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Research Solutions Reports Fiscal First Quarter 2021 Results

Reports 35 Percent Year-over-Year Increase in Platform Annual Recurring Revenue to $4.7 Million

Nov 12, 2020

HENDERSON, Nev., Nov. 12, 2020 /PRNewswire/ -- 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 first quarter ended September 30, 2020.

Fiscal First Quarter 2021 Summary Compared to Prior Year Quarter:

  • Total revenue increased 2% to $7.7 million
  • Platform revenue up 33% to $1.1 million, Annual recurring revenue up 35% to $4.7 million
  • Total gross margin improved 110 basis points to 31.6%
  • Net income of $15,000, an improvement of $96,000; diluted earnings per share of nil
  • Adjusted EBITDA of $167,000, an improvement of $131,000

"The sustained momentum within our Platforms business is evident in our first quarter fiscal 2021 results, with 31 net new deployments in the quarter and a record for Annual Recurring Revenue," said Peter Derycz, President and CEO of Research Solutions. "We continue to enhance the product initiatives and offerings through Article Galaxy research platform to simplify, accelerate and lower the cost of information access for our users, including many within the life sciences field that continue to work on therapeutics and vaccines for COVID-19. We believe we remain well-positioned to grow our business through ongoing product improvements to our Article Galaxy platform, additional partnership opportunities, such as our most recent partnership with BIO Business Solutions, and our refined lead generation and sales approach."

Fiscal First Quarter 2021 Results

Total revenue increased 2% to $7.7 million, compared to $7.6 million in the same year-ago quarter.

Platform subscription revenue increased 33% to approximately $1.1 million compared to $856,000 in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments, including 31 net deployments added in the quarter. The quarter ended with annual recurring revenue of $4.7 million, up 7% sequentially and 35% year-over-year (see the company's definition of annual recurring revenue below).

Transaction revenue decreased 2% to $6.6 million compared to $6.7 million in the prior-year quarter. Transaction count increased 4.3% from the year-ago quarter to 225,000, with 1,090 transaction customers, compared to 1,134 customers in the first quarter of fiscal year 2020 (see the company's definition of active customer accounts and transactions below).

Total gross margin improved 110 basis points from the prior-year quarter to 31.6%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.

Total operating expenses were $2.4 million, essentially unchanged from the year-ago quarter.

Net income in the first quarter was $15,000, or nil per diluted share, compared to a net loss of ($81,000), or nil per share, in the prior-year quarter. Adjusted EBITDA was $167,000, a $132,000 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 September 30, 2020, amounted to $10.2 million compared to $9.3 million as of June 30, 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.

Conference Call
Research Solutions President and CEO Peter Derycz and CFO Alan Urban will host the conference call, followed by a question and answer period.

Date: Thursday, November 12, 2020
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: 10011712

The conference call will be broadcast live and available for replay until December 3, 2020, by dialing 1-844-512-2921 and using the replay ID 10011712, and via the investor relations section of the company's website at http://researchsolutions.investorroom.com/.

Fiscal First Quarter Financial and Operational Summary Tables vs. Prior-Year Quarter










Quarter Ended September 30,





2020

2019

Change

% Change



Revenue:








Platforms

$    1,141,688

$        856,445

$        285,243

33.3%




Transactions

6,606,737

6,738,668

(131,931)

-2.0%



Total Revenue

7,748,425

7,595,113

153,312

2.0%










Gross Profit:








Platforms

937,736

705,975

231,760

32.8%




Transactions

1,511,840

1,610,560

(98,720)

-6.1%



Total Gross Profit

2,449,576

2,316,535

133,040

5.7%










Gross profit as a % of revenue:








Platforms

82.1%

82.4%

-0.3%





Transactions

22.9%

23.9%

-1.0%




Total Gross Profit

31.6%

30.5%

1.1%











Operating Expenses:








Sales and marketing

498,374

550,349

(51,975)

-9.4%




Technology and product development

622,961

499,191

123,770

24.8%




General and administrative

1,161,061

1,231,345

(70,284)

-5.7%




Depreciation and amortization

3,723

7,558

(3,835)

-50.7%




Stock-based compensation

170,790

142,672

28,118

19.7%




Foreign currency translation loss

(24,249)

12,123

(36,372)

-300.0%



Total Operating Expenses

2,432,660

2,443,238

(10,578)

-0.4%



Income (loss) from operations

16,915

(126,703)

143,618

113.4%










Other Income (Expenses):








Interest expense

-

-

-





Other income (expense)

235

25,549

(25,314)

-99.1%




Provision for income taxes

(2,505)

(6,494)

3,989

61.4%




Gain on sale of disc'd operations

-

26,191

(26,191)

-100.0%



Total Other Income (Expenses):

(2,270)

45,246

(47,516)

-105.0%



Net income (loss)

$          14,645

$         (81,457)

96,102

118.0%










Adjusted EBITDA

$        167,179

$          35,650

$        131,529

368.9%













Quarter Ended September 30,





2020

2019

Change

% Change



Platforms:








ARR (Annual recurring revenue):








  Beginning of Period

$    4,446,088

$    3,224,672

$    1,221,416

37.9%




   Incremental ARR

295,095

273,697

21,398

7.8%




  End of Period

$    4,741,183

$    3,498,369

$    1,242,814

35.5%











Deployments:








  Beginning of Period

401

301

100

33.2%




   Incremental Deployments

31

19

12

63.2%




  End of Period

432

320

112

35.0%











ASP (Average sales price):








  Beginning of Period

$          11,088

$          10,713

$                374

3.5%




  End of Period

$          10,975

$          10,932

$                   43

0.4%










Transactions:








Transaction count

225,086

215,780

9,306

4.3%




Corporate customers

805

853

(48)

-5.6%




Academic customers

285

281

4

1.4%




Total customers

1,090

1,134

(44)

-3.9%














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):




Quarter Ended September 30,




2020

2019

Change

% Change


Net Income (loss)

$          14,645

$         (81,457)

$          96,102

118.0%


 Add (deduct):







Other income (expense)

(235)

(25,549)

25,314

99.1%



Foreign currency translation loss

(24,249)

12,123

(36,372)

-300.0%



Provision for income taxes

2,505

6,494

(3,989)

-61.4%



Depreciation and amortization

3,723

7,558

(3,835)

-50.7%



Stock-based compensation

170,790

142,672

28,118

19.7%



Gain on sale of disc. ops.

-

(26,191)

26,191

100.0%


 Adjusted EBITDA

$        167,179

$          35,650

$        131,529

-368.9%

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.reprintsdesk.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 improved liquidity, an expanded investor base and driving long-term shareholder value as a result of listing on Nasdaq, continued momentum in the Company's business and financial performance, and the Company's strong outlook. 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




September 30,


June 30,



2020


2020



(unaudited)



Assets





Current assets:





Cash and cash equivalents


$

10,187,333


$

9,311,556

Accounts receivable, net of allowance of $88,102 and $88,485, respectively



4,455,091



4,449,260

Prepaid expenses and other current assets



240,381



241,747

Prepaid royalties



1,042,558



720,367

Total current assets



15,925,363



14,722,930








Other assets:







Property and equipment, net of accumulated depreciation of $810,349 and $804,999,
respectively



12,091



11,276

Deposits and other assets



6,183



6,155

Right of use asset, net of accumulated amortization of $421,469 and $390,691,
respectively



41,553



72,331

Total assets


$

15,985,190


$

14,812,692








Liabilities and Stockholders' Equity







Current liabilities:







Accounts payable and accrued expenses


$

7,382,741


$

6,349,845

Deferred revenue



3,555,579



3,524,507

Lease liability, current portion



45,550



79,326

Total current liabilities



10,983,870



9,953,678








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; 26,190,713 and 26,032,263
   shares issued and outstanding, respectively



26,191



26,032

Additional paid-in capital



26,261,156



26,134,819

Accumulated deficit



(21,162,154)



(21,176,799)

Accumulated other comprehensive loss



(123,873)



(125,038)

Total stockholders' equity



5,001,320



4,859,014

Total liabilities and stockholders' equity


$

15,985,190


$

14,812,692

 

Research Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss)

(Unaudited)




Three Months Ended



September 30,



2020


2019






Revenue:







Platforms


$

1,141,688


$

856,445

Transactions



6,606,737



6,738,668

Total revenue



7,748,425



7,595,113








Cost of revenue:







 Platforms



203,952



150,470

Transactions



5,094,897



5,128,108

Total cost of revenue



5,298,849



5,278,578

Gross profit



2,449,576



2,316,535








Operating expenses:







Selling, general and administrative



2,428,938



2,435,680

Depreciation and amortization



3,723



7,558

Total operating expenses



2,432,661



2,443,238

Income (loss) from operations



16,915



(126,703)








Other income



235



25,549








Income (loss) from operations before provision for income taxes



17,150



(101,154)

Provision for income taxes



(2,505)



(6,494)








Income (loss) from continuing operations



14,645



(107,648)








Gain from sale of discontinued operations



-



26,191








Net income (loss)



14,645



(81,457)








Other comprehensive income (loss):

Foreign currency translation



1,165



(3,568)

Comprehensive income (loss)


$

15,810


$

(85,025)








Basic income (loss) per common share:







Income (loss) per share from continuing operations


$

-


$

-

Income per share from discontinued operations


$

-


$

-

Net income (loss) per share


$

-


$

-

Basic weighted average common shares outstanding



25,898,900



24,095,266








Diluted income (loss) per common share:







Income (loss) per share from continuing operations


$

-


$

-

Income per share from discontinued operations


$

-


$

-

Net income (loss) per share


$

-


$

-

Basic weighted average common shares outstanding



26,511,180



24,095,266

 

SOURCE Research Solutions, Inc.

For further information: Steven Hooser or John Beisler, Three Part Advisors, (214) 872-2710, shooser@threepa.com; jbeisler@threepa.com