Research Solutions Inc (RSSS) Q1 2025 Earnings Report

Revenue and profitability metrics (USD, QQ1 2025):
- Total revenue: $12,044,482; YoY growth: 20%; QoQ not disclosed in press data.
- Platform revenue: $4,304,000; YoY growth: 67%; Platform share of total revenue: ~36% (vs ~26% prior year).
- ARR (contracted annualized revenue) at period end: $17,6 million; YoY growth: 60%; B2B ARR: $12.2 million; B2C ARR: $5.4 million. Pro forma ARR growth vs prior year: ~22%.
- Transaction revenue: $7,677,000; YoY growth: 3.4%.
- Gross margin: 47.9% overall; Platform gross margin: 87.4%; Transaction gross margin: 25.7%.
- Operating expenses: $5.12 million; Net income: $0.669 million; Net income margin: 5.56%; Diluted EPS: $0.0201.
- EBITDA: $0.854 million (GAAP EBITDA); Adjusted EBITDA: $1.3 million; Adjusted EBITDA margin: 10.6% for the quarter; Trailing twelve months adjusted EBITDA: just under $4.0 million, margin ~8.5%.
- Active customers: 1,390 (vs 1,395 year ago).
- Cash flow and liquidity: Net cash provided by operating activities: $0.843 million; Cash at end of period: $6.924 million; Cash at beginning: $6.100 million; No borrowings outstanding; No long-term debt.
- Per-share data: Weighted average common shares outstanding: 30.346 million; Diluted shares: 33.235 million.

Management insights from QQ1 2025 earnings call (themes with context):
- Growth and profitability momentum: Roy Olivier highlighted that QQ1 2025 results show the scalability of the model, with net income and adjusted EBITDA growth outpacing revenue growth YoY, even after one-time prior-year expenses. He cited a 20% revenue rise and a 67% platform revenue increase for the quarter, with ARR up 60% (B2B $12.2M; B2C $5.4M). Quote: 'Our first quarter results reflect the financial scalability of our model, as our net income and adjusted EBITDA growth outpaced our top line on a year-over-year basis.'
- SaaS mix acceleration and cross-sell cadence: Bill Nurthen noted the mix shift toward platforms lifting gross margins (platform margin ~87.4%) and targeting blended margin above 50% over the next 12–15 months. He also highlighted pro forma ARR growth of ~22% YoY and a move toward higher-quality SaaS revenue. Quote: 'In Q1, the platforms business contributed almost two-thirds of the gross profit. As this mix shift continues, we are starting to see the reality of being able to push our blended gross margin above 50%.'
- Churn and sales execution as near-term headwinds: Roy acknowledged higher than expected churn, including non-controllable churn from acquisitions and customer closures, offset by fewer losses to competitors. He attributed some weakness to seasonality and upsell productivity, while remaining confident in a rebound. Quote: 'We saw higher than expected non-controllable churn driven primarily by acquisitions of our customers and customers closing their business.'
- M&A pipeline and strategy: Management emphasized a growing inbound deal flow as valuations normalize, with an emphasis on strategic fit and strong cross-sell opportunities into the existing base. Roy noted Valuations coming down and increased deal flow, with a focus on cross-selling to existing customers. Quote: 'We continue to evaluate M&A opportunities and remain highly focused on looking at businesses that have the right valuation and fit into either our product strategy or something where we can unlock cross-selling opportunities to create higher organic growth.'
- Management of go-to-market and academic expansion: The company highlighted the appointment of Sefton Cohen as Chief Revenue Officer to standardize sales processes and accelerate ARR growth, with a 90-day plan and organization-wide training starting January. The academic channel showed uneven deployment timing historically (Q4 strong, Q1 softer due to academic decision cycles) but with expectations of rebound as fall semester progresses. Roy cited the UC system win for Article Galaxy Scholar as a notable academic win and referenced the potential for stronger B2C momentum in fall. Quote: 'We recently hired Sefton Cohen as our new Chief Revenue Officer... we are excited to have Sefton join us, and we are very confident in his ability to help us execute moving forward.'

RSSS faces a pivotal transition into a higher-margin SaaS-centric model, anchored by a strengthened platform strategy (Syte and Article Galaxy) and AI-enabled product enhancements. The QQ1 2025 results show meaningful progress in ARR expansion and platform profitability, supported by a clean balance sheet and robust cash generation. Near-term profitability may be modestly constrained by seasonality and higher SG&A from new leadership, but management comments on a strong Q2 and historically stronger Q3/Q4 suggest a favorable cadence. The M&A landscape appears more receptive as valuations normalize, offering potential cross-sell-driven upside. Key catalysts include: (1) sustained B2B/academic demand and pipeline strength (notably the UC deployment and 2M+ ARR pipeline), (2) successful integration and cross-sell of Syte/AG/Resolute AI, and (3) AI-enabled product enhancements expanding addressable markets. Investors should monitor: ARR growth trajectory, churn composition (controllable vs non-controllable), platform margin progression toward or above 50% blended margin, quarterly EBITDA progression (Q2 sequential dip vs Q3/Q4 rebound), and the evolution of cross-sell revenue from Syte and Article Galaxy.