Research Solutions Reports Fiscal Second Quarter 2025 Results
Rhea-AI Summary
Research Solutions (NASDAQ: RSSS) reported fiscal Q2 2025 results with significant growth metrics. Total revenue increased 15.5% to $11.9 million, driven by a 47% rise in platform revenue to $4.6 million. Annual Recurring Revenue (ARR) grew 23% to $19.1 million, including $12.7 million in B2B and $6.4 million in B2C recurring revenue.
The company achieved its best organic performance with 61 net new B2B platform deployments and recorded a nearly $1 million sequential increase in B2C recurring revenue. Gross profit improved 30% with margins expanding 540 basis points to 48.9%. However, the company reported a net loss of $2.0 million ($0.07 per share), primarily due to a $2.4 million charge related to Scite's contingent earnout liability. Adjusted EBITDA reached $963,000, up from $318,000 in the prior year, with trailing twelve-month Adjusted EBITDA of $4.6 million representing a 9.5% margin.
Positive
- Revenue growth of 15.5% to $11.9 million
- Platform revenue increased 47% to $4.6 million
- ARR grew 23% to $19.1 million
- Gross margin improved 540 basis points to 48.9%
- Record 61 net new B2B platform deployments
- Adjusted EBITDA increased to $963,000 from $318,000
- Operating cash flow of over $1 million, up from $0.3 million
Negative
- Net loss of $2.0 million compared to $54,000 loss year-over-year
- $2.4 million charge for Scite earnout liability
- Operating expenses increased 16.8% to $5.7 million
- Transaction customer count decreased to 1,384 from 1,398
News Market Reaction 1 Alert
On the day this news was published, RSSS declined 7.42%, reflecting a notable negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
Reports 23 Percent Increase in ARR to
Fiscal Second Quarter 2025 Summary
- Total revenue of
$11.9 million 15.5% increase from the prior-year quarter. - Platform revenue up
47% to$4.6 million . Platform revenue accounted for39% of total revenue as compared to30% in the prior-year quarter. - Annual Recurring Revenue ("ARR") up
23% to$19.1 million , which includes approximately$12.7 million $6.4 million - Gross profit up
30% from the prior-year quarter. Total gross margin improved 540 basis points to48.9% . - Net loss of
$2.0 million $0.07 $54,000 $2.4 million - Adjusted EBITDA of
$963,000 $318,000 $112,000 $4.6 million 9.5% margin. - Cash flow from operations of over
$1 million $0.3 million
"Our second quarter results benefited from the continued recognition of the advantages and savings our products offer within the research process and the conclusion of the election cycle, which removed some near-term economic uncertainty. We experienced strong growth in both B2B and B2C ARR. The 61 net new B2B platform deployments represent our best organic performance ever recorded in a quarter, and we also recorded a nearly
Fiscal Second Quarter 2025 Results
Total revenue was
Platform subscription revenue increased
Transaction revenue was
Total gross margin improved 540 basis points from the prior-year quarter to
Total operating expenses were
Net loss for the second quarter was
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 13, 2025
Time: 5:00 p.m. ET (2:00 p.m. PT)
Dial-in number: 1-203-518-9848
Conference ID: RESEARCH
The conference call will be broadcast live and available for replay until March 13, 2025 by dialing 1-412-317-6671 and using the replay ID 11157678, 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, | |||||||||
2024 | 2023 | Change | % Change | 2024 | 2023 | Change | % Change | |||
Revenue: | ||||||||||
Platforms | $ 4,601,257 | $ 3,125,584 | $ 1,475,673 | 47.2 % | $ 8,930,902 | $ 5,725,776 | $ 3,205,126 | 56.0 % | ||
Transactions | $ 7,312,962 | $ 7,188,158 | 124,804 | 1.7 % | $ 15,027,799 | $ 14,648,937 | 378,862 | 2.6 % | ||
Total Revenue | 11,914,219 | 10,313,742 | 1,600,477 | 15.5 % | 23,958,701 | 20,374,713 | 3,583,988 | 17.6 % | ||
Gross Profit: | ||||||||||
Platforms | 3,981,415 | 2,639,399 | 1,342,016 | 50.8 % | 7,763,893 | 4,856,977 | 2,906,916 | 59.9 % | ||
Transactions | 1,839,678 | 1,844,403 | (4,725) | -0.3 % | 3,823,076 | 3,658,391 | 164,685 | 4.5 % | ||
Total Gross Profit | 5,821,093 | 4,483,802 | 1,337,291 | 29.8 % | 11,586,969 | 8,515,368 | 3,071,601 | 36.1 % | ||
Gross profit as a % of revenue: | ||||||||||
Platforms | 86.5 % | 84.4 % | 2.1 % | 86.9 % | 84.8 % | 2.1 % | ||||
Transactions | 25.2 % | 25.7 % | -0.5 % | 25.4 % | 25.0 % | 0.5 % | ||||
Total Gross Profit | 48.9 % | 43.5 % | 5.4 % | 48.4 % | 41.8 % | 6.6 % | ||||
Operating Expenses: | ||||||||||
Sales and marketing | 1,343,087 | 804,927 | 538,160 | 66.9 % | 2,533,494 | 1,489,943 | 1,043,551 | 70.0 % | ||
Technology and product development | 1,506,849 | 1,336,558 | 170,291 | 12.7 % | 2,879,607 | 2,581,137 | 298,470 | 11.6 % | ||
General and administrative | 2,008,201 | 2,023,848 | (15,648) | -0.8 % | 3,938,377 | 4,566,717 | (628,340) | -13.8 % | ||
Depreciation and amortization | 306,233 | 155,749 | 150,484 | 96.6 % | 618,328 | 215,369 | 402,959 | 187.1 % | ||
Stock-based compensation | 534,322 | 596,455 | (62,133) | -10.4 % | 952,311 | 1,188,269 | (235,958) | -19.9 % | ||
Foreign currency translation loss | 29,554 | (13,738) | 43,292 | NM | (74,686) | (7,118) | (67,568) | 949.3 % | ||
Total Operating Expenses | 5,728,246 | 4,903,799 | 824,446 | 16.8 % | 10,847,431 | 10,034,317 | 813,114 | 8.1 % | ||
Income (loss) from operations | 92,847 | (419,997) | 512,844 | 122.1 % | 739,538 | (1,518,949) | 2,258,487 | 148.7 % | ||
Other Income (Expenses): | ||||||||||
Other income | (2,057,887) | 376,426 | (2,434,313) | NM | (1,989,362) | 516,737 | (2,506,099) | NM | ||
Provision for income taxes | (15,194) | (10,057) | (5,137) | 51.1 % | (61,406) | (39,459) | (21,947) | 55.6 % | ||
Total Other Income (Expenses): | (2,073,081) | 366,369 | (2,439,450) | NM | (2,050,768) | 477,278 | (2,528,046) | NM | ||
Net income (loss) | $ (1,980,234) | $ (53,628) | (1,926,606) | NM | $ (1,311,230) | $ (1,041,671) | (269,559) | NM | ||
NM | ||||||||||
Adjusted EBITDA | $ 962,956 | $ 318,469 | $ 644,487 | 202.4 % | $ 2,235,491 | $ (122,429) | $ 2,357,920 | -1926.0 % | ||
Quarter Ended December 31, | Six Months Ended December 31, | |||||||||
2024 | 2023 | Change | % Change | 2024 | 2023 | Change | % Change | |||
Platforms: | ||||||||||
B2B ARR (Annual recurring revenue*): | ||||||||||
Beginning of Period | $ 12,187,834 | $ 11,020,241 | $ 1,167,593 | 10.6 % | $ 12,060,201 | $ 9,444,130 | $ 2,616,071 | 27.7 % | ||
Incremental ARR | 550,422 | 594,507 | (44,085) | -7.4 % | 678,055 | 2,170,618 | (1,492,563) | -68.8 % | ||
End of Period | $ 12,738,256 | $ 11,614,748 | $ 1,123,508 | 9.7 % | $ 12,738,256 | $ 11,614,748 | $ 1,123,508 | 9.7 % | ||
Deployments: | ||||||||||
Beginning of Period | 1,029 | 880 | 149 | 16.9 % | 1,021 | 835 | 186 | 22.3 % | ||
Incremental Deployments | 61 | 62 | (1) | -1.6 % | 69 | 107 | (38) | -35.5 % | ||
End of Period | 1,090 | 942 | 148 | 15.7 % | 1,090 | 942 | 148 | 15.7 % | ||
ASP (Average sales price): | ||||||||||
Beginning of Period | $ 11,844 | $ 12,523 | $ (679) | -5.4 % | $ 11,812 | $ 11,310 | $ 502 | 4.4 % | ||
End of Period | $ 11,686 | $ 12,330 | $ (643) | -5.2 % | $ 11,686 | $ 12,330 | $ (643) | -5.2 % | ||
B2C ARR (Annual recurring revenue*): | ||||||||||
Beginning of Period | $ 5,430,795 | $ - | $ 5,430,795 | NM | $ 5,363,129 | $ - | $ 5,363,129 | NM | ||
Incremental ARR | 940,586 | 3,954,090 | (3,013,504) | NM | 1,008,252 | 3,954,090 | (2,945,838) | NM | ||
End of Period | $ 6,371,381 | $ 3,954,090 | $ 2,417,291 | 61.1 % | $ 6,371,381 | $ 3,954,090 | $ 2,417,291 | 61.1 % | ||
Total ARR (Annualized recurring revenue): | $ 19,109,637 | $ 15,568,838 | $ 3,540,799 | 22.7 % | $ 19,109,637 | $ 15,568,838 | $ 3,540,799 | 22.7 % | ||
Transaction Customers: | ||||||||||
Corporate customers | 1,051 | 1,065 | (14) | -1.3 % | 1,063 | 1,078 | (15) | -1.3 % | ||
Academic customers | 333 | 333 | - | 0.0 % | 325 | 319 | 6 | 1.9 % | ||
Total customers | 1,384 | 1,398 | (14) | -1.0 % | 1,388 | 1,397 | (9) | -0.6 % | ||
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. For B2C ARR, this includes the annualized value of monthly subscriptions, meaning their monthly value multiplied by twelve.
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) including any change in fair value of contingent earnout liability, foreign currency transaction loss, provision for income taxes, depreciation and amortization, stock-based compensation, 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, | ||||||||||
2024 | 2023 | Change | % Change | 2024 | 2023 | Change | % Change | ||||
Net Income (loss) | $ (1,980,234) | $ (53,628) | $ (1,926,606) | NM | $ (1,311,230) | $ (1,041,671) | $ (269,559) | NM | |||
Add (deduct): | - | ||||||||||
Other (income) expense | 2,057,887 | (376,426) | 2,434,313 | NM | 1,989,362 | (516,737) | 2,506,099 | NM | |||
Foreign currency translation loss (gain) | 29,554 | (13,738) | 43,292 | NM | (74,686) | (7,118) | (67,568) | 949.3 % | |||
Provision for income taxes | 15,194 | 10,057 | 5,137 | 51.1 % | 61,406 | 39,459 | 21,947 | 55.6 % | |||
Depreciation and amortization | 306,233 | 155,749 | 150,484 | 96.6 % | 618,328 | 215,369 | 402,959 | 187.1 % | |||
Stock-based compensation | 534,322 | 596,455 | (62,133) | -10.4 % | 952,311 | 1,188,269 | (235,958) | -19.9 % | |||
Adjusted EBITDA | $ 962,956 | $ 318,469 | $ 644,487 | 202.4 % | $ 2,235,491 | $ (122,429) | $ 2,357,920 | 1926.0 % | |||
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
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 enhanced product offerings, additional customers, 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, | |||||||
2024 | June 30, | ||||||
(unaudited) | 2024 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 7,701,155 | $ | 6,100,031 | |||
Accounts receivable, net of allowance of | 7,116,055 | 6,879,800 | |||||
Prepaid expenses and other current assets | 742,166 | 643,553 | |||||
Prepaid royalties | 589,068 | 1,067,237 | |||||
Total current assets | 16,148,444 | 14,690,621 | |||||
Non-current assets: | |||||||
Property and equipment, net of accumulated depreciation of | 63,355 | 88,011 | |||||
Intangible assets, net of accumulated amortization of | 10,230,439 | 10,764,261 | |||||
Goodwill | 16,345,888 | 16,315,888 | |||||
Deposits and other assets | 867 | 981 | |||||
Total assets | $ | 42,788,993 | $ | 41,859,762 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 8,104,118 | $ | 8,843,612 | |||
Deferred revenue | 8,853,415 | 9,023,848 | |||||
Contingent earnout liability, current portion | 3,963,956 | — | |||||
Total current liabilities | 20,921,489 | 17,867,460 | |||||
Non-current liabilities: | |||||||
Contingent earnout liability, long-term portion | 10,741,044 | 12,298,114 | |||||
Total liabilities | 31,662,533 | 30,165,574 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Preferred stock; | — | — | |||||
Common stock; | 32,640 | 32,295 | |||||
Additional paid-in capital | 38,836,646 | 38,089,958 | |||||
Accumulated deficit | (27,620,476) | (26,309,246) | |||||
Accumulated other comprehensive loss | (122,350) | (118,819) | |||||
Total stockholders' equity | 11,126,460 | 11,694,188 | |||||
Total liabilities and stockholders' equity | $ | 42,788,993 | $ | 41,859,762 | |||
Research Solutions, Inc. and Subsidiaries Consolidated Statements of Operations and Other Comprehensive Loss (Unaudited) | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
December 31, | December 31, | ||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||
Revenue: | |||||||||||||
Platforms | $ | 4,601,257 | $ | 3,125,584 | $ | 8,930,902 | $ | 5,725,776 | |||||
Transactions | 7,312,962 | 7,188,158 | 15,027,799 | 14,648,937 | |||||||||
Total revenue | 11,914,219 | 10,313,742 | 23,958,701 | 20,374,713 | |||||||||
Cost of revenue: | |||||||||||||
Platforms | 619,842 | 486,185 | 1,167,009 | 868,799 | |||||||||
Transactions | 5,473,284 | 5,343,755 | 11,204,723 | 10,990,546 | |||||||||
Total cost of revenue | 6,093,126 | 5,829,940 | 12,371,732 | 11,859,345 | |||||||||
Gross profit | 5,821,093 | 4,483,802 | 11,586,969 | 8,515,368 | |||||||||
Operating expenses: | |||||||||||||
Selling, general and administrative | 5,422,013 | 4,748,050 | 10,229,103 | 9,818,948 | |||||||||
Depreciation and amortization | 306,233 | 155,749 | 618,328 | 215,369 | |||||||||
Total operating expenses | 5,728,246 | 4,903,799 | 10,847,431 | 10,034,317 | |||||||||
Income (loss) from operations | 92,847 | (419,997) | 739,538 | (1,518,949) | |||||||||
Other income | 348,999 | 108,194 | 417,524 | 248,505 | |||||||||
Change in fair value of contingent earnout liability | (2,406,886) | 268,232 | (2,406,886) | 268,232 | |||||||||
Loss before provision for income taxes | (1,965,040) | (43,571) | (1,249,824) | (1,002,212) | |||||||||
Provision for income taxes | (15,194) | (10,057) | (61,406) | (39,459) | |||||||||
Net loss | (1,980,234) | (53,628) | (1,311,230) | (1,041,671) | |||||||||
Other comprehensive income (loss): | |||||||||||||
Foreign currency translation | 2,637 | 6,349 | (3,531) | 5,403 | |||||||||
Comprehensive loss | $ | (1,977,597) | $ | (47,279) | $ | (1,314,761) | $ | (1,036,268) | |||||
Loss per common share: | |||||||||||||
Net loss per share, basic and diluted | $ | (0.07) | $ | - | $ | (0.04) | $ | (0.04) | |||||
Weighted average common shares outstanding, basic and diluted | 30,421,808 | 28,092,945 | 30,384,339 | 27,564,404 | |||||||||
Research Solutions, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) | |||||||
Six Months Ended | |||||||
December 31, | |||||||
2024 | 2023 | ||||||
Cash flow from operating activities: | |||||||
Net loss | $ | (1,311,230) | $ | (1,041,671) | |||
Adjustment to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 618,328 | 215,369 | |||||
Stock options expense | 88,045 | 61,714 | |||||
Restricted common stock expense | 864,266 | 1,105,606 | |||||
Modification cost of accelerated vesting of restricted common stock | — | 20,949 | |||||
Adjustment to contingent earnout liability | 2,406,886 | (268,232) | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (266,255) | (681,502) | |||||
Prepaid expenses and other current assets | (98,613) | (67,986) | |||||
Prepaid royalties | 478,169 | 121,100 | |||||
Accounts payable and accrued expenses | (737,670) | 349,310 | |||||
Deferred revenue | (170,433) | (241,545) | |||||
Net cash provided by (used in) operating activities | 1,871,493 | (426,888) | |||||
Cash flow from investing activities: | |||||||
Purchase of property and equipment | (5,404) | (55,763) | |||||
Payment for acquisition of Resolute, net of cash acquired | — | (2,718,253) | |||||
Payment for acquisition of Scite, net of cash acquired | — | (7,305,493) | |||||
Net cash used in investing activities | (5,404) | (10,079,509) | |||||
Cash flow from financing activities: | |||||||
Common stock repurchase | (205,278) | (68,748) | |||||
Payment of contingent acquisition consideration | (62,560) | (278,195) | |||||
Net cash used in financing activities | (267,838) | (346,943) | |||||
Effect of exchange rate changes | 2,873 | 5,666 | |||||
Net increase (decrease) in cash and cash equivalents | 1,601,124 | (10,847,674) | |||||
Cash and cash equivalents, beginning of period | 6,100,031 | 13,545,333 | |||||
Cash and cash equivalents, end of period | $ | 7,701,155 | $ | 2,697,659 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for income taxes | $ | 61,406 | $ | 39,459 | |||
Non-cash investing and financing activities: | |||||||
Contingent consideration accrual on asset acquisition | $ | 30,198 | $ | 36,364 | |||
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SOURCE Research Solutions, Inc.
FAQ
What was Research Solutions (RSSS) revenue growth in Q2 2025?
How much did RSSS platform revenue grow in Q2 2025?
What was RSSS's Annual Recurring Revenue (ARR) in Q2 2025?
What caused RSSS's net loss in Q2 2025?
How many new platform deployments did RSSS achieve in Q2 2025?
