RSSS - Earnings call transcript Q2 2025 | Research Solutions, Inc.

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Operator

Good day, everyone, and welcome to today's Research Solutions, Inc.

Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this call may be recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Steven Hooser, Investor Relations. Please go ahead, sir.

Steven Hooser

good and Jess, you, afternoon, everyone. Thank for quarter fiscal you joining us second Solutions' Research the year for Thank XXXX call. earnings

fiscal company's Chief call Strategy Chief the closed the Olivier, Chief available second with today Officer; Executive a and Financial are Nurthen, is Officer; researchsolutions.com. company of Josh at on Officer. After afternoon, the the results On press for and XXXX. Bill release the release Roy its website me this The President Nicholson, W. issued market quarter announcing

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

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

Roy Olivier

sales terms results results. nice and deployments, organic pleased strong team ARR was quarter. with you, strong deployments academic-focused in the We We academic record and new Thank Net bottom-line. overall teams top a reorganization and some sales in saw team. of due results and into a and helped the delivered new team during Overall, which the second corporate the the of were I'm of to quarter corporate-focused produce an on net Steven.

we of customer are area CAC and focus terms CAC in remain cost where business. said, growth our on or terms and not and We continue in a want net which number to or CAC run upsells, be to improving That to that be acquisition of our The to we'll to is quarterly LTV overall the value $X.X we strong. lifetime rate. is need ARR where million, of churn

walk to AI sales in news expects Officer, to Bill detail, pass portion, the every break financial second call of quarter, a to in end then Research some ARR more However, BXC the and of to more to as market. some the quarters Bill's regarding in our Nicholson, results January second space and results we of had a the first, back through it long-term. Chief recent steps by up that new we're sign-ups, to in detail. After continue and Josh before take strong ask the our to of we consistently impacted quarter. I'll spend how from to and be improve digital ramp quarter the will maximize the slowdown quarter. BXC and few at that Scite win our of entries Solutions months X impact on as and dial like derived new Founder new expect into I address deliver Strategy the comment Bill? join the can over But today slowed performance. I'd formula the into get to are we we the to fiscal we holiday taking where to quarter the I'll review

William Nurthen

Roy, afternoon, you, good and everyone. Thank

ResoluteAI transaction XX, the like would I transaction XXXX, December we XXXX. the Scite and to everyone on Before on start, July I remind closed X, that

transaction For business. the ResoluteAI anniversaried QX is the fully now in comparisons,

had of we to XX.X% last XXXX. second was quarter X revenue increase Scite. Total month XXXX only million, activity from year, of quarter for related the $XX.X fiscal a However, of the fiscal second

for was BXB XX% $XX.X in Our and of increased over our strong over the XX% the and both down measure reflecting $X.X forma and in Platform been BXB in ARR of Scite quarter, million net annual Scite's growth of to the and to rate XX% quarter. growth approximately ARR, revenue as ended or continued $X.X BXC a accounted broken contributions We and and ARR to million, Scite, subscription XX% million. approximately revenue recurring with in total and The our by end for approximately purely driven year $X.X calculation The platform prior incremental experienced full associated primarily subscribers. quarter. Platform X in addition pro revenue normalized had months now BXB Net in XX quarter growth prior quarter net the $XX.X the revenue growth XX% upselling from activity year growth as BXC of about is of which deployments up organic platform million for in is deployments. deployments compared a efforts. The was the with the the a December. anniversaried increase having revenue year-over-year, quarter have ARR purposes, million Resolute as we ARR ARR both fully in sales platform

the As the highest were company deployments the ever in has XX platform organic Roy posted. the performance mentioned, quarter net

products. well the BXC with it was as the BXB pleased are as multiple We not quarter also but growth in strong and only across ARR as distributed

our other a time we we how from In release quarter. quarter as and growth define seasonally second the academic seasonality both million, increase weakest is noted and use as on BXC transaction addition, $X.X recurring be out that QX non-GAAP expected revenue. terms. Transaction It from play for prior and QX. revenue see rebounded revenue call was Scite annual X.X% the for the our it year should today's see significantly BXB we prior press nice discussed Please was to for

constant total the decline to vesting lower to of were expected, continues and coming shift costs XXX Our to be gross prior ago. paid product Scite same service compared million Platforms a towards business in quarter. to our as more million for as growth quarter the we've in full period the decreased year the month service year our the primarily a was customer There some in Transaction prior the from X,XXX associated prior completed development, related also closer modest active the some compensation been XXXX growth XX% to $X.X in our and to XX increases count which X,XXX in year last a were acquisitions in compared quarter. with holding in sales component to related for to in gross fiscal in XXX technology increase includes is our the is academic stock this basis lower year in mix slightly expenses a side related quarter transaction the flat quarter the related XXXX. result it year continues noncash transactions margin labor basis The quarter. point The to quarter was the over due primarily and, versus X cases, fees second blended marketing remain is market-based business. Gross scales. Gross the and margin quarter margin ongoing points revenue associated edge point had year. Total as the improvement revenue business quarter depreciation same grants business and XX.X%. to with expense the second to Platforms The as fiscal period was of the of $X.X increase of The with quarter additional fees business, helping which restricted plus and expenses the recorded and us compared on higher-margin and to XX.X%, to producing compared basis new decrease margins. Platforms amortization were operating in stock. the increases XX.X%, having

to quarter. Turning year share recorded $X a in quarter prior from in compared of The or $X.X of million $XX,XXX million loss year income the to for profitability. or million to loss the Net was prior net operations quarter. per from $X.XX loss compared nil a $X.X operations company of the

projected quarter's for liability increasing a This related earnout include provision the results $X.X to Scite. million contingent

in margin. our as with quarter. Typically, being being prior to is inclusive While said, on QX. May results QX seasonality calls, this of lowest which as the growth QX have we typically company to trailing And end adjusted basis, Chairman assumptions. quite experiencing stock That in exiting business is him results our we about our where a in quarters to noted year. Adjusted performance. which further this year I until adjustment some revisit the position in commission-related earnout with quarter. working the Scite and with of business, are of near good EBITDA XX-month view is our was EBITDA caused calculated, the in QX in little result there the will with the This remain QX, quarter his strong you and on we dramatic, $XXX,XXX all substantially a in our momentum best now million, in the expenses $XXX,XXX quarter ago associated former in XX% for growth compared represents us earnout in Platforms When adjusted which organic a the assist $XXX,XXX is the the we QX officially and were to combine heading. growth is EBITDA These feel subject experienced assumptions at the happen do $X.X the very

last XX, cash of XXXX. and another June strong a and year-to-date $X.X quarter cash Cash XX, December of cash the the Turning million quarter million $X.X million generation. flow sheet million XXXX, year. burn equivalents $X.X $X We on flow. prior and from to compared versus as to were $X.X in $X.X compared balance operations million million in Cash experienced of to was our quarter year

fiscal over flow, cash now now improve our expect cash so have continue we move the XX-month cash QX, are $X.X flow in trailing to a QX million results to period from flow for our basis, We and strongest year. into as On generated operations. we through heading we seasonal

revolving As credit. of borrowings quarter under end, outstanding there were our of no line

we look the we the we very encouraged across growth ahead, by business. organic are As Platforms seeing are

will expenses we experience sequential did SG&A a note that You uptick the for in quarter.

permanent was expenses and to related to was few that type a items this of nonrecurring more discussed. related some unique I previously Some

million. That hired G&A have growth, do, where development, some continue said, we we line extent, marketing, on added expect a in hold in in and and heads. new I however, investing not the cautiously are where from recall prior product some of said, that additional to we SG&A shift technology or to growth We have to normalized that expenses. All saw $X.X and CRO we on sales to We in primarily run do QX like a upwards calls, these was that downwards growing. investment I've prior them expenses year, where are more materially indicated QX. for expenses And which rate last was more

at So back QX even the Roy? our believe And these can we X a forward to as levels, quarters looking now next call months. I'll and to QX strong continue over result, to finish a are for that the Roy. we profitability. turn strongest be

Roy Olivier

Thanks, Bill.

net as see and few did we things. of quarter, result deployment the a Regarding a a nice new growth ARR

First, concluded. activity the and election after bookings up picked noticeably

marketing the team more of top a been our has Second, doing nice driving funnel BXB with pipeline. work job

academic Third, quarter in second team corporate a a more teams. into as quarter strong team, The in its resulted only single in deal we team split our flow which academic sales and a team. both has had

immediate I think new and brought Revenue early impact. he Cohen, positive Sefton Chief our we in Officer Finally, an November, had in

have for that second We are of half notable. several think year I the priorities the

a our growth, marketing BXB we will those delivering activity is in during in of driving to in driving -- generating leads continue focus has space. and sign-ups leader a has include of the Some lot They've as that that scientific of huge in thought pipeline into terms approach QX made job sales positioning great almost and done research forward the focus out and AI and a results us progress reiterate, our BXC been and standard and training as QX. We'll to extensive predictable team flew process. professional people, and sales heavily repeatable X/X of continue workforce for moving and Atlanta to use the team. standardize we a on better will The of XX building sales intent help results. In disciplined well January, building early with

the the executing of have oriented process of the long-term. already execution successful daily. our are those impact a organization Part in huge plan We results that will and in principles rest around be but may that short-term, positive the

LTV to acceleration and said, long-term As additional start QX, to about in QX updates it quarters, of bookings and primarily next we and Bill and investment continues on And what to will expenses, and our That nonorganic. Product continue Analytics organic we're investments will the while the return across both options, CAC of in have UX business see changes many in FY to to will seeing the expect and CAC is view Article and whether those and to is for CAC measure customers' our clear it our the a CAC excited plans, be a both and I is will sales focus into continue doing nothing think of also and products, make and to mentioned, you improve across Instrumentation levels. to for marketing and will available reporting integration look couple are external. we're priority. will LTV. we is customers the 'XX's negatively remain terms in to the cause to of a other be at in CX report both and working that impact development of changes actionable which the short-term. what optimistic to in provide our that Scite of growth normal standpoint, key to and numerous platforms, instrumentation our the know QX QX analytics. but we and continuing AI working and platform and not. Galaxy today improve ROI research. From Externally, nothing us and internal software improve primarily products to to workflow and we or of portfolio

content for and accretive be roadmap, customers things our We and to revenue will product EBITDA continue add targets. will look or our enhance to that

Josh like to over recent to the I'd provide call around Now all Josh? news. to the some Nicholson turn context AI

Josh Nicholson

call, business, progress want made met from to months joined of over I XX the all the year. I acquisition I last the DeepSeek Scite. transforming relates that both work think dialing Roy. we've and for ago about this I'm been OpenAI, continued Thanks, Solutions me. then, our from in-person and And having recent have thanks and at with happy excited I as join first, investors Solutions with down appreciate many AI of how I'm momentum, and Research in, to Since whole. Today, Research and the with which hard and the to we talk about have Scite others. advances we how and a heads

how and and win? In a fit we race even in As the happening amongst we early paper entitled biggest can to How do AI all used days the GPT-X we an seem cases XXXX, published or Build exploratory. the "How appreciate, world. arms to there's economies do be companies of for I in most are ChatGPT and a Science." These absurd

could of the working of on XXXX, Dolly. Skyscraper atop velociraptors image skyscraper of a an use style a could You Lunch in create you

Thiel, wanted you and comedy use image, Peter create Musk you Page, Larry If to standup an show could imaginary ChatGPT. with Elon

AI access research do the using based you and rights how scientific deep companies we companies AI with like papers on Solutions even is of applied will Boolean to a Alzheimer's and Research problems solve If Research research. leading you accelerate We learn gap Solutions, the we're AI to research. wanted workflows a and researchers leveraging believe in There seconds, specific that to help our world's or to AI can do figures research. We unique read the a win. At from the PhD. joined how understand solution Scite better content to was native for for research, cannot. world's a deeply build any is focus for to the topic facts any maybe research ChatGPT started better AI Research workflows, science to to an mission We real Combined tool or for that and LLM on verticals still build research. search, Solutions and get researchers biggest that

we can growing some any allowed develop to out As our in whether despite into is, will repeat and customers' well assistant come do. Summarize, into the at of built as a The out value can think flexibility comes and I'll to through for that us in as focus data. one one we more me magnitude, to were will AI pain that and homegrown results orders paywall. points or Scite content usage something forward. With however, declining. workflow press AI to will their what has thanks behind part. We I'd say only plug with model, We research create and right Q&A. compound, is provide LLMs call the That searching operator showing it in the research will Scite or proprietary on having more is LLM, see the going use our benefits this LLM the a researcher focus as over tomorrow. that, recently the highlighting research one these key, back put again and that of turn quality content the Scite advances, focused it and tool first access I'll to only more, release a like is the vertical costs remain better we join, of Plugging free to tool application rights is is this the the for

Operator

Jacob Markets. [Operator Capital Lake go to first Instructions] Stephan, We'll Street

Jacob Stephan

Congrats deployments results on Platform and here. the

million -- help of kind Just versus kind little us new better logo in could in the wanted quarter. a bit you wins kind of of cross-sells of on incremental maybe that the $X.X ARR understand help

William Nurthen

is add that, logos. a new start by of Yes, real the But would Galaxy cross-selling existing are then continue logo lot I from successful if Roy well, say logo to still we outperformance the like. and at new on Article customers. of new sales, a very into he'd driven perspective, are customers. our again, say lot the an was the some and our but of expectations new outperformance to upselling I one net in it that we was so can would quarter was be A and Scite can generation. quarter underperforming I -- to we on exception producing

Roy Olivier

Yes.

mute. Sorry and of some products continues but Article a the is about was is Bill Scite couple I base into But at the There our in our upsells do level of is there Galaxy primarily Galaxy not into on XXX% ago. to performing our was logos. It that. -- Article features new it upsells was accurate. years into upsells okay,

Jacob Stephan

out your December, end of they in as semester, slower, That's in could comments, you at for the -- impact helpful. in of But kind think that do kind our maybe models? January And then starts earlier the classes of about bit this seasonal little BXC a see kind we help but alluded students look of impact Roy. kind you as to the of you to us overall

Roy Olivier

have on and fiscal well. QX. fairly our as may usually strong in Josh is this some Yes. business BXC QX commentary The

You good And that we you mid-late anything in January little down, typically in have summer. But would the school it see obviously, the at to QX expect performance pause to want there, mid-December for as of add that? Josh, slowed out in this get of end people to but to do quarter. then our

Josh Nicholson

too don't business. The a more student the Yes, professor, of or have to undergraduate you're much I universities, add an whether to that. seasonality impacts

Jacob Stephan

maybe trended AI? maybe costs kind are you started? say? How for And where how of kind color in could Maybe of how things go last if AI the to over next do just Josh, on looking the now months, on you XX that's of think one cost they any one, so honing had over -- what time. and

Josh Nicholson

Yes.

it a ROI I deployed, the cost new models to to approach for new of variety are evaluating, there a on switching model we able So take of costs, assess a this to different measured And performance of think model. it. from good is models the a as we're

to cheaper since progress Solutions the week most might model really that? even a not And And we go more And want is so be cost long, But month bit explore in efficiencies, say right? the again, up. as AI, Research different largely a on the in could of the maybe this joining models, lot they all so the or halved. performance, kind this you X. Bill, a expensive with

William Nurthen

have, I mean, Josh we've much. there. the has as that -- impacting that you in advantages covered it the out as was we're and release pretty The well. think as with see too I the of But our least solutions. our the numbers, point being we Not well I sort think at been don't materially talked down yes, we main press costs I put scaling that But have the coming AI short-term. with been up about searches

Operator

next We'll Group. to with Klee [Operator Instructions] go Allen Maxim

Allen Klee

understand you Or else was kind of advantage is I talking think the also you some competitive access the When I your to about that something way would say? did heard that of you there you content? AI, have exclusive

Roy Olivier

commentary some -- add I'll ahead, Yes, and go Josh then Josh.

Josh Nicholson

a is applying say and this access like But ChatGPT AI focus think, researchers advantage. Is vertical to industries would AI really that I specialized across going of said why workflows tool into that differentiator. also and looking do, not I think way I is a generalized and I underpins Yes. at AI the the also going in different exclusive a really more the

And of from data researchers. and deep so then also kind really we're the workflow going a on advantage of focused

Allen Klee

does and May. quarters? it's the My what that -- will over X was does if and stock, be earnout start in paid other the that does you right? it it And Is -- question paid? gets you're cash going When getting calculate and when to it mentioned that

William Nurthen

frame. just Once sometime But some July on stock That's would the expect start It payments in the time this depends in sure. X the I of calculated cash, like it's yes, Yes, acceptance year. to over July probably May, things numbers frame July of half and quarters. that. half correct. time timing the -- the payout is

Allen Klee

I yet, last out don't your -- is or? one Q question. Maybe

William Nurthen

be will tomorrow. that filed No,

Allen Klee

what say is can the yesterday just what -- tell you something, as count what -- share kind on usually us of page, front there the then or you Could the number that of is?

William Nurthen

Yes, XX.X it's million. roughly

Operator

with Rabover Artko next go to Capital. Peter We'll

Peter Rabover

for much hone talked can least you least the I XX% at or think one I on you in Josh, And guys on just whole at growth the congratulations know about -- segments the was on XX% guys guess just the Scite I'm or that, of that mentioned like earnout. thing. versus of organic? -- that's kind that's get how how a drove that. you I of what's that number. what did And And -- that curious you there? mean, I Like great and the cross-selling

Roy Olivier

you of Bill, the want touch first part that? to do

William Nurthen

Yes, with comments. I'll start a few Yes.

So what's basically most, then XX% mix kind on pro took of yes, X this and and we of it month, sale. producing we X that's the sale, took preacquisition is it the and would but had the we year, say a months again, together cross-sell and compared new where to forma emphasis result. I new definitely

I positive of was had still through a Scite for back the which of capacity standalone. future cross-sell -- when growth. Galaxy think upside Article a product, lot didn't great we a base, of But is kind within lot you and have it not large team have for as sales but a a thing a think really

get to to umbrella, trained, has some really it teams under That able say, customers could then you led our of take Scite our and behind we're sales some growth. once marketing got we to." get get we've warm lot also a So "Hey,

that end group And quarter December. And the a bunch to academic around had has it's focus in that's towards academic academic." on I a very Scite of corporate sort we split specialization "Hey, really say, the cohesive sales really of of Roy sales focus think thing, and lot is to those have produced sales to why have of teams. other we in team a success, alluded that which the some us and and

there's growth so Scite. really of a there. we're a lot And that's out of ramp And this just where nice nice getting

add Josh, that. want know you to Roy, don't if So to I

Roy Olivier

No, well said. Josh?

Josh Nicholson

to add No, don't that. have anything I to

Peter Rabover

just more And like, look, Like do where at point the that aha there highlight. the what mean, I mean, most moment and mean, such with there's competitive get start how on where a that's appreciate advantage Josh, search I that's yes, high of they that. And I very like I information. is Like color the a will and at we think enough piece the to not rate. people great. that's piece Scite get -- know a your that business think our big think ChatGPT you lies organically realize growing I then the No. of a one of happens? for need to they they more where moment do is and important

Josh Nicholson

to I that. see Yes. I starting mean are think people

organizations the have contracts some out tail lot and smaller look we're research-intensive have you long Scite where smaller, than others. a versus taking a groups spend on of and of a researchers On you lot these some these marketing mentioned. winning Obviously,

I really on and the so to and focused we'll building our workflows down keeping think leveraging heads And is win. specialized AI how of that kind

is, that And need advantage might expect we deep going of the leveraging be kind flashiest, I so workflows but and the really on again, data the that we to take.

Operator

to questions turn additional or the any for I'll at program Mr. Olivier It appears closing this over back further we have no remarks. time. that

Roy Olivier

everyone, Yes. Thanks, joining. for

meeting will We look Three rep discuss the speaking to Advisors. third great you March that fiscal in in we reminder, ROTH to should a March Dana As attend XX May would with participating like XX. XXXX or sales their Part a Qualified through either Conference ROTH to be contact or investors quarter in California, results. forward Point, our a Have evening. schedule

Operator

Thank participation. you. This does conclude your program. Thank today's for you

You time. any may disconnect at

Research Solutions (RSSS) 13 Feb 252025 Q2 Earnings call transcript