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Research Solutions, Inc. (RSSS) SEC Filing 8-K Material Event for the period ending Thursday, November 11, 2021

Research Solutions, Inc.

CIK: 1386301 Ticker: RSSS

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

 

Research Solutions Reports Fiscal First Quarter 2022 Results

 

Company Reports 33 Percent Increase in Platform ARR to $6.3 Million

 

HENDERSON, Nev., November 11, 2021 Research Solutions, Inc. (NASDAQ: RSSS), a pioneer in providing cloud-based workflow solutions for R&D driven organizations, reported financial results for its fiscal first quarter ended September 30, 2021.

 

Fiscal First Quarter 2022 Summary

 

·Total revenue of $7.7 million, unchanged from prior-year quarter
·Platform revenue up 32% to $1.5 million. Annual Recurring Revenue (“ARR”) up 33% to $6.3 million.
·Gross profit up 9% from prior-year quarter. Total gross margin improved 275 basis points to 34.4%.
·Loss of $0.01 per share, compared to earnings of nil per diluted share in the prior-year quarter
·37 net new platform deployments in the quarter compared to 31 in the prior-year

 

“Our first quarter fiscal 2022 results reflect the continued focus on the growth of our Platforms business, with 37 net new deployments in the quarter and 158 deployments over the past 12 months,” said Roy W. Olivier, President and CEO of Research Solutions. “The combination of product initiatives and more focused sales and marketing efforts is leading to the addition of customers brand new to the company. With additional products set for launch later this year and the ability to use our strong balance sheet to make strategic acquisitions to supplement our organic growth, we believe we are well-positioned for continued success in fiscal 2022.”

 

Fiscal First Quarter 2022 Results

 

Total revenue was $7.7 million, unchanged from the same year-ago quarter.

 

Platform subscription revenue increased 32% to $1.5 million compared to approximately $1.1 million in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments, including 37 net deployments added in the quarter. The quarter ended with annual recurring revenue of $6.3 million, up 7% sequentially and 33% year-over-year (see the company's definition of annual recurring revenue below).

 

 

 

 

Transaction revenue was $6.2 million, compared to $6.6 million the first quarter of fiscal 2021. As previously noted, some of the decrease is related to the transaction savings that customers experience as they transition to the recurring revenue platform business. Transaction customer count for the quarter was 1,153, compared to 1,090 customers in the prior-year quarter (see the company's definition of active customer accounts and transactions below).

 

Total gross margin improved 275 basis points from the prior-year quarter to 34.4%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business.

 

Total operating expenses were $3.0 million, compared to $2.4 million in the first quarter of 2021. The increase was primarily due to higher general and administrative costs.

 

Net loss in the first quarter was ($372,000), or ($0.01) per share, compared to net income of $15,000, or nil per diluted share, in the prior-year quarter. Adjusted EBITDA was ($181,000), compared to $167,000 in the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).

 

Conference Call

Research Solutions Interim President and CEO Roy W. Olivier and CFO Bill Nurthen will host the conference call, followed by a question and answer period.

 

Date: Thursday, November 11, 2021

Time: 5:00 p.m. ET (2:00 p.m. PT)

Toll-free dial-in number: 1-844-825-9789

International dial-in number: 1-412-317-5180

Conference ID: 10161728

 

The conference call will be broadcast live and available for replay until December 9, 2021, by dialing 1-844-512-2921 and using the replay ID 10161728, 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,  
   2021   2020   Change   % Change 
Revenue:                    
Platforms  $1,509,874   $1,141,688   $368,186    32.2%
Transactions  $6,232,630   $6,606,737    (374,107)   -5.7%
Total Revenue   7,742,504    7,748,425    (5,921)   -0.1%
                     
Gross Profit:                    
Platforms   1,264,218    937,736    326,482    34.8%
Transactions   1,396,157    1,511,840    (115,683)   -7.7%
Total Gross Profit   2,660,375    2,449,576    210,799    8.6%
                     
Gross profit as a % of revenue:                    
Platforms   83.7%   82.1%   1.6%     
Transactions   22.4%   22.9%   -0.5%     
Total Gross Profit   34.4%   31.6%   2.7%     
                     
Operating Expenses:                    
Sales and marketing   522,951    498,374    24,577    4.9%
Technology and product development   821,460    622,961    198,499    31.9%
General and administrative   1,497,223    1,161,061    336,162    29.0%
Depreciation and amortization   2,896    3,723    (827)   -22.2%
Stock-based compensation   171,110    170,790    320    0.2%
Foreign currency translation loss   11,243    (24,249)   35,492    146.4%
Total Operating Expenses   3,026,883    2,432,660    594,223    24.4%
Income (loss) from operations   (366,508)   16,915    (383,424)   -2266.7%
                     
Other Income (Expenses):                    
Other income (expense)   276    235    41    17.4%
Provision for income taxes   (5,770)   (2,505)   (3,265)   -130.3%
Gain on sale of disc'd operations   -    -    -      
Total Other Income (Expenses):   (5,494)   (2,270)   (3,224)   -142.0%
Net income (loss)  $(372,002)  $14,645    (386,648)   -2640.1%
                     
Adjusted EBITDA  $(181,259)  $167,179   $(348,439)   -208.4%
                     

 

   Quarter Ended September 30, 
   2021   2020   Change   % Change 
Platforms:                    
ARR (Annual recurring revenue):                    
  Beginning of Period  $5,880,179   $4,446,088   $1,434,091    32.3%
   Incremental ARR   402,748    295,095    107,653    36.5%
  End of Period  $6,282,927   $4,741,183   $1,541,744    32.5%
                     
Deployments:                    
  Beginning of Period   553    401    152    37.9%
   Incremental Deployments   37    31    6    19.4%
  End of Period   590    432    158    36.6%
                     
ASP (Average sales price):                    
  Beginning of Period  $10,633   $11,088   $(454)   -4.1%
  End of Period  $10,649   $10,975   $(326)   -3.0%
                     
Transaction Customers:                    
Corporate customers   853    805    48    6.0%
Academic customers   300    285    15    5.3%
Total customers   1,153    1,090    63    5.8%

 

 

 

 

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 (“ARR”) 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,  
   2021   2020   Change   % Change 
Net Income (loss)  $(372,002)  $14,645   $(386,648)   -2640.1%
Add (deduct):                    
Other income (expense)   (276)   (235)   (41)   -17.4%
Foreign currency translation loss   11,243    (24,249)   35,492    146.4%
Provision for income taxes   5,770    2,505    3,265    130.3%
Depreciation and amortization   2,896    3,723    (827)   -22.2%
Stock-based compensation   171,110    170,790    320    0.2%
Gain on sale of disc. ops.   -    -    -      
Adjusted EBITDA  $(181,259)  $167,179   $(348,439)   -208.4%

 

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 additional customers, potential acquisitions 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

Consolidated Balance Sheets

 

   September 30,     
   2021   June 30, 
   (unaudited)   2021 
Assets          
Current assets:          
Cash and cash equivalents  $10,871,336   $11,004,337 
Accounts receivable, net of allowance of $47,695 and $51,495, respectively   4,702,686    4,717,453 
Prepaid expenses and other current assets   207,813    270,252 
Prepaid royalties   265,156    904,921 
Total current assets   16,046,991    16,896,963 
           
Other assets:          
Property and equipment, net of accumulated depreciation of $825,050 and $824,123, respectively   21,187    20,755 
Deposits and other assets   876    906 
Total assets  $16,069,054   $16,918,624 
           
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable and accrued expenses  $6,461,726   $6,687,188 
Deferred revenue   4,438,591    4,804,351 
Total current liabilities   10,900,317    11,491,539 
           
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; 26,594,119 and 26,498,215 shares issued and outstanding, respectively   26,594    26,498 
Additional paid-in capital   27,098,585    26,982,052 
Accumulated deficit   (21,833,890)   (21,461,888)
Accumulated other comprehensive loss   (122,552)   (119,577)
Total stockholders’ equity   5,168,737    5,427,085 
Total liabilities and stockholders’ equity  $16,069,054   $16,918,624 

 

 

 

 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Operations and Other Comprehensive Loss

(Unaudited)

 

   Three Months Ended 
   September 30, 
   2021   2020 
Revenue:          
Platforms  $1,509,874   $1,141,688 
Transactions   6,232,630    6,606,737 
Total revenue   7,742,504    7,748,425 
           
Cost of revenue:          
Platforms   245,656    203,952 
Transactions   4,836,473    5,094,897 
Total cost of revenue   5,082,129    5,298,849 
Gross profit   2,660,375    2,449,576 
           
Operating expenses:          
Selling, general and administrative   3,023,987    2,428,938 
Depreciation and amortization   2,896    3,723 
Total operating expenses   3,026,883    2,432,661 
           
Income (loss) from operations   (366,508)   16,915 
           
Other income   276    235 
           
Income (loss) from operations before provision for income taxes   (366,232)   17,150 
Provision for income taxes   (5,770)   (2,505)
           
Net income (loss)   (372,002)   14,645 
           
Other comprehensive income (loss):          
Foreign currency translation   (2,975)   1,165 
Comprehensive income (loss)  $(374,977)  $15,810 
           
Income (loss) per common share:          
Basic  $(0.01)  $ 
Diluted  $(0.01)  $ 
           
Weighted average common shares outstanding:          
Basic   26,277,116    25,898,900 
Diluted   26,277,116    26,511,180 

 

 

 

 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

   Three Months Ended 
   September 30, 
   2021   2020 
Cash flow from operating activities:          
Net income (loss)  $(372,002)  $14,645 
Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities:          
Depreciation and amortization   2,896    3,723 
Amortization of lease right       30,778 
Fair value of vested stock options   71,999    77,627 
Fair value of vested restricted common stock   99,111    93,164 
Changes in operating assets and liabilities:          
Accounts receivable   14,767    (5,831)
Prepaid expenses and other current assets   62,439    1,366 
Prepaid royalties   639,765    (322,191)
Accounts payable and accrued expenses   (225,462)   1,032,896 
Deferred revenue   (365,760)   31,072 
Lease liability       (33,776)
Net cash provided by (used in) operating activities   (72,247)   923,473 
           
Cash flow from investing activities:          
Purchase of property and equipment   (3,643)   (4,304)
Net cash used in investing activities   (3,643)   (4,304)
           
Cash flow from financing activities:          
Proceeds from the exercise of stock options       14,100 
Common stock repurchase   (54,481)   (58,395)
Net cash used in financing activities   (54,481)   (44,295)
           
Effect of exchange rate changes   (2,630)   903 
Net increase (decrease) in cash and cash equivalents   (133,001)   875,777 
Cash and cash equivalents, beginning of period   11,004,337    9,311,556 
Cash and cash equivalents, end of period  $10,871,336   $10,187,333 
           
Supplemental disclosures of cash flow information:          
Cash paid for income taxes  $5,770   $2,505 

 

Contact

 

Steven Hooser or John Beisler

Three Part Advisors

(214) 872-2710

 

shooser@threepa.com; jbeisler@threepa.com

 

# # #

 

 

 

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Ticker: RSSS
CIK: 1386301
Form Type: 8-K Corporate News
Accession Number: 0001104659-21-138201
Submitted to the SEC: Fri Nov 12 2021 5:03:13 PM EST
Accepted by the SEC: Fri Nov 12 2021
Period: Thursday, November 11, 2021
Industry: Business Services
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Other Events

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