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Research Solutions Inc (RSSS)
NASDAQ:RSSS
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Research Solutions
(NASDAQ:RSSS)
Rating:59Neutral
Price Target:―
Positive Factors
Capital and Growth
With $12.2M in cash expected, no debt, and projections for positive free cash flow, there is sufficient capital to support organic growth.
Financial Performance
The company reported preliminary select results that exceeded expectations on the bottom line.
Product and Market Expansion
Growth initiatives include expanded offerings, new AI offerings, cross-selling, and an expanded and improved sales force.
Negative Factors
External Risks
Government and academic budget cuts could potentially impact business.
Valuation Concerns
Shares trade at an EV/revenue multiple of 1.9x based on CY26E revenue vs. a peer group average at 3.3x.
Research Solutions (RSSS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$107.02M
Dividend YieldN/A
Average Volume (3M)73.55K
Price to Earnings (P/E)―
Beta (1Y)0.16
Revenue Growth14.85%
EPS Growth-460.91%
CountryUS
Employees145
SectorTechnology
Sector Strength84
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.03
Shares Outstanding32,458,730
10 Day Avg. Volume60,582
30 Day Avg. Volume73,551
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap0.69
Enterprise Value/Revenue1.51
Enterprise Value/Gross Profit3.14
Enterprise Value/Ebitda26.84
Forecast
1Y Price Target
$5.12Price Target Upside55.15% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
Research Solutions Business Overview & Revenue Model
Company DescriptionResearch Solutions, Inc., through its subsidiaries, provides cloud-based software-as-a-service research platform. The company is also involved in the transactional sale of published scientific, technical, and medical (STM) content managed, sourced, and delivered through the Transactions platform. Its solutions enable life science and other research intensive organizations to accelerate their research and development activities with access and management STM articles used throughout the intellectual property development lifecycle. The company was formerly known as Derycz Scientific, Inc. and changed its name to Research Solutions, Inc. in March 2013. Research Solutions, Inc. was founded in 2006 and is based in Henderson, Nevada.
How the Company Makes MoneyResearch Solutions makes money through a subscription-based revenue model and transactional services. Key revenue streams include subscription fees from its cloud-based platform, Article Galaxy, which offers on-demand document retrieval and management services. The company also generates revenue from per-transaction fees when users access or purchase specific articles or documents. Significant partnerships with academic institutions, corporate research divisions, and publishers help broaden its customer base and ensure a continuous flow of content, contributing to its earnings.
Research Solutions Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Sep 18, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong performance with significant ARR growth, improved cash flow, and record adjusted EBITDA, driven by strategic investments in AI and SaaS revenue. However, there is a slight concern over the decline in transaction revenue and potential impacts from budget cuts in the future.Q3-2025 Updates
Positive Updates
Strong ARR Growth
The company reported an ARR above $20 million for the first time with a $1.2 million incremental ARR for the quarter, marking a 23% year-over-year growth.
Gross Margin Improvement
Gross margin for the third quarter was 49.5%, a 430 basis point improvement over the prior year quarter. Platform business gross margin reached 87.4%, up by 180 basis points.
Record Adjusted EBITDA
Adjusted EBITDA reached $1.4 million, setting a new company record, and representing a 10.4% margin.
Cash Flow Increase
Cash flow from operations in the quarter was approximately $2.9 million compared to $2 million in the prior year quarter, with a year-to-date total of $4.8 million.
AI Product Growth
AI-based products showed strong growth, particularly in the B2B enterprise license segment, which saw a 180% increase over the previous year quarter.
Negative Updates
Transaction Revenue Decline
Transaction revenue for the third quarter was $7.8 million, down 4% compared to the prior year quarter.
Decrease in Active Customers
Total active customer count for the quarter was 1,380, compared to 1,426 in the same period a year ago.
Potential Impact from Budget Cuts
Recent budget cuts in government and academic institutions may impact business, though no material changes have been observed yet.
Company Guidance
During the Research Solutions, Inc. fiscal 2025 third-quarter earnings call, the company reported several key financial metrics and strategic developments. Annual recurring revenue (ARR) surpassed $20 million for the first time, with a quarterly incremental ARR growth of $1.2 million. Total revenue for the quarter reached $12.7 million, up from $12.1 million in the same period the previous year, while platform subscription revenue saw a 22% increase to $4.8 million. The company's gross margin improved by 430 basis points to 49.5%, driven by a shift towards higher-margin SaaS revenue, with platform gross margins at 87.4%. Adjusted EBITDA set a new record at $1.4 million, contributing to a trailing twelve-month adjusted EBITDA of $5.1 million, representing a 10.4% margin. The company also highlighted strong growth in their AI-based products, with a notable 180% year-over-year increase in their B2B enterprise license segment. They ended the quarter with $9.9 million in cash and cash equivalents, up from $6.1 million, and reported cash flow from operations of $2.9 million for the quarter.Research Solutions Financial Statement Overview
Summary
Research Solutions demonstrates strong revenue growth and cash flow generation. The balance sheet is stable with no debt, but profitability challenges due to negative net income and low return on equity suggest the need for improved cost management.Income Statement
Research Solutions shows a steady revenue growth trajectory with a significant increase of approximately 21.2% in TTM (Trailing-Twelve-Months) compared to the previous period. However, profitability metrics such as the net profit margin are concerning, with a substantial negative net income in TTM, indicating challenges in cost management despite the higher revenue growth.73
Positive
Balance Sheet
The company's balance sheet demonstrates stability with a strong equity base, evidenced by an equity ratio of 26% in TTM. The absence of debt is a positive indicator of financial prudence. However, the relatively low return on equity of -64.6% in TTM due to negative net income suggests inefficiencies in generating profits from shareholders' equity.68
Positive
Cash Flow
The cash flow statement highlights a strong free cash flow generation, with a growth rate of 67.6% in TTM. The operating cash flow to net income ratio is positive, at -0.008 in TTM, indicating that the company is generating cash from operations despite negative earnings. This suggests a potential for operational resilience and cash flow stability.75
Positive
| Breakdown | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 44.62M | 37.70M | 32.93M | 31.76M | 31.06M |
| Gross Profit | 19.64M | 14.70M | 12.02M | 10.29M | 9.64M |
| EBITDA | 66.73K | 291.26K | -1.47M | -235.14K | -688.80K |
| Net Income | -3.79M | 571.62K | -1.63M | -285.09K | -779.69K |
Balance Sheet | |||||
| Total Assets | 41.86M | 21.83M | 17.03M | 16.92M | 14.81M |
| Cash, Cash Equivalents and Short-Term Investments | 6.10M | 13.55M | 10.60M | 11.00M | 9.31M |
| Total Debt | 0.00 | 0.00 | 0.00 | 0.00 | 79.33K |
| Total Liabilities | 30.17M | 14.50M | 12.14M | 11.49M | 9.95M |
| Stockholders Equity | 11.69M | 7.33M | 4.88M | 5.43M | 4.86M |
Cash Flow | |||||
| Free Cash Flow | 3.48M | 3.34M | -461.49K | 1.85M | 2.42M |
| Operating Cash Flow | 3.55M | 3.38M | -417.20K | 1.87M | 2.42M |
| Investing Cash Flow | -10.10M | -344.66K | -44.29K | -19.85K | 0.00 |
| Financing Cash Flow | -905.85K | -97.26K | 63.27K | -159.97K | 1.55M |
Research Solutions Technical Analysis
Positive
3.30
Price Trends
2.85
Positive
2.81
Positive
3.11
Positive
Market Momentum
0.12
Negative
74.60
Negative
88.01
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RSSS, the sentiment is Positive. The current price of 3.3 is above the 20-day moving average (MA) of 2.94, above the 50-day MA of 2.85, and above the 200-day MA of 3.11, indicating a bullish trend. The MACD of 0.12 indicates Negative momentum. The RSI at 74.60 is Negative, neither overbought nor oversold. The STOCH value of 88.01 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RSSS.
Research Solutions Risk Analysis
Research Solutions disclosed 31 risk factors in its most recent earnings report. Research Solutions reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Research Solutions Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
61 Neutral | $35.51B | 8.11 | -11.05% | 1.89% | 8.55% | -8.72% | |
59 Neutral | $107.02M | ― | -30.88% | ― | 14.85% | -460.91% | |
54 Neutral | $68.91M | ― | -208.78% | ― | -12.09% | 62.51% | |
48 Neutral | $73.92M | ― | -269.26% | ― | 93.83% | 23.31% | |
46 Neutral | $678.58M | ― | -46.05% | ― | 926.05% | 68.96% | |
44 Neutral | $86.00M | ― | -137.76% | ― | -24.89% | -72.84% | |
33 Underperform | $23.75M | ― | -150.70% | ― | ― | ― |
* Technology Sector Average
Performance Comparison
RSSS
Research Solutions
3.30
0.57
20.88%
ALTS
ALT5 Sigma Corporation
3.87
1.81
87.86%
LPSN
Liveperson
0.89
-0.19
-17.59%
UPLD
Upland Software
2.40
0.28
13.21%
PSQH
PSQ Holdings
1.66
-0.98
-37.12%
CSAI
Cloudastructure, Inc. Class A
1.28
-24.13
-94.96%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.