Research Solutions, Inc. (RSSS) Q1 2026 Earnings Call Transcript

Total Revenue $12.3 million, up from $12 million in the first quarter of fiscal 2025, representing a year-over-year increase. The growth was driven by a net increase in platform deployments, upsells, and cross-sells into the existing customer base.

Platform Subscription Revenue $5.1 million, an 18% increase year-over-year. This growth was primarily due to a net increase in platform deployments and upsells/cross-sells into the existing customer base.

Annual Recurring Revenue (ARR) $21.3 million, up 21% year-over-year. This includes $14.8 million in B2B ARR and $6.5 million in normalized ARR from Scite's B2C subscribers. The growth was driven by strong B2B performance and incremental ARR growth.

Incremental ARR $375,000, a 92% increase compared to $195,000 in the prior year quarter. B2B growth was especially strong at $561,000, up from $128,000 last year. The increase was attributed to improved sales execution and new platform sales.

Transaction Revenue $7.2 million, down from $7.7 million in the prior year quarter, reflecting a decline of approximately 6.5%. The decline was attributed to economic conditions, changes in research priorities, and reduced revenue from specific large customers.

Gross Profit $6.2 million, an 8% increase year-over-year. Gross margin improved to 50.6%, a 270 basis point increase, driven by a revenue mix shift towards higher-margin platform business and expanding gross margins in the platform segment.

Platform Business Gross Margin 88.1%, a 70 basis point increase year-over-year. The improvement was due to slower growth in labor and hosting costs compared to revenue growth.

Transaction Business Gross Margin 23.8%, down from 25.7% in the prior year quarter. The decline was due to lower copyright margins and reduced fixed cost leverage from a smaller revenue base.

Operating Expenses $5.3 million, up from $5.1 million in the prior year quarter. The increase was driven by higher sales and marketing expenses, partially offset by lower general and administrative and stock-based compensation expenses.

Net Income $749,000 or $0.02 per diluted share, compared to $669,000 or $0.02 per diluted share in the prior year quarter. The increase was attributed to improved operational performance.

Adjusted EBITDA $1.5 million, a 16% increase from $1.3 million in the prior year quarter. This was the second-best adjusted EBITDA performance in company history, driven by strong revenue growth and cost management.

Cash and Cash Equivalents $12 million as of September 30, 2025, compared to $12.2 million on June 30, 2025. Despite a $1.3 million cash outlay for the Scite earnout, operational cash flow remained strong.

Cash Flow from Operations $1.1 million, a 31% increase from $843,000 in the first quarter of fiscal 2025. The increase was due to healthy operational cash flow.