Research Solutions Reports Fiscal Fourth Quarter and Full Year 2017 Financial Results

ENCINO, Calif., Sept. 18, 2017 /PRNewswire/ -- Research Solutions, Inc. (OTCQB: RSSS), a pioneer in providing cloud-based solutions for scientific research, reported financial results for its fiscal fourth quarter and full year ended June 30, 2017.

The preliminary results below are from continuing operations and exclude the results of the Reprints and ePrints business whose assets were sold on June 30, 2017. In addition, prior period results for the Reprints and ePrints business are classified as discontinued operations.

Fiscal Fourth Quarter 2017 Summary vs. Year-Ago Quarter

• Total revenue increased 11% to $6.8 million.
• Platform revenue up 145% to $318,000, with a 137% increase in total Platform deployments to 140. Annual recurring revenue was up 137% to $1.4 million.
• Transaction revenue up 8% to $6.5 million, with customer count up 11% to 1,001. Transaction count up 11% to 212,386.
• Total gross margin up 180 basis points to 25.0%.
• Net loss from continuing operations was $0.8 million, or $(0.03) per share, compared to a net loss of $0.2 million, or $(0.01) per share.

Management Commentary
"As our preliminary results indicated, the market momentum for our SaaS Platform business continues to grow," said Peter Derycz, president and CEO of Research Solutions. "Fourth quarter deployments more than doubled to 140, with annual recurring revenue up 137% to $1.4 million. In our Transactions business, the proactive measures we put into place last quarter to grow revenue and improve margins are having their intended effect. We look forward to our operational and financial momentum continuing into fiscal 2018."

Fiscal Fourth Quarter 2017 Financial Results
Total revenue increased 11% to $6.8 million compared to $6.2 million in the same year-ago quarter.

Platform subscription revenue increased 145% to $318,000 compared to $130,000 in the year-ago quarter. The increase was due to a 137% increase in the total number of paid Platform deployments to 140. The quarter ended with annual recurring revenue up 137% to $1.4 million (see the company's definition of annual recurring revenue below).

Transaction revenue increased 8% to $6.5 million compared to $6.0 million in the same year-ago quarter. Total active customers increased 11% from 909 to 1,011, and transaction count also increased 11% from 191,000 to 212,000 (see the company's definition of active customer accounts and transactions below).

Total gross margin increased 180 basis points to 25.0% from 23.2% in the same year-ago quarter. The increase was driven by a revenue mix shift to the higher-margin Platforms business.

Total operating expenses increased to $2.5 million compared to $1.6 million in the year-ago quarter, driven primarily by the company's investment in sales, marketing and technology personnel to support increased Platform sales and deployments.

Net loss from continuing operations in the fiscal fourth quarter was $0.8 million, or $(0.03) per share, compared to a net loss of $0.2 million, or $(0.01) per share, in the year-ago quarter. Adjusted EBITDA totaled $(0.6) million compared to $0.0 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 company's investment in its Platform business.

Cash and cash equivalents at June 30, 2017 were $5.8 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. Apart from a $0.3 million office lease liability due to new accounting guidance for leases, the company had no long-term liabilities or other debt.

Full Year 2017 Financial Results
Total revenue increased 7% to $25.7 million compared to $24.1 million in 2016.

Platform subscription revenue increased 144% to $980,000 compared to $402,000 in 2016. The increase was due to the previously mentioned increase in total paid Platform deployments to 140 and strong annual recurring revenue growth to $1.4 million.

Transaction revenue increased 4% to $24.8 million compared to $23.7 million in 2016. Total active customers increased 11% from 873 to 967, and transaction count increased 9% from 741,849 to 810,083.

Total gross margin increased 30 basis points to 23.7% from 23.4% in 2016. The increase was driven by the revenue mix shift to the higher-margin Platforms business.

Total operating expenses increased to $9.2 million compared to $6.9 million in 2016, driven primarily by the company's investment throughout the year in sales, marketing and technology personnel to support increased Platform sales and deployments.

Net loss from continuing operations in fiscal 2017 was $3.1 million, or $(0.14) per share, compared to a net loss of $1.4 million, or $(0.08) per share, in 2016. Adjusted EBITDA totaled $(2.3) million compared to $(0.5) million in 2016. Both the net loss and Adjusted EBITDA reflect the company's investment in its Platform business.

Further details about these results are available in the company's annual report on Form 10-K, 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 results and the company's outlook, followed by a question and answer period.

Date: Monday, September 18, 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: 10003523

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 Group 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 October 2, 2017.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 10003523

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, income from discontinued operations, 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):

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.

View original content with multimedia:http://www.prnewswire.com/news-releases/research-solutions-reports-fiscal-fourth-quarter-and-full-year-2017-financial-results-300521392.html

SOURCE Research Solutions, Inc.