ENCINO, Calif., Feb. 16, 2016 /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 second quarter ended December 31, 2015.

Fiscal Second Quarter 2016 Financial Highlights vs. the Year-Ago Quarter

• Article Galaxy revenue increased 14% to $5.8 million.
• Article Galaxy gross profit up 3% to $1.3 million.
• Article Galaxy transactions increased 31% to 181,135, marking the company's fifth consecutive quarter of more than 20% year-over-year growth in Article Galaxy transactions.
• Active Article Galaxy customer accounts increased 18% to 862, with academic customer accounts increasing 55% to 143 and corporate accounts increasing 12% to 719.

Fiscal Second Quarter 2016 Operational Highlights

• New OpenAthens™ partnership expands authentication solutions for scientific, technical and medical content access.
• Article Galaxy® Autumn 2015 release featured short-term article rentals, instant access to subscription content from online databases and Article Galaxy's order form for requesting documents, as well as a new Article Galaxy Library Portal add-on.
• Hosted Content Workflow 2015 conferences in London and Frankfurt, with industry thought leaders presenting the future of corporate information.
• For the sixth consecutive year named to the EContent 100 list as one of the most influential companies in the digital content industry, along with Google, Amazon, Facebook and other major tech companies.

Fiscal Second Quarter 2016 Financial Results     

Total revenue in the fiscal second quarter of 2016 increased 17% to $9.3 million, compared to $7.9 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 second quarter of 2016 to $5.8 million (62% of revenue). Revenue generated by the company's Reprints and ePrint business was up 23% to $3.5 million (38% of revenue).

The increase in Article Galaxy revenue was driven by an increase in transactions, which was up 31% to 181,135 in the fiscal second quarter versus 138,736 in the same year ago quarter. The number of active customer accounts conducting transactions increased by 18% to 862 in the fiscal second quarter, versus 732 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 55% from 92 to 143, and corporate accounts increased 12% from 640 to 719 versus same year-ago quarter.

Total gross profit in the fiscal second quarter increased 6% to $1.6 million compared to $1.5 million in the same year-ago quarter. Article Galaxy gross profit increased 3% to $1.31 million, with Reprints and ePrints gross profit up 19% to $290,000.

Total gross profit as a percentage of revenue decreased by 190 basis points to 17.1%. Article Galaxy gross margin decreased 240 basis points to 22.5%, and Reprints and ePrints gross profit decreased 30 basis points to 8.2%.

Net loss from continuing operations in the fiscal second quarter totaled $0.3 million or $(0.02) per diluted share compared to a net loss of $0.1 million or $(0.01) per diluted share in the same year-ago quarter.

Adjusted EBITDA totaled $5,300 in the fiscal second quarter compared to $112,000 in the same year-ago quarter (see definition and further discussion about the presentation of adjusted EBITDA, a non-GAAP term, below).

Cash and cash equivalents at December 31, 2015 totaled $1.8 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 December 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 million or 80% of eligible accounts receivable. This amount equaled approximately $2.9 million of available credit at December 31, 2015. The company has renewed the revolving line of credit to extend through October 2017, with the material terms remaining mostly unchanged.

At December 31, 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 second 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 second quarter, our growth trajectory with Article Galaxy, our SaaS solution for low-cost access to full-text scholarly research, continued its steady climb," said Research Solutions President and CEO Peter Derycz. "Revenue, transactions and new customer acquisitions were up across the board.

"Also, during the quarter we made tremendous progress enhancing Article Galaxy in terms of better security, adding time-saving and cost-saving features, and creating even easier access for researchers. While these enhancements help keep us ahead of the pack, they also stimulate greater customer usage and create new ways for us to monetize the Article Galaxy platform.

"We demonstrated Article Galaxy at the two International Content Workflow conferences we hosted in London and Frankfurt in October. Attendees included representatives from some of the largest corporations in the world, including some major new prospects. The strong level of interest that we receive at these events has helped to greatly expand our sales pipeline, and this has kept our new European sales engineer very busy over the last few months.

"Our strengthening international presence is perhaps one of the most important aspects to consider when evaluating our Article Galaxy business model. At its core is a virtual store that is open 24 hours a day, seven days a week, and accessible from anywhere in the world. While having a sales engineer based in Europe will help drive new customer wins in the region, servicing new international customers does not require the deployment of new offices or other capital resources to the region. This further highlights the tremendous leverage and scalability in our model, and the few barriers we face in terms of greater market expansion.

"Subsequent to the quarter, our unrivaled competitive advantages were highlighted once again when we were selected by Access Copyright as the preferred vendor of document delivery services for their Canadian customers. This win reflects how our customer acquisition efforts have continued to maintain a 90-plus percent closing rate when our solution is evaluated against our competitors.

"As we look ahead to the remainder of the year, we expect to maintain our double digit growth in Article Galaxy transactions, fueled by the uniqueness of our Article Galaxy platform that supports both increasing customer usage and new customer wins. In fact, we have already tracked double-digit revenue and transaction growth in January as compared to the same year-ago period, with this supporting our continued outlook for strong, steady growth with Article Galaxy over the coming quarters."

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.

Date: Tuesday, February 16, 2016
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: 1-866-516-3002
International dial-in number: 1-253-237-1159
Conference ID: 44056703             

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/pa6iftza 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 February 23, 2016.

Toll-free replay number: 1-855-859-2056
International replay number: 1-404-537-3406
Replay ID: 44056703       

Fiscal Second 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 February 16, 2016 in its Quarterly Report on Form 10-Q for the period ended December 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.

Important Cautions Regarding Forward-Looking Statements
This release contains "forward-looking statements" that include information relating to future events and future financial and operating performance. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause these differences include, but are not limited to: 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.  Examples of such forward looking statements in this release include statements regarding the expected continued improvement and market acceptance of the Article Galaxy platform, and the expected growth of Article Galaxy revenue, transactions, and customers.  The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Trademarks are the property of their respective owners.

SOURCE Research Solutions, Inc.