RSSS — Research Solutions, Inc.

Summary of Research Solutions' Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Total Revenue: $11.8 million, down from $11.9 million year-over-year.
• Platform Subscription Revenue: Increased by 14% to $5.2 million, driven by a net increase of 47 platform deployments.
• Annual Recurring Revenue (ARR): Rose 14% year-over-year to $21.8 million, with B2B ARR at $15.3 million and B2C ARR at approximately $6.4 million.
• Transaction Revenue: Decreased to $6.6 million from $7.3 million, primarily due to customer churn and reduced volumes from larger clients.
• Gross Profit: Increased to $6.2 million, with a gross margin of 52.4%, up 350 basis points year-over-year.
• Net Income: Reported at $547,000 or $0.02 per diluted share, compared to a net loss of $2 million in the prior year.
• Adjusted EBITDA: Increased to $1.3 million, a 36% rise from the previous year.

2. Strategic Updates and Business Highlights

• B2B Segment Growth: Strong performance in B2B with 47 net new deployments, indicating customer enthusiasm for product development.
• Product Improvements: Ongoing enhancements in software and data offerings, including faster patent data integration and improved sales processes.
• API and AI Integration: Transitioning from a document delivery model to an "Answers and Access" platform, focusing on API sales and embedding services into customer workflows.
• Market Positioning: Emphasizing unique capabilities in rights management and compliance, positioning the company as critical infrastructure for research.

3. Forward Guidance and Outlook

• Second Half Expectations: Anticipation of stronger performance in B2B and transactions, although a year-over-year decline in transaction revenue is expected due to prior churn.
• Cash Flow Management: Plans to grow cash balance while fulfilling site earn-out obligations from operating cash flow.
• Long-term Goals: Aiming to exceed fiscal 2025 EBITDA levels in each remaining quarter and return SaaS growth rates to above 20%.

4. Bad News, Challenges, or Points of Concern

• Transaction Revenue Decline: Expected continued decline in transaction revenue due to churn from a significant customer and reduced volumes from others.
• B2C Segment Challenges: Increased competition in digital marketing and lower conversion rates from trials to subscribers impacting B2C growth.
• Market Competition: Heightened competition in both B2B and B2C segments, particularly from new entrants in the digital space.

5. Notable Q&A Insights

• Pipeline Growth: The pipeline for API deals is expanding, with larger contracts expected as customers integrate services into their workflows.
• B2C Recovery Uncertainty: While there are favorable trends in student enrollment, the company remains cautious about B2C growth in the second half.
• Internal AI Utilization: The company is leveraging AI internally to enhance productivity, particularly in software development, though it is not primarily focused on cost reduction.
• Long Tail Publisher Relationships: Discussions with smaller publishers are ongoing, with potential for new revenue opportunities as they seek to navigate AI challenges.

This summary encapsulates the key points from Research Solutions' Q2 2026 earnings call, highlighting both the positive developments and the challenges faced by the company.