Research Solutions Reports Preliminary Fiscal Fourth Quarter 2017 Financial Results

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Sep 05, 2017, 08:30 ET

ENCINO, Calif., Sept. 5, 2017 /PRNewswire/ -- Research Solutions, Inc. (OTCQB: RSSS), a pioneer in providing cloud-based solutions for scientific research, is reporting preliminary financial results for its fiscal fourth quarter ended June 30, 2017.

The preliminary results below are from continuing operations only and exclude the results of the Reprints and ePrints business whose assets were sold on June 30, 2017. In addition, prior period results for the Reprints and ePrints business are classified as discontinued operations.

Preliminary Fiscal Fourth Quarter 2017 Summary vs. Year-Ago Quarter

Total revenue is projected to increase 11% to approximately $6.8 million from $6.2 million.
Platform revenue up 145% to approximately $318,000 from $130,000.
Transaction revenue up 8% to approximately $6.5 million from $6.0 million.
Total gross margin expected to increase 180 basis points to approximately 25.0% from 23.2%.
Net loss from continuing operations expected to be approximately $800,000, or $(0.03) per share, compared to a net loss of $200,000, or $(0.01) per share.

Management Commentary

"Our preliminary fourth quarter results reflect the increasing customer value and market momentum that we are delivering from our SaaS Platform line of business," said Peter Derycz, president and CEO of Research Solutions. "Deployments for our unique cloud-based solution, known as Article Galaxy, increased to 140 at the end of the quarter, with annual recurring revenue growing by triple-digits to approximately $1.4 million. We continued to invest in this business as demonstrated by the April launch of a new version of our award-winning research platform, which featured a completely redesigned user interface with more friendly navigation capabilities and enhanced technology infrastructure.

"In our Transactions business, the proactive measures we are taking to improve revenue and margins are having their intended effect. Fourth quarter transaction revenue increased 8% year-over-year with double-digit transaction count growth, and a 40 basis point gross margin improvement.

"Finally, our preliminary results reflect the June sale of our Reprints and ePrints business. The divestiture enables us to focus solely on our Platform solution, while removing the unpredictable nature of its revenue and lifting the overall gross margin profile of our business. We look forward to our operational and financial momentum continuing into fiscal 2018, underscored by version 2.0 of our Platform business launching in the next several months."

Preliminary Fiscal Fourth Quarter 2017 Financial Results

Total revenue is projected to increase 11% to approximately $6.8 million compared to $6.2 million in the same year-ago quarter.

Platform subscription revenue is projected to increase 145% to approximately $318,000 compared to $130,000 in the year-ago quarter. The increase was due to a 137% increase in the total number of paid Platform deployments to 140. The quarter is expected to end with annual recurring revenue up 137% to approximately $1.4 million (see the company's definition of annual recurring revenue below).

Transaction revenue is expected to increase 8% to $6.5 million compared to $6.0 million in the fourth quarter of 2016. Total active customers increased 11%, from 909 to 1,011, and transaction count also increased 11%, from 191,000 to 212,000 (see the company's definition of active customer accounts and transactions below).

Total gross margin is expected to increase approximately 180 basis points to 25.0% from 23.2% in the same year-ago quarter.

Net loss from continuing operations in the fiscal fourth quarter is expected to be approximately $800,000, or $(0.03) per share, compared to a net loss of $200,000, or $(0.01) per share, in the year-ago quarter. The loss reflects the company's continued sales, marketing and technology investments in its fast-growing, recurring revenue Platform business.

Fiscal Fourth Quarter and Full Year 2017 Conference Call

Research Solutions will release its full financial results for the fiscal fourth quarter and full year 2017 on September 18, 2017. Further details will be announced at a later time.

Active Customer Accounts, Transactions and Annual Recurring Revenue

The company defines active customer accounts as the sum of the total quantity of customers per month for each month in the period divided by the respective number of months in the period. The quantity of customers per month is defined as customers with at least one transaction during the month.

A transaction is an order for a unit of copyrighted content fulfilled or managed in the Platform.

The company defines annual recurring revenue as the value of contracted Platform subscription recurring revenue normalized to a one-year period.

About Research Solutions

Research Solutions, Inc. (OTCQB: RSSS) is a pioneer in cloud-based research intelligence and retrieval solutions for R&D-driven organizations. More than 70 percent of the top 25 pharmaceutical companies in the world rely on services delivered by Research Solutions' wholly owned subsidiary Reprints Desk. The company's Software-as-a-Service (SaaS) Platform provides customers with on-demand access to, and augmented data from, tens of millions of scientific, medical, and technical (STM) documents, helping them to accelerate acquisition at the point of discovery, save time and money, and remain copyright-compliant. For more information, visit www.researchsolutions.com.

Important Cautions Regarding Forward-Looking Statements

Certain matters discussed in this press release may be forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the company's products in the market; the company's success in obtaining new customers and new Platform deployments; the company's success in technology and product development; the company's ability to execute its business model and strategic plans; the company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the company's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the company's Securities and Exchange Commission Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q. The company assumes no obligation to update the cautionary information in this release.

SOURCE Research Solutions, Inc.