Reports 18% Revenue Increase, ARR of $17.4 Million and Record Cash Flow
HENDERSON, Nev., Sept. 19, 2024 /PRNewswire/ -- Research Solutions, Inc. (NASDAQ:RSSS), a trusted partner providing cloud-based workflow solutions to accelerate research for R&D-driven organizations, reported record financial results for its fourth quarter and full fiscal year ended June 30, 2024.
Fiscal Fourth Quarter 2024 Summary (compared to prior-year quarter)
Total revenue of $12.1 million, a 22% increase.
Platform revenue up 86% to $4.3 million. Platform revenue accounted for 35% of the revenue as compared to 23% in the prior year.
Annual Recurring Revenue ("ARR") up 84% to $17.4 million, which includes approximately $12.1 million of B2B recurring revenue and $5.4M of B2C recurring revenue.
Gross profit up 44%. Total gross margin improved 710 basis points to 46.5%.
Net loss of $2.8 million, or ($0.09) per diluted share, compared to $376,000 or $0.01 per diluted share. The quarter's result includes a charge of approximately $4.3 million related to increasing the projected earnout for Scite.
Adjusted EBITDA of $1.4 million, a 70% improvement and a Company quarterly record, compared to $825,000.
Cash flow from operations of $2.0 million, compared to $1.5 million, a 30% improvement.
Fiscal Year 2024 Summary (compared to Fiscal 2023)
Total revenue of $44.6 million, an 18% increase.
Platform revenue up 61% to $14.0 million. Transaction revenue increased 5.7% to $30.7 million.
Gross profit up 34%. Total gross margin improved 500 basis points to 44.0%.
Net loss of $3.8 million, or ($0.13) per diluted share, including the previously mentioned $4.3 million charge and $1.5 million in proxy and acquisition-related expenses, compared to net income of $572,000 or $0.02 per diluted share.
Adjusted EBITDA of $2.2 million, which is inclusive of proxy and acquisition-related expenses of $1.4 million, a Company record, compared to $2.0 million.
Cash flow from operations of $3.6 million, a Company record, compared to $3.4 million.
"Fiscal 2024 was a transformational year for the Company. We completed two acquisitions which helped position us as a vertical SaaS and AI company, helping researchers throughout their entire workflow. The integration of these acquisitions and our operational execution were meaningful contributors to our 85% year-over-year ARR growth and the double-digit increase in Adjusted EBITDA," said Roy W. Olivier, President and CEO of Research Solutions. "There are many untapped market opportunities where our highly specialized product offerings can serve as a vital piece of the research process. Overall, we believe we are well-positioned to deliver meaningful ARR growth while expanding Adjusted EBITDA margins, creating long-term value for our shareholders."
Fiscal Fourth Quarter 2024 Results
Total revenue was $12.1 million, a 22% increase from $10.0 million in the year-ago quarter primarily driven by increased platform revenue versus the prior-year period due to revenue from the Company's acquisitions as well as organic platform revenue growth.
Platform subscription revenue for the quarter was $4.3 million, an 86% year-over-year increase. The increase was primarily due to the acquisition of Scite, as well as organic growth in the core Article Galaxy platform. The quarter ended with annual recurring revenue of $17.4 million, up 84% year-over-year (see the company's definition of annual recurring revenue below).
Transaction revenue was $7.9 million, compared to $7.7 million in the fourth quarter of fiscal 2023. The transaction active customer count for the quarter was 1,398, compared to 1,404 customers in the prior-year quarter (see the company's definition of active customer accounts and transactions below).
Total gross margin improved 710 basis points from the prior-year quarter to 46.5%. The increase was primarily driven by the continued revenue mix shift to the higher-margin Platforms business, as well as a 70 basis point increase in margins in the transactions business.
Total operating expenses were $5.0 million, compared to $3.7 million in the fourth quarter of 2023. The increase was primarily related to the additional cost base associated with the aforementioned acquisitions, as well as increased non-cash depreciation and amortization expense related to such acquisitions.
Other expense for the quarter was approximately $3.5 million, compared to other income of $120,000 in the prior-year quarter. The primary driver of this was $4.3M of expense related to increasing the earn-out assumption associated with the Scite acquisition.
Net loss in the fourth quarter was $2.8 million, or ($0.09) per diluted share, compared to net income of $376,000, or $0.01 per diluted share, in the prior-year quarter. Adjusted EBITDA was $1.4 million, compared to $825,000 in the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).
Full-Year Fiscal 2024 Results
Total revenue was $44.6 million, an 18% increase from fiscal 2023, driven by both increased platform revenue and transaction revenue.
Platform subscription revenue for fiscal 2024 was $14.0 million, a 61% year-over-year increase. The increase was primarily due to the acquisition of Scite, as well as organic growth in the core Article Galaxy platform.
Transaction revenue was $30.7 million, compared to $29.0 million in fiscal 2023. The increase was driven by organic growth and the impact of a full year of contribution from the acquisition of contracts from FIZ Karlsruhe, compared to six months in fiscal 2023.
Total gross margin improved 500 basis points from the prior-year to 44.0%. The increase was primarily driven by the continued revenue mix shift to the higher-margin Platforms business, as well as a 100 basis point increase in margins in the transactions business related to pricing initiatives.
Total operating expenses for the year were $20.4 million, compared to $14.5 million in fiscal 2023. The increase was primarily related to the additional cost base associated with the acquisitions, including increased non-cash depreciation and amortization expense related to such acquisitions, as well as the aforementioned proxy and acquisition-related expenses.
Net loss for fiscal 2024 was $3.8 million, or ($0.13) per diluted share, compared to net income of $572,000, or $0.02 per diluted share, in the prior-year. Adjusted EBITDA was $2.2 million, compared to $2.0 million in fiscal 2023 (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).
Conference CallResearch 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, September 19, 2024Time: 5:00 p.m. ET (2:00 p.m. PT)Dial-in number: 1-412-317-5180
The conference call will be broadcast live and available for replay until October 19, 2024 by dialing 1-412-317-6671 and using the replay ID 10191850, 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,
Twelve Months Ended June 30,
2024
2023
Change
% Change
2024
2023
Change
% Change
Revenue:
Platforms
$ 4,277,338
$ 2,303,375
$ 1,973,963
85.7 %
$ 13,956,517
$ 8,683,246
$ 5,273,271
60.7 %
Transactions
$ 7,856,176
$ 7,656,342
199,834
2.6 %
$ 30,667,382
$ 29,020,206
1,647,176
5.7 %
Total Revenue
12,133,514
9,959,717
2,173,797
21.8 %
44,623,899
37,703,452
6,920,447
18.4 %
Gross Profit:
Platforms
3,650,286
2,028,265
1,622,021
80.0 %
11,889,314
7,655,960
4,233,353
55.3 %
Transactions
1,992,580
1,892,278
100,302
5.3 %
7,750,852
7,044,931
705,921
10.0 %
Total Gross Profit
5,642,866
3,920,543
1,722,323
43.9 %
19,640,166
14,700,891
4,939,274
33.6 %
Gross profit as a % of revenue:
Platforms
85.3 %
88.1 %
-2.7 %
85.2 %
88.2 %
-3.0 %
Transactions
25.4 %
24.7 %
0.6 %
25.3 %
24.3 %
1.0 %
Total Gross Profit
46.5 %
39.4 %
7.1 %
44.0 %
39.0 %
5.0 %
Operating Expenses:
Sales and marketing
830,195
455,030
375,165
82.4 %
3,442,503
2,285,478
1,157,025
50.6 %
Technology and product development
1,489,491
991,093
498,398
50.3 %
5,442,382
3,742,192
1,700,190
45.4 %
General and administrative
1,917,907
1,649,333
268,574
16.3 %
8,511,697
6,654,012
1,857,685
27.9 %
Depreciation and amortization
311,004
22,163
288,841
1303.3 %
836,271
52,649
783,622
1488.4 %
Stock-based compensation
426,190
585,384
(159,194)
-27.2 %
2,155,461
1,849,906
305,555
16.5 %
Foreign currency translation loss
6,336
(37,743)
44,079
116.8 %
21,395
(121,953)
143,348
117.5 %
Total Operating Expenses
4,981,123
3,665,260
1,315,863
35.9 %
20,409,709
14,462,284
5,947,425
41.1 %
Income (loss) from operations
661,743
255,283
406,460
159.2 %
(769,543)
238,608
(1,008,151)
-422.5 %
Other Income (Expenses):
Other income
(3,451,948)
120,522
(3,572,470)
NM
(2,903,983)
338,617
(3,242,600)
NM
Provision for income taxes
(31,022)
(59)
(30,963)
NM
(113,071)
(5,602)
(107,469)
NM
Total Other Income (Expenses):
(3,482,970)
120,463
(3,603,433)
NM
(3,017,054)
333,015
(3,350,069)
NM
Net income (loss)
$ (2,821,227)
$ 375,746
(3,196,973)
NM
$ (3,786,597)
$ 571,623
(4,358,220)
NM
NM
Adjusted EBITDA
$ 1,405,273
$ 825,087
$ 580,186
70.3 %
$ 2,243,584
$ 2,019,210
$ 224,374
11.1 %
Quarter Ended June 30,
Twelve Months Ended June 30,
2024
2023
Change
% Change
2024
2023
Change
% Change
Platforms:
B2B ARR (Annual recurring revenue*):
Beginning of Period
$ 11,653,063
$ 9,107,681
$ 2,545,382
27.9 %
$ 9,444,130
$ 7,922,188
$ 1,521,942
19.2 %
Incremental ARR
407,139
336,448
70,691
