The following is a summary of the Research Solutions, Inc. (RSSS) Q1 2025 Earnings Call Transcript:

Financial Performance:

• Research Solutions reported a total Q1 revenue of $12 million, a 20% increase year-over-year. Notably, Platform subscription revenue grew 67% to $4.3 million, contributing significantly to the revenue mix.

• The company achieved a record high gross margin of 47.9%, up 780 basis points from the previous year, driven by a shift towards higher-margin platform business.

• Adjusted EBITDA reached $1.3 million, improving from a negative $441,000 in the previous year, with a margin of 10.6%. Net income for the quarter was $669,000, turning around from a net loss of $988,000 in the same quarter last year.

Business Progress:

• Research Solutions has a strategic focus on expanding its Platform business, which has shown significant growth and profitability improvement. The acquisition of Scite has contributed to this growth.

• The company has hired a new Chief Revenue Officer, Sefton Cohen, to enhance sales performance and strategy, aiming for more substantial ARR growth.

• Despite some challenges like longer sales cycles and higher churn, the company has seen positive developments in B2C ARR during the fall semester, indicating a strong start to Q2 in this area.

Opportunities:

• Research Solutions sees continued opportunities in both B2B and B2C segments, with B2B including prospects for partnerships or acquisitions that align with their product strategy and enable cross-selling.

• The company's shift in revenue mix towards more profitable platform services represents a growing focus on enhancing overall profitability and leveraging strategic M&A opportunities, given more realistic valuation expectations in the market.

Risks:

• Notable risks include elongated sales cycles and increased churn due to various factors like customer budget constraints and company closures, highlighting some market and operational challenges.

• Another significant aspect is managing the integration and performance of acquired entities like Scite, which is crucial for maintaining growth trajectories and customer satisfaction.

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