ENCINO, Calif., Nov. 16, 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 first quarter ended September 30, 2015.

Fiscal First Quarter 2016 Financial Highlights vs. Year-Ago Quarter

• Article Galaxy revenue increased 8% to $5.6 million.
• Article Galaxy gross profit up 2% to $1.3 million, with gross profit as a percentage of revenue off 140 basis points at 23.5%.
• Article Galaxy transactions increased 22% to 171,178.
• Active Article Galaxy customer accounts increased 9% to 819, with academic customer accounts increasing 52% to 126, and corporate accounts increasing 4% to 693.

Fiscal First Quarter 2016 Operational Highlights

• Appointed former Elsevier CEO John Regazzi as chairman of the board.
• Released Article Galaxy Summer 2015 software-as-a-service version that speeds up time-to-papers for researchers worldwide.
• Released new social connectors and export functionality for Article Galaxy Widget including the ability for users to bookmark, securely share and export journal article citations.
• Rolled out library help desk add-on solution following multiple sales and deployments.
• Introduced copyright re-use rights information into 'Article Galaxy' content access and management solution.

Fiscal First Quarter 2016 Financial Results           

Total revenue in the fiscal first quarter of 2016 increased 6% to $8.0 million, compared to $7.6 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 8% in the fiscal first quarter of 2016 to $5.6 million, compared to $5.2 million in the same year-ago quarter.

The increase in Article Galaxy revenue was driven by an increase in transactions, which was up 22% to 171,178 in the fiscal first quarter versus 140,821 in the same year ago quarter. The number of active customer accounts conducting transactions increased by 9% to 819 in the fiscal first quarter, versus 752 in the same year-ago quarter (see the definition of transactions and active customer accounts in the section, "Transactions and Active Customer Accounts," below).  Academic accounts increased 52% from 83 to 126, and corporate accounts increased 4% from 669 to 693 versus same year-ago quarter.

Total gross profit in the fiscal first quarter increased 4% to $1.6 million compared to $1.5 million in the same year-ago quarter. Article Galaxy gross profit increased 2% to $1.32 million versus $1.30 million in the same year-ago quarter. Article Galaxy gross margin decreased 140 basis points to 23.5% in the fiscal first quarter, versus gross margin of 24.9% in the same year-ago quarter. 

Net loss from continuing operations in the fiscal first quarter totaled $179,000 or ($0.01) per diluted share compared to a net loss of $7,000 or $0.00 per diluted share in the same year-ago quarter.

Adjusted EBITDA loss totaled $5,600 compared to an adjusted EBITDA gain of $192,000 in the same year-ago quarter (see definition and further discussion about the presentation of adjusted EBITDA, a non-GAAP term, below).

Cash at September 30, 2015 totaled $1.5 million compared to $1.4 million at June 30, 2015. The increase in cash was primarily due to cash provided by operating activities.

As of September 30, 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 $1.6 million of available credit at September 30, 2015. The Company has renewed the revolving line of credit to extend through October 2017 with the material terms remaining mostly unchanged.

At September 30, 2015, the company had net operating loss carry forwards of approximately $6.8 million applicable to federal tax liability expiring in 2030 and approximately $5.0 million applicable to state tax liability expiring in 2020.

Further details about the company's results in fiscal first quarter 2016 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

"During the first quarter we maintained our growth trajectory with Article Galaxy, with revenue, transactions and new customer acquisitions up across the board," said Research Solutions president and CEO, Peter Derycz. "In fact, transactions were up 22% versus the same year-ago quarter, marking our 4th consecutive quarter of more than 20% year-over-year transactional growth for Article Galaxy.

"Perhaps one of the most exciting achievements during the quarter was the onboarding of a major pharma customer. This customer has now joined our growing base of top customers which includes four out of the top five companies in the world in terms of R&D performance as ranked by Forbes, as well as six of the top 10 global biotechs and pharmas as ranked by revenue. This new customer has already risen to become one of our own top five in terms of Article Galaxy revenue. The initial feedback we have been receiving from them, both directly and indirectly, has been tremendous. They have truly become one of our top product champions in pharma, and we expect them to become a core reference account for other large prospects in the future.

"Also during the first quarter, we made great strides with our push into academia, realizing a 52% increase in academic customer accounts. Academia now represents more than 15% of all of our Article Galaxy customer accounts. This performance also reflects that our customer acquisition efforts have maintained a 90+ percent closing rate when our solution is evaluated against our competitors.

"From an operational perspective, in the first quarter we officially launched our new Article Galaxy Summer 2015 product release. This release featured breakthroughs in workflow efficiencies and time-saving features for researchers worldwide. We have continued to listen closely to the requests and evolving needs of our customers, and during the quarter we announced several additional enhancements to the Article Galaxy Widget. We are already seeing these features helping to secure customer wins with large healthcare and research-intensive organizations around the world.

"We were proud to demonstrate all of these new features at our Content Workflow 2015 Events that we hosted on October 22 in London and Frankfurt. We haven't hosted one of these events since 2010, and it turned out to be a fantastic success. Attendees included corporate information managers, librarians, R&D professionals, pharmaceutical specialists, as well as others involved in acquiring and managing content resources. They represented both existing customers and prospects, including some of the largest corporations in the world.

"Also helping us host the event was our first European-based sales engineer, who joins a growing European sales and account management team. This is an important market for us, especially given that now with the onboarding of a new major pharma who is based in Europe, and that approximately 40% percent of Article Galaxy revenue is generated from the region.

"Further, the strong level of interest we receive at these events greatly expanded our sales pipeline, so we expect our new European sales engineer to be kept very busy. These international industry events also highlight one of the most important aspects of our digital business model. At its core is a Article Galaxy virtual service and store that is open 24 hours a day, seven days a week, and accessible from anywhere in the world.

"Having a sales engineer based in Europe will help drive new customer wins in the region and in terms of servicing these current international customers, it will not require any further deployment of offices, employees or other capital resources to the region. These factors demonstrate the tremendous leverage and scalability in our model, and why we believe these events were so valuable to our future prospects.

"Finally, as we continue to roll out new functionality with our Article Galaxy Platform and updates to our new article rental technology, we expect to maintain our double digit growth in Article Galaxy transactions. In fact, we tracked 23% growth in October as compared to the same year-ago period, with this supporting our outlook for strong growth and improved profitability in fiscal 2016."

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/6njcm86y 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 November 23, 2015.

Fiscal First Quarter 2016 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 November 16, 2015 in its Quarterly Report on Form 10-Q for the period ended September 30, 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.