RSSS - Earnings call transcript Q3 2024 | Research Solutions, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to this Research Solutions, Inc. Conference Call. [Operator Instructions] Please note this call may be recorded. I will be standing by should you need any assistance.It is now my pleasure to turn today's program over to John Beisler with Investor Relations.

John Beisler

Thank you, operator, and good afternoon, everyone. us Call.On Research Roy the joining Fiscal Third W. for Earnings XXXX call you today Solutions' for Quarter Thank today are Financial Olivier, Bill Executive Chief Officer. Chief President Officer; and Nurthen, and results the After market a announcing quarter closed fiscal afternoon, for the company third the this press issued release XXXX. of its and some the will website remarks, to like I researchsolutions.com.Before is under of statements and today Roy made that made the release forward-looking Securities The Act company's Bill Private available be would XXXX. remind on of at Litigation begin prepared the you their Reform expressed Actual factors. implied results may differ materially to from of those variety or a due results We refer today's call, financial will for the SEC discussion useful conditions.Also reference you the management of measures, investors. financial for certain provide to operating Research risks believe that filings the which and with more information impact we detailed recent on a could non-GAAP Solutions' future company's to earnings this is of measures included those reconciliation the measures afternoon. in A earlier GAAP issued release

would like replay via Finally, Olivier. for call would company's Roy on the over the recorded link now to available to website.I be call this I W. to made a turn and remind Roy? everyone like will

William Nurthen

Roy, mute. may on be you

Roy Olivier

mute. I'm on

and I strategy calls, this Thank think thank improve on reimagine before? You the discussed you, and it you, done we've to John, Bill.As our haven't previous is research workflow.

with from and this overall quarterly I of excited million the success. to had few months and We in show in million adjusted platform quarter a a journey. remain flow and After scale of $XX results revenue, Scite operations. as revenue SaaS fits to $XX rate results The EBITDA to acquisitions of recent continue $XX journey's and into are business than in run Scite part the approximately The represents million we more ability and a starting cash that. terms are and from that Our of Resolute the strong how Resolute, of There's big it performance growth, creation. vision for growth. translate in document like in and back the then we to walk the this will the through as Bill how of in said, future detail, our fiscal I'm making strategic delivery to be revenue.I'm Bill? business numbers.So, businesses transformation financial XXXX in it very undertake quarterly value about and will product excited about I'd and moving accomplishments and discuss That to shareholder financial journey pieces to detail. progress and over or transaction continue lots our the we it third progress quarter pass means the are what results excited I'll more to committed

William Nurthen

of that the everyone.Before XX now XXXX. Thank contribution from year, you, July I'd third ResoluteAI, to include Roy, which both and closed of December Scite results closed good remind like on a everyone which acquisition, full our begin, acquisition afternoon, quarter's I the and on quarter last X,

XXXX. numbers, of XX% for year-to-date are a fiscal the X fiscal $XX.X was quarter third of third into X approximately the months and quarter fiscal there million, from numbers.Total revenue Scite XXXX increase For of factored of the ResoluteAI months

the million or year-over-year ended by of up platform deployments platform increased increase revenue, ARR, from revenue last primarily with the increase subscription Scite the was BXB and We was growth we in in grow annual of Scite did, and and majority BXB from the in approximately the experienced Scite quarter The of ARR XX% about about limited to X% year BXC as the the net revenue quarter. in million $X to in of as driven revenue Our the XX% a recurring well acquisition. million. ResoluteAI from addition $X acquisition, $XX.X both contributed Article platform sequentially. ARR discuss in We take in a which the minutes wanted business.I quarter, the few Galaxy added We fact, to vast incremental sequential quarter.

of churn the in majority was vast ResoluteAI business. by that the offset However, growth

material, this unexpected that in now this is it concentrated quarter. which of us. mean is the through the cycled most it completely a had is The the While churn ResoluteAI. on from have upside of downside that QX. we in was does renewal in future of of effect churn not was a renewal and good large not churn the risk had not will ResoluteAI was dates perspective, and customers, we have across behind all customers portion This that X ARR The

the Scite out However, ARR we technology.On was rolling believe in the the expectations. note, products in a BXB and using Resolute are above we BXC quarter both strong new growth is worst positive us, and largely behind and

the recurring and successes Scite and million, $X.X of quarter upside noted we business. which more Additionally, press both Scite customer are of and $X.X they we about will lot BXB X% increase year terms.Transaction and in speak our a for revenue revenue today's how we the million, cross-sell at of Today, annual there's announced in the use non-GAAP some was When to Roy for prior a side million see from define believe of Article base, $X.X we the quarter. we other detail. that had Please roughly continue release BXC third the Galaxy within large had they ARR. acquisition, about

contracts was acquired represents which first acquisition, year-over-year our FIZ X, January from that the effective Karlsruhe XXXX. the quarter customer This includes comparison

the is March experienced transaction modest, for high and for quarter. represented is was revenue, significantly for returns of we While and happening, the of at company slowdown which largely quarter looking year. year-over-year affected increase a the April, time was In April year-over-year the year-over-year quarterly are a week transaction and typically in early for this was strong a up was seasonally comparison by last this mark in start opposite revenue.Further, effect with our Easter, year we best during the QX normal

a point into a was Galaxy. The and attributable increase third quarter remained year period normally business the to weighted to increased higher margin increased ongoing within margin and we gross million back prior or and the post the for our business for is depreciation improvement XX% shift those than primarily gross confident we products the primarily towards the as our to were profit compared $XXX,XXX year the increase Scite's into quarter I profitability. an The in profitability decrease of margin but to to range of a of revenues.Platform same the between quarter expense recent are to for XX% strong call X,XXX net Our margin be We of forward, ability Scite opportunity quarter. basis a allowing The a prior proxy last total consistent performance. ], adjusted The profit. $XXX,XXX Resolute's on active intangible margins. to share for half related to adjusted us, We quarter basis QX, diluted acquisitions.Turning was points XX.X%, heavily in us year, the customer the recorded margins was of from quarter.Turning that million of the platforms activities. the margin.Gross demonstrate range revenues a amortization on with in over and result per amortization income EBITDA per copyright platform in XX.X%. would lower positive in compared [ the quarter, revenue was $X.X transaction of in Article the a the to assets increase more about the much XXXX. the mix will This ago.Gross in And operating generate going on platform count EBITDA behind we as remain contributing largely largely with margin to perspective, associated third is an to share to expenses expenses are net were X,XXX translated to also to and history, XX.X% fall of expectations that In be to a related due over operating approximately generated XX%. compared or our the to margin in XXX the to The a the thought back of of with mentioned of prior year also gross revenue. in $X.X $XXX,XXX mix roughly of of breakeven M&A Article inclusion profitability ago continues Gross the Total non-cash the our results, to able business, company's This income business. our cleaner quarter. quarter likely the now the higher-margin (sic) blended gross expect. of ResoluteAI first similar platform little margin platform $XX,XXX the Galaxy experienced matter attributable the compared that the million I $XXX,XXX of company XX X/X decrease $X.XX well $XXX,XXX but business. a our expenses the in balance income.Net was current increase associated revenue gross year with in XX.X%, which compared revenues, of basis record addition with quarter's and $X.X is year Recall the of half as expense, one-time our year sheet.

spent with flow QX generated in from with from new covenant we cash untapped. from in in In and fit into a today. is and $X.X $X.X over compared the also think year compared where line ago after it we was Bank Cash $XXX,XXX of experienced million This quarter, the is cash the million good remains that a equivalents a at also new for where is flow for needs that and $X.X we in million end to acquisition.We cash stand and quarter, credit of cash record million line operations we respect XXXX a with our quarter. stood both We and XX, cash of the to the business prior company the operations the the flexible March Scite perspective, $X PNC to diversification as quarter. entered

I some potential be has As QX we think look to the QX similar to ahead, with very exceptions.

period being strongest related I acquisition. down transaction advertising our on we transaction year-over-year.Second, up very for be returns positive our expect customer BXC seasonally modestly spend revenue, to but QX are revenue with to sequentially, would First, seeing

result, increased experimenting As advertising spend a will in be we QX. with

I clean, higher. think flow Roy? now marketing and back be another our performance the with it.I'll be quarter we to likely that said, relatively Roy. call So, sales should and the EBITDA turn strong behind adjusted will experience All will cash expenses

Roy Olivier

Thanks, I the of Bill.In earnings BHAG ARR of end $XX in discussed our our last FY goal big by call, million 'XX. or

behind Our of $XX.X a end ARR means little million, that pacing goal. at we're is QX which the

very where with However, this be addition, toward comfortable business. straight will Overall, our we I'm My priorities Bill EBITDA, mentioned but today.In pleased ResoluteAI was we are to largely need our the work as stand not follows. within X in continue with churn areas we operations BHAG due flow quarter, cash performance to from several adjusted I the line, progress on. but the the remain revenue, have to top

part acquisitions. Scite First, we've integration that the new across acquired and of the products Resolute as

the the completed the first integration. Scite sign-on, or now seamlessly and so AG We have of users between We product. phase single support Galaxy Scite-Article jump AG can

product. We Galaxy Article also have added the Scite badge the to

the As of see an a of can the pricing see is articles, the a Galaxy detailed quickly Scite and all or to the while user to product quality in and unique growth. jump click and badge articles, platform.The for the of FICO reminder, can this for in the user users score that results or the availability can Rotten Scite product feature more second Article Scite so Scite article Tomatoes articles AG allows on judge

also to of refer The team, have new-new the which team, we existing to customers, and beat year. on X last drivers reminder, to logos as a is sells track sells Galaxy, will last Article is Article year. The track transaction-only Galaxy team As beat new new growth. on

to continue licenses. addition up and team who moving see with through software We in seats strong upsell to has to or challenges the adding customers versions delivered more performance historically features advanced

remain of churn, on, and to our customers of a that workflows material this work phase who's problem.My versus have ahead increase growth. to years.The is in how competition. invest controllable enter That out of due continues or of acquired the churn we As where be brought any in spend to where fourth is, the doing group, previous we high in to we than leadership that business. that we of historically seen priority make we There to nice careful not new sorry, uncontrollable A which we need that about churn to continue and -- to growth, a driver and more it higher, drive is is I'm We said, going our are customer will churn setting job block of with we seen. customer our up we see increasing outreach thoughtful majority investments due that next our being for to third get new growth? need and have

I out onboarding. sales building think to verticals or a forward it's time more we approach move focused around accelerate new logo products

existing our our that seen this Scite back $XXX,XXX. BXB of a in From deals in 'XX ARR We I'll new call.We with QX the report alone, on are $XXX,XXX base. BXB I into in were around reported in FY product. in some customer closed our We exciting have new was last now, call planning lot cross-sell a next which of activity our over Scite Scite perspective, and

strong the very a quarters. of have couple to expect results and see next strong in pipeline We

closed the the Galaxy the large deal our Article in I'm some a takeaways part customer, for country with closed competitive in closed excited the XX and We deal a the the in more ever pharma of new-new Middle seen a terms large customer see success India, progress in in in past, deals larger aforementioned pharma East.On deals. to and to good during quarter. had As we've largest the as deal progress of closing top Article deal in we've which cross-sells, here, SMB. X-year Galaxy to teams more that first We our the Mainland the is Scite China X first contract. we side, second

While term.On majority new business deals in is long our great SMB we competitiveness for side, large remains of our saw unprecedented a Resolute the in logos, the QX. churn

do to that sorry, to we and return historic not -- mentioned, going return to forward. levels more I'm expect remain expect Bill churn As to it

sets.The based BXB $X QX leased we to ARR $X.X new data the Resolute's did BXC of progress. an product around positive Scite Scite contract solutions AG X BXB products great QX, technology clinical show to reporting -- client, reported on the at ended existing end continues we landscape At software the sorry, We side, and and we million. be a million. the On with close and trial

with and ad experiment to monitor continue trials and subscribers. We to spend to then conversion

pipeline move close. We have some the also We've a BXB our into cross-sell seen seen BXC BXC to efforts. in BXB success individual sales subscribers few and

for slow we to business' in season but this We as remain season into excited FY -- entering are the move the contribution about document typical months we the summer BXC, DocDel. 'XX.Moving delivery or

revenue, a also product in transaction some FY availability due late Easter improvements and in publishers' transaction Galaxy. material and platform nice through report to reported to paywall, to Article Scite due starting work in to we as manage that in we're some we're this UX strong year, the the in experienced I pricing due see in growth rebound the report DocDel over agreements can seeing DocDel Last seen early and can I integrate into BXC March addition, 'XX.In we've sales we was in sales sales to April. some year. Our slowdown that Easter April.

matter You the had impact recall employee may our some the we of on about concerns base. proxy

also second and a Employee I'm to completed report We from nice that our Gallup improvement a Survey, recently we year pleased showed ago. Engagement

results. I'm do, significantly.While progress versus work has improved we the always actively disengaged will in have very engaged to more Our the with we have ratio and pleased Gallup

much business you about with many potential to When had diligence did know, than plus that and combination we a more simple very months, can in Scite, of my even X exciting be that to that As its After a measured on this greater X. comments believe the the lead is very event. a path business. we the something few a I'm convinced typically our transformational I'm

can for help while here, Operator? building Our employees to value for direction operator back I'm shareholder QX turn about are that research excited we of to what our over that, the are the I'd and like And results, excited with Q&A. creation.With to do we we also potential what the and I'm can the what how and customers very long-term improve long-term happy help research. about overall means call

Operator

first Instructions] at Street. We'll hear Jacob from Stephan Lake [Operator

Jacob Stephan

a you're there? you. not well. how of curious of of it's made Roy, of market Congrats the seeing and you to Appreciate just regarding on as due comment kind and to some win competition. you're I'm yourself quarter usually the from positioning churn kind how your competitors how opportunity share kind

Roy Olivier

a That's Yes. great question.

product where is categories Resolute participate come a which our have that tools, in. we in to superior in, the and is include strategy which Scite think discovery I

not or Galaxy, we to these a adds is software.So And some and And add the We badge unique competitive more functionality references the access tool core is into add delivery Article into we that's additional our real like the as from together, forward, continue the moving value. which and think to integrating that tightly we AI tools Scite product, reference to platforms, which one exporting advantage platform. you're integrate features to of document continue capability importing management think and the we next the tool. functionality

addition our out In the simply to is be research and fact tool easiest today. that fastest there the objective to

move but be much I a strategy a and with conversation good made have we share continue it's competitive feel to to forward. take have and progress like as So we longer that,

Jacob Stephan

Got And one it. Understood. just more. maybe

You BXC guys of expansion. solid had kind a quarter and

sense see here. on and saw sales in about the your here We trending going marketing QX. just guess, think over moving You kind can in any expense noted are maybe term of I here. forward? quarter QX to how we first sales that million be should But implemented kind efforts of kind But near $X in how over of we marketing and

Roy Olivier

as on in let more we bit to drives the we big the mentioned, will Bill experiment numbers. as invest I picture, continue digital spend comment trials on I'll a ad right BXC mean, with side. that subscribers the spend Bill and Yes.

expect side, we be changes BXB don't big QX. negligible.But but into Bill, roll We we any it may I next year, into costs the comments? will On go as as add some we additional think any

William Nurthen

Yes, a couple.

the fully cost Scite a base First, this had perspective. represented we was first quarter that from

pushing And think this rate the I one of quarter. of we sort so a run reasonable that's $X.X to with the spend. million of exception kind And do that's us what's marketing had

We'll there probably -- what be in $XXX,XXX whether or quarter. think to getting of experiment. we'll will kind marketing metrics that are not. we're that that we'll And looking maybe $XXX,XXX, at and I going do expenditure anywhere, of the spend we're to return going kind additional forward continue see of on

one, rapidly, so get And or how turn that results quite off something quick we not a seeing we're turn then on the working. can read we And if it adjust that, very we is two, it's want. on

a on I think look the at that on So, how I P&L basis. go-forward that's line would

Jacob Stephan

appreciate it the about thinking Yes. kind -- Maybe about Okay. quarter with growth. I you overall kind a was help expectations? us opportunity more. how Obviously, in of maybe -- and that. just nice the rate And BXC one overall But of of growth are growth opportunity. sorry, hop ARR think here

Roy Olivier

Yes.

the customers good us, the new what when I to I think is also mean, relative we materially what of churn the different, really of are don't very, it and onboarding know obviously compare they're know very new rates different. to business, churn we rate but is BXB to BXC don't rates. we

roughly know when say we So XX million platform subscribe that that -- there, million I'm the at I I on out looking mean, researchers research. number, of that out there's XX a for or that exact TAM there in focuses to terms to business,

to the is onboard spend, lifetime we seen mentioned, in in said, of can cost or subscriber seasonality large And per conversion any especially increased those the have to the to many continue trial where So, up as rate. expand And we point in question see to so see we're addition value customers? we've rest the business. very the that that material TAM, terms spend trial, the we of I a to in numbers. not how dial Bill deliver where it that far, to up mentioned, think the value that's of change customer comparison we there's signs All more change today.The and is, material has users a than we've continuing as going why, our

spend people August to then We're up going dialing be school.Anything June, we're get want month, again much July, careful sorry. So, this as dial-up this add, about to spend -- you and back I'm to Bill?

William Nurthen

covers it, that Roy. I No, think

Operator

Group. [Operator Instructions] hear from Maxim Allen at next We'll Klee

Allen Klee

about Or kind next You it gave in ramps guidance for Or annual revenue. to think your Eddie? mind? of kind get accelerate there? recurring do Does about X-plus fiscal years over is you steady you up it how How a the XXXX do it of think that? your how

Roy Olivier

Yes.

call million our Just guidance. $XX to be clear, I target wouldn't

No, bottom, For a on we're me, you know, provide that chasing, And to number. it's $XX top we in to I That's question, hairy and the It's million. see BHAG the big typically as ago, think of we your I goal what now the a moved we've products. don't fully guidance but the $XX mind, not a though. chasing. Keep years in BHAG. million. integrated provided were acceleration I've or X it we'll Back

the Scite we're of and implementation of of will we future. Resolute. the X We've combination into a products the drive Solutions, out haven't all think of to build of built Research road We not things the finished companies; going new lot also

per certainly conservative, outperform we half but growth relatively as second we to growth looking $X.X quarter, of 'XX the being that that net hit me million believe So -- 'XX. get and in into for I quarters, FY these then in ARR but we'll $X.XX I'm won't early throughout start million or

Allen Klee

That's great.

count? housekeeping your a What's share Just question. current

Roy Olivier

Bill?

William Nurthen

to XX just say, million roughly. want let to $XX.X ], [ I around confirm, me right million XX It's million Yes.

Allen Klee

about Can those them? any new the sense from announced opportunity recently. X you features you you And if can and products features of give or talk

Roy Olivier

will the allow of engines focused we're are Yes. you work tech way We criteria. to one departments search It basically think there's those using the our of trial is within put to organizations on together or that in tremendous And products clinical amount a information. then landscape. we gather typically serve,

is scientific peer-reviewed in the it of Some articles.

Resolute Some that data for search the you has, write the ask of it to summary run. or of clinical the tech the subject that landscape external you summary and it write literally of a sets it for research will is matter a trial in

it So heavy to to does the grow dramatically but it effectively, functions we expect is it expect millions, tools, what of do do reduces amount time to XXs them within research-intensive be of we organizations.These those takes don't over time.

However, I think in certainly are than XXs, Scite's the are Galaxy departments companies of of that versions because is research work type researchers, targets that that TAM of smaller. for even Article whereas thousands the are of our simply doing the that the Any the smaller typically Scite. much hundreds, or organizations are

up or references. steps size Scite, They near helping opportunity and our departments the exciting they're anywhere of an Galaxy products. with would as the of the Galaxy research them various of think line process. Article SciPro involved strategy Article So, in I all But or not

Allen Klee

your sales results the cost and to what you that? Last sales acquire, increase How extra you about for do in if hopeful, spend gotten the good get like question marketing and you to think marketing, on dollar for in hope that. an as you've

Roy Olivier

on do Yes. BXB the BXC -- you we up here When and pull of side, and comments to some Bill, the I comment well, side. on mean, something I've I got a want invest can context. couple you give

William Nurthen

Yes.

One and other ratio pay we're of acquisition to that to and So side, back BXC cost typically, that customer. value lifetime customer time the at the typically X as the looking the cost is that the metrics. acquire is to compared a customer on cost

improving, if be to metrics X as maybe lifetime those kind quick under minimally looking can looking but more of for those. XX to is looking aggressive under months little a we're more trying and above kind months like where optimize standard, more, we're value the Xx bit or there improving, CAC. pretty of so, we're to of obviously, not so, general, And we spending see are In payback and

Are things monitoring. those what Are -- that's are So, are to more it's these add but And we looking they improving at, we're we're deteriorate? these really as spend? numbers starting trends?

Roy Olivier

Yes.

on the similar have a We approach side. BXB

Just the bit are different. a numbers

experienced out typically XX-month have lifetime of typically we and large a kind between at because very XX- have a customers we don't period, So, churn value payback fast and rate.

CAC numbers done and a few to there in very maximize traffic of the converts nice past business our LTV spend I months area are again, the of So, job think we've where into pipeline. calibrating another that good, that's sales

we've to I the made get I we will lot progress a start in So, 'XX. of think FY of beginning And numbers into that up there. got as show -- think

Operator

conclude for our additional turn And any this session back for does I'm Q&A conference. to today's or happy remarks. to Olivier Mr. floor the closing

Roy Olivier

joining thanks, and the you, call thank Well, today. in everyone, for

attend you and quarter to there. should or Advisors, day. we Three the forward in We IDEAS participating to Part that great New be Part again speaking discuss our full-year XXXX like contact June will Three in September Advisors to would you meeting fiscal results. schedule Have see fourth to Qualified on look a investors Conference a in York City with and XX. Hope

Operator

thank for you your conclude and we and does teleconference, participation. ladies gentlemen, This today's

You lines. your disconnect may now

Research Solutions (RSSS) 9 May 242024 Q3 Earnings call transcript