Research Solutions, Inc. (NASDAQ:RSSS) is a leading provider of software and related services that help research-intensive organizations save time and money. The company's comprehensive suite of platforms and solutions cater to the evolving needs of the research community, empowering them to accelerate their research and development activities.
Business Overview
Research Solutions operates through two primary revenue streams: Platforms and Transactions. The Platforms segment offers cloud-based SaaS solutions that enable researchers to discover, acquire, and manage scientific, technical, and medical (STM) content. These platforms include Resolute.ai, scite.ai, and Article Galaxy, which provide advanced search capabilities, seamless content acquisition, and efficient content management tools. The Transactions segment facilitates the sale of individual STM articles, delivering them electronically to customers in a timely manner.Financials
In the fiscal year ended June 30, 2023, Research Solutions reported annual revenue of $37,703,452, a net income of $571,623, and annual operating and free cash flow of $361,967. The company's strong financial performance is a testament to its ability to execute its strategic initiatives and capitalize on the growing demand for its innovative solutions.Quarterly Highlights
For the third quarter of fiscal 2023, Research Solutions reported total revenue of $12,115,672, a 17.1% increase compared to the same period in the prior year. This growth was driven by a 75.7% increase in Platform revenue, which reached $3,953,403, and a 0.9% increase in Transaction revenue, which amounted to $8,162,269.The company's gross profit margin for the quarter was 45.2%, a significant improvement of 630 basis points compared to the third quarter of fiscal 2022. This expansion was primarily attributable to the increasing contribution of the higher-margin Platforms segment, which accounted for over 60% of the company's gross profit.
Research Solutions also delivered strong profitability in the quarter, reporting net income of $76,301 and generating a record $961,000 in adjusted EBITDA. This performance was driven by the company's ability to effectively manage its operating expenses, which included investments in sales, marketing, and product development to support its growth initiatives.
Geographic Breakdown
Research Solutions' revenue is diversified across geographic regions, with the United States accounting for 59.2% of total revenue in the nine months ended March 31, 2023. Europe contributed 31.5% of revenue, while the rest of the world made up the remaining 9.4%. This geographic diversification helps mitigate the company's exposure to regional economic fluctuations and provides a solid foundation for continued global expansion.Segment Performance
The Platforms segment continued to be a key driver of growth, with revenue increasing 51.7% to $9,679,179 in the nine months ended March 31, 2023, compared to the same period in the prior year. This strong performance was driven by the successful integration of the Scite and Resolute acquisitions, as well as organic growth in the company's existing platform offerings.The Transactions segment also contributed to the company's overall growth, with revenue increasing 6.8% to $22,811,206 in the nine months ended March 31, 2023, compared to the same period in the prior year. This growth was primarily attributable to increased paid order volume, as well as the contribution from the FIZ Karlsruhe asset acquisition, which was effective January 1, 2023.