Research Solutions(US:RSSS)2025-09-19 20:01Financial Performance - Total revenue increased by $4,434,082, or 9.9%, to $49,057,981 for the year ended June 30, 2025, driven by a $4,999,178 increase in Platforms revenue [172]. - Platforms revenue reached $18,955,695, a 35.8% increase from the previous year, attributed to new deployments and the Scite acquisition [171]. - Total gross profit rose by $4,555,785, or 23.2%, to $24,195,951, with Platforms gross profit increasing by 39.5% [175]. - Net income improved by $5,052,150, or 133.4%, to $1,265,553, mainly due to increased gross profit despite higher operating expenses [178]. - For the year ended June 30, 2025, the company reported a net income of $1,265,553, a significant increase of $5,052,150 or 133.4% compared to a net loss of $(3,786,597) in 2024 [188]. - Adjusted EBITDA for the year ended June 30, 2025, was $5,267,607, reflecting a growth of $3,024,023 or 134.8% from $2,243,584 in 2024 [188]. - The company experienced a decrease in other (income) expense by $1,751,136 or 60.3%, from $2,903,983 in 2024 to $1,152,847 in 2025 [188]. - Foreign currency transaction losses changed dramatically, with a loss of $(202,527) in 2025 compared to a gain of $21,395 in 2024, marking a change of $(223,922) or (1,046.6)% [188]. - Depreciation and amortization increased by $409,091 or 48.9%, from $836,271 in 2024 to $1,245,362 in 2025 [188]. - Stock-based compensation decreased by $431,900 or 20.0%, from $2,155,461 in 2024 to $1,723,561 in 2025 [188]. Revenue Recognition and Accounting - The company operates under ASC 606 for revenue recognition, ensuring that revenue reflects the transfer of goods or services to customers [159]. - Revenue is derived from two sources: annual licenses for accessing premium features of the cloud-based SaaS platforms and transactional sales of STM content, with revenue recognized upon delivery of single articles [160]. - The company reported an allowance for doubtful accounts of $182,324 and $68,579 as of June 30, 2025 and 2024, respectively, with provisions and reserve adjustments of approximately $163,000 and $99,000 for the years ended June 30, 2025 and 2024 [167]. - The company’s trade accounts receivable are evaluated for collectability, with specific reserves for bad debts established based on historical losses and assessments of outstanding receivables [167]. - Total cost of revenue decreased as a percentage of revenue from 56.0% to 50.7%, reflecting improved efficiency [173]. Operating Expenses - Operating expenses totaled $21,694,740, a 6.3% increase, primarily due to a 55.7% rise in sales and marketing expenses [176]. - The company recorded a decrease in the provision for income taxes to $82,811, down $30,260 from the prior year [177]. Cash Flow and Financing - Cash and cash equivalents increased to $12,227,312 as of June 30, 2025, up $6,127,281 from the previous year, primarily from operating activities [180]. - Net cash provided by operating activities was $7,023,166 for the year ended June 30, 2025, influenced by adjustments to contingent earnout liability and an increase in deferred revenue [181]. - The company entered into a $500,000 secured revolving line of credit with PNC, with no outstanding borrowings as of June 30, 2025 [186]. Technology and Innovation - The company utilizes Generative AI technologies in its Platforms, enhancing user experience and providing unique insights, with plans to release several new Platform solutions to support research workflows [150]. - The company’s Platforms facilitate rights and permissions for re-use cases, including AI applications, ensuring copyright compliance for customers [148]. - The company’s Platforms are deployed as a single, multi-tenant system, allowing for scalability and rapid innovation across its customer base [151]. - The company has over 200 million existing STM journal articles available for instant download, with an addition of 2 to 4 million newly published STM articles each year [153]. - The company has arrangements with hundreds of content publishers, enabling electronic delivery of articles, often in seconds, enhancing the efficiency of its document delivery service [155]. Adjusted EBITDA Considerations - Adjusted EBITDA is utilized for internal budgeting, forecasts, strategic planning, and evaluating business strategies, including potential acquisitions [189]. - Limitations of Adjusted EBITDA include not reflecting cash expenditures for capital needs, working capital changes, or interest expenses [193]. - The company emphasizes that future results may still be affected by unusual or non-recurring items despite the use of Adjusted EBITDA [189]. Economic Environment - Inflation has not materially affected operations to date, but there is a risk of increased operating costs due to inflationary pressures in the future [156]. - The company does not have any off-balance sheet arrangements, indicating a straightforward financial structure [190].