Reports 23 Percent Increase in ARR to $19.1 Million and 61 Net New Platform Deployments

HENDERSON, Nev., Feb. 13, 2025 /PRNewswire/ — Research Solutions, Inc. (NASDAQ: RSSS), the leading AI-powered research workflow platform, reported financial results for its fiscal second quarter ended December 31, 2024.

Fiscal Second Quarter 2025 Summary

• Total revenue of $11.9 million, a 15.5% increase from the prior-year quarter.
• Platform revenue up 47% to $4.6 million. Platform revenue accounted for 39% of total revenue as compared to 30% in the prior-year quarter.
• Annual Recurring Revenue (“ARR”) up 23% to $19.1 million, which includes approximately $12.7 million of B2B recurring revenue and $6.4 million of B2C recurring revenue.
• Gross profit up 30% from the prior-year quarter. Total gross margin improved 540 basis points to 48.9%.
• Net loss of $2.0 million or ($0.07) per share, compared to a net loss of ($54,000) or nil per share in the prior-year quarter. The quarter’s results include a charge of approximately $2.4 million related to increasing the projected contingent earnout liability for Scite.
• Adjusted EBITDA of $963,000 compared to $318,000 in the prior-year quarter.   The result is inclusive of $112,000 in commission fees related to the sale of stock by the Company’s former Chairman.  On a trailing twelve-months (“TTM”) basis, the Company has now generated Adjusted EBITDA of $4.6 million, which represents a 9.5% margin.
• Cash flow from operations of over $1 million in the quarter, compared to $0.3 million in the prior-year quarter.

“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 $1 million sequential increase in B2C recurring revenue. The reported net loss in the quarter is related to the continued outperformance of Scite, which experienced strong academic B2B sales in the quarter in addition to B2C growth,” said Roy W. Olivier, President and CEO of Research Solutions. “Lastly, I am delighted that during the quarter our former Chairman largely exited his ownership position, eliminating an overhang that had weighed down the stock price for some time, enabling that stock to be diversified across multiple new shareholders.” 

Fiscal Second Quarter 2025 Results

Total revenue was $11.9 million, a 15.5% increase from $10.3 million in the year-ago quarter as both platform and transaction revenue increased from the prior period.

Platform subscription revenue increased 47% to $4.6 million compared to $3.1 million in the year-ago quarter. The increase was primarily due to an increase in the total number of paid Platform deployments and B2C subscribers, as well as upsells to existing customers. The quarter ended with annual recurring revenue of $19.1 million, up 23% year-over-year (see the company’s definition of annual recurring revenue below).

Transaction revenue was $7.3 million, compared to $7.2 million in the second quarter of fiscal 2024. The increase was primarily due to increased copyright revenues. The transaction customer count for the quarter was 1,384, compared to 1,398 customers in the prior-year quarter (see the Company’s definition of active customer accounts and transactions below).

Total gross margin improved 540 basis points from the prior-year quarter to 48.9%. The increase was primarily driven by a continued revenue mix shift to the higher-margin Platforms business as well as increased margins in that business.

Total operating expenses were $5.7 million, compared to $4.9 million in the second quarter of 2024. The increases were related to additional costs in Sales and Marketing and Technology and Product Development, which include having a full quarter of Scite expenses in the period, compared to one month in the prior-year quarter.  There was also an increase in non-cash depreciation and amortization expense associated with the acquisitions completed in fiscal year 2024.

Net loss for the second quarter was $2.0 million, or ($0.07) per share, compared to net loss of ($54,000), or nil per share, in the prior-year quarter. The quarter’s results include a provision of approximately $2.4 million related to increasing the projected contingent earnout liability for Scite. Adjusted EBITDA was $963,0000, compared to $318,000 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 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/.