Research Solutions(US:RSSS)2025-11-14 21:01Financial Performance - Total revenue for the three months ended September 30, 2025, increased by $267,703, or 2.2%, compared to the prior year, driven by an $791,195 increase in Platforms revenue [128]. - Platforms revenue reached $5,120,840, reflecting an 18.3% increase, while Transactions revenue decreased by $523,492, or 6.8%, totaling $7,191,345 [128]. - Gross profit for the three months ended September 30, 2025, was $6,225,298, an increase of $459,422, or 8.0%, with Platforms gross profit rising by 19.2% [132]. - Net income for the period was $749,387, representing an increase of $80,383, or 12.0%, attributed to higher gross profit despite increased operating expenses [134]. - Adjusted EBITDA for Q3 2025 reached $1,472,963, reflecting a $200,428 increase or 15.8% from $1,272,535 in Q3 2024 [144]. Revenue Sources - Revenue is derived from two main sources: annual licenses for accessing premium features of the SaaS platforms and transactional sales of STM content, reflecting a diversified revenue model [115]. - The company recognizes revenue from single article delivery services upon delivery to the customer, ensuring timely revenue recognition aligned with service fulfillment [117]. Cost Management - Total cost of revenue decreased by $191,719, or 3.1%, to $6,086,887, with the cost of Platforms increasing by 11.6% and Transactions decreasing by 4.4% [129]. - Operating expenses increased by $144,442, or 2.8%, totaling $5,263,627, primarily due to a 40.0% increase in sales and marketing expenses [133]. Cash Flow - Cash and cash equivalents at the end of the period were $11,955,763, a decrease of $271,549 from the previous quarter, primarily due to cash used in financing activities [136]. - Net cash provided by operating activities was $1,107,119, driven by net income and adjustments to contingent earnout liability [137]. - Net cash used in financing activities was $1,361,218, primarily for the payment of contingent acquisition consideration [141]. Tax and Other Expenses - Provision for income taxes decreased by $24,981, from $46,212 in Q3 2024 to $21,231 in Q3 2025, a decline of 54.1% [144]. - Stock-based compensation decreased by $205,507, from $417,989 in Q3 2024 to $212,482 in Q3 2025, a reduction of 49.2% [144]. - Other (income) expense increased significantly by $259,578, from $(68,525) in Q3 2024 to $191,053 in Q3 2025, marking a 378.8% change [144]. - Foreign currency transaction gain improved by $86,984, from $(104,240) in Q3 2024 to $(17,256) in Q3 2025, an increase of 83.4% [144]. - Depreciation and amortization slightly increased by $3,971, from $312,095 in Q3 2024 to $316,066 in Q3 2025, a change of 1.3% [144]. Operational Efficiency - The Platforms enable researchers to obtain articles generally in under an hour, often in seconds, showcasing the efficiency of the company's document delivery service [111]. - The company utilizes advanced AI models, including generative AI assistants, to enhance user experience and streamline research workflows across its Platforms [106]. - The company has arrangements with hundreds of content publishers, allowing for electronic access to a vast majority of articles, facilitating quick delivery to customers [111]. - The company’s Platforms include tools for managing rights and permissions for content reuse, ensuring compliance with copyright laws, particularly in AI applications [104]. - The Platforms are deployed as a single, multi-tenant system, allowing for scalability and rapid innovation, which contributes to a competitive advantage in the market [107]. Accounting and Compliance - The company’s financial statements are prepared in accordance with GAAP, requiring estimates and assumptions that may affect reported amounts of assets, liabilities, revenue, and expenses [112]. - The company does not have any off-balance sheet arrangements [145]. - Adjusted EBITDA is used by the company for internal budgets, forecasts, and strategic planning, but has limitations as an analytical tool [146]. - The company does not provide quantitative and qualitative disclosures about market risk as it is not required [148].