Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Research Solutions Inc (RSSS, Financial) achieved a record high annual recurring revenue (ARR) of $20.4 million, marking a 23% year-over-year increase.
- The company's platform subscription revenue increased by 22%, driven by growth in both B2B and B2C platform revenue.
- Gross margin improved significantly to 49.5%, a 430 basis point increase from the previous year, due to a shift towards higher-margin platform business.
- The company reported a record adjusted EBITDA of $1.4 million, surpassing the previous company record.
- Research Solutions Inc (RSSS) is seeing strong growth in its AI-based products, with a 180% increase in the B2B enterprise license segment year-over-year.
Negative Points
- Transaction revenue for the third quarter decreased by 4% compared to the prior year, attributed to lower paid order volume.
- The total active customer count declined to 1,380 from 1,426 in the same period a year ago.
- There is uncertainty regarding the impact of recent budget cuts in government and academic institutions on the company's future business.
- The company has not yet fully leveraged AI internally to improve productivity or reduce costs, particularly in software engineering.
- B2C segment is experiencing seasonal weakness, with a decline in trials and sign-ups expected to continue through the end of June.
Q & A Highlights
Q: Can you discuss the potential for increasing investment in sales and marketing to drive faster growth?
A: Roy W. Olivier, President and CEO, explained that the company has been investing in sales and marketing, including splitting and training sales teams and adopting a new solution-oriented selling process. The goal is to develop a predictable model for customer acquisition costs and lifetime value, similar to their B2C side. Once they achieve predictability, they may increase investment to drive growth.
Q: How is AI being utilized internally to improve processes and efficiency?
A: Roy W. Olivier noted that while AI is being used in sales processes for research, the company is starting to focus more on using AI internally to enhance productivity, particularly in R&D and software engineering. They aim to leverage AI as a productivity enhancement rather than solely for cost reduction.
Q: Can you provide insights into the performance of new logo versus cross-sell teams?
A: Roy W. Olivier reported that new logo teams performed well, contributing to over half of the total new bookings for the quarter. The corporate and academic teams showed equal revenue splits, with the upsell and renewal teams also having a strong quarter, particularly in the academic sector.
Q: Are there any trends in the B2C segment as classes wrap up?
A: Roy W. Olivier mentioned a weakening in trials and sign-ups due to seasonality. However, they have made changes that improved conversion rates, although these improvements may not fully offset the seasonal softness expected through June.
Q: How is the upsell and cross-sell performance, particularly in relation to the site product?
A: Bill Northern, CFO, highlighted that the upsell and cross-sell teams had their best quarter of the year, with significant cross-selling of the site product into existing Article Galaxy customers, indicating strong opportunities for growth in this area.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
