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Research Solutions, Inc. (RSSS) SEC Filing 8-K Material Event for the period ending Thursday, May 12, 2022

Research Solutions, Inc.

CIK: 1386301 Ticker: RSSS

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

 

 

Research Solutions Reports Fiscal Third Quarter 2022 Results

 

Reports Record Quarterly Revenue and 32 Percent Increase in ARR to $7.3 Million

 

HENDERSON, Nev., May 12, 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 third quarter ended March 31, 2022.

 

Fiscal Third Quarter 2022 Summary

 

·Total revenue of $8.8 million, a quarterly record for the Company and a 5% increase from the prior-year quarter
·Platform revenue up 33% to $1.8 million. Annual Recurring Revenue (“ARR”) up 32% to $7.3 million
·Gross profit up 20% from prior-year quarter. Total gross margin improved 460 basis points to 37.0%
·Loss of $0.01 per share, compared to breakeven in the prior-year quarter, positive Adjusted EBITDA of $0.1 million compared to $0.2M in the prior-year quarter
·Platform incremental ARR generated in the quarter was $0.5M and a total of $1.8M in the past twelve months.
·34 net new platform deployments in the quarter, 168 net new on a trailing twelve months basis

 

“Our third quarter results reflect the continued growth within our Platforms segment, as we posted our highest quarterly total revenue in company history and second consecutive quarter of at least $500,000 of incremental ARR,” said Roy W. Olivier, President and CEO of Research Solutions. “In addition, Q3 is seasonally a strong renewal period for us and this quarter we experienced our highest ever upsell bookings from existing customers as they continue to see the value in our Article Galaxy platform.”

 

Fiscal Third Quarter 2022 Results

 

Total revenue was $8.8 million, a 5% increase from $8.3 million in the year-ago quarter as platform revenue increased and transaction revenue was essentially unchanged from the prior period.

 

Platform subscription revenue increased 33% to $1.8 million compared to approximately $1.3 million in the year-ago quarter. The growth was due to an increase in ARR associated with renewals over the last twelve months as well as an increase in the total number of paid Platform deployments, including 34 net deployments added in the quarter. The quarter ended with annual recurring revenue of $7.3 million, up 32% year-over-year (see the company’s definition of annual recurring revenue below).

 

 

 

Transaction revenue was $7.0 million, relatively flat compared to the third quarter of fiscal 2021. Transaction customer count for the quarter was 1,193, compared to 1,108 customers in the prior-year quarter (see the company's definition of active customer accounts and transactions below).

 

Total gross margin improved 460 basis points from the prior-year quarter to 37.0%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platform business as well as lower copyright costs in the quarter.

 

Total operating expenses were $3.6 million, compared to $2.7 million in the third quarter of 2021. The increase was primarily due to higher technology and product development and general and administrative costs related to strategic growth initiatives in the business.

 

Net loss in the third quarter was ($341,000), or ($0.01) per share, compared to net income of $50,000, or breakeven on a diluted share basis, in the prior-year quarter. Adjusted EBITDA was $94,000, compared to $238,000 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, May 12, 2022

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

Toll-free dial-in number: 1-800-892-9785

International dial-in number: 1-212-231-2907

Conference ID: 22018555

 

The conference call will be broadcast live and available for replay until June 12, 2022 by dialing 1-844-512-2921 and using the replay ID 22018555, 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, 
   2022   2021   Change   % Change   2022   2021   Change   % Change 
Revenue:                                        
Platforms  $1,786,224   $1,344,183   $442,041    32.9%  $4,900,927   $3,706,406   $1,194,521    32.2%
Transactions  $6,971,128   $6,996,349    (25,221)   -0.4%  $19,471,216   $19,832,286    (361,070)   -1.8%
Total Revenue   8,757,352    8,340,532    416,820    5.0%   24,372,143    23,538,692    833,451    3.5%
                                         
Gross Profit:                                        
Platforms   1,567,173    1,110,487    456,686    41.1%   4,204,552    3,051,755    1,152,797    37.8%
Transactions   1,671,324    1,592,153    79,171    5.0%   4,531,980    4,492,043    39,937    0.9%
Total Gross Profit   3,238,497    2,702,640    535,857    19.8%   8,736,532    7,543,798    1,192,734    15.8%
                                         
Gross profit as a % of revenue:                                        
Platforms   87.7%   82.6%   5.1%        85.8%   82.3%   3.5%     
Transactions   24.0%   22.8%   1.2%        23.3%   22.7%   0.6%     
Total Gross Profit   37.0%   32.4%   4.6%        35.8%   32.0%   3.8%     
                                         
Operating Expenses:                                        
Sales and marketing   543,496    566,713    (23,217)   -4.1%   1,584,804    1,552,658    32,146    2.1%
Technology and product development   971,959    664,195    307,764    46.3%   2,661,655    1,911,903    749,752    39.2%
General and administrative   1,629,371    1,233,603    395,768    32.1%   4,742,729    3,513,415    1,229,314    35.0%
Depreciation and amortization   4,988    2,066    2,922    141.4%   12,144    8,828    3,316    37.6%
Stock-based compensation   399,234    179,345    219,889    122.6%   870,883    786,084    84,799    10.8%
Foreign currency translation loss   29,394    6,648    22,746    342.1%   52,619    (35,070)   87,689    NM 
Total Operating Expenses   3,578,442    2,652,570    925,872    34.9%   9,924,834    7,737,818    2,187,016    28.3%
Income (loss) from operations   (339,945)   50,070    (390,015)   NM    (1,188,302)   (194,020)   (994,282)   NM 
                                         
Other Income (Expenses):                                        
Other income (expense)   237    250    (13)        777    884    (107)   -12.1%
Provision for income taxes   (822)   (572)   (250)   0.0%   (6,592)   (3,077)   (3,515)   NM 
Gain on sale of disc'd operations   -    -    -         -    -    -      
Total Other Income (Expenses):   (585)   (322)   (263)   81.7%   (5,815)   (2,193)   (3,622)   NM 
Net income (loss)  $(340,530)  $49,748    (390,278)   NM   $(1,194,117)  $(196,213)   (997,904)   NM 
                   NM                   NM 
Adjusted EBITDA  $93,671   $238,129   $(144,458)   NM   $(252,656)  $565,822   $(818,478)   NM 

 

   Quarter Ended March 31,   Nine Months Ended March 31, 
   2022   2021   Change   % Change   2022   2021   Change   % Change 
Platforms:                                        
ARR (Annual recurring revenue):                                        
Beginning of Period  $6,848,613   $5,021,053   $1,827,560    36.4%  $5,880,179   $4,446,088   $1,434,091    32.3%
Incremental ARR   500,233    533,542    (33,309)   -6.2%   1,468,668    1,108,507    360,161    32.5%
End of Period  $7,348,847   $5,554,595   $1,794,252    32.3%  $7,348,847   $5,554,595   $1,794,252    32.3%
                                         
Deployments:                                        
Beginning of Period   646    461    185    40.1%   553    401    152    37.9%
Incremental Deployments   34    51    (17)   -33.3%   127    111    16    14.4%
End of Period   680    512    168    32.8%   680    512    168    32.8%
                                         
ASP (Average sales price):                                        
Beginning of Period  $10,602   $10,892   $(290)   -2.7%  $10,633   $11,088   $(454)   -4.1%
End of Period  $10,807   $10,849   $(42)   -0.4%  $10,807   $10,849   $(42)   -0.4%
                                         
Transaction Customers:                                        
Corporate customers   904    841    63    7.5%   875    818    56    6.9%
Academic customers   289    267    22    8.2%   300    284    16    5.8%
Total customers   1,193    1,108    85    7.7%   1,175    1,102    73    6.6%

 

 

 

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 March 31,   Nine Months Ended March 31, 
   2022   2021   Change   % Change   2022   2021   Change   % Change 
Net Income (loss)  $(340,530)  $49,748   $(390,278)   NM   $(1,194,117)  $(196,213)  $(997,904)   NM 
Add (deduct):                                 -      
Other income (expense)   (237)   (250)   13    5.2%   (777)   (884)   107    12.1%
Foreign currency translation loss   29,394    6,648    22,746    342.1%   52,619    (35,070)   87,689    NM 
Provision for income taxes   822    572    250    43.7%   6,592    3,077    3,515    114.2%
Depreciation and amortization   4,988    2,066    2,922    141.4%   12,144    8,828    3,316    37.6%
Stock-based compensation   399,234    179,345    219,889    122.6%   870,883    786,084    84,799    10.8%
Gain on sale of disc. ops.   -    -    -         -    -    -      
Adjusted EBITDA  $93,671   $238,129   $(144,458)   -60.7%  $(252,656)  $565,822   $(818,478)   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 visitwww.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

 

   March 31,     
   2022   June 30, 
   (unaudited)   2021 
Assets          
Current assets:          
Cash and cash equivalents  $10,640,521   $11,004,337 
Accounts receivable, net of allowance of $80,655 and $51,495, respectively   5,622,368    4,717,453 
Prepaid expenses and other current assets   338,236    270,252 
Prepaid royalties   959,208    904,921 
Total current assets   17,560,333    16,896,963 
           
Other assets:          
Property and equipment, net of accumulated depreciation of $836,339 and $824,123, respectively   43,671    20,755 
Deposits and other assets   905    906 
Total assets  $17,604,909   $16,918,624 
           
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable and accrued expenses  $7,084,276   $6,687,188 
Deferred revenue   5,342,828    4,804,351 
Total current liabilities   12,427,104    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; 27,000,844 and 26,498,215 shares issued and outstanding, respectively   27,001    26,498 
Additional paid-in capital   27,927,567    26,982,052 
Accumulated deficit   (22,656,005)   (21,461,888)
Accumulated other comprehensive loss   (120,758)   (119,577)
Total stockholders’ equity   5,177,805    5,427,085 
Total liabilities and stockholders’ equity  $17,604,909   $16,918,624 

 

 

 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Operations and Other Comprehensive Loss

(Unaudited)

 

   Three Months Ended   Nine Months Ended 
   March 31,   March 31, 
   2022   2021   2022   2021 
Revenue:                    
Platforms  $1,786,224   $1,344,183   $4,900,927   $3,706,406 
Transactions   6,971,128    6,996,349    19,471,216    19,832,286 
Total revenue   8,757,352    8,340,532    24,372,143    23,538,692 
                     
Cost of revenue:                    
Platforms   219,051    233,696    696,375    654,651 
Transactions   5,299,804    5,404,196    14,939,236    15,340,243 
Total cost of revenue   5,518,855    5,637,892    15,635,611    15,994,894 
Gross profit   3,238,497    2,702,640    8,736,532    7,543,798 
                     
Operating expenses:                    
Selling, general and administrative   3,573,454    2,650,504    9,912,690    7,728,990 
Depreciation and amortization   4,988    2,066    12,144    8,828 
Total operating expenses   3,578,442    2,652,570    9,924,834    7,737,818 
                     
Income (loss) from operations   (339,945)   50,070    (1,188,302)   (194,020)
                     
Other income   237    250    777    884 
                     
Income (loss) from operations before provision for income taxes   (339,708)   50,320    (1,187,525)   (193,136)
Provision for income taxes   (822)   (572)   (6,592)   (3,077)
                     
Net income (loss)   (340,530)   49,748    (1,194,117)   (196,213)
                     
Other comprehensive income (loss):                    
Foreign currency translation   1,609    (3,333)   (1,181)   3,348 
Comprehensive income (loss)  $(338,921)  $46,415   $(1,195,298)  $(192,865)
                     
Basic income (loss) per common share:                    
Net income (loss) per share  $(0.01)  $   $(0.05)  $(0.01)
Weighted average common shares outstanding   26,512,195    26,027,665    26,392,949    25,966,072 
                     
Diluted income (loss) per common share:                    
Net income (loss) per share  $(0.01)  $   $(0.05)  $(0.01)
Weighted average common shares outstanding   26,512,195    26,565,892    26,392,949    25,966,072 

 

 

 

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

   Nine Months Ended 
   March 31, 
   2022   2021 
Cash flow from operating activities:          
Net loss  $(1,194,117)  $(196,213)
Adjustment to reconcile net loss to net cash provided by (used in) operating activities:          
Depreciation and amortization   12,144    8,828 
Amortization of lease right       72,331 
Fair value of vested stock options   424,450    504,936 
Fair value of vested restricted common stock   446,433    281,148 
Changes in operating assets and liabilities:          
Accounts receivable   (904,915)   (563,829)
Prepaid expenses and other current assets   (67,984)   (75,473)
Prepaid royalties   (54,287)   (23,146)
Deposits and other assets       5,360 
Accounts payable and accrued expenses   397,088    1,208,474 
Deferred revenue   538,477    1,076,966 
Lease liability       (79,326)
Net cash provided by (used in) operating activities   (402,711)   2,220,056 
           
Cash flow from investing activities:          
Purchase of property and equipment   (34,251)   (11,853)
Net cash used in investing activities   (34,251)   (11,853)
           
Cash flow from financing activities:          
Proceeds from the exercise of stock options   97,688    88,850 
Proceeds from the exercise of warrants   59,500    81,251 
Common stock repurchase   (82,053)   (150,386)
Repurchase of stock options and warrants       (308,313)
Net cash provided by (used in) financing activities   75,135    (288,598)
           
Effect of exchange rate changes   (1,989)   2,401 
Net increase (decrease) in cash and cash equivalents   (363,816)   1,922,006 
Cash and cash equivalents, beginning of period   11,004,337    9,311,556 
Cash and cash equivalents, end of period  $10,640,521   $11,233,562 
           
Supplemental disclosures of cash flow information:          
Cash paid for income taxes  $6,592   $3,077 

 

 

 

Contact

Steven Hooser or John Beisler

Three Part Advisors

(214) 872-2710

 

shooser@threepa.com; jbeisler@threepa.com

# # #

 

 

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Research Solutions, Inc. provided additional information to their SEC Filing as exhibits

Ticker: RSSS
CIK: 1386301
Form Type: 8-K Corporate News
Accession Number: 0001104659-22-059437
Submitted to the SEC: Thu May 12 2022 4:14:47 PM EST
Accepted by the SEC: Thu May 12 2022
Period: Thursday, May 12, 2022
Industry: Business Services
Events:
  1. Earnings Release
  2. Financial Exhibit

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