Research Solutions’ Earnings Call Highlights Growth and Challenges

Research Solutions ((RSSS)) has held its Q3 earnings call. Read on for the main highlights of the call.

Research Solutions, Inc. recently held its earnings call, revealing a generally positive sentiment with notable achievements in several key financial metrics. The company reported significant growth in annual recurring revenue (ARR), platform subscription revenue, and adjusted EBITDA, all contributing to an optimistic outlook. However, challenges such as a decline in transaction revenue and a decrease in active customer count were also acknowledged.

Annual Recurring Revenue (ARR) Milestone

Research Solutions achieved a significant milestone as its ARR surpassed $20 million for the first time, with an incremental ARR of $1.2 million for the quarter. This marks a 23% year-over-year growth, highlighting the company’s successful efforts in expanding its recurring revenue streams.

Platform Subscription Revenue Growth

The company’s platform subscription revenue saw a substantial increase of 22%, reaching $4.8 million. This growth was primarily driven by the success of the SITE B2B and B2C platforms, as well as the Article Galaxy product, underscoring the strength of Research Solutions’ subscription-based offerings.

Gross Margin Improvement

Research Solutions reported an improvement in its gross margin by 430 basis points, reaching 49.5%. The platforms recorded an impressive gross margin of 87.4%, reflecting a favorable revenue mix shift towards higher-margin SaaS offerings.

Adjusted EBITDA Record

The company set a new record for adjusted EBITDA at $1.4 million, a significant increase from $961,000 in the prior year quarter. This achievement underscores the company’s operational efficiency and effective cost management strategies.

Cash Flow and Liquidity

Research Solutions’ cash and cash equivalents rose to $9.9 million from $6.1 million as of June 30, 2024. The trailing twelve-month cash flow from operations exceeded $6.7 million, indicating strong liquidity and financial health.

AI Strategy Success

The company’s AI-based products demonstrated robust growth, with the SITE platform experiencing a remarkable 180% year-over-year increase in the B2B enterprise license segment. This success highlights the effectiveness of Research Solutions’ strategic focus on AI-driven solutions.

Transaction Revenue Decline

Despite the overall positive performance, transaction revenue saw a decline of 4%, falling to $7.8 million compared to the prior year quarter. This decrease was attributed to lower paid order volume, presenting a challenge for the company to address moving forward.

Active Customer Count Decline

The total active customer count decreased to 1,380 from 1,426 in the same period a year ago. This decline in customer numbers poses a challenge for Research Solutions as it seeks to expand its customer base and enhance customer retention.

Forward-Looking Guidance

Looking ahead, Research Solutions, Inc. remains optimistic about its growth prospects. The company reported strong financial and operational results in the fiscal third quarter of 2025, with ARR reaching $20.4 million, reflecting a 23% year-over-year increase. Platform subscription revenue rose by 22%, and gross margin improved significantly. Despite a decline in transaction revenue, the company’s strategic focus on AI-based products and disciplined sales and marketing strategies position it well for future growth, particularly in the B2B enterprise license segment.

In summary, Research Solutions, Inc.’s earnings call presented a positive outlook with significant achievements in key financial metrics. The company’s strategic focus on AI and subscription-based offerings has driven substantial growth, despite challenges in transaction revenue and customer count. Overall, the earnings call highlighted Research Solutions’ strong financial health and promising future prospects.