Research Solutions Inc. Reports $8.6 Million in Revenue and Positive Adjusted EBITDA for First Quarter Fiscal Year 2014

Article Galaxy product grows by 12% in revenue and 15% in gross profit over the same quarter last year, fueled by growing market adoption. First Quarter Fiscal Year 2014 Results Include: $8.6 Million in Revenue, $87,000 in Adjusted EBITDA.

PR Newswire

ENCINO, Calif., Nov. 19, 2013 /PRNewswire/ -- Research Solutions, Inc. (RSSS), a pioneer in facilitating the flow of information from the publishers of scientific, technical, and medical content to enterprise customers in life science and other research intensive organizations around the world, today reported financial and operating results for its first quarter fiscal year 2014 (quarter ended September 30, 2013).

First Quarter Fiscal Year 2014 Highlights:

  • $8.6 million in consolidated revenue, a 10% decrease over the same quarter last year; $6.6 million in revenue from North American operations, a 7% decrease over same quarter last year; $2.0 million in revenue from French subsidiary TAAG, a 20% decrease over same quarter last year
  • Adjusted EBITDA of $87,000 ($51,000 from North American operations, and $36,000 from TAAG)
  • North American Revenue Detail: $4.4 million in revenue from Article Galaxy, a 12% increase over the same quarter last year (The Article Galaxy journal article platform includes single article delivery services) and; $2.1 million in revenue from Reprints and ePrints, a 31% decrease over same quarter last year.
  • North American Gross Profit Detail: $1.0 million in gross profit from Article Galaxy, $175,000 in gross profit from Reprints and ePrints
  • $2.0 million in consolidated gross profit, a 7% decrease over prior year; $1.2 million in gross profit from North American operations, a 5% decrease over prior year, and; $800,000 in gross profit from TAAG, a 9% decrease over prior year

Management Commentary

"We are very excited to report that our Article Galaxy Software and Content Delivery Engine has emerged as our main revenue and gross margin driver.  We have historically simply reported it as part of revenue from North American operations, but due to its steady growth and primary importance to the company, we believe it's time to talk about it in more detail.  Article Galaxy is truly a rising star in our industry and one of the reasons we have received many accolades, including a Trend Setting Product of the Year by KMWorld magazine.  It is used by hundreds of organizations all over the world, and in various industries including Pharmaceutical, Biotechnology, Aerospace, Engineering and Legal, as well as in the Academic and Government sectors.  It has really outshone everything else we do and we look forward to focusing on it even more in the future.  We have a major release coming in January 2014 which we are very excited about, and will continue making substantial improvements going forward.  It is a scalable platform that has proven to be very solid and reliable for our customers, which is key," said Research Solutions President and CEO Peter Derycz.

Alan Urban, Chief Financial Officer, added, "While revenue from Article Galaxy saw a 12% growth over the same quarter last year, we experienced decreases in revenue from Reprint and ePrints and TAAG compared to same quarter last year.  The same trend was true of gross margin dollars, Article Galaxy was up by 15%, while Reprint and ePrint and TAAG gross margin dollars were both down." Mr. Urban continued, "We produced adjusted EBITDA of $87,000 for the quarter."

Conference Call

Research Solutions management will host an investment-community conference call on Wednesday, November 20, 2013 beginning at 4:15 p.m. Eastern Time (1:15 p.m. Pacific Time) to discuss these results and answer questions. To participate in the call please dial +1 (866) 516-3002 for domestic callers or +1 (253) 237-1159 for international callers, and enter Conference ID: 12603251 when prompted.

The webcast will also be available from the Company's website at www.researchsolutions.com. Listening to the webcast requires Internet access and the Windows Media Player or other compatible streaming media player. A recorded replay will be available at www.researchsolutions.com website for 60 days following the conclusion of the call.

Results at a Glance

The following financial information should be read in conjunction with the unaudited financial statements and accompanying notes thereto filed by the Company with the Securities and Exchange Commission on November 19, 2013 in its Quarterly Report on Form 10-Q for the period ended September 30, 2013. The Quarterly Report can be viewed at www.sec.gov.

(Table amounts in 000's)






Quarter Ended

Quarter Ended





Sept. 30, 2013

Sept. 30, 2012

% Change

NORTH AMERICAN OPERATIONS





Revenue:






Article Galaxy

$               4,469

$           3,975

12%



Reprints and ePrints

$               2,149

$           3,128

(31)%


Total Revenue

$               6,617

$           7,103

(7)%







Gross profit:






Article Galaxy

$               1,023

$              893

15%



Reprints and ePrints

$                  175

$              373

(53)%


Total Gross profit

$               1,198

$           1,266

(5)%







Income (loss) from operations

$                  (89)

$                57

(255)%


Adjusted EBITDA

$                    51

$              198

(74)%







TAAG (FRANCE)





Revenue

$               1,960

$           2,439

(20)%


Gross profit

$                  807

$              891

(9)%


Income (loss) from operations

$                  (34)

$              (71)

52%


Adjusted EBITDA

$                    36

$                23

55%







CONSOLIDATED





Revenue

$               8,578

$           9,542

(10)%


Gross profit

$               2,005

$           2,157

(7)%


Income (loss) from operations

$                (123)

$              (14)

(804)%


Adjusted EBITDA

$                    87

$              221

(61)%

Use of Non-GAAP Measure – Adjusted EBITDA

Research Solutions management evaluates and makes operating decisions using various financial metrics. In addition to the Company's GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. Management believes that this non-GAAP measure provides useful information about the Company's operating results.  The attached tables provide a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.

Adjusted EBITDA is defined as net income from operations before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, impairment of acquired intangibles and goodwill, loss on facility sublease, and (gain) loss on sale of fixed assets.

Reconciliation of Adjusted EBITDA to Income from Operations


(Table amounts in 000's)




North American

Operations Quarter Ended Sept. 30, 2013



TAAG

(France)

Quarter Ended Sept. 30, 2013



Total

Quarter Ended Sept. 30, 2013












Income from operations


$

(89)



$

(34)



$

(123)


Add:

   Depreciation and amortization



47




70




117


   Stock-based compensation



93








93


Adjusted EBITDA


$

51



$

36



$

87


About Research Solutions®

Research Solutions, Inc. is a pioneer in facilitating the flow of information from the publishers of scientific, technical, and medical content to enterprise customers in life science and other research intensive organizations around the world. We develop products, services and systems to facilitate the re-use of published content in a manner that helps organizations achieve their research, marketing, and communication goals effectively and in compliance with copyright law and regulatory rules.  Our subsidiary companies include Reprints Desk, Inc., and Techniques Appliquees aux Arts Graphiques, S.p.A. (TAAG).  For more information, please visit www.researchsolutions.com.

Forward-Looking Statements

Certain matters discussed in this press release may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company's products in the market; the Company's success in obtaining new customers; the Company's success in technology and product development; the Company's ability to execute its business model and strategic plans; the Company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the Company's Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q.  Examples of forward-looking statements in this release include statements related to new products, anticipated revenue and profitability.  The Company assumes no obligation to update the forward-looking information in this release.

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