Research Solutions Reports Fiscal Third Quarter 2017 Financial Results
Montag, 15.05.2017 22:10 von PR Newswire
PR Newswire
ENCINO, Calif., May 15, 2017
ENCINO, Calif., May 15, 2017 /PRNewswire/ -- Research Solutions, Inc. (OTCQB: RSSS), a pioneer in providing cloud-based solutions for scientific research, reported financial results for its fiscal third quarter ended March 31, 2017.
Fiscal Third Quarter 2017 Summary vs. Year-Ago Quarter
- Total revenue was $8.6 million compared to $8.7 million.
- Platform revenue was up 124% to $270,920, with a 152% increase in total Platform deployments to 116. Annual recurring revenue was up 127% to $1.1 million.
- Transaction revenue was essentially unchanged at $6.4 million, with customer count up 9% to 985. Transaction count was up 7% to 212,827.
- Total gross margin was 20.0% compared to 20.2%.
- Net loss was $(0.6) million, or $(0.03) per share, compared to net income of $32,000 or $0.00 per share. The loss was due to the company's continued investment in its fast growing, recurring revenue Platform business.
Management Commentary
"Our third quarter was yet again highlighted by rapid growth in our Platform business, with triple-digit growth in both revenue and deployments," said Peter Derycz, president and CEO of Research Solutions. "70% of our 61 fiscal year-to-date deployments are with completely new customers, further reflecting the large and growing market opportunity for our company.
"While transactions and customer count in our Transactions business accelerated from prior year, revenue was essentially flat due to declining orders from existing customers that were mostly offset by orders from new customers.
"At the end of the quarter, we launched the latest version of our cloud-based Platform solution. The upgrade showcases full mobile responsiveness, design enhancements and the introduction of 'gadgets,' or powerful apps that allow for sophisticated data augmentation of content. We believe the gadget concept will revolutionize the way research is done today. Like mobile apps, gadgets are flexible, customizable tools for scientific research that are capable of augmenting scientific documents with data, streamlining cumbersome research processes. Early customer response has been encouraging and we look forward to our expanded sales force introducing the enhanced product to an even wider audience of customers in need of this unique solution."
Fiscal Third Quarter 2017 Financial Results
Total revenue was $8.6 million compared to $8.7 million in the same year-ago quarter. The slight decrease was primarily attributable to a 10% ($0.2 million) decline in the company's legacy Reprints and ePrints business. Reprints and ePrints order volume often fluctuate from period-to-period depending upon customer marketing budgets and the publication of journal articles matching their requirements. While this segment is cash flow positive, it continues to be a low margin business that requires limited resources and time.
Platform subscription revenue was up 124% to $270,920 compared to $121,034 in the year-ago quarter. The increase was due to a 152% increase in total Platform deployments to 116. The quarter ended with annual recurring revenue up 127% to $1.1 million (see the company's definition of annual recurring revenue below).
Transaction revenue was essentially unchanged at $6.4 million, as orders from new customers nearly offset orders from existing customers. Total active customers increased 9% to 985 and transaction count increased 7% to 212,827 (see the company's definition of active customer accounts and transactions below).
Total gross margin was 20.0% compared to 20.2% in the year-ago quarter. The slight decrease was primarily driven by lower Transaction and Reprints and ePrints margin.
Total operating expenses increased to $2.4 million compared to $1.7 million in the year-ago quarter, driven primarily by further investment in the company's sales force and technology personnel to support increased Platform sales and deployments.
Net loss in the fiscal third quarter was $(0.6) million, or $(0.03) per share, compared to net income of $32,000, or $0.00 per share, in the year-ago quarter. Adjusted EBITDA totaled $(0.5) million compared to $0.2 million in the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below). Both the net loss and Adjusted EBITDA reflect the aforementioned personnel investments in the company's fast-growing Platform business.
Cash and cash equivalents at March 31, 2017 were $5.2 million compared to $6.1 million at June 30, 2016. There were no outstanding borrowings under the company's revolving line of credit, which provides the lesser of $4 million or 80% of eligible accounts receivable. With the exception of a $445,000 office lease liability due to new accounting guidance for leases, the company had no long-term liabilities or other debt.
Further details about these results are available in the company's quarterly report on Form 10-Q, which is available in the investor relations section of the company's website at www.researchsolutions.com.
Conference Call
Research Solutions President and CEO Peter Derycz and CFO Alan Urban will host an investor conference call to discuss these quarterly results and the company's outlook, followed by a question and answer period.
Date: Monday, May 15, 2017
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: 1-855-327-6837
International dial-in number: 1-631-891-4304
Conference ID: 10002833
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 1-949-574-3860.
The conference call will be broadcast live and available for replay here and via the investor relations section of the company's website at www.researchsolutions.com.
A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through May 29, 2017.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 10002833
Fiscal Third Quarter 2017 Financial and Operational Summary Tables
|
Quarter Ended March 31, | ||||||
|
2017 |
2016 |
Change |
% Change | |||
|
Revenue: |
||||||
|
Platforms |
$ 270,920 |
$ 121,034 |
$ 149,886 |
123.8% | ||
|
Transactions |
6,372,679 |
6,394,127 |
(21,448) |
-0.3% | ||
|
Reprints and ePrints |
2,000,200 |
2,209,056 |
(208,856) |
-9.5% | ||
|
Total Revenue |
8,643,799 |
8,724,217 |
(80,418) |
-0.9% | ||
|
Gross Profit: |
||||||
|
Platforms |
212,553 |
99,477 |
113,076 |
113.7% | ||
|
Transactions |
1,374,837 |
1,475,448 |
(100,611) |
-6.8% | ||
|
Reprints and ePrints |
141,616 |
190,089 |
(48,473) |
-25.5% | ||
|
Total Gross Profit |
1,729,006 |
1,765,014 |
(36,008) |
-2.0% | ||
|
Gross profit as a % of revenue: |
||||||
|
Platforms |
78.5% |
82.2% |
-3.7% |
|||
|
Transactions |
21.6% |
23.1% |
-1.5% |
|||
|
Reprints and ePrints |
7.1% |
8.6% |
-1.5% |
|||
|
Total Gross Profit |
20.0% |
20.2% |
-0.2% |
|||
|
Operating Expenses: |
||||||
|
Sales and marketing |
963,784 |
525,681 |
438,103 |
83.3% | ||
|
General and administrative |
1,251,807 |
1,011,670 |
240,137 |
23.7% | ||
|
Depreciation and amortization |
33,906 |
30,310 |
3,596 |
11.9% | ||
|
Stock-based compensation |
112,326 |
130,568 |
(18,242) |
-14.0% | ||
|
Foreign currency translation loss |
6,272 |
(2,829) |
9,101 |
-321.7% | ||
|
Total Operating Expenses |
2,368,095 |
1,695,400 |
672,695 |
39.7% | ||
|
Income (loss) from operations |
(639,089) |
69,614 |
(708,703) |
1018.0% | ||
|
Other Income (Expenses): |
||||||
|
Interest expense |
(3,000) |
(6,389) |
3,389 |
53.0% | ||
|
Other income (expense) |
10,143 |
(25,639) |
35,782 |
-139.6% | ||
|
Provision for income taxes |
(5,544) |
(5,210) |
(334) |
-6.4% | ||
|
Total Other Income (Expenses): |
1,599 |
(37,238) |
38,837 |
104.3% | ||
|
Net income (loss) |
$ (637,490) |
$ 32,376 |
$ (669,866) |
2069.0% | ||
|
Adjusted EBITDA |
$ (486,585) |
$ 227,663 |
$ (714,248) |
313.7% | ||
|
Transactions: |
||||||
|
Transaction count |
212,827 |
198,160 |
14,667 |
7.4% | ||
|
Corporate customers |
802 |
763 |
39 |
5.1% | ||
|
Academic customers |
183 |
139 |
44 |
31.7% | ||
|
Total customers |
985 |
902 |
83 |
9.2% | ||
|
Nine Months Ended March 31, | ||||||
|
2017 |
2016 |
Change |
% Change | |||
|
Revenue: |
||||||
|
Platforms |
$ 662,129 |
$ 272,075 |
$ 390,054 |
143.4% | ||
|
Transactions |
18,245,640 |
17,664,101 |
581,539 |
3.3% | ||
|
Reprints and ePrints |
5,924,813 |
8,130,368 |
(2,205,555) |
-27.1% | ||
|
Total Revenue |
24,832,582 |
26,066,544 |
(1,233,962) |
-4.7% | ||
|
Gross Profit: |
||||||
|
Platforms |
528,175 |
221,579 |
306,596 |
138.4% | ||
|
Transactions |
3,868,109 |
3,983,447 |
(115,338) |
-2.9% | ||
|
Reprints and ePrints |
460,131 |
710,637 |
(250,506) |
-35.3% | ||
|
Total Gross Profit |
4,856,415 |
4,915,663 |
(59,248) |
-1.2% | ||
|
Gross profit as a % of revenue: |
||||||
|
Platforms |
79.8% |
81.4% |
-1.7% |
|||
|
Transactions |
21.2% |
22.6% |
-1.4% |
|||
|
Reprints and ePrints |
7.8% |
8.7% |
-1.0% |
|||
|
Total Gross Profit |
19.6% |
18.9% |
0.7% |
|||
|
Operating Expenses: |
||||||
|
Sales and marketing |
2,399,286 |
1,521,157 |
878,129 |
57.7% | ||
|
General and administrative |
3,688,996 |
3,167,119 |
521,877 |
16.5% | ||
|
Depreciation and amortization |
96,801 |
61,144 |
35,657 |
58.3% | ||
|
Stock-based compensation |
518,012 |
551,698 |
(33,686) |
-6.1% | ||
|
Foreign currency translation loss |
27,227 |
4,293 |
22,934 |
534.2% | ||
|
Total Operating Expenses |
6,730,322 |
5,305,411 |
1,424,911 |
26.9% | ||
|
Income (loss) from operations |
(1,873,907) |
(389,748) |
(1,484,159) |
-380.8% | ||
|
Other Income (Expenses): |
||||||
|
Interest expense |
(9,000) |
(14,382) |
5,382 |
37.4% | ||
|
Other income (expense) |
20,277 |
(18,229) |
38,506 |
-211.2% | ||
|
Provision for income taxes |
(28,486) |
(22,510) |
(5,976) |
-26.5% | ||
|
Total Other Income (Expenses): |
(17,209) |
(55,121) |
37,912 |
68.8% | ||
|
Net income (loss) |
$ (1,891,116) |
$ (444,869) |
$ (1,446,247) |
-325.1% | ||
|
Adjusted EBITDA |
$ (1,231,867) |
$ 227,387 |
$ (1,459,254) |
641.7% | ||
|
Platforms: |
||||||
|
ARR (Annual recurring revenue) |
$ 1,124,451 |
$ 496,027 |
$ 628,424 |
126.7% | ||
|
Deployments |
116 |
46 |
70 |
152.2% | ||
|
ASP (Average sales price) |
$ 9,694 |
$ 10,783 |
$ (1,090) |
-10.1% | ||
|
Transactions: |
||||||
|
Transaction count |
597,697 |
550,473 |
47,224 |
8.6% | ||
|
Corporate customers |
773 |
725 |
48 |
6.6% | ||
|
Academic customers |
179 |
136 |
43 |
31.9% | ||
|
Total customers |
952 |
861 |
91 |
10.6% | ||
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 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, and other potential adjustments that may arise.
Set forth below is a reconciliation of Adjusted EBITDA to net income (loss):
|
Three Months Ended March 31, | |||||||||
|
2017 |
2016 |
2017-2016 | |||||||
|
Net loss |
$ |
(637,490) |
$ |
32,376 |
$ |
(669,866) | |||
|
Add (deduct): |
|||||||||
|
Interest expense |
3,000 |
6,389 |
(3,389) | ||||||
|
Other (income) expense |
(10,143) |
25,639 |
(35,782) | ||||||
|
Foreign currency transaction loss |
6,272 |
(2,829) |
9,101 | ||||||
|
Provision for income taxes |
5,544 |
5,210 |
334 | ||||||
|
Depreciation and amortization |
33,906 |
30,310 |
3,596 | ||||||
|
Stock-based compensation |
112,326 |
130,568 |
(18,242) | ||||||
|
Adjusted EBITDA |
$ |
(486,585) |
$ |
227,663 |
$ |
(714,248) | |||
|
Nine Months Ended March 31, | |||||||||
|
2017 |
2016 |
2017-2016 | |||||||
|
Net loss |
$ |
(1,891,116) |
$ |
(444,869) |
$ |
(1,446,247) | |||
|
Add (deduct): |
|||||||||
|
Interest expense |
9,000 |
14,382 |
(5,382) | ||||||
|
Other (income) expense |
(20,277) |
18,229 |
(38,506) | ||||||
|
Foreign currency transaction loss |
27,227 |
4,293 |
22,934 | ||||||
|
Provision for income taxes |
28,486 |
22,510 |
5,976 | ||||||
|
Depreciation and amortization |
96,801 |
61,144 |
35,657 | ||||||
|
Stock-based compensation |
518,012 |
551,698 |
(33,686) | ||||||
|
Adjusted EBITDA |
$ |
(1,231,867) |
$ |
227,387 |
$ |
(1,459,254) | |||
About Research Solutions
Research Solutions, Inc. (OTCQB: RSSS) is a pioneer in cloud-based research intelligence and retrieval solutions for R&D-driven organizations. More than 70 percent of the top 25 pharmaceutical companies in the world rely on services delivered by Research Solutions' wholly owned subsidiary Reprints Desk. The company's Software-as-a-Service (SaaS) Platform provides customers with on-demand access to, and augmented data from, tens of millions of scientific, medical, and technical (STM) documents, helping them to accelerate acquisition at the point of discovery, save time and money, and remain copyright-compliant. For more information, visit www.researchsolutions.com.
Important Cautions Regarding Forward-Looking Statements
Certain matters discussed in this press release may be forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the company's products in the market; the company's success in obtaining new customers and new Platform deployments; the company's success in technology and product development; the company's ability to execute its business model and strategic plans; the company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the company's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the company's Securities and Exchange Commission Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q. The company assumes no obligation to update the cautionary information in this release.
|
Research Solutions, Inc. and Subsidiaries Condensed Consolidated Balance Sheets | ||||||
|
March 31, |
June 30, | |||||
|
2017 |
2016 | |||||
|
(unaudited) |
||||||
|
Assets |
||||||
|
Current assets: |
||||||
|
Cash and cash equivalents |
$ |
5,242,978 |
$ |
6,076,875 | ||
|
Accounts receivable, net of allowance of $47,510 and $52,084, respectively |
5,186,517 |
5,761,860 | ||||
|
Prepaid expenses and other current assets |
196,553 |
164,610 | ||||
|
Prepaid royalties |
1,276,576 |
173,665 | ||||
|
Total current assets |
11,902,624 |
12,177,010 | ||||
|
Other assets: |
||||||
|
Property and equipment, net of accumulated depreciation of $682,849 and $642,051, respectively |
83,662 |
82,207 | ||||
|
Intangible assets, net of accumulated amortization of $602,779 and $546,679, respectively |
58,499 |
104,848 | ||||
|
Deposits and other assets |
19,061 |
7,594 | ||||
|
Right of use asset, net of accumulated amortization of $18,018 |
445,004 |
- | ||||
|
Total assets |
$ |
12,508,850 |
$ |
12,371,659 | ||
|
Liabilities and Stockholders' Equity |
||||||
|
Current liabilities: |
||||||
|
Accounts payable and accrued expenses |
$ |
6,338,404 |
$ |
5,690,768 | ||
|
Deferred revenue |
1,163,813 |
639,834 | ||||
|
Lease liability, current portion |
88,124 |
- | ||||
|
Total current liabilities |
7,590,341 |
6,330,602 | ||||
|
Long-term liabilities: |
||||||
|
Lease liability, long-term portion |
357,063 |
- | ||||
|
Total liabilities |
7,947,404 |
6,330,602 | ||||
|
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; 23,925,910 and 23,809,593 shares issued and outstanding, respectively |
23,926 |
23,810 | ||||
|
Additional paid-in capital |
22,070,330 |
21,642,763 | ||||
|
Accumulated deficit |
(17,473,411) |
(15,582,295) | ||||
|
Accumulated other comprehensive loss |
(59,399) |
(43,221) | ||||
|
Total stockholders' equity |
4,561,446 |
6,041,057 | ||||
|
Total liabilities and stockholders' equity |
$ |
12,508,850 |
$ |
12,371,659 | ||
|
Research Solutions, Inc. and Subsidiaries Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss) (Unaudited) | ||||||||||||
|
Three Months Ended |
Nine Months Ended | |||||||||||
|
March 31, |
March 31, | |||||||||||
|
2017 |
2016 |
2017 |
2016 | |||||||||
|
Revenue |
$ |
8,643,799 |
$ |
8,724,217 |
$ |
24,832,582 |
$ |
26,066,544 | ||||
|
Cost of revenue |
6,914,793 |
6,959,203 |
19,976,167 |
21,150,881 | ||||||||
|
Gross profit |
1,729,006 |
1,765,014 |
4,856,415 |
4,915,663 | ||||||||
|
Operating expenses: |
||||||||||||
|
Selling, general and administrative |
2,334,189 |
1,665,090 |
6,633,521 |
5,244,267 | ||||||||
|
Depreciation and amortization |
33,906 |
30,310 |
96,801 |
61,144 | ||||||||
|
Total operating expenses |
2,368,095 |
1,695,400 |
6,730,322 |
5,305,411 | ||||||||
|
Income (loss) from operations |
(639,089) |
69,614 |
(1,873,907) |
(389,748) | ||||||||
|
Other income (expenses): |
||||||||||||
|
Interest expense |
(3,000) |
(6,389) |
(9,000) |
(14,382) | ||||||||
|
Other income (expense) |
10,143 |
(25,639) |
20,277 |
(18,229) | ||||||||
|
Total other income (expenses) |
7,143 |
(32,028) |
11,277 |
(32,611) | ||||||||
|
Income (loss) from operations before provision for income taxes |
(631,946) |
37,586 |
(1,862,630) |
(422,359) | ||||||||
|
Provision for income taxes |
(5,544) |
(5,210) |
(28,486) |
(22,510) | ||||||||
|
Net income (loss) |
(637,490) |
32,376 |
(1,891,116) |
(444,869) | ||||||||
|
Other comprehensive income (loss): |
||||||||||||
|
Foreign currency translation |
(18,090) |
(6,603) |
(16,178) |
(11,966) | ||||||||
|
Comprehensive income (loss) |
$ |
(655,580) |
$ |
25,773 |
$ |
(1,907,294) |
$ |
(456,835) | ||||
|
Basic income (loss) per common share: |
||||||||||||
|
Net income (loss) per share |
$ |
(0.03) |
$ |
- |
$ |
(0.08) |
$ |
(0.03) | ||||
|
Basic weighted average common shares outstanding |
23,265,939 |
17,707,900 |
23,199,010 |
17,642,449 | ||||||||
|
Diluted income (loss) per common share: |
||||||||||||
|
Net income (loss) per share |
$ |
(0.03) |
$ |
- |
$ |
(0.08) |
$ |
(0.03) | ||||
|
Diluted weighted average common shares outstanding |
23,265,939 |
18,464,000 |
23,199,010 |
17,642,449 | ||||||||
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SOURCE Research Solutions, Inc.