RSSS - Earnings call transcript Q1 2021 | Research Solutions, Inc.

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Operator

Good afternoon, everyone, and thank you for participating in today's Conference Call to Discuss Research Solutions' Financial and Operating Results for its First Fiscal 2021 Quarter Ended September 30, 2020.

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Steven Hooser, Investor Relations. Please go ahead.

Steven Hooser

Thank you, operator, and good afternoon, everyone. us Call. Research joining fiscal first for Earnings XXXX you today Solutions' for quarter Thank

call are Officer. the available the a first and closed On quarter today researchsolutions.com. afternoon, company's press Alan Executive and this The results Urban, website Officer; release Chief fiscal announcing at Chief for company XXXX. on Financial the After its market Peter the issued Derycz, the President is release

some non-GAAP like detailed today's We and GAAP SEC the impact condition. the Alan Research prepared future afternoon. that to the materially Litigation a Securities measures begin with Solutions' today XXXX. management release for measures believe for remind differ be in earnings statements filings of issued or would investors. refer to factors. call, is of reconciliation results will those a of Actual recent press measures, Also, will made the risks that Peter made implied Before under are of and remarks, this to the you Reform A their and could due discussion projected Act certain those provide from useful you operating financial may financial I to Private of forward-looking the on which information results included we company's more reference variety

With Executive and Finally, President over I website. Solutions' would now turn available I'd Officer. for made call recorded Peter via like Peter? that replay on and to be everyone Research the to company's that, remind like will Derycz, link the Chief this call to

Peter Derycz

address remain reported fiscal and fiscal pandemic I’m traction million quarter fiscal up from everyone ago. joining offering see all the from the safe to our and the as to we we delighted another within year other platform the organizations success including and therapeutics of end Galaxy and in deployments for results, first a XX continued XXXX offerings. upon enterprise-wide and partnerships in of in to enhancing accelerate potential continues. have We an number million, and increase Steven, pandemic. for product research. spoke science sciences to achieved quarter Since annual researching of to first industry large time provide at A operate recurring COVID-XX and money, hope COVID-XX and September same our we deployments, net XXXX the one-stop a record revenue and the our save into platform are new continued you, their quarter entering increasing the $X.X helps thanks XX% of our Article Thank the system results. $X.X We due life healthy year-end new you vaccines our record that and our for shop customers added life XXXX, at build us of

We Gadget, copyright-free access provides continue available. provide to our to which materials COVID Research Viewer when

over find initiatives results all help various proud detail. Alan? are We a we to pass But level in I normalcy. quarter fiscal return to shortly. are that researchers the to of the on I'd we to financial like in to that cause hopes by for these treatments the helping can will this virus contribute to first more speak it implementing through our first, walk Alan,

Alan Urban

Thank and you, Peter, afternoon, everyone. good

XXXX. increase total million, quarter from quarter the X% a fiscal was $X.X first Our first revenue of

The with low release revenue, other revenue Please annual of terms. quarter million primarily approximately by we platform driven ended Our in churn net high see subscription first non-GAAP XX recurring continued up sequentially and efforts, X% press customers. our today's annual use define recurring quarter. XX% in net and sales year-over-year, revenue how increase and year, for over last increased reflecting $X.X XX% and platform $X.X deployments the million, a platform in to deployments including up-sell

Our includes XXX,XXX. prior which XXX,XXX articles the transaction and year transaction to The on count, unpaid quarter. revenue compared X% total in approximately increased million, paid to from million $X.X $X.X a to decreased year-over-year basis

customer decreased by active X,XXX. XX Our to count total

count, corporate customers total the essentially total the a flat customer four increased by by is active decreased to XXX of customers compared which quarter. to QX academic Within XXX, to XX and

turning gross margins. Now to

income proportional business. total mix Our is business gross ongoing recorded over The quarter quarter gross to year quarter. of margin in was shift $X.XX or per $XX,XXX to to in point margin the The Net basis quarter, The basis net per basis XX%. costs. $XX,XXX the labor of the share points point Gross in our XX.X%, a decrease towards improved the a was proportional margin is the to $XXX,XXX ago of operating costs. Total first labor attributable transactions XXXX. from target decrease lower offset XX.X%, expenses margin general and XX% compared XX.X%. unchanged decrease compared platform for increase virtually a but primarily our to $X.X were $XX,XXX the margin administrative revenue quarter. XX The in high prior marketing low costs, to $X.XX the gross was improvement our within EBITDA allocation prior XXX in decreased loss range quarter due a development and quarter. quarter the XXX million and higher copyright platform of business sales increase platforms in year to product Adjusted due the or higher increase year the a costs share of as to year prior compared platform to in and still

And increased or of million June no outstanding cash There $X.X million were XXXX. September and credit. XX, cash on debt borrowings $X.X as sheet, our under we line revolving versus of balance our XXXX XX, million to no long-term to $XX.X Turning have equivalents liabilities.

mix expenses as margin higher flat. our As essentially business and platforms long operating to our revenue towards remained shift continues

positive financial generate to position. cash and flow, strengthening expect income further net We EBITDA, our

us respond of that of the I'll the pandemic well call the consider to changes well COVID-XX as ability Our as in strength the back middle that keeps Peter? cash to and to be to should organization position may to debt-free Peter. and presented turn positioned and add any our speaks remain opportunity arise an now potential acquisitions financial makes strategic to sense. our

Peter Derycz

Thanks, Alan.

first continue we results Galaxy We believe the multiple for show, of segment. to large our Platform Article on both focus offers quarter benefits growth our As and organizations. small

not these a While larger the and landscapes larger same average while universe needs sales organizations and competitive small potential life often the price, in carry to much resources larger medium the of face greater. customers same is lack companies. if customers due regulatory businesses of internal greater of the facing And sciences

earlier, generating for a on year-over-year to due spend is This expense quarter we the mentioned our As return. our marketing reducing and and sufficient decreased felt spend basis. Alan a not marketing sales was that other primarily media

of deployments However, year-over-year compared and sequentially our net number increased quarter. to the new fourth

we matters new offer Galaxy+ While by it that received half marketing this that absolute excited to our reflects has positively how been than data allocate just I'm in first our sales deployments dollars does proof offering dollar spend. Article than of report our more point, the amount adopted of more quarter. one the and quarter’s and marketing was

add to offering. as are We more this looking part of publishers

BIO than Article world's previously spent cost access for Elsevier. the countries. van der member Officer. in their Management more innovation management, can product Organization at group our Nature rate call years well wheelhouse; savings end subscribe our sector. solutions Head at and the on Michiel of at purchasing the Springer strengthening fits million technology program life articles. further customer-centric hired Heijden association as his Galaxy gain development will prior after the their continued United and quarter, focus than partnership our trade those business BIO. was the This more largest Product largest we of capabilities. previous Michiel discounted and squarely including as to mentioned X,XXX with biotechnology companies known unit in workforce as XX journal And Chief as These focused representing the sciences solutions for product our and our within is also the Innovation announced industry's R&D is in organizations. on provide partnership Shortly a XX development, organizations nine States our we July, now other companies, As Michiel in and Product platform to and Biotechnology

the experience. customer we and rolled automation weeks, improvements of a significantly In a few UI addition, number improved out in past that over will result

and led did Galaxy+. Article teams really also larger some customers our value scientific access cost lowest analysis team legally on both is organizations. end medium-sized The the conclude businesses, automation and provides analysis the to Article benefit This improvement Our to alternative analysis and cost that Article the us proposition Article true for for the research. and both benefit of the Article cost Galaxy of fastest shows for as Galaxy combined well with as research Galaxy small result This Galaxy+. published using

training also favorable, our for customer platform over and intact, customers This, fiscal Operator? our examine sales, I'd call Q&A. our We are lead help and combined demand world-class services our marketing they as expect and these other to so back research. understand efforts and beyond. must us our continually organizations trends into R&D remains more will deployments existing will Overall, incorporating efficient ways the with continued positioned accelerate generation the effective. growth. time this of turn With power our revenue to contribute progress additional for strong and that and product have platform. a XXXX and throughout well truly make now we our happiness the effectively value resources and like sales as potential leaves helps can improvements and to save It's sheet, operator money We communicate well that, of to and the for team, remain information believe product and balance commitment their providing to to information and

Operator

now queue. There We'll no session. are in questioners the Instructions] [Operator question-and-answer begin the

Derycz closing So back conference over remarks. turn the I'd like to Peter for to

Peter Derycz

piling Actually, operator, up. they’re

Operator

My mistake.

mistake. my Sorry,

from The MKH first Melas George Management. question comes Please go from ahead.

George Melas

you a what Good do you quarter, the accelerate like seems put sales Thank Peter more operator. on you Maybe, resources think much, where good to and continuation be working deployments? little might more net into bit can to able the new Seems marketing growth. Peter, Alan. and possibly to detail of morning, good be side, and a very you go

Peter Derycz

Yes. thanks. George, Yes,

on that and that that never started out eliminated work then, some and We the big side, of some with didn't. And marketing ones so working were specifically just campaigns of on did. recently sort experimenting spending streamlining of getting believers the that basically, focus as reorganized, things the business. – couple As we’re these you marketing leadership there's it's Platform bringing And and years we matter a also part of know, sales that, some not in ago but reorganized doing just a focused and really yes, control. we've weren't of things that that on in

got partnerships So now of was going seeing, like formula not, the and sort also product things Galaxy+ that not of we’ve that we’ve out and sort what’s the of more finding Article what’s realized enhancements, working, then working, a a them? What you’re it’s getting reps It’s really initiatives of trying doing, kind are of many you’re kind lead of setting, in really, the that what like supporting good you’re and sales. generation matter street. how – appointment out digital support sales on what’s warm

street sort sort items street, generation, said, reps to acquisition fine-tuning resources for our like more that we’re applying think that’s and what I anymore. worked to at the cost, on and the sort looking I sales bang we’re that about the So, even fine-tuning more now it lead Then we’re and and is on yes, But because customer area we’re our actually maybe, about buck. of work. that finding it, get it’s of they’re of not support more

George Melas

Okay, great. Thank much. Appreciate. you very

Peter Derycz

We’ll run bio additional that. that on putting giving really be the for just its as be – a well. We’ll be good Yes. money, thoughts we’ll adding partnership,

there to So, effort have there. a out reach in There’s of there’s to. going companies be lot some you that

Operator

Okay.

question Rabover from Please go ahead. from Artko Peter comes Next Capital.

Peter Rabover

Hey, guys.

you’ve about it’s partnerships, had, So months. yes, I think, in evo that additions – XX few last ask other don’t wanted sure partnerships Springer, really platform know, good had the I it’s the XXX the segue. not that’s that to you’ve a a and one I had more you’ve

respect So, of I’m with XXX, how cetera, out and getting partnerships the sales to just those working, those just related – getting many curious those how were platforms? partnerships et

Peter Derycz

Yes.

integrations of I ones, that sort of of different the then there the are a in some on and as And came think, different partnerships right the all have well, sort so board and beginning year. later nature, on. year the partnerships occurred were

good Springer our many up deal that, Plus. say, deals driver been the figures to a opting partnerships, I’d – Nature that So for are Galaxy the say can in sales driven Article We deals you Galaxy are just but – were I of that has how number or deal a for Article getting by those of good enhancer. it

from of I’d think there. I interactive, the we’re more sure now leads has a partnership, that, partnerships so but some we seeing are that the there; traction say. and that, than coming ones Nature put others, and BIO But action, say yes, then, out equally. the the lead I brand-new, can all comment but, BIO, more on So, good other I some say some put some have been to and however, generation, team BIO partnerships, not Springer are point, right the going work I’d no yes, really at this I’m generating a And partnership. good team on

Peter Rabover

Is bit of price, any for reason average quarter. that? Thanks. if little this you’ve a Okay. then price a it there had And

Peter Derycz

No.

time, think no deals. think But they’re turn little of with as in And up. deals fluctuation nature. there’s I smaller added bit goes yes, I be drop it’s terms standard and a or maybe, over a in off, it lot deals of you’ll just new

per the slightly. maybe drop slight down It’s just very So, average sales drop. just it price

Peter Rabover

renewal Okay. rate, guess, And what’s return I been? has your then

Peter Derycz

it’s Yes. figures, don’t up put but We the exact digit. single

We great. for then and upsells, at made and by it, have more churn; up churn. that’s digit, churn, us churns and so, total you’re than so logo single gives renewals negative a when which the low looking dollars, logo call

and up up and sort like that stick amazing top customer well. an and of that, year-over-year. to deployed, gets people a I used level that it, with it customer does think on the of we our have And happiness And stands product group support It sort none then take our a to and the the great then that turn just upsell, and group. great of experience customer renewal customer peers then that an in a industry do. there into set our year, in ability happiness throughout of

happy pretty we’re about So, that.

Peter Rabover

I potentially terms outside then of in that that, guess pipeline – Great. partnerships but Okay. whether up technical answer, nebulous the what’s And opportunities anything or they’re if partnerships that over M&A nebulous customers like development you or question, pick maybe you’re I guess any more very of or seeing?

Peter Derycz

Yes.

partners which we work to We’re with. selectively choosing want

get and allocated So, we to resources don’t handful we to partnerships. dedicate do that from want We focus to want a XXX to partner. do really and on can resources our

find that if fits of I part the EBITDA enhancement going we at taking a find possible at something business the be side just well that’s So half get – as avenue saying, if of early side not what count we for looking at mix are so with that is has that profile, we and now an – developing our balance a product was acquisition, size we’re balance of days, COVID, just hey, started – an still, ongoing sheet to year were could We that hadn’t you where product and on had past then general we we opportunity now process, on, it’s but sitting M&A and interesting of are good types if NASDAQ, compared to we’re look can starting we COVID of look those our I year were side we a and ago, strategy, a this have, profile think opportunities. we’d look M&A customer customer the we gone even as NASDAQ. sheet. ago, definitely a but start COVID-XX, can think the us, here be where so the right

Peter Rabover

side but you, this of the it’s and and of say like the the of it’s would hindering mean terms growth are important almost obviously revenue is the side wedded I it’s is the profile, you’re growth, business I shareholder, I the platforms the long-time company bigger growing in at mean, obviously, stock platform not because business, a business how maybe, declining. so and probably, it’s guess to the of much it’s transactions on as business? growing – growing how, or the I side profile, that, Yes. I transaction other profitable, point, guess

So, curious. with those would industry to or done in a separate do like transaction just potentially sense past it two, you’ve make the

Peter Derycz

functionality Yes. look thinking the products however, at the pretty delivery, possibility product strategy this When of product, Those – knowledge that connect, creation the knowledge. features which managed, the management, on that that falls point. the business, intertwined where, you we of transactions of more are knowledge and categories, delivered, sort now now is hey, of our knowledge at sort support right knowledge is into three was knowledge product the call what the has platform and the which delivered, helping the been to new creation brings

key knowledge now. is delivery say, I’d So attribute a

so businesses at the platform makes And that this makes, the situation where business and are transaction pretty a point. intertwined for

for right situation the right see technically, short-term, or don’t platform that the role, but just involved we probably figure them I the not the the a business deal a areas. but connected think more maybe as a gets rising I but from knowledge to kind way in could right keep management and proposition, of in perspective, a offer creations situation out for on or longer-term maybe right

Peter Rabover

Thanks. for you question, the but Great. in kind thank short were color. just of our Those

Peter Derycz

covers everybody’s combination And and under not, thanks like, of it the have on the or get really that were hood. under the screen, we but no, don’t see going to really not going let’s we’re the that whole consolidated this able on story able really tell platform know under looked what’s understood numbers here, and – say to that show the to hood you and under understand was the yes, do we people thanks Yes. you what’s like look yes, business. the emergence with really it’s

Peter Rabover

Great.

else words. questions. for off somebody ask Okay. and unless the Thanks I’ll hop nice

Peter Derycz

Thank you.

Operator

[Operator [indiscernible]. question The comes Instructions] Please next go ahead. from

Unidentified Analyst

guys. Hi, questions. Good Thanks quarter. taking my for

in transaction, along wondering any larger you deployments in time? specifically doing point kind following more to little the bit this with firm? if – of What’s a and little starting bit there average Just ASPs of change you I kind smaller, the you’re certainly on the a platform is guess on at midsize types the deploy a the highlight are deployments, the mix but for could of

Peter Derycz

because a overall to new, increasing. Yes. features, once the onto say, in more average sales size, grown starting price grown lower and accounts we’re new committed, price is customers take advantage of average I’d the the sales platform and price starts

So, I’d say lower a rate for always at will most deals. new-new the probably be than average

we than do higher that we However, some in do – get deals around the price. some come get that average sales larger the at pop

So, company actually life the is say on size and there’s occasional our maybe science I’d small companies. occurring medium But around activity the and large most comes efforts the deal. that’s the part, that in for street

continuing to we’re So see most the of that’s what action.

Unidentified Analyst

sometimes get mentioned, must Maybe, to sales where technically ways be I small to, but calls of, different not need strategy going is of Great. optimizing, you’re particular more be costly was a get opportunity follow-up universe, which great? Yes. different go-to since, downstream, volumes to you any there, had is you as could, is as you maybe, going that’s – enterprises, but the thoughts if mentioned you’re there of just you bit spend, terms would go that it market more to just marketing little and and and and finding there with in or that that kind do a you to is. midsize downstream the and you

Peter Derycz

Yes.

yes, right available be content we engine. marketing time areas. of type there’s the having having right couple to well question the at right being right is, SEO-driven, are the One right information into and search think, being I our more for of – a tuning typed is fine a the

six you say, So, see let’s online definitely our next our evolve a will materials, website quite over and the bit months.

world. partnership, represent number huge then small with and partnerships looking So the them a BIO, dealing they of And thing. And dealing are a that’s companies with definitely medium of size. like at around biotech most we’re

we’re we’re on special say looking what of the account they sort contact is know and – of can on more written and to side, large that. partnership bit those – to doing And those were are the driven look at we side, a us. the do of or know us. different RFPs you find So, it’s I’d accounts that a they about those I at accounts nature are need there situations where company, by out deals a a think large large

driven, purchasing information or deals in purchasing. librarian managed then managed RFP a So typically it's conjunction and are driven with professional an by those or more –

sort different things definitely we and looking cloud, So but volume. generation like appointment the lead for and it's online a a of and lead that setting web generation

Unidentified Analyst

probably of a land as Okay. then mentioned, in which churn had because terms the did certainly, somewhat kind you technically positive. Great. expand is you the to about dollar briefly I and And you – value of to and kind positive, start platform, churn, start goal and of think is as of deployment certainly you say, is you mentioned

customer the the knowing. of customer the And feel you or someone another can like customer or for brought may like that idea turn metrics the of – there in a something on. get you get mature they left on current constantly a a I what what's and with some some customer three has go trying average that. thing, from sales a back ago, left we tank Are on widgets or to customer base lose to of turn expand. that four turned current increasing customer on? in zero as – you land is is to have has years you've can there can they not two, do six, customer the nine terms and And mean, got some has any new Although in you same is

Peter Derycz

account the it customer to account the ahead when call basically account the is review that on manager I upselling review, definitely out to renewal of point it's renewal, what Well, comes with an and of data-driven. and Yes. customer reached happiness data-driven, team

the during since look number users installed, base things of first once we like the with grow or – company at So platform, using the grow it's things like, contract did basic them. – the user we signed

is a we signed that them determine big So are on platform on. the new also weren't relevant look that one at whether first just and do user when relevant growth activity to then to they features today,

case be they turn case. started, things when could the started that now So that's small. And new platform that they out lot, improving. into case few can in itself that a on, hey, the then, the then the help to they're third And so also it, them that arena is, is

in past, we drive – be of and should development. and our whether is or day able even thing, for product the product was growth and deals development do as growth. on there on a just that see off continue renewals to the decide the new actually forward So weren't this key And during driver you platform things upsells. signed for fact the strategic year, to there that is getting but better to one something new up the is going

Unidentified Analyst

a of you of kind pricing then, for how But got you to that new dashboard adding it pricing. renewal yet? up, what more – when certainly those. a is Is comes an of and a features really yet? terms the in what pricing? from Have power? There keep of both bit explored – is little to platform So of not about usually pricing you’ve user users have Or kind the issue at least

Peter Derycz

then think have reality and and – of customers, is things, as don’t market of increase so capability there I Yes, that but side yes we’re they priced, actually well, budget under limited on. course, sometimes

a also that charging our when vendors are that using, the So at we’re a than mix them we to But I'd we're realistic our in charging, you I look have think customers – that of have vendor more they approach. say. lot lot definitely

priority be we're And think, into we'll as them, useful foundation innovation of their higher I innovation that's so the continuous for I to vendor on able continuous then let's a moving delivering believe, of, say and long category start very list. as then

Unidentified Analyst

Yes.

trends, but so. and you the if give support to small questions All to more, get more, packing him into you're you I able at him had. you're it. well, Appreciate new by be time, some, That's can pricing all right, over pricing You got giving guys. it stuff even the least should platform Thanks good. positive

Peter Derycz

you, it Thank as right. Appreciate well. Scott. All

Operator

concludes This the to conference the for closing back session. over Derycz like turn question-and-answer any remarks. Peter I would to

Peter Derycz

activity be making but Yes. those We're we're not as Thank good that, it'll progress here, good well. seeing on the we recording everybody would listening for reflecting eventually think attending, stocks and that reflect expansion we're with our life shareholders. for And, of keep that innovation, yes, on move we're help science keep and products on sciences working what the on doing. working matter forward to going

thank see So next you all you and, quarter. we'll

Operator

This concludes call. today's conference

your a you Thank for may disconnect day. You lines. and have participating, pleasant

Research Solutions (RSSS) 13 Nov 202021 Q1 Earnings call transcript