Research Solutions Reports Strong Q4 and FY2025 Results with 21% YoY Growth in Platform Revenue.

Research Solutions reports preliminary Q4 and FY2025 results, anticipating 21% YoY growth in Platform revenue for Q4 and a 10% YoY increase in total revenue for the fiscal year. ARR grew 20% YoY to $20.9 million, and operating cash flow exceeded $7.0 million, significantly enhancing liquidity. The company's corporate gross margin improved from 44% in FY2024 to over 49% in FY2025.

Research Solutions (NASDAQ: RSSS) has announced preliminary results for the fourth quarter and fiscal year 2025, showcasing significant growth across key metrics. The company reported a 21% year-over-year (YoY) increase in Platform revenue for Q4, reaching $5.2 million, and a 3% YoY increase in total revenue to $12.4 million. This performance was driven by strong recurring revenue growth, with Annual Recurring Revenue (ARR) reaching $20.9 million, up 20% from the previous year [1].

For the full fiscal year 2025, Research Solutions projects total revenue of $49.1 million, a 10% YoY increase, with Platform revenue expected to grow 36% to approximately $19 million. The company's corporate gross margin improved from 44% in FY2024 to over 49% in FY2025. This improvement in margins reflects the company's successful transition to a high-margin, subscription-based business model [1].

Notable achievements include Q4 net income of $2.3 million, Adjusted EBITDA of $1.6 million (up 15% YoY), and strong cash flow from operations at $2.3 million, with an ending cash balance exceeding $12.2 million. The company finalized the Scite earn-out at $15.4 million, to be paid 62% in cash and 38% in stock over eight quarters through May 2027 [1].

Research Solutions' strategic focus on its "weighted rule of 40" metric (combining ARR growth and Adjusted EBITDA margin) reached 34% for FY2025, approaching the benchmark 40% target that top-performing SaaS companies aim to achieve. This metric, along with the accelerating platform business growth and expanding margins, suggests that Research Solutions is executing effectively on its transition toward a higher-value AI-powered research platform model [1].

Despite a minor top-line miss, Research Solutions reported progress in recurring revenue, ongoing AI-driven product improvements, and solid cash generation. The company's active customer count was 1,380 in Q3 fiscal 2025, with low customer churn supporting recurring platform revenue growth of approximately 20% and approximately 36% for FY2025. Management emphasized new investments in account management and the integration of new AI features, such as large language models and "tables mode" in its Scite Assistant, to enhance data extraction and reduce AI-generated errors [2].

Looking ahead, Research Solutions did not provide explicit financial guidance for fiscal 2026 or the upcoming quarter. However, the company remains focused on boosting annual recurring revenue, improving adjusted EBITDA margin, and tracking its "Rule of 40" performance. The company's $12.2 million cash balance and positive cash flow provide flexibility for future acquisition or strategic investment [2].

References:
[1] https://www.stocktitan.net/news/RSSS/research-solutions-reports-preliminary-fourth-quarter-and-fiscal-b7v8dwy0f6qn.html
[2] https://www.nasdaq.com/articles/research-solutions-reports-earnings