Research Solutions Inc (RSSS) Q3 2024 Earnings Report

Research Solutions Inc posted a solid QQ3 2024 performance driven by a meaningful expansion in annual recurring revenue (ARR) and a favorable revenue mix shift toward higher-margin platform offerings, even as the company contends with churn within the ResoluteAI portfolio. Total revenue reached $12.12 million for the quarter, up 17% year over year, with platform subscription revenue up 76% to roughly $4.0 million and ARR finishing at $16.6 million, up 82% YoY and 6% sequentially. The company generated $2.02 million of cash flow from operations and $0.96 million of adjusted EBITDA, marking a notable profitability and cash-flow improvement in the back half of the year after earlier one-time costs related to acquisitions and proxy matters. Net income was breakeven to modestly positive ($0.076 million) on GAAP, while GAAP gross margin rose to 45.2% (up 630 bps YoY) as revenue mix continues to tilt toward higher-margin platform revenues (which delivered >60% of gross profit on ~1/3 of revenue). Management highlighted ongoing integration efforts across Scite and ResoluteAI, cross-sell momentum into Article Galaxy, and a strategic path to a long-term ARR goal of $30 million by FY2026 (BHAG). The quarterly results benefited from cross-sell growth in Scite (B2C and B2B) and improved operational efficiency, while challenges persist from ResoluteAI churn concentrated among a few large customers. The guidance suggests Q4 will be seasonally weaker for transaction revenue but supported by continued B2C advertising and disciplined marketing spend, with an emphasis on achieving another solid adjusted EBITDA quarter and sustaining operating cash flow strength. Investors should monitor ARR progression, churn normalization in ResoluteAI, platform adoption in B2B/B2C, and the pace of profitability as Scite and Resolute integrations mature.