Core Insights - Research Solutions has announced significant enhancements to its AI product, Scite Assistant, aimed at providing enterprise customers with more accurate responses to complex research questions and tasks [1][6]. Group 1: Product Enhancements - The latest version of Scite utilizes OpenAI's o3-mini with reasoning, a more powerful engine that enhances the AI's capabilities [2]. - Scite's reasoning models are specifically trained to evaluate multiple potential approaches and solve multi-step problems methodically, unlike standard AI models that rely primarily on pattern recognition [3]. - The new model allows for customizable reasoning intensity, enabling users to control the depth of analysis before generating responses, alongside existing settings for journal selection and publication date ranges [4]. Group 2: Performance Improvements - Research Solutions has prepared detailed comparison documents that showcase substantial quality improvements in outputs from the previous and new versions of Scite across various research scenarios [5]. - The enhancements are expected to deliver better information synthesis, improved identification of nuances and conflicting evidence, and higher-quality outputs compared to other AI research tools on the market [4]. Group 3: Company Overview - Research Solutions operates as a vertical SaaS and AI company, simplifying research workflows for academic institutions, life science companies, and research organizations globally [7]. - The company uniquely combines AI-powered tools with access to both open access and paywalled research, facilitating efficient discovery, access, management, and analysis of scientific literature [7].

Core Insights - Research Solutions has launched a new solution that allows customers to purchase legal rights to use scientific journal content within AI applications, addressing a significant need in the AI-enabled research and development market [1][3] - The solution aims to bridge the gap between enterprise AI capabilities and scientific content, creating sustainable growth opportunities while shaping the future of research [2] Company Strategy - The launch is a milestone in the company's strategic growth plan, establishing a new licensing framework that addresses market friction in the scientific content ecosystem [3] - The solution is developed based on extensive research and discussions with publishers and customers, ensuring a sustainable framework for integrating AI-driven research while protecting intellectual property rights [4] Market Impact - Scientific literature drives billions in R&D investment annually, and the new solution simplifies the process of acquiring necessary rights for using copyrighted content with AI tools, facilitating the adoption of AI-powered research methodologies [3][5] - The combination of generative AI and scientific data presents unprecedented opportunities for research, with the goal of facilitating access to relevant literature while respecting publishers' and authors' rights [5] Solution Features - The solution provides multiple strategic advantages, including faster and more targeted searching, analysis, and summarization of journal articles, which reduces research cycle times [8] - It is designed to ensure fair value distribution across all stakeholders, with publishers choosing which models to participate in, thereby promoting legal compliance and mitigating risk for R&D-focused organizations [8]

Core Insights - Research Solutions has launched a new feature called Tables in Scite Assistant, enhancing the ability to extract and analyze data from scientific literature using AI, which positions the company favorably in the AI research platform market [1][2]. Group 1: Product Features and Benefits - The Tables functionality allows researchers to significantly reduce manual effort, time, and resources in literature reviews by automatically structuring data from peer-reviewed literature [2]. - Scite Tables enables researchers to extract data from a comprehensive collection of research articles, facilitating quicker access to key data points [2]. - Early adoption of Scite Tables across various teams has led to improvements in research efficiency, particularly in areas like competitive intelligence and biomarker identification [3]. Group 2: User Feedback and Customization - User feedback has been instrumental in the development of Scite Tables, with enterprise customers highlighting the transformative impact of customizable and organized research data [4]. - Customers have emphasized the importance of providing more than just AI summaries, indicating a need for deeper engagement with research content [4]. Group 3: Company Overview - Research Solutions operates as a vertical SaaS and AI company, focusing on simplifying research workflows for academic institutions and life science companies [5]. - The company offers a unique marketplace for scientific, technical, and medical content, combining AI tools with access to both open access and paywalled research [5].

User Base and Platform Features - Research Solutions reported a significant increase in its user base, with over 200 million existing STM journal articles available for instant download and an addition of 2 to 4 million newly published STM articles each year [118]. - The company’s cloud-based SaaS platforms facilitate the electronic delivery of single articles, achieving delivery times generally under an hour, often in seconds, enhancing customer satisfaction [119]. - The company utilizes advanced AI models, including Generative AI, to enhance user experience and streamline research workflows, with plans to release several new platform solutions [115]. - The Platforms enable life science and research-intensive organizations to reduce research costs over time, driving down the ultimate cost per article [109]. - The Platforms are designed to be scalable and stable, providing a competitive advantage through rapid innovation [116]. - The company has established arrangements with hundreds of content publishers, allowing for the electronic delivery of articles and compliance with copyright laws [119]. Revenue and Financial Performance - Revenue is derived from two main sources: annual or monthly licenses for accessing premium features and transactional sales of STM content, with revenue recognized upon delivery of articles [123]. - Total revenue for the three months ended December 31, 2024, increased by $1,600,477, or 15.5%, compared to the prior year, reaching $11,914,219 [135]. - Platforms revenue grew by $1,475,673, or 47.2%, to $4,601,257 for the three months ended December 31, 2024, driven by additional deployments and the Scite acquisition [135]. - Gross profit for the three months ended December 31, 2024, increased by $1,337,291, or 29.8%, totaling $5,821,093 [141]. - Total revenue for the six months ended December 31, 2024, increased by $3,583,988, or 17.6%, reaching $23,958,701 [134]. - Platforms revenue for the six months ended December 31, 2024, increased by $3,205,126, or 56.0%, totaling $8,930,902 [134]. - Total gross profit for the six months ended December 31, 2024, was $11,586,969, an increase of $3,071,601, or 36.1% [141]. - Total cost of revenue as a percentage of revenue decreased from 58.2% to 51.6% for the six months ended December 31, 2024 [139]. Operating Expenses and Losses - Operating expenses rose by $824,447, or 16.8%, to $5,728,246 for the three months ended December 31, 2024, with sales and marketing expenses increasing by 66.9% [135]. - Net loss for the three months ended December 31, 2024, was $1,980,234, compared to a net loss of $53,628 in the prior year, representing a 3,592.5% increase in loss [135]. - Total operating expenses for the three months ended December 31, 2024, increased by $824,447, or 16.8%, compared to the same period in 2023, reaching $5,728,246 [142]. - Sales and marketing expenses rose by $538,160, or 66.9%, primarily due to increased personnel costs and marketing expenditures related to the Scite acquisition [144]. - Net loss for the three months ended December 31, 2024, was $(1,980,234), an increase of $1,926,606, or 3,592.5%, compared to the prior year, mainly due to charges related to the Scite acquisition [145]. - Adjusted EBITDA for the three months ended December 31, 2024, was $962,956, reflecting an increase of $644,487, or 202.4%, compared to the same period in 2023 [155]. Cash Flow and Financing - Cash and cash equivalents at the end of the period on December 31, 2024, were $7,701,155, an increase of $1,601,124 from $6,100,031 at the beginning of the period [148]. - Net cash provided by operating activities for the six months ended December 31, 2024, was $1,871,493, primarily due to adjustments related to contingent earnout liability [149]. - Net cash used in investing activities for the six months ended December 31, 2024, was $5,404, significantly lower than $10,079,509 in the same period of 2023, which included payments for acquisitions [151]. - Net cash used in financing activities for the six months ended December 31, 2024, was $267,838, compared to $346,943 in the same period of 2023 [152]. - The company entered into a $500,000 secured revolving line of credit with PNC Bank, which matures on April 15, 2025, with no outstanding borrowings as of December 31, 2024 [153]. Accounting and Impairment - Stock-based compensation is calculated using the Black-Scholes-Merton Option Pricing model, which could materially affect compensation expenses [129]. - The company follows ASC 606 for revenue recognition, ensuring that revenue reflects the transfer of goods or services to customers [122]. - Goodwill is tested for impairment annually, with no indicators of impairment for intangible assets reported for the period ended December 31, 2024 [127][128].

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $11.9 million, a 15.5% increase from Q2 2024 [13] - Platform subscription revenue increased 47% to $4.6 million, driven by net increase in Platform deployments and contributions from Scite [13] - Annual recurring revenue (ARR) reached $19.1 million, up 23% year-over-year, with net incremental ARR growth of approximately $1.5 million [14] - Gross margin for Q2 was 48.9%, a 540-basis-point improvement over the prior year [17] - Net loss for the quarter was $2 million or $0.07 per share, compared to a net loss of $54,000 in the prior year [21] Business Line Data and Key Metrics Changes - B2B ARR was $12.7 million, while normalized ARR associated with Scite's B2C subscribers was approximately $6.4 million [14] - Transaction revenue for Q2 was $7.3 million, a 1.7% increase from the prior year [16] - The Platforms business recorded a gross margin of 86.5%, a 210-basis-point increase compared to the prior year [18] Market Data and Key Metrics Changes - The total active customer count for the quarter was 1,384, compared to 1,398 in the same period a year ago [16] - B2C experienced a slowdown at the end of the quarter due to the holiday break, impacting new signups [10] Company Strategy and Development Direction - The company reorganized its sales team into corporate-focused and academic-focused teams, resulting in strong performance in both segments [8] - Continued focus on improving customer acquisition costs (CAC) and CAC-to-LTV ratios while investing in sales and marketing [35][27] - Emphasis on enhancing product offerings, particularly in integrating AI into existing platforms [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the organic growth in the Platforms business and expects acceleration in bookings in Q4 and FY 2026's Q1 [35][26] - The company anticipates that the upcoming quarters will show improved cash flow results as they enter their strongest seasonal period [25] Other Important Information - Adjusted EBITDA for the quarter was $963,000, compared to $318,000 in the year-ago quarter [23] - The company experienced a strong quarter of cash generation, with cash and cash equivalents at $7.7 million as of December 31, 2024 [25] Q&A Session Summary Question: Can you help us understand new logo wins versus cross-sells in the $1.5 million of incremental ARR? - Management indicated that the quarter was driven primarily by new logo sales, with some success in cross-selling Scite into existing Article Galaxy customers [50][52] Question: What is the expected impact of seasonal trends on B2C performance? - Management noted that B2C typically performs well in fiscal Q2 and Q3, with a slowdown expected in mid-December to mid-January [54][56] Question: How have AI costs trended over time? - AI costs have halved since joining Research Solutions, with ongoing evaluations of new models for ROI [58][60] Question: What is the competitive advantage regarding exclusive content access? - Management emphasized that exclusive access to content, combined with a focus on specialized workflows, is a key differentiator in the AI space [64][68] Question: Can you elaborate on the 75% growth for Scite? - The 75% growth was attributed to a mix of new sales and cross-sells, with a significant emphasis on new sales following the integration of Scite into the company [78][80]

Revenue Growth - Total revenue increased by 15.5% to $11.9 million compared to $10.3 million in the prior-year quarter[5] - Annual Recurring Revenue (ARR) rose by 23% to $19.1 million, including approximately $12.7 million from B2B and $6.4 million from B2C[4] - Platform revenue surged by 47% to $4.6 million, accounting for 39% of total revenue, up from 30% in the prior-year quarter[4] - Transaction revenue was $7.3 million, a slight increase from $7.2 million in the second quarter of fiscal 2024[7] - Total revenue for the three months ended December 31, 2024, was $11,914,219, representing a 15.5% increase from $10,313,742 in the same period of 2023[23] Profitability and Loss - Gross profit increased by 30% year-over-year, with total gross margin improving by 540 basis points to 48.9%[4] - Net loss for the quarter was $2.0 million, or ($0.07) per share, compared to a net loss of ($54,000) in the prior-year quarter[10] - Adjusted EBITDA reached $963,000, a significant increase from $318,000 in the prior-year quarter, representing a 202.4% growth[12] - Net income (loss) for the quarter was $(1,980,234), a significant increase in loss compared to $(53,628) in the previous year[17] - The company reported a loss before provision for income taxes of $1,965,040 for the three months ended December 31, 2024, compared to a loss of $43,571 in the same period of 2023[23] Cash Flow and Liquidity - Cash flow from operations exceeded $1 million, compared to $0.3 million in the prior-year quarter[4] - Cash flow from operating activities for the six months ended December 31, 2024, was $1,871,493, a significant improvement from a cash outflow of $426,888 in the prior year[25] - Cash and cash equivalents increased to $7,701,155 from $6,100,031, reflecting a growth of 26.2%[21] - Cash and cash equivalents at the end of the period were $7,701,155, an increase from $2,697,659 at the end of the same period in 2023[25] Operating Expenses - Total operating expenses rose to $5.7 million, up from $4.9 million in the second quarter of 2024, primarily due to increased costs in Sales and Marketing and Technology[9] - Total operating expenses for the three months ended December 31, 2024, were $5,728,246, up from $4,903,799 in the same period of 2023[23] Customer Metrics - The company recorded 61 net new B2B platform deployments, marking the best organic performance in a quarter[3] - Total customer accounts decreased by 14, resulting in a total of 1,384 customers, a decline of 1.0% from the previous period[13] Asset and Liability Management - Total assets rose to $42,788,993, up from $41,859,762, indicating a growth of 2.2%[21] - Total current liabilities increased to $20,921,489 from $17,867,460, a rise of 11.5%[21] Other Financial Metrics - Incremental ARR decreased by $44,085, representing a decline of 7.4% compared to the previous period, with a total ARR of $19,109,637, up 22.7% year-over-year[13] - Average sales price (ASP) at the end of the period was $11,686, down 5.2% from $12,330[13] - B2C ARR increased to $6,371,381, representing a growth of 61.1% compared to the previous period[13] - The company incurred $2,406,886 in changes in fair value of contingent earnout liability for the three months ended December 31, 2024[23] - The company did not make any payments for acquisitions during the six months ended December 31, 2024, after significant cash outflows for acquisitions in the previous year[25] Foreign Currency Impact - The company reported a foreign currency translation loss of $29,554, compared to a gain of $(13,738) in the previous year, marking a significant change[17]

Core Insights - Research Solutions, Inc. reported a 23% increase in Annual Recurring Revenue (ARR) to $19.1 million and achieved 61 net new platform deployments, marking the best organic performance in a quarter [1][4][11] Financial Performance - Total revenue for the fiscal second quarter was $11.9 million, reflecting a 15.5% increase from $10.3 million in the same quarter last year [3][11] - Platform subscription revenue rose by 47% to $4.6 million, accounting for 39% of total revenue compared to 30% in the prior-year quarter [4][11] - Transaction revenue was $7.3 million, slightly up from $7.2 million in the previous year, primarily due to increased copyright revenues [5][11] - Total gross margin improved by 540 basis points to 48.9%, driven by a shift towards higher-margin platform business [6][11] Operating Expenses and Losses - Total operating expenses increased to $5.7 million from $4.9 million in the prior-year quarter, attributed to higher costs in Sales and Marketing and Technology and Product Development [7][11] - The net loss for the quarter was $2.0 million, or ($0.07) per share, compared to a net loss of ($54,000) in the prior-year quarter [8][11] - Adjusted EBITDA was $963,000, up from $318,000 in the year-ago quarter, indicating improved operational efficiency [8][11] Customer Metrics - The company ended the quarter with 1,090 total platform deployments, a 15.7% increase year-over-year [12] - The transaction customer count was 1,384, a slight decrease from 1,398 in the prior-year quarter [5][12] Cash Flow and Financial Position - Cash flow from operations exceeded $1 million in the quarter, compared to $0.3 million in the prior-year quarter [11] - Total assets as of December 31, 2024, were $42.79 million, with current assets amounting to $16.15 million [20]

Core Viewpoint - Research Solutions Inc. (RSSS) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system reflects changes in earnings estimates, which are strongly correlated with stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [4][6]. - An increase in earnings estimates typically leads to higher fair value for a stock, prompting institutional investors to buy or sell, thus affecting stock prices [4]. Company Performance Indicators - Research Solutions is projected to earn $0.06 per share for the fiscal year ending June 2025, representing a year-over-year increase of 400% [8]. - Over the past three months, the Zacks Consensus Estimate for Research Solutions has risen by 200%, indicating a positive outlook for the company's earnings [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% of stocks receiving a 'Strong Buy' or 'Buy' rating, suggesting superior earnings estimate revisions [9][10]. - The upgrade of Research Solutions to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating potential for market-beating returns in the near term [10].

Company Overview - Research Solutions, Inc. (NASDAQ: RSSS) is a vertical SaaS and AI company that simplifies research workflow for academic institutions, life science companies, and research organizations globally [4] - The company operates as a publisher-independent marketplace for scientific, technical, and medical (STM) content, combining AI-powered tools with access to both open access and paywalled research [4] - The platform enhances the efficiency of discovering, accessing, managing, and analyzing scientific literature, thereby accelerating scientific discovery [4] Upcoming Financial Results - Research Solutions will hold a conference call to discuss its financial results for the fiscal 2025 second quarter, which ended on December 31, 2024 [1] - The conference call is scheduled for Thursday, February 13, 2025, at 5:00 p.m. ET [1][2] - A press release with the financial results will be issued after market close and prior to the call [1] Conference Call Details - The call will be hosted by President and CEO Roy W. Olivier and CFO Bill Nurthen, followed by a Q&A session [2] - Participants can join the call by dialing 1-203-518-9848 and using the conference ID "RESEARCH" [2] - A replay of the conference call will be available after 8:00 p.m. ET on the same day through March 13, 2025 [3]

HENDERSON, Nev., Jan. 28, 2025 /PRNewswire/ -- Research Solutions (NASDAQ: RSSS), a leader in AI solutions built for researchers, announced today that usage of its AI-powered research platform, Scite, has grown by 250 percent year-over-year. This acceleration validates the unique differentiation in the Scite offering and is indicative of platform's growing adoption among academic customers and research organizations. This has come at a time when AI-related technology costs have decreased more than 50 percen ...