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Research Solutions (RSSS)
:RSSS
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Research Solutions
(NASDAQ:RSSS)
63Neutral
Positive Factors
Financial Stability
With $7.7M in cash, no debt, and projections for positive free cash flow, there is sufficient capital to support organic growth.
Market Position
Shares trade at 2.4x FY25 revenue versus its direct peer group average RELX and CLVT at 5.6x, a gap that can close as the Company continues to execute its transition to a recurring revenue platform.
Revenue Growth
The high-margin Platform segment continues to be the key to long-term value creation with revenue up 47% year-over-year, representing 39% of total revenue and almost 2/3 of gross profits.
Negative Factors
ARR Growth Challenges
Despite churn creating a headwind, ARR growth is impacted by uncontrollable factors such as acquisitions and bankruptcy.
Customer Churn
Research Solutions saw significantly higher uncontrollable churn (acquisitions, bankruptcy, etc.) accounting for the majority of the churn, although the churn due to competitors was down significantly.
Macro Issues
Headwinds include churn and macro issues impacting some of their customers, mainly due to financial difficulties customers are facing.
Research Solutions (RSSS) vs. S&P 500 (SPY)
Market Cap
$84.88M
Dividend YieldN/A
Average Volume (3M)101.28K
Price to Earnings (P/E)―
Beta (1Y)0.25
Revenue Growth18.51%
EPS Growth-714.65%
CountryUS
Employees145
SectorTechnology
Sector Strength43
IndustrySoftware - Application
Share Statistics
EPS (TTM)-0.13
Shares Outstanding32,646,828
10 Day Avg. Volume62,867
30 Day Avg. Volume101,279
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.89
Price to Cash Flow (P/CF)22.10
P/FCF Ratio22.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$5.12Price Target Upside96.92% 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 Financial Statement Overview
Summary
Research Solutions exhibits a solid growth trajectory in revenue with significant cash flow generation. While the balance sheet is strong with no debt, profitability remains a challenge. The company needs to focus on improving operational efficiency and cost management to enhance profitability and return on equity to ensure sustainable growth.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 | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 48.21M | 44.62M | 37.70M | 32.93M | 31.76M | 31.06M | Gross Profit |
| 22.40M | 19.64M | 14.70M | 12.02M | 10.29M | 9.64M | EBIT |
| 1.51M | -769.54K | 238.61K | -1.49M | -318.99K | -832.37K | EBITDA |
| 2.68M | 66.73K | 291.26K | -1.47M | -235.14K | -628.28K | Net Income Common Stockholders |
| -4.06M | -3.79M | 571.62K | -1.63M | -285.09K | -779.69K |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 2.25M | 6.10M | 13.55M | 10.60M | 11.00M | 9.31M | Total Assets |
| 7.81M | 41.86M | 21.83M | 17.03M | 16.92M | 14.81M | Total Debt |
| 85.20K | 0.00 | 0.00 | 0.00 | 0.00 | 79.33K | Net Debt |
| -2.16M | -6.10M | -13.55M | -10.60M | -11.00M | -9.23M | Total Liabilities |
| 4.22M | 30.17M | 14.50M | 12.14M | 11.49M | 9.95M | Stockholders Equity |
| 3.55M | 11.69M | 7.33M | 4.88M | 5.43M | 4.86M |
| Cash Flow | Free Cash Flow | ||||
| 5.83M | 3.48M | 3.34M | -461.49K | 1.85M | 2.42M | Operating Cash Flow |
| 5.85M | 3.55M | 3.38M | -417.20K | 1.87M | 2.42M | Investing Cash Flow |
| -19.15K | -10.10M | -344.66K | -44.29K | -19.85K | 0.00 | Financing Cash Flow |
| -826.75K | -905.85K | -97.26K | 63.27K | -159.97K | 1.55M |
Research Solutions Technical Analysis
Negative
2.60
Price Trends
3.28
Negative
3.43
Negative
3.05
Negative
Market Momentum
-0.18
Negative
26.00
Positive
7.08
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RSSS, the sentiment is Negative. The current price of 2.6 is below the 20-day moving average (MA) of 2.83, below the 50-day MA of 3.28, and below the 200-day MA of 3.05, indicating a bearish trend. The MACD of -0.18 indicates Negative momentum. The RSI at 26.00 is Positive, neither overbought nor oversold. The STOCH value of 7.08 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $92.33B | 38.07 | 56.34% | 1.53% | 5.86% | 13.13% | |
70 Outperform | $74.02B | 42.77 | 338.74% | ― | 12.27% | 54.69% | |
64 Neutral | $41.75B | 44.37 | 463.98% | 0.52% | 7.47% | 59.46% | |
63 Neutral | $84.88M | ― | -32.33% | ― | 18.51% | -714.65% | |
61 Neutral | $15.14M | 34.08 | 3.18% | ― | 9.56% | 61.85% | |
57 Neutral | $20.89B | 10.40 | -13.99% | 2.52% | 4.47% | -23.34% | |
48 Neutral | $2.71B | ― | -11.44% | ― | -2.74% | 34.70% |
* Technology Sector Average
Performance Comparison
RSSS
Research Solutions
2.60
-0.48
-15.58%
ELSE
Electro-Sensors
4.42
0.23
5.49%
FTNT
Fortinet
96.67
27.82
40.41%
VRSK
Verisk Analytics
298.61
67.98
29.48%
RELX
Relx
50.67
8.99
21.57%
CLVT
Clarivate
3.92
-3.54
-47.45%
Research Solutions Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -33.50% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant growth in revenue, platform subscription, and ARR, alongside improvements in gross margin and cash flow. However, challenges such as customer churn, an increased net loss, and a seasonal B2C slowdown highlight areas of concern. Overall, the positive aspects slightly outweigh the negative ones, suggesting an optimistic outlook with some caution.Highlights
Revenue Growth
Total revenue for the second quarter of fiscal 2025 was $11.9 million, a 15.5% increase from the second quarter of fiscal 2024.
Platform Subscription Revenue Increase
Platform subscription revenue increased 47% to $4.6 million, driven by a net increase of Platform deployments and contributions from Scite.
Annual Recurring Revenue (ARR) Growth
The company ended the quarter with $19.1 million in ARR, up 23% year-over-year, with strong growth in both B2B and B2C Platform deployments.
Record Platform Deployments
Achieved 61 net new B2B Platform deployments, the highest organic performance the company has ever posted.
Improved Gross Margin
Gross margin for the second quarter was 48.9%, a 540-basis-point improvement over the second quarter of fiscal 2024.
Cash Flow and Balance Sheet Strength
Generated $1 million in cash flow from operations during the quarter, with cash and cash equivalents increasing to $7.7 million.
Lowlights
Customer Churn and Upsell Challenges
The company is not where it wants to be in terms of churn and upsells, indicating room for improvement in retaining and expanding existing customers.
Net Loss Increase
Net loss for the quarter was $2 million, compared to a net loss of $54,000 in the prior year quarter, influenced by a $2.4 million provision related to Scite's contingent earn-out liability.
Seasonal Slowdown in B2C
B2C slowed at the end of the quarter due to the holiday break, with expectations of a continued slowdown impacting January.
Company Guidance
During the Research Solutions, Inc. Second Quarter 2025 Earnings Conference Call, the company reported a notable performance with a 15.5% increase in total revenue, reaching $11.9 million compared to the same period in fiscal 2024. Platform subscription revenue surged by 47% to $4.6 million, driven by a net increase in Platform deployments and a 75% pro forma revenue growth from Scite. Annual recurring revenue (ARR) rose to $19.1 million, marking a 23% year-over-year increase, with $1.5 million net incremental ARR growth and 61 net B2B Platform deployments. The gross margin improved to 48.9%, up by 540 basis points from the previous year, led by the Platforms business gross margin of 86.5%. The company recorded an income from operations of $0.1 million and adjusted EBITDA of $963,000, with cash and cash equivalents increasing to $7.7 million.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.