Research Solutions (RSSS) Q4 Earnings call transcript Sep 19, 2024

In a recent earnings call, Research Solutions, Inc. (RSI) showcased a transformational year marked by strategic acquisitions and significant financial achievements, setting the stage for future growth and innovation. President and CEO, Roy Olivier, and CFO, Bill Nurthen, discussed the company's impressive fiscal 2024 results, highlighting the successful integration of Resolute.AI and Scite.AI, and the launch of new features across their research platforms.

Financial Highlights

RSI reported record-breaking revenue of $44.6 million in fiscal 2024, representing an 18% increase from the previous year. This growth was driven by a 61% increase in platform subscription revenue, which now accounts for 35% of total revenue. Gross margin also saw a substantial improvement, reaching 44%, up from 40% in 2023, demonstrating the company's ability to shift its revenue mix towards higher-margin platforms. The company generated $2.2 million in EBITDA and $3.6 million in cash flow from operations, signifying a strong financial position.

Strategic Acquisitions and Integration

The acquisitions of Resolute.AI and Scite.AI have significantly expanded RSI's addressable market and strengthened its leadership position in discovery and analysis capability. Scite's B2C sales have outperformed expectations, with a $290,000 increase in Q4, and its B2B business has also seen notable growth. The integration of these companies has been a key focus, with a single sign-on and pricing availability now in place, allowing seamless integration and improved workflows.

Innovation and Product Development

RSI's commitment to innovation was evident with the launch of new features across its platforms, including Smart Folders, instant in-platform delivery, and pricing availability of STM content. The company also announced partnerships with Jisc and other publishers to provide more accessible and accurate information to users.

Looking Ahead to Fiscal 2025

As RSI looks to the future, it is deliberately splitting its sales team into a corporate team and an academic team to better support higher growth in the academic segment. This strategic move is expected to accelerate growth in both the corporate and academic sectors, with a focus on opportunities that align with RSI's product and company strategy. The company also remains vigilant in its search for M&A opportunities, with several active conversations ongoing.

Challenges and Outlook

Despite the strong performance, RSI acknowledged the challenges posed by macroeconomic headwinds and the impact on budgets across the corporate and academic customer base. However, the company remains optimistic about the potential for venture capital funding in the biotech sector and continues to work diligently to provide value to its existing customers.

Conclusion

Research Solutions, Inc.'s strong financial performance, strategic acquisitions, and innovative product development demonstrate its commitment to supporting research-intensive organizations. With a focus on growth opportunities and a robust financial position, RSI is well-positioned for continued success in the years ahead.