Overview: Research Solutions Inc (RSSS) delivered a solid first quarter of fiscal 2026 (quarter ended September 30, 2025) anchored by strong B2B new logo activity and a 21% year-over-year increase in total ARR to $21.3 million. Revenue reached $12.31 million, gross margin expanded to 50.6%, and adjusted EBITDA rose to $1.50 million, marking the second-best quarterly EBITDA in company history. The quarter also reflected strategic progress in transitioning to a comprehensive SaaS/AI platform for scientific research, supported by sizable platform margins (Platform gross margin 88.1%) and continued cash flow strength (operating cash flow of $1.11 million) with no borrowings outstanding. Management framed the outlook around seasonality in EBITDA, the ongoing efficacy of B2B sales investments, and AI-enabled product initiatives that may unlock higher ARR and ASP in the coming quarters.
Key developments: The ARR lift was driven by large platform deals (including Real Chemistry and other top pharma customers) and ongoing upsells within the B2B segment. Platform revenue represented 42% of total revenue, up from 36% a year earlier, underscoring a margin-enhancing mix shift toward higher-margin subscriptions. The company also signaled continued investment in AI-related offerings (RightsDel and AI gateway) and an acceleration in product development via AI-assisted tooling, aimed at improving conversion rates, retention, and cross-sell opportunities. While transaction revenue declined 7.5% year over year, management attributed this to structural churn in a subset of corporate customers and highlighted lower fixed-cost leverage as a contributor to margin dynamics. The balance sheet remained robust with $11.96 million of cash and no revolver borrowings, and a continued focus on managing costs to approach a weighted Rule of 40.
Investor takeaway: RSSS is midway through a strategic transition toward a more recurring, higher-margin SaaS/AI-centric business, supported by a growing ARR base, improving platform profitability, and a disciplined cost structure. The near-term risk is the transaction segment and customer concentration, but the opportunity set in AI licensing rights, publisher partnerships, and headless workflow integrations offers a plausible path to meaningfully higher ARR/ASP over the next 12–24 months. The company’s cash position and lack of debt provide runway to fund these growth initiatives, though execution on converting B2C trials to enterprise subscriptions and realizing AI uplift remains critical to the upside.