Reports Full-Year GAAP Net Income, Record Adjusted EBITDA and 28% Increase in Platform Revenue
HENDERSON, Nev., Sept. 13, 2023 /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 fourth quarter and full year ended June 30, 2023.
Fiscal Fourth Quarter 2023 Summary
- Total revenue increased 16% to $10.0 million
- Platform revenue up 22% to $2.3 million; Annual recurring revenue up 19% to $9.4 million
- Gross profit up 19% to the prior-year quarter; Total gross margin improved 110 basis points to 39.4%
- Net income of $375,746 or one cent per diluted share, compared to a net loss of ($438,267) or one cent per share in the prior-year quarter
- Adjusted EBITDA of $825,087 compared to ($121,327) in the same period a year ago
- Cash flow from operations of $1.5 million compared to slightly negative cash flow in the prior-year quarter
Full-Year Fiscal 2023 Summary
- Total revenue increased 14% to $37.7 million
- Platform revenue of $8.7 million, a 28% increase, with a 14% increase in total deployments to 835
- Total gross margin increased 250 basis points to 39.0%
- Net income of $0.6 million, or $0.02 per diluted share, compared to a net loss of $1.6 million or ($0.06) per share in the prior year
- Adjusted EBITDA of $2.0 million compared to ($0.4 million) in the previous year
- Cash flow from operations of $3.4 million, compared to ($0.4 million) in the previous year
Items Subsequent to End of Fiscal 2023
- Acquired ResoluteAI, a developer of advanced search and discovery tools
- Engaged Jeremy Murphy as an advisor and observer to the Board of Directors
"Fiscal year 2023 was an exciting year for our business. Our results represent the significant progress made across our organization, highlighted by our highest annual organic revenue growth in more than a decade and first year of GAAP profitability since fiscal 2015," said Roy W. Olivier, President and CEO of Research Solutions. "Our customers continue to recognize the greater efficiency and cost savings offered through our Article Galaxy platform and our recent acquisition of ResoluteAI expands these offerings and capabilities, providing us with meaningful cross-selling opportunities. While we continue to see headwinds in the platform business, we are optimistic about our fiscal year 2024 and look to continue to grow the business organically as well as through strategic M&A."
Fiscal Fourth Quarter 2023 Results
Total revenue increased 16% to $10.0 million, compared to $8.6 million in the same year-ago quarter.
Platform subscription revenue increased 22% to $2.3 million compared to approximately $1.9 million in the year-ago quarter. The increase was primarily due to an increase in upsell activity within our existing customer base and an increase in the total number of paid Platform deployments, including 20 added in the quarter. The quarter ended with annual recurring revenue of $9.4 million, up 4% sequentially and 19% year-over-year (see the company's definition of annual recurring revenue below).
Transaction revenue was up 15%, increasing to $7.7 million, compared to $6.7 million in the fourth quarter of fiscal 2022. Transaction customers count for the quarter was 1,404, compared to 1,213 customers in the prior year quarter (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 39.4%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.
Total operating expenses were approximately $3.7 million, a $62,000 decrease from the fourth quarter of 2022. The decrease was primarily due to lower sales and marketing expenses.
Net income in the fourth quarter was $376,000, or one cent per diluted share, compared to a net loss of ($438,000), or two cents per share, in the prior-year quarter. Adjusted EBITDA was $825,000, compared to ($121,000) in the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).
Full-Year Fiscal 2023 Results
Total revenue increased 14% to $37.7 million, compared to $32.9 million in fiscal 2022.
Platform subscription revenue was $8.7 million, a 28% increase over the prior year. The increase was due to upselling current platform customers and an increase in the total number of paid Platform deployments.
Transaction revenue was $29.0 million, an 11% increase compared to the previous year. The increase is primarily due to organic growth and also the acquisition of certain customer contracts from FIZ Karlsruhe which became effective in the third quarter of fiscal 2023.
Total gross margin improved 250 basis points over the prior year to 39.0%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.
Total operating expenses were $14.5 million compared to $13.7 million in the prior year. The increase was primarily due to higher stock compensation expense related to the transition to a new program that the Company views as better aligned with shareholders' interests.
Net income for fiscal year 2023 was $572,000, or $0.02 per diluted share. Net loss in fiscal 2022 was $1.6 million, or ($0.06) per share. Adjusted EBITDA for fiscal 2023 was a positive $2.0 million, compared to a negative $374,000 in the prior year (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).
Cash and cash equivalents on June 30, 2023, amounted to $13.5 million compared to $10.6 million as of June 30, 2022. 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 Roy W. Olivier and CFO Bill Nurthen will host the conference call, followed by a question and answer period.
Date: Wednesday, September 13, 2023
Time: 5:00 p.m. ET (2:00 p.m. PT)
Dial-in number: 1-412-317-5180
Conference ID: 10182138
The conference call will be broadcast live and available for replay until October 13, 2023, by dialing 1-412-317-6671 and using the replay ID 10182138, and via the investor relations section of the company's website at http://researchsolutions.investorroom.com/.
Fiscal Fourth Quarter Financial and Operational Summary Tables vs. Prior-Year Quarter
Quarter Ended June 30, | |||||
2023 | 2022 | Change | % Change | ||
Revenue: | |||||
Platforms | $ 2,303,375 | $ 1,886,845 | $ 416,530 | 22.1 % | |
Transactions | $ 7,656,342 | $ 6,675,164 | 981,178 | 14.7 % | |
Total Revenue | 9,959,717 | 8,562,009 | 1,397,708 | 16.3 % | |
Gross Profit: | |||||
Platforms | 2,028,265 | 1,646,631 | 381,634 | 23.2 % | |
Transactions | 1,892,278 | 1,636,511 | 255,767 | 15.6 % | |
Total Gross Profit | 3,920,543 | 3,283,142 | 637,401 | 19.4 % | |
Gross profit as a % of revenue: | |||||
Platforms | 88.1 % | 87.3 % | 0.8 % | ||
Transactions | 24.7 % | 24.5 % | 0.2 % | ||
Total Gross Profit | 39.4 % | 38.3 % | 1.0 % | ||
Operating Expenses: | |||||
Sales and marketing | 455,030 | 691,368 | (236,338) | -34.2 % | |
Technology and product development | 991,093 | 1,049,430 | (58,337) | -5.6 % | |
General and administrative | 1,649,333 | 1,663,671 | (14,339) | -0.9 % | |
Depreciation and amortization | 22,163 | 5,507 | 16,656 | 302.5 % | |
Stock-based compensation | 585,384 | 225,501 | 359,883 | 159.6 % | |
Foreign currency translation loss | (37,743) | 91,279 | (129,022) | NM | |
Total Operating Expenses | 3,665,260 | 3,726,756 | (61,497) | -1.7 % | |
Income (loss) from operations | 255,283 | (443,614) | 698,897 | 157.5 % | |
Other Income (Expenses): | |||||
Other income (expense) | 120,522 | 6,377 | 114,145 | NM | |
Provision for income taxes | (59) | (1,030) | 971 | -94.3 % | |
Total Other Income (Expenses): | 120,463 | 5,347 | 115,116 | NM | |
Net income (loss) | $ 375,746 | $ (438,267) | 814,013 | 185.7 % | |
Adjusted EBITDA | $ 825,087 | $ (121,327) | $ 946,414 | NM | |
Quarter Ended June 30, | |||||
2023 | 2022 | Change | % Change | ||
Platforms: | |||||
ARR (Annual recurring revenue): | |||||
Beginning of Period | $ 9,107,681 | $ 7,348,847 | $ 1,758,834 | 23.9 % | |
Incremental ARR | 336,449 | 573,341 | (236,892) | -41.3 % | |
End of Period | $ 9,444,130 | $ 7,922,188 | $ 1,521,942 | 19.2 % | |
Deployments: | |||||
Beginning of Period | 815 | 680 | 135 | 19.9 % | |
Incremental Deployments | 20 | 53 | (33) | -62.3 % | |
End of Period | 835 | 733 | 102 | 13.9 % | |
ASP (Average sales price): | |||||
Beginning of Period | $ 11,175 | $ 10,807 | $ 368 | 3.4 % | |
End of Period | $ 11,310 | $ 10,808 | $ 502 | 4.6 % | |
Transaction Customers: | |||||
Corporate customers | 1,090 | 920 | 170 | 18.5 % | |
Academic customers | 314 | 293 | 21 | 7.2 % | |
Total customers | 1,404 | 1,213 | 191 | 15.7 % | |
Fiscal Full Year Financial and Operational Summary Tables vs. Prior-Year
Twelve Months Ended June 30, | |||||
2023 | 2022 | Change | % Change | ||
Revenue: | |||||
Platforms | $ 8,683,246 | $ 6,787,772 | $ 1,895,474 | 27.9 % | |
Transactions | $ 29,020,206 | $ 26,146,380 | 2,873,826 | 11.0 % | |
Total Revenue | 37,703,452 | 32,934,152 | 4,769,300 | 14.5 % | |
Gross Profit: | |||||
Platforms | 7,655,960 | 5,851,183 | 1,804,777 | 30.8 % | |
Transactions | 7,044,931 | 6,168,491 | 876,440 | 14.2 % | |
Total Gross Profit | 14,700,891 | 12,019,674 | 2,681,217 | 22.3 % | |
Gross profit as a % of revenue: | |||||
Platforms | 88.2 % | 86.2 % | 2.0 % | ||
Transactions | 24.3 % | 23.6 % | 0.7 % | ||
Total Gross Profit | 39.0 % | 36.5 % | 2.5 % | ||
Operating Expenses: | |||||
Sales and marketing | 2,285,478 | 2,276,172 | 9,306 | 0.4 % | |
Technology and product development | 3,742,192 | 3,711,085 | 31,107 | 0.8 % | |
General and administrative | 6,654,012 | 6,406,400 | 247,612 | 3.9 % | |
Depreciation and amortization | 52,649 | 17,651 | 34,998 | 198.3 % | |
Stock-based compensation | 1,849,906 | 1,096,384 | 753,522 | 68.7 % | |
Foreign currency translation loss | (121,953) | 143,898 | (265,851) | NM | |
Total Operating Expenses | 14,462,284 | 13,651,590 | 810,694 | 5.9 % | |
Income (loss) from operations | 238,608 | (1,631,916) | 1,870,523 | 114.6 % | |
Other Income (Expenses): | |||||
Other income (expense) | 338,617 | 7,154 | 331,463 | NM | |
Provision for income taxes | (5,602) | (7,622) | 2,020 | -26.5 % | |
Total Other Income (Expenses): | 333,015 | (468) | 333,483 | NM | |
Net income (loss) | $ 571,623 | $ (1,632,384) | 2,204,006 | 135.0 % | |
Adjusted EBITDA | $ 2,019,210 | $ (373,983) | $ 2,393,192 | NM | |
Twelve Months Ended June 30, | |||||
2023 | 2022 | Change | % Change | ||
Platforms: | |||||
ARR (Annual recurring revenue): | |||||
Beginning of Period | $ 7,922,188 | $ 5,880,179 | $ 2,042,009 | 34.7 % | |
Incremental ARR | 1,521,942 | 2,042,009 | (520,067) | -25.5 % | |
End of Period | $ 9,444,130 | $ 7,922,188 | $ 1,521,942 | 19.2 % | |
Deployments: | |||||
Beginning of Period | 733 | 553 | 180 | 32.5 % | |
Incremental Deployments | 102 | 180 | (78) | -43.3 % | |
End of Period | 835 | 733 | 102 | 13.9 % | |
ASP (Average sales price): | |||||
Beginning of Period | $ 10,808 | $ 10,633 | $ 175 | 1.6 % | |
End of Period | $ 11,310 | $ 10,808 | $ 502 | 4.6 % | |
Transaction Customers: | |||||
Corporate customers | 1,012 | 886 | 126 | 14.2 % | |
Academic customers | 304 | 299 | 5 | 1.6 % | |
Total customers | 1,316 | 1,185 | 131 | 11.1 % | |
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 June 30, | |||||
2023 | 2022 | Change | % Change | ||
Net Income (loss) | $ 375,746 | $ (438,267) | $ 814,013 | 185.7 % | |
Add (deduct): | |||||
Other income (expense) | (120,522) | (6,377) | (114,145) | NM | |
Foreign currency translation loss | (37,743) | 91,279 | (129,022) | -141.3 % | |
Provision for income taxes | 59 | 1,030 | (971) | -94.3 % | |
Depreciation and amortization | 22,163 | 5,507 | 16,656 | 302.5 % | |
Stock-based compensation | 585,384 | 225,501 | 359,883 | 159.6 % | |
Adjusted EBITDA | $ 825,087 | $ (121,327) | $ 946,414 | NM | |
Twelve Months Ended June 30, | |||||
2023 | 2022 | Change | % Change | ||
Net Income (loss) | $ 571,623 | $ (1,632,384) | $ 2,204,006 | 135.0 % | |
Add (deduct): | - | ||||
Other income (expense) | (338,617) | (7,154) | (331,463) | NM | |
Foreign currency translation loss | (121,953) | 143,898 | (265,851) | -184.7 % | |
Provision for income taxes | 5,602 | 7,622 | (2,020) | -26.5 % | |
Depreciation and amortization | 52,649 | 17,651 | 34,998 | 198.3 % | |
Stock-based compensation | 1,849,906 | 1,096,384 | 753,522 | 68.7 % | |
Adjusted EBITDA | $ 2,019,210 | $ (373,983) | $ 2,393,192 | NM | |
About Research Solutions
Research 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 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 product offerings and cross-selling opportunities, , management's optimistic outlook for fiscal 2024, 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 | ||||||
June 30, | June 30, | |||||
2023 | 2022 | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 13,545,333 | $ | 10,603,175 | ||
Accounts receivable, net of allowance of $85,015 and $94,144, respectively | 6,153,063 | 5,251,545 | ||||
Prepaid expenses and other current assets | 400,340 | 276,026 | ||||
Prepaid royalties | 1,202,678 | 846,652 | ||||
Total current assets | 21,301,414 | 16,977,398 | ||||
Other assets: | ||||||
Property and equipment, net of accumulated depreciation of $881,908 | 70,193 | 47,985 | ||||
Intangible assets, net of accumulated amortization of $747,355 and $723,036, | 462,068 | — | ||||
Deposits and other assets | 1,052 | 893 | ||||
Total assets | $ | 21,834,727 | $ | 17,026,276 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable and accrued expenses | $ | 8,079,516 | $ | 6,604,032 | ||
Deferred revenue | 6,424,724 | 5,538,526 | ||||
Total current liabilities | 14,504,240 | 12,142,558 | ||||
Commitments and contingencies | ||||||
Stockholders' equity: | ||||||
Preferred stock; $0.001 par value; 20,000,000 shares authorized; no shares issued | — | — | ||||
Common stock; $0.001 par value; 100,000,000 shares authorized; 29,487,508 and | 29,487 | 27,076 | ||||
Additional paid-in capital | 29,941,873 | 28,072,855 | ||||
Accumulated deficit | (22,522,649) | (23,094,272) | ||||
Accumulated other comprehensive loss | (118,224) | (121,941) | ||||
Total stockholders' equity | 7,330,487 | 4,883,718 | ||||
Total liabilities and stockholders' equity | $ | 21,834,727 | $ | 17,026,276 | ||
Research Solutions, Inc. and Subsidiaries | ||||||
Years Ended | ||||||
June 30, | ||||||
2023 | 2022 | |||||
Revenue: | ||||||
Platforms | $ | 8,683,246 | $ | 6,787,772 | ||
Transactions | 29,020,206 | 26,146,380 | ||||
Total revenue | 37,703,452 | 32,934,152 | ||||
Cost of revenue: | ||||||
Platforms | 1,027,286 | 936,589 | ||||
Transactions | 21,975,275 | 19,977,889 | ||||
Total cost of revenue | 23,002,561 | 20,914,478 | ||||
Gross profit | 14,700,891 | 12,019,674 | ||||
Operating expenses: | ||||||
Selling, general and administrative | 14,409,634 | 13,633,939 | ||||
Depreciation and amortization | 52,649 | 17,651 | ||||
Total operating expenses | 14,462,283 | 13,651,590 | ||||
Income (loss) from operations | 238,608 | (1,631,916) | ||||
Other income | 338,617 | 7,154 | ||||
Income (loss) from operations before provision for income taxes | 577,225 | (1,624,762) | ||||
Provision for income taxes | (5,602) | (7,622) | ||||
Net income (loss) | 571,623 | (1,632,384) | ||||
Other comprehensive income (loss): | ||||||
Foreign currency translation | 3,717 | (2,364) | ||||
Comprehensive income (loss) | $ | 575,340 | $ | (1,634,748) | ||
Basic income (loss) per common share: | ||||||
Net income (loss) per share | $ | 0.02 | $ | (0.06) | ||
Weighted average common shares outstanding | 26,860,761 | 26,422,295 | ||||
Diluted income (loss) per common share: | ||||||
Net income (loss) per share | $ | 0.02 | $ | (0.06) | ||
Weighted average common shares outstanding | 29,139,759 | 26,422,295 | ||||
Research Solutions, Inc. and Subsidiaries | ||||||
Years Ended | ||||||
June 30, | ||||||
2023 | 2022 | |||||
Cash flow from operating activities: | ||||||
Net income (loss) | $ | 571,623 | $ | (1,632,384) | ||
Adjustment to reconcile net income (loss) to net cash provided by (used in) | ||||||
Depreciation and amortization | 52,649 | 17,651 | ||||
Fair value of vested stock options | 375,189 | 470,615 | ||||
Fair value of vested restricted common stock | 1,418,718 | 557,496 | ||||
Fair value of vested unrestricted common stock | 68,272 | — | ||||
Modification cost of stock options | 56,000 | — | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | (901,518) | (534,092) | ||||
Prepaid expenses and other current assets | (124,314) | (5,774) | ||||
Prepaid royalties | (356,026) | 58,269 | ||||
Accounts payable and accrued expenses | 1,337,056 | (83,156) | ||||
Deferred revenue | 886,198 | 734,175 | ||||
Net cash provided by (used in) operating activities | 3,383,847 | (417,200) | ||||
Cash flow from investing activities: | ||||||
Purchase of property and equipment | (47,209) | (44,288) | ||||
Payment for non-refundable deposit for asset acquisition | (297,450) | — | ||||
Net cash used in investing activities | (344,659) | (44,288) | ||||
Cash flow from financing activities: | ||||||
Proceeds from the exercise of stock options | 57,500 | 97,688 | ||||
Proceeds from the exercise of warrants | — | 59,500 | ||||
Common stock repurchase | (104,250) | (93,918) | ||||
Payment of contingent acquisition consideration | (50,509) | — | ||||
Net cash provided by (used in) financing activities | (97,259) | 63,270 | ||||
Effect of exchange rate changes | 229 | (2,944) | ||||
Net increase (decrease) in cash and cash equivalents | 2,942,158 | (401,162) | ||||
Cash and cash equivalents, beginning of period | 10,603,175 | 11,004,337 | ||||
Cash and cash equivalents, end of period | $ | 13,545,333 | $ | 10,603,175 | ||
Supplemental disclosures of cash flow information: | ||||||
Cash paid for income taxes | $ | 5,602 | $ | 7,622 | ||
Non-cash investing and financing activities: | ||||||
Contingent consideration accrual on asset acquisition | $ | 138,428 | $ | — | ||
SOURCE Research Solutions, Inc.