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Research Solutions, Inc. (RSSS) SEC Filing 8-K Material Event for the period ending Thursday, February 10, 2022

Research Solutions, Inc.

CIK: 1386301 Ticker: RSSS

Exhibit 99.1

 

 

 

Research Solutions Reports Fiscal Second Quarter 2022 Results

Reports Record 56 Net New Platform Deployments and 36 Percent Increase in ARR to $6.8 Million

 

HENDERSON, Nev., February 10, 2022 Research Solutions, Inc. (NASDAQ: RSSS), a pioneer in providing cloud-based workflow solutions for R&D driven organizations, reported financial results for its fiscal second quarter ended December 31, 2021.

 

Fiscal Second Quarter 2022 Summary

 

·Total revenue of $7.9 million, a 5.7% increase from prior-year quarter

 

·Platform revenue up 31% to $1.6 million. Annual Recurring Revenue (“ARR”) up 36% to $6.8 million

 

·Gross profit up 19% from prior-year quarter. Total gross margin improved 390 basis points to 36.0%

 

·Loss of $0.02 per share, compared to a loss of $0.01 per share in the prior-year quarter

 

·Platform incremental ARR generated in the quarter was a record high of $0.6M. The Company has now generated $1.8M of incremental platform ARR in the past twelve months.

 

·56 net new platform deployments in the quarter compared to 29 in the prior-year

 

“In the second quarter we saw a record number of new customers adopt the platform, and existing customers continue to increase the number of features they subscribe to as they expand the licensed number of users,” said Roy W. Olivier, President and CEO of Research Solutions. “The increase in ARR during the quarter reflects continued operational efficiencies, more accountability from our sales teams, and a deeper focus on innovative new product upgrades. We believe we are well-positioned for growth in the second half of fiscal 2022.”

 

  

Fiscal Second Quarter 2022 Results

 

Total revenue was $7.9 million, a 5.7% increase from $7.4 million in the year-ago quarter as both platform and transaction revenue increased from the prior period.

 

 

 

 

Platform subscription revenue increased 31% to $1.6 million compared to approximately $1.2 million in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments, including 56 net deployments added in the quarter, as well as upsells to existing customers. The quarter ended with annual recurring revenue of $6.8 million, up 9% sequentially and 36% year-over-year (see the company’s definition of annual recurring revenue below).

 

Transaction revenue was $6.3 million, compared to $6.2 million the second quarter of fiscal 2021. Transaction revenue has historically declined due to the savings experienced by customers as they transition to the recurring revenue platform business, however, this was the first quarter in the last six to experience transaction revenue growth over the prior period. Transaction customer count for the quarter was 1,179, compared to 1,109 customers in the prior-year quarter (see the company's definition of active customer accounts and transactions below).

 

Total gross margin improved 390 basis points from the prior-year quarter to 36.0%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business as well as reduced copyright costs in the quarter.

 

Total operating expenses were $3.3 million, compared to $2.7 million in the second quarter of 2021. The increase was primarily due to higher technology and product development and general and administrative costs.

 

Net loss in the second quarter was ($482,000), or ($0.02) per share, compared to net loss of ($261,000), or ($0.01) per share, in the prior-year quarter. Adjusted EBITDA was ($165,000), compared to $161,000 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 President and CEO Roy W. Olivier and CFO Bill Nurthen will host the conference call, followed by a question and answer period.

 

Date: Thursday, February 10, 2022

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: 10017815

 

The conference call will be broadcast live and available for replay until March 10, 2022 by dialing 1-844-512-2921 and using the replay ID 10017815, and via the investor relations section of the company's website at http://researchsolutions.investorroom.com/.

 

 

 

 

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

 

   Quarter Ended December 31,   Six Months Ended December 31, 
   2021   2020   Change   % Change   2021   2020   Change   % Change 
Revenue:                                
Platforms  $1,604,829   $1,220,535   $384,294    31.5%  $3,114,703   $2,362,223   $752,480    31.9%
Transactions  $6,267,458   $6,229,200    38,258    0.6%  $12,500,088   $12,835,937    (335,849)   -2.6%
Total Revenue   7,872,287    7,449,735    422,552    5.7%   15,614,791    15,198,160    416,631    2.7%
                                         
Gross Profit:                                        
Platforms   1,373,161    1,003,532    369,629    36.8%   2,637,379    1,941,268    696,111    35.9%
Transactions   1,464,499    1,388,050    76,449    5.5%   2,860,656    2,899,890    (39,234)   -1.4%
Total Gross Profit   2,837,660    2,391,582    446,078    18.7%   5,498,035    4,841,158    656,877    13.6%
                                         
Gross profit as a % of revenue:                                        
Platforms   85.6%   82.2%   3.3%        84.7%   82.2%   2.5%     
Transactions   23.4%   22.3%   1.1%        22.9%   22.6%   0.3%     
Total Gross Profit   36.0%   32.1%   3.9%        35.2%   31.9%   3.4%     
                                         
Operating Expenses:                                        
Sales and marketing   518,357    487,571    30,786    6.3%   1,041,308    985,945    55,363    5.6%
Technology and product development   868,236    624,747    243,489    39.0%   1,689,696    1,247,708    441,988    35.4%
General and administrative   1,616,135    1,118,750    497,385    44.5%   3,113,358    2,279,812    833,546    36.6%
Depreciation and amortization   4,260    3,039    1,221    40.2%   7,156    6,762    394    5.8%
Stock-based compensation   300,539    435,949    (135,410)   -31.1%   471,649    606,739    (135,090)   -22.3%
Foreign currency translation loss   11,982    (17,469)   29,451    NM    23,225    (41,718)   64,943    NM 
Total Operating Expenses   3,319,509    2,652,587    666,922    25.1%   6,346,392    5,085,248    1,261,144    24.8%
Income (loss) from operations   (481,849)   (261,005)   (220,844)   NM    (848,357)   (244,090)   (604,268)   NM 
                                         
Other Income (Expenses):                                        
Other income (expense)   264    399    (135)        540    634    (94)   -14.8%
Provision for income taxes   -    -    -    0.0%   (5,770)   (2,505)   (3,265)   NM 
Gain on sale of disc'd operations   -    -    -         -    -    -      
Total Other Income (Expenses):   264    399    (135)   -33.8%   (5,230)   (1,871)   (3,359)   NM 
Net income (loss)  $(481,585)  $(260,606)   (220,979)   NM   $(853,587)  $(245,961)   (607,627)   NM 
                   NM                   NM 
Adjusted EBITDA  $(165,068)  $160,514   $(325,582)   NM   $(346,327)  $327,693   $(674,021)   NM 

 

   Quarter Ended December 31,   Six Months Ended December 31, 
   2021   2020   Change   % Change   2021   2020   Change   % Change 
Platforms:                                
ARR (Annual recurring revenue):                                        
Beginning of Period  $6,282,927   $4,741,183   $1,541,744    32.5%  $5,880,179   $4,446,088   $1,434,091    32.3%
Incremental ARR   565,687    279,870    285,817    102.1%   968,434    574,965    393,469    68.4%
End of Period  $6,848,613   $5,021,053   $1,827,560    36.4%  $6,848,613   $5,021,053   $1,827,560    36.4%
                                         
Deployments:                                        
Beginning of Period   590    432    158    36.6%   553    401    152    37.9%
Incremental Deployments   56    29    27    93.1%   93    60    33    55.0%
End of Period   646    461    185    40.1%   646    461    185    40.1%
                                         
ASP (Average sales price):                                        
Beginning of Period  $10,649   $10,975   $(326)   -3.0%  $10,633   $11,088   $(454)   -4.1%
End of Period  $10,602   $10,892   $(290)   -2.7%  $10,602   $10,892   $(290)   -2.7%
                                         
Transaction Customers:                                        
Corporate customers   867    809    58    7.2%   860    807    53    6.6%
Academic customers   312    300    12    4.0%   306    293    14    4.6%
Total customers   1,179    1,109    70    6.3%   1,166    1,100    67    6.0%

 

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 December 31,   Six Months Ended December 31, 
   2021   2020   Change   % Change   2021   2020   Change   % Change 
Net Income (loss)  $(481,585)  $(260,606)  $(220,979)   NM   $(853,587)  $(245,961)  $(607,627)   NM 
Add (deduct):                                 -      
Other income (expense)   (264)   (399)   135    -33.8%   (540)   (634)   94    -14.8%
Foreign currency translation loss   11,982    (17,469)   29,451    NM    23,225    (41,718)   64,943    NM 
Provision for income taxes   -    -    -         5,770    2,505    3,265    130.3%
Depreciation and amortization   4,260    3,039    1,221    40.2%   7,156    6,762    394    5.8%
Stock-based compensation   300,539    435,949    (135,410)   -31.1%   471,649    606,739    (135,090)   -22.3%
Gain on sale of disc. ops.   -    -    -         -    -    -      
Adjusted EBITDA  $(165,068)  $160,514   $(325,582)   NM   $(346,327)  $327,693   $(674,021)   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 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

 

   December 31,     
   2021   June 30, 
   (unaudited)   2021 
Assets          
Current assets:          
Cash and cash equivalents  $10,679,714   $11,004,337 
Accounts receivable, net of allowance of $75,655 and $51,495, respectively   4,618,340    4,717,453 
Prepaid expenses and other current assets   325,861    270,252 
Prepaid royalties   655,146    904,921 
Total current assets   16,279,061    16,896,963 
           
Other assets:          
Property and equipment, net of accumulated depreciation of $829,554 and $824,123, respectively   40,918    20,755 
Deposits and other assets   880    906 
Total assets  $16,320,859   $16,918,624 
           
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable and accrued expenses  $6,514,905   $6,687,188 
Deferred revenue   4,741,238    4,804,351 
Total current liabilities   11,256,143    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; 26,817,056 and 26,498,215 shares issued and outstanding, respectively   26,817    26,498 
Additional paid-in capital   27,475,741    26,982,052 
Accumulated deficit   (22,315,475)   (21,461,888)
Accumulated other comprehensive loss   (122,367)   (119,577)
Total stockholders’ equity   5,064,716    5,427,085 
Total liabilities and stockholders’ equity  $16,320,859   $16,918,624 

 

 

 

 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Operations and Other Comprehensive Loss

(Unaudited)

 

 

   Three Months Ended   Six Months Ended 
   December 31,   December 31, 
   2021   2020   2021   2020 
                 
Revenue:                    
Platforms  $1,604,829   $1,220,535   $3,114,703   $2,362,223 
Transactions   6,267,458    6,229,200    12,500,088    12,835,937 
Total revenue   7,872,287    7,449,735    15,614,791    15,198,160 
                     
Cost of revenue:                    
Platforms   231,668    217,003    477,324    420,955 
Transactions   4,802,959    4,841,150    9,639,432    9,936,047 
Total cost of revenue   5,034,627    5,058,153    10,116,756    10,357,002 
Gross profit   2,837,660    2,391,582    5,498,035    4,841,158 
                     
Operating expenses:                    
Selling, general and administrative   3,315,249    2,649,548    6,339,236    5,078,486 
Depreciation and amortization   4,260    3,039    7,156    6,762 
Total operating expenses   3,319,509    2,652,587    6,346,392    5,085,248 
                     
Loss from operations   (481,849)   (261,005)   (848,357)   (244,090)
                     
Other income   264    399    540    634 
                     
Loss from operations before provision for income taxes   (481,585)   (260,606)   (847,817)   (243,456)
Provision for income taxes           (5,770)   (2,505)
                     
Net  loss   (481,585)   (260,606)   (853,587)   (245,961)
                     
Other comprehensive income (loss):                    
Foreign currency translation   185    5,516    (2,790)   6,681 
Comprehensive loss  $(481,400)  $(255,090)  $(856,377)  $(239,280)
                     
Loss per common share:                    
Net loss per share, basic and diluted  $(0.02)  $(0.01)  $(0.03)  $(0.01)
Weighted average common shares outstanding, basic and diluted   26,351,947    25,988,117    26,314,532    25,943,509 

 

 

 

 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

   Six Months Ended 
   December 31, 
   2021   2020 
         
Cash flow from operating activities:          
Net loss  $(853,587)  $(245,961)
Adjustment to reconcile net loss to net cash provided by (used in) operating activities:          
Depreciation and amortization   7,156    6,762 
Amortization of lease right       61,886 
Fair value of vested stock options   127,668    419,785 
Fair value of vested restricted common stock   343,981    186,954 
Changes in operating assets and liabilities:          
Accounts receivable   99,113    221,657 
Prepaid expenses and other current assets   (55,609)   (55,533)
Prepaid royalties   249,775    46,503 
Accounts payable and accrued expenses   (172,283)   (550,693)
Deferred revenue   (63,113)   861,000 
Lease liability       (67,882)
Net cash provided by (used in) operating activities   (316,899)   884,478 
           
Cash flow from investing activities:          
Purchase of property and equipment   (26,991)   (6,134)
Net cash used in investing activities   (26,991)   (6,134)
           
Cash flow from financing activities:          
Proceeds from the exercise of stock options   30,671    14,100 
Proceeds from the exercise of warrants   59,500    81,251 
Common stock repurchase   (67,812)   (127,274)
Net cash provided by (used in) financing activities   22,359    (31,923)
           
Effect of exchange rate changes   (3,092)   5,527 
Net increase (decrease) in cash and cash equivalents   (324,623)   851,948 
Cash and cash equivalents, beginning of period   11,004,337    9,311,556 
Cash and cash equivalents, end of period  $10,679,714   $10,163,504 
           
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: 0001104659-22-019363
Submitted to the SEC: Thu Feb 10 2022 4:15:31 PM EST
Accepted by the SEC: Thu Feb 10 2022
Period: Thursday, February 10, 2022
Industry: Business Services
Events:
  1. Earnings Release
  2. Financial Exhibit

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