Research Solutions Reports Fiscal Third Quarter 2021 Results

HENDERSON, Nev., May 13, 2021 /PRNewswire/ — Research Solutions, Inc. (NASDAQ: RSSS), a pioneer in providing cloud-based workflow solutions for…

HENDERSON, Nev., May 13, 2021 /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 third quarter ended March 31, 2021.

Fiscal Third Quarter 2021 Highlights Compared to Prior Year Quarter:

  • Platform revenue increased 32% to $1.3 million, Annual recurring revenue increased 34% to $5.6 million
  • Total gross margin improved 80 basis points to 32.4%
  • Net income of $50,000, compared to net income of $12,000 in the prior-year quarter
  • Adjusted EBITDA of $238,000, an improvement of $93,000

“Our third quarter results include a pair of records within our Platforms business. We achieved 51 net new deployments for the quarter, and Annual Recurring Revenue increased by $534,000, bringing ARR to $5.6 million at the end of the quarter,” said Roy W. Olivier, Interim President and CEO of Research Solutions. “This quarter’s strong performance within platform deployments reflects the beginning of the payoff of our sales initatives implemented last year.”

Fiscal Third Quarter 2021 Results

Total revenue increased 4% to $8.3 million, compared to $8.0 million in the same year-ago quarter.

Platform subscription revenue increased 32% to approximately $1.3 million compared to $1.0 million in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments, including 51 net deployments added in the quarter, with upselling existing cutomer accounts also adding to the increase. The quarter ended with annual recurring revenue of $5.6 million, up 11% sequentially and 34% year-over-year (see the company’s definition of annual recurring revenue below).

Transaction revenue was $7.0 million, virtually unchanged from the prior-year quarter. Transaction customers count for the quarter was 1,108, compared to 1,115 customers in the third quarter of fiscal year 2020 (see the company’s definition of active customer accounts below).

Total gross margin improved 80 basis points from the prior-year quarter to 32.4%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.

Total operating expenses were $2.7 million, a $102,000 increase from the year-ago quarter, primarily driven by greater technology and product development expenses.

Net income  in the third quarter was $50,000, or $0.00  per diluted share, compared to  net income of $12,000, or $0.00 per diluted share, in the prior-year quarter. Adjusted EBITDA was $238,000, a new record and a $93,000 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 March 31, 2021 amounted to $11.2 million, compared to $10.2 million as of December 31, 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 Interim President and CEO Roy W. Olivier, Executive Chairman of the Board Peter Derycz and CFO Alan Urban will host the conference call, followed by a question and answer period.

Date: Thursday, May 13, 2021

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: 10014529

The conference call will be broadcast live and available for replay until June 3, 2021, by dialing 1-844-512-2921 and using the replay ID 10014529, and via the investor relations section of the company’s website at http://researchsolutions.investorroom.com/.

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



Quarter Ended March 31,


Nine Months Ended March 31,




2021

2020

Change

% Change


2021

2020

Change

% Change


Revenue:












Platforms

$1,344,183

$1,017,789

$326,394

32.1%


$3,706,406

$2,824,059

$882,347

31.2%



Transactions

6,996,349

7,029,617

(33,268)

-0.5%


19,832,286

20,348,898

(516,612)

-2.5%


Total Revenue

8,340,532

8,047,406

293,126

3.6%


23,538,692

23,172,957

365,735

1.6%













Gross Profit:












Platforms

1,110,487

839,870

270,618

32.2%


3,051,755

2,333,162

718,594

30.8%



Transactions

1,592,153

1,699,144

(106,991)

-6.3%


4,492,043

4,796,187

(304,144)

-6.3%


Total Gross Profit

2,702,640

2,539,014

163,627

6.4%


7,543,798

7,129,349

414,450

5.8%


Gross profit as a % of revenue:












Platforms

82.6%

82.5%

0.1%



82.3%

82.6%

-0.3%




Transactions

22.8%

24.2%

-1.4%



22.7%

23.6%

-0.9%



Total Gross Profit

32.4%

31.6%

0.9%



32.0%

30.8%

1.3%



Operating Expenses:












Sales and marketing

566,713

626,956

(60,243)

-9.6%


1,552,658

1,816,142

(263,484)

-14.5%



Technology and product development

664,195

536,238

127,957

23.9%


1,911,903

1,584,148

327,755

20.7%



General and administrative

1,233,604

1,230,580

3,024

0.2%


3,513,416

3,732,300

(218,884)

-5.9%



Depreciation and amortization

2,066

5,510

(3,444)

-62.5%


8,828

19,908

(11,080)

-55.7%



Stock-based compensation

179,345

142,237

37,108

26.1%


786,084

808,541

(22,457)

-2.8%



Foreign currency translation loss

6,648

8,648

(2,000)

-23.1%


(35,070)

15,315

(50,385)

-329.0%


Total Operating Expenses

2,652,571

2,550,169

102,402

4.0%


7,737,819

7,976,354

(238,535)

-3.0%


Income (loss) from operations

50,069

(11,155)

61,225

548.8%


(194,020)

(847,005)

652,985

77.1%













Other Income (Expenses):












Other income (expense)

250

23,662

(23,412)

-98.9%


884

75,738

(74,854)

-98.8%



Provision for income taxes

(572)

(561)

(11)

-2.0%


(3,077)

(7,861)

4,784

60.9%



Gain on sale of disc’d operations



117,445

(117,445)

-100.0%


Total Other Income (Expenses):

(322)

23,101

(23,423)

-101.4%


(2,193)

185,322

(187,515)

-101.2%


Net income (loss)

$      49,747

$      11,946

37,802

-316.5%


$  (196,213)

$  (661,683)

465,470

70.3%























Quarter Ended March 31,


Nine Months Ended March 31,




2021

2020

Change

% Change


2021

2020

Change

% Change


Platforms:












ARR (Annual recurring revenue):












  Beginning of Period

$5,021,054

$3,717,800

$  1,303,254

35.1%


$4,446,088

$3,224,672

$ 1,221,416

37.9%



   Incremental ARR

533,541

432,030

101,511

23.5%


1,108,507

925,158

183,349

19.8%



  End of Period

$5,554,595

$4,149,830

$  1,404,765

33.9%


$5,554,595

$4,149,830

$ 1,404,765

33.9%














Deployments:












  Beginning of Period

461

338

123

36.4%


401

301

100

33.2%



   Incremental Deployments

51

36

15

41.7%


111

73

38

52.1%



  End of Period

512

374

138

36.9%


512

374

138

36.9%














ASP (Average sales price):












  Beginning of Period

$      10,892

$      10,999

$            (108)

-1.0%


$      11,088

$      10,713

$             374

3.5%



  End of Period

$      10,849

$      11,096

$            (247)

-2.2%


$      10,849

$      11,096

$            (247)

-2.2%













Transaction Customers:












Corporate customers

841

845

(4)

-0.5%


818

851

(33)

-3.9%



Academic customers

267

270

(3)

-1.1%


284

278

6

2.2%



Total customers

1,108

1,115

(7)

-0.6%


1,102

1,129

(27)

-2.4%
























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 March 31,


Nine Months Ended March 31,



2021

2020

Change

% Change


2021

2020

Change

% Change

Net Income (loss)

$      49,747

$      11,946

$        37,802

316.5%


$  (196,213)

$  (661,683)

$    465,470

70.3%

 Add (deduct):










Other income (expense)

(250)

(23,662)

23,412

98.9%


(884)

(75,738)

74,854

98.8%


Foreign currency translation loss

6,648

8,648

(2,000)

-23.1%


(35,070)

15,315

(50,385)

-329.0%


Provision for income taxes

572

561

11

2.0%


3,077

7,861

(4,784)

-60.9%


Depreciation and amortization

2,066

5,510

(3,444)

-62.5%


8,828

19,908

(11,080)

-55.7%


Stock-based compensation

179,345

142,237

37,108

26.1%


786,084

808,541

(22,457)

-2.8%


Gain on sale of disc. ops.



(117,445)

117,445

100.0%

 Adjusted EBITDA

$    238,128

$    145,240

$        92,889

64.0%


$    565,822

$       (3,241)

$    569,063

17558.2%

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 continued momentum in the Company’s business andsales initiatives. 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











March 31, 







2021


June 30, 




(unaudited)


2020


Assets








Current assets:








Cash and cash equivalents


$

11,233,562


$

9,311,556


Accounts receivable, net of allowance of $56,042 and $88,485, respectively



5,013,089



4,449,260


Prepaid expenses and other current assets



317,220



241,747


Prepaid royalties



743,513



720,367


Total current assets



17,307,384



14,722,930










Other assets:








Property and equipment, net of accumulated depreciation of $819,607 and $804,999, respectively



15,165



11,276


Deposits and other assets



878



6,155


Right of use asset, net of accumulated amortization of $463,022 and $390,691, respectively





72,331


Total assets


$

17,323,427


$

14,812,692










Liabilities and Stockholders’ Equity








Current liabilities:








Accounts payable and accrued expenses


$

7,558,319


$

6,349,845


Deferred revenue



4,601,473



3,524,507


Lease liability, current portion





79,326


Total current liabilities



12,159,792



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; 26,352,008 and 26,032,263 shares issued and outstanding, respectively



26,352



26,032


Additional paid-in capital



26,631,985



26,134,819


Accumulated deficit



(21,373,012)



(21,176,799)


Accumulated other comprehensive loss



(121,690)



(125,038)


Total stockholders’ equity



5,163,635



4,859,014


Total liabilities and stockholders’ equity


$

17,323,427


$

14,812,692


 

Research Solutions, Inc. and Subsidiaries

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

(Unaudited)




Three Months Ended


Nine Months Ended




March 31, 


March 31, 




2021


2020


2021


2020
















Revenue:














Platforms


$

1,344,183


$

1,017,789


$

3,706,406


$

2,824,059


Transactions



6,996,349



7,029,617



19,832,286



20,348,898


Total revenue



8,340,532



8,047,406



23,538,692



23,172,957
















Cost of revenue:














Platforms



233,696



177,919



654,651



490,897


Transactions



5,404,196



5,330,473



15,340,243



15,552,711


Total cost of revenue



5,637,892



5,508,392



15,994,894



16,043,608


Gross profit



2,702,640



2,539,014



7,543,798



7,129,349
















Operating expenses:














Selling, general and administrative



2,650,504



2,544,659



7,728,990



7,956,446


Depreciation and amortization



2,066



5,510



8,828



19,908


Total operating expenses



2,652,570



2,550,169



7,737,818



7,976,354
















Income (loss) from operations



50,070



(11,155)



(194,020)



(847,005)
















Other income



250



23,662



884



75,738
















Income (loss) from operations before provision for income taxes



50,320



12,507



(193,136)



(771,267)


Provision for income taxes



(572)



(561)



(3,077)



(7,861)
















Income (loss) from continuing operations



49,748



11,946



(196,213)



(779,128)
















Gain from sale of discontinued operations









117,445
















Net income (loss)



49,748



11,946



(196,213)



(661,683)
















Other comprehensive income (loss):














Foreign currency translation



(3,333)



(14,677)



3,348



(16,702)


Comprehensive income (loss)


$

46,415


$

(2,731)


$

(192,865)


$

(678,385)
















Basic income (loss) per common share:














Income (loss) per share from continuing operations


$

0.00


$


$

(0.01)


$

(0.03)


Income per share from discontinued operations


$


$


$


$


Net income (loss) per share


$

0.00


$


$

(0.01)


$

(0.03)


Basic weighted average common shares outstanding



26,027,665



24,960,394



25,966,072



24,411,888
















Diluted income (loss) per common share:














Income (loss) per share from continuing operations


$

0.00


$


$

(0.01)


$

(0.03)


Income per share from discontinued operations


$


$


$


$


Net income (loss) per share


$

0.00


$


$

(0.01)


$

(0.03)


Diluted weighted average common shares outstanding



26,565,892



25,717,403



25,966,072



24,411,888


 

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SOURCE Research Solutions, Inc.