RSSS - Earnings call transcript Q3 2021 | Research Solutions, Inc.

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Research Solutions Incorporated Third Fiscal 2021 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Mr. Steven Hooser, Investor Relations, for opening remarks. ahead. go Please

Steven Hooser

and us Ashley XXXX everyone. you Thank call. Thank for good Research joining today fiscal Solutions for you, afternoon third earnings quarter

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

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

turn remind over everyone I on for Peter website. to the this the like available link to a Peter? recorded to now would I a made like call would Derycz. will via Finally, that call be replay and company’s

Peter Derycz

and Steven hello Thank everyone. you,

and parts now of Chairman offering, a of the he allowing Executive allows model press I CEO. me served ever. through late more on quite platform’s years successfully our After the March, and company Roy our XXXX have President company the I serving have shift and in SaaS that company have the on has acquiring a for pivoting Chairman Executive transitioned than and and passion the role as business. the to in on by operating to towards My our For to overall the business a Board is companies. is the now Interim the SaaS-based Roy role while Olivier those founding as that missed known of growth-focused the focus CEO has Board for to continue to growth strong of I focus a for background X release

match positive go company’s for phase starting if success. we on best best our quarters, more history. details. our the one those just into Alan is will of he is next the a our of not perfect in He a So note quarter as completed

to and looking and him be on So forward really foundation really getting am sure a a starting him. shareholders expansion know I positive meeting him our will team. I find to of very am to solid our you

things on over the We Q&A questions With that, turn Olivier. organizational like would or will to I any improvement. growth to be the answer about focus our regarding to on Roy Roy? both

Roy Olivier

you, and everyone. hello Thank Peter

that transaction legacy I a today think is all front-row SaaS about we a company thank the today. a have business. in business true X I years seat is for platform the to seen get past to to on he position for it Solutions to business like platform have The I’d First, the Research Peter Having has from a SaaS and the business. the transaction business done a Board, pivot way

are the delivering a We transaction accelerate the via research process. platform ultimately to help

future. be on we reporting we call, more can that the going pivot. I’ll that a later the made And momentum think keep on in have We with bit great a process bit how

speak to For a provider past over joining and Services, CEO those on Network the chance the ARI Board, of services. to had a tools and was X the of I call I President prior SaaS have to weeks, marketing not

million During of my grew was tenure the there, that ARI million. $XX less to than acquisitions. revenues remaining growth half About $XXX over acquisitions XX completed organic, and coming from from

During in third get first, call that return over well lead company. a utilizing quarter like look But to into avenues to the I’d I growth meaningful turn I value Alan business for plans past forward more our Alan? strategy will to time, shareholders. created delivered drive to new to efforts results. Urban discuss details we the the for M&A the about of company’s and a as initial and our experience the my moment. to operational great as development

Alan Urban

Thank you, and Roy good afternoon everyone.

million revenue total in $X XXXX. third million the $X.X quarter fiscal of was to compared quarter Third

platform revenue, million in year-over-year, successful $X.X $XXX,XXX. in Our a quarter sequentially terms. We XX% by and define the increased to revenue deployments reflecting and the Please churn use annual record ended $X.X other and our for of renewals and sales by a XX including third of revenue new including customers. platform today’s XX% continued with deployments the we how annual and driven see efforts, recurring recurring our in platform release low year, XX% net non-GAAP grew from continued up upselling. increase our XX% upsell press subscription ARR a million, record last quarter

year of for academic two quarter revenue increase corporate past second number $X in quarter the by fiscal million, was of An year-over-year offset was active the in the Total quarter and X,XXX unchanged the decrease versus the quarters. was X,XXX over customer improved transaction customers customers. prior XXXX. in Our from relatively count a

over in from basis, ever decrease business margin to $XX,XXX a a Gross million expenses percentage generates margin on quarter year XX.X%. quarter to was gross well and I an margin, in margin high was by income platforms the and our shift Total costs. recorded points we $XXX,XXX the low slight year our improvement was platform unchanged due partially our largest of gross business quarter Net and prior higher labor report at to lower basis for range an third operating of prior for respectively, development target were here The transaction The is quarter costs XX%. share business, in the ongoing ever increase to sales share gross XX.X%, revenue margin ago $X.X basis the the towards the XX XX% turning diluted compared XXXX. net income The the point margin of within the and now a prior gross the prior copyright million, due And dollars $X.X to quarter. still from dollars gross year the as well. diluted the another Higher of or compared the Total offset mix largest quarter year record. zero decreased the to records XX% basis marketing total of or in Adjusted increase on in have zero which Now, over our margin product proportional increase have of XX.X%, quarter. relatively to XX% XXX year and costs. quarter. quarter. to $XX,XXX $XXX,XXX, of a was $XX,XXX at EBITDA were increase

quarter $XX.X and revolving we line or were for $X.X and I debt There call the Roy? to no XXXX. balance to borrowings as no credit, availability, the ending outstanding were other XX, now Turning back compared of subject December of cash cash million to equivalents have $XX.X million to XX, XXXX under turn long-term sheet, March liabilities. our million our Roy. will

Roy Olivier

XXX Interim Thanks, the in Alan. I’m and President excited the becoming laid five as team days progress I about and sustained towards the business. the objectives out After my improvements the follows. first results is for making CEO,

complete on accelerate First That transaction strategic how to was increase exercise planning value. a focused shareholder growth churn. addressing includes review to and

revenue the rate overall drag and business are on you a As this. has growth steps of taking transaction been the to address we know,

business assigned assigned I’ve sorry intended revenue, – owns to business. executive an have now plan in who important am the churn First, operating address segment one gross I our transaction margin to I and important this

increased proactively Moving churn an improve managing have the on to revenue. profile on financial our to the the of continue but transaction drivers platform focus that forward, we growth, with segment will toward eye of we business an the focus

business. total identifying by information confirming and our customers accelerate also identifying current market working addressable platform and customers by includes total We’re review to vertical. our growth market and confirming information This and vertical. segment addressable our in segment

meet customers looking specific by that to our identify are criteria We name.

also will has markets, new our customers and review to products use information then will how The accelerate that accelerate new growth. marketing platform future. based for and TAM We on we extensions looking the historically geographic SaaS to assets historic be project, we add deployed resources think help for our value company success. product to that we in sales new will that same and deploy Related sales

new forward, understand to focused the to other markets in the delivery, Moving seconds new right products on we invest words, is historically, in to is product Also, drive growth need article customer. there. few to our delivering additional opportunity and knowledge our where a copyright related platform and

Looking be delivery. a knowledge leader continue forward, in we to intend to

users the knowledge into acquired help knowledge spend platform. using our create in property will and time platform Galaxy. we our further as building initial our This inside have own more eventually scholarly their expand Additionally, dive or our well intellectual they the will Article management tools knowledge articles managing work creation as on will tools

X.X in of calendar process this in step QX Article of first The release year. is this Galaxy the

approach positive approach of prototype to our Article any and will aligned to strategy this TAM are serve more additional development objective have customers classic in intend time, best we partner feedback. have upgrade product to offering a better Also who growth. market time. this on a accelerate Galaxy our pricing research more with we our product Over us to believe customers ultimately received have X.X a good, We to sales M&A align and added value program us with positive very our and our shown new better, upgrades participate impact provide to We and and the be doing, available will with SaaS at customers a churn. overall around move help

have or products, an a do both. that add We and initial may developed to new segments targets already verticals expand represent list of opportunity

Therefore, are accelerate And to expand value. that be terms fit underway interesting acquire valuation expectations that expectations that able we and while to multiple we We disciplined In a will strategy, growth be our targets. will finding in enhances challenge, conversations some acquisitions. our looking today’s believe to and in may companies our offerings with that companies having a for are are growth. targets challenging. approach our accretive market, I our of we are are shareholder

we value to fit our a today. believe I can still that valuation targets profile at our is accretive However, find that

vision, we our analysts. The reviewing accelerating and to are Updating business our us organic for to can ensure mission, in all awareness and level right ensure values to the other the objectives of company the on both investor reviewing lead aspects shareholder the positioned plan include to integrating growth we retain XXX-day well relations next increasing and with a base key plan hire with team expanding and our focus acquisitions.

reporting the to on Finally, points of detailed next level, business just during back more to but at more the Q&A. plan I on over for I detail like our each learning would call, back for the will operator a Operator? in turn now, call these

Operator

Our question comes from Adam Instructions] [Operator first Wilk.

Adam Wilk

you guys. to remarks. just taking things a that prepared my wanted in question. for the mentioned couple touch I Thanks Hi of on

about you. and you start can around color helpful more acquiring add size? in of see might take sort maybe And be are I discipline little kind to looking of am maybe maybe kind side you what segment you how expand want a M&A of and of at any just interested anything you the of the that Just you hearing Thank kind bit to things. with shape of start. might the kind

Roy Olivier

Yes. you. Thank

of within verticals companies create just the product little offering segment, sell we the opportunity academic some out in other me, example companies we on as is there properly. an are a in if think color an find operate we today they to have But And is an other where we they markets. other a there are, either the targets. addition another our number across, that balls are we combined, or government integrated that you there with of segment. the us, to acquisition cross-sellable they Pharma a have in a which is also segment, corporate of we look product I are in business Corporate kind is of. able into there that create most segment and the market. to that Within segment. And as interesting corporate do the significant you into might interesting that their same corporate, us the successful obvious vertical that’s segment There may synergy to may our vertical analysis that, examples Just focus there tools the course, to somebody markets, opportunities think know, direct not other corporate those are But home-run extent cost primarily and Academic or on success is when primarily other addition be advantage competitors those have of the synergy cross-sellable into in to that like to what might run or And cross-sell in take segment. are segment

in But about. learning use there are make of companies lot they platform targets kind is about there segment a that us I today, for property. a folks the researchers – out that of certainly think every So know a am of have that may words, have I are And their out that download, the what and intellectual found, lot at it manage documents, you some is certainly would more business they didn’t use tool day our do there other perspective, cross-sell. out manage XXX tool product to there create In they or of valuable. own may a their we They other and there They use discover create when download, tools can of out to government. may academic. fill that in we are got from lot a we products look that some

All of view, am Back big for those to those your to acquire companies. comment, accretive to it in a us, are my value. in potentially I opportunities believer being our

pay believer above in unless historically cross-sell to are paying So, also I to for or opportunities, reduction am that’s on not is whether I synergy clear creative line-of-sight dilution. trading like at, we I don’t am big multiples significant what opportunities. typically acquisitions. pretty cost visibility there a

at have earn-out. bank our And debt, any So, cash, with if equity lot look the all. item a record, acquisitions of you there if last equity on table done seller is of offered the we at past a combination typically, track debt, is

the helps. for question. know don’t that I So, if Thanks

Adam Wilk

It does. Thank you. helpful. That’s Alright.

platform So with along growth on M&A so the is maybe transaction chugging the talk, obviously, side. and less

tool side. organic capabilities in the as Is the and isn’t – maybe opposed or more cross-selling like transaction about the this adding So, to it’s the that on to the or maybe throwing to right up-selling like on look growth set towel way at that?

Roy Olivier

Absolutely.

XXX markets this In identify sales platform, if is that is we drive have not may we enough have TAM fact, XX,XXX part talked project than not more of way are SMBs doing think to have we potential we only the growth. can which may resources or resources that have sales about today Because about deployed acquire our today TAM, of that them. to than you

around why a just quarter? can’t marketing So, We seems of know a quarter, need the like to I And the there. a answer the of resources instead guy sales execute sell is new a of have who we We don’t It as part XX question selling people but is we the opportunity opportunity. are. it’s – first part and is answer, ask of literally XXX complicated these that list don’t names. the

products based companies countries. opportunities lot boiling have already first major are new think users buyers by we on is raise to M&A executing sales are, on specifically the done and platform adding extensions. are while can who And plan new work down a of to we we countries doing the and of together on main So, thing had product the are which the are success have platform ARPU and what those who we put where I a in accelerate and

Adam Wilk

Got That’s helpful. Thank you. it.

something. be new at from later unless maybe you that? am or kind Just experiencing one come the kind Does they missing road in net should me, I Yet, so more previous skyrocketed I looking pressure looks some revenues with the are are quarters, of or I that pricing this how noticed that quarter. deployments, line on of like down maybe

Roy Olivier

Alan the on growth have of, tremendous I kind I – and nice the paying will to ask a obviously, of seen new But well. deployments platform. is the efforts But overshadowing business. number jump on in as we in business platform that’s transaction off. think say in here net being SMB our Peter will the are are I going we

very, opposed platforms as very the pharma So to the are into a selling that? But of large customers. to to you customers number Peter, we want do add smaller

Peter Derycz

past side, in had, that additions month. also, I like the We that quarter. said, of growth I customer a don’t revenue. revenue we From say Yes. revenue in X/XX recognize would recognize the we every large

side on on revenue the customer side. addition So, will recognition that trail the

Adam Wilk

just I can. And Thanks. one I great. said I last know one one, quick I am sorry, Okay, more but if

wondering, – change thing, things it, ratios, of of are a of How LTV/CAC picture about the management will management churn, you how kind disclosing new kind just of shift. strength Just like that thinking are people in line with maybe I or the trending call you give of guys this shift, forward? better and business to kind

Roy Olivier

what right we active and debate Roy. currently actually had is we kind some to are have that publish. reviewing what am publish, This Yes. we we having now. a of may internal I conversations That’s want about very

yet, at the think out we to to I to no look models you will try but So that need decision on you continue build understand that wants investment opportunity. and provide everybody that to what the build,

Adam Wilk

Alright. understand. I

thanks great lot taking it. Well, appreciate I great. and job for questions. Okay, a

Roy Olivier

Thank you.

Operator

Your ahead. Please from next comes question Instructions] Billeadeau. [Operator go Scott

Scott Billeadeau

that in Maybe there guess on or the feel. time? platform help have Is little answered and that function on candidates. as a potential But it also to are deliver can And thoughts was platforms and and content give built some they characterizing us follow-up the you question of those there potential in maybe my these I over because previous Hi mainly development to of well? the guys. that change content Most a business M&A mix is of any have they content, many their will one.

Roy Olivier

is a there a of Yes. by this we publishers, in is connect not My that That’s content as new driven view them, and virtually business and tremendous already all of number the the them. is question. great guy to primarily

or are we tools targets acquisition expansions our the of most current looking at are So platform. to

you For to and narrow and countries you tools help get peanut that about that to there in we Highlight down workflows you do we of you typically example you actual search think to once text in to manageable that those, you supports bunch the would help it? going of for a of in, it, lot place. just not will supports a Is own allergy, you that the Are mining today, your workflow. Google. been keep create you be company a And deliver a more search you is have go keep that there AI and of then research workflow tools that’s out tools there that another regulations are part we annotate on for documentation example, have although source your amount there we out I or Are changes. make results, something receive like there it, there to results? the manage changes that that’s article it, help is research?

want day. comments. there So, – platform we of may to add additional our natural that some same portfolio – every to are addition are that Peter, have regulatory-driven kind the users are tools out you that is there workflow our a using there to workflow

Peter Derycz

and to with been industry, content, literature or that type areas the my of scientific, like technical on, there Yes. it that and be looking different role really to that ecosystem of at information. could interact when we interact add of is specifically have of focusing content interesting are us. at I could And new of categories STM, Things categories the comes other touch patents, is to and would players. medical other grey standards, that content question there the on which I like the literature where looking add is Part that. to content

categories. create could think if helping new especially only So, knowledge creation to area, I new new that, opportunities management but and knowledge knowledge that a interweave an not way opportunities can – even by be interesting new delivery different interweave we find content

when So, at sort I have something looking at players and the targets that in been ecosystem. actively of core that’s looking

deeper getting way STM So, into we are deep pretty in. literature the

content it’s okay, really categories really question, So, content doing. really, could we interplay are with there when the it well are it’s of other what that to comes specifically,

Scott Billeadeau

to a that. Great. And just then follow-up

the customers. it’s technology you the certainly, doing but for this hear That kind things to are internally. the points tool, expensive As don’t that value how there you tool, – going be and are of certainly, from analysis much higher that too pinch you is your biggest have

obviously to be the built, should lot – value a probably the Is top So list customer. are expensive probably maybe as are they give insight a opportunities I – to to that’s that obviously, list, that those? you to as to. also rank – type Those of us jump going But pinch most that’s high little certainly, customers farther and the is be away lily higher mean ones. some how pad but be their the want those though to there you a are points

Roy Olivier

to up are And and recurring list is simply or active end is look we lot And we to that acquire. targets how think whatever on because direct are a we now it on growth it like. think of looking we when what too working in. the they. product early profile competitors comes right way our those is we they big size, about extensions our will fit does at revenue When passing on, are The big are much today how analysis

recently $XX acquirable at stage. of We necessarily say that million revenue. in got That’s is but not this looking small us for growth already emerging, a approached that’s still for something actually mode I relatively are we a that’s for, doing So, can feel we acquire. company wouldn’t we but like

$X interested very However, a that other we tool million, or there as that are companies way in their be And X,XXX $X of the doing lot way. there cross-selling – revenue that customer may cross-selling in base. we very very is well, our in in interested million be into out may other may interested be

of are I customers, So, are companies acquirable revenue. past have out they they think smaller actually that that actually there the stage. actually lot there recurring and is prototype product, They a have have a

Scott Billeadeau

Great. all Thank I you. Thanks. That’s have guys.

Roy Olivier

Thank you.

Peter Derycz

Scott. you, Thank

Operator

are the further There session. Olivier over I would question-and-answer questions. concludes to like closing no Mr. to This remarks. any turn the conference Roy back for

Roy Olivier

interest you, to thank thanks and and your operator, Research all in participating of call. Well, for you in Solutions our

contact We Part look will specifically one-on-one We mid-June, speaking a a virtual again Have day. be you in meeting. participating to would June in qualified to forward Part quarter you to great Advisors’ ‘XX in like if year XX and fiscal and September to for our investors a setup results. Advisors Three full conference Three for fourth

Operator

call. conference today’s concludes This

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

Research Solutions (RSSS) 15 May 212021 Q3 Earnings call transcript