Earnings Labs

Research Solutions, Inc. (RSSS)

Q3 2017 Earnings Call· Mon, May 15, 2017

$2.44

-0.41%

Key Takeaways · AI generated
AI summary not yet generated for this transcript. Generation in progress for older transcripts; check back soon, or browse the full transcript below.

Same-Day

-3.00%

1 Week

-3.00%

1 Month

-5.00%

vs S&P

-6.44%

Transcript

Operator

Operator

Good afternoon, everyone and thank you for participating in today's conference call to discuss Research Solutions Financial Results for its Fiscal Third Quarter Ended March 31, 2017. Earlier today, the Company issued a press release discussing these results and a copy of the release is available for viewing and can be downloaded from the Investor Relations section of the company's website. Joining us today are Research Solutions' President and CEO, Peter Derycz; and the Company’s CFO, Alan Urban. Following their remarks, we will open the call for your questions. Then, before we conclude today's call, I will provide the necessary cautions regarding any forward-looking statements made by the management. I will also provide information regarding the company's use of non-GAAP financial information. Finally, I would like to remind everyone that this call will be recorded and made available for replay via a link in the Investor Section of the company’s website. I will now turn the call over to Peter Derycz, Research Solutions' President and CEO.

Peter Derycz

Management

Thank you, operator and good afternoon everyone. I’ll open the call with a brief state of our business and then pass the call to Alan to speak about our financial results. Finally, I will return to address other details of the business and our outlook. Our third quarter was yet again highlighted by rapid growth in our platform business, triple-digit growth in both revenue and deployments. Our platform subscription revenue increased 124% year-over-year driven by a 152% increase in total deployments. Further, 70% of our fiscal year-to-date deployments are with new customers, evidence of our large market opportunity. While transactions and customer count in our transaction business accelerated from prior year, revenue was essentially flat due to declining orders from existing customers that were mostly offset by orders from new customers. At the end of the quarter, we launched the latest version of our cloud-based Platform solution. The upgrade showcases full mobile responsiveness, design enhancements, and the introduction of 'gadgets,' or powerful apps that allow for sophisticated data augmentation of content. We believe the gadget concept will revolutionize the way research is done today. Like mobile apps, gadgets are flexible, customizable tools for scientific research that are capable of augmenting scientific documents with data, streamlining cumbersome research processes. Early customer response has been encouraging and we look forward to our expanded sales force introducing the enhanced product to an even wider audience of customers in need of this unique solution. But now, I’d like to turn the call over to our CFO, Alan Urban, who will walk us through some of the financial details for the quarter. Alan?

Alan Urban

Management

Thank you, Peter, and good afternoon everyone. Before I begin, a quick reminder that platforms provide premium access through our research intelligence products and services on an annual subscription basis, while transactions primarily represent customer article purchases conducted via both paid premium platform access and free-standard platform access. Now, a few comments on our Q2 results compared to the same prior year period. Our platform subscription revenue increased 124% to approximately 271,000 compared to the year ago quarter, which was driven by a 152% increase in total platform deployments to 116. This translates into 23 incremental deployments in Q3. With total platform deployment up over 20% over the previous quarter, the quarter ended with platform annual recurring revenue up 127% on a year-over-year basis to $1.1 million and up 24% sequentially. Please see today's press release for how we define and use annual recurring revenue and other non-GAAP terms. Transaction revenue was essentially unchanged at $6.4 million compared to the same year ago quarter as declining orders from existing customers offset an increase in orders from new customers. However, total customer count was up 9% to 985. The number of corporate customers was up 5% to 802, and academic customers were up 32% to 183. Together, this drove a 7% increase in transactions to approximately 213,000. Total revenue was $8.6 million compared to $8.7 million in the same year-ago quarter. The slight decrease was primarily attributable to a $200,000 decline in our legacy Reprints and ePrints businesses. As we have stated, Reprints and ePrints order volumes often fluctuate from period to period depending upon customer marketing budgets and the publication of journal articles matching their requirements. While this segment is cash flow positive, it continues to be a low margin business that requires limited resources and time. Moving on to…

Peter Derycz

Operator

Thanks, Alan. So now, more details on the progress of our Platform business. Our third quarter was another step forward in our development and enhancement of the product. We continued to build out our sales and marketing team to support the vast market potential we see for this product. As I mentioned, 70% of our new platform customers represented company’s brand new [indiscernible] Research Solutions. Our Company has been effective in acquiring these customers through content generation, digital and inbound marketing, and traditional sales prospecting. We have initiatives in place to increase market awareness and engagement, lead generation and sales conversions. As for the upselling of current customers, we are currently working to train our teams on how to best accomplish the upsell process. In fact, we’ve created an account management group that is now dedicated to it. We will be doing other things to shorten sales cycle like the pretrials with a self-sign-up option. As I mentioned in my opening remarks, in April we launched a new version of our platform what we are calling Article Galaxy 1.5. The new version has been introduced to selected customers in a faint approach, which we began in late March. Initially, immediate migration is absolute and we will continue to support the current legacy platform until September 2017. The new platform delivers a completely redesigned user interface with more friendly navigation capabilities and enhanced technology infrastructure, improved order history, and new functionalities enabling quick lookup of reuse rights, availability options, and online mentions of journal articles. The new platform switch from a multi-page application to a single page application allows for faster response times, improved user experience, and full global responsiveness across devices for seamless use on smart phones and tablets regardless of operating system. Debuting this new version, our ecosystem of…

Peter Derycz

Operator

Okay. Well, thank you for attending today’s earnings call. We look forward to reporting our annual results sometime in the summer. Thanks so much.