Research Solutions ((RSSS)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Research Solutions’ recent earnings call painted a picture of robust growth and strategic evolution, underscored by impressive financial metrics and a forward-thinking approach. The sentiment was largely positive, with strong growth in annual recurring revenue (ARR), platform subscription revenue, and improved gross margins. These achievements were bolstered by the successful implementation of AI strategies and a significant increase in cash flow. However, the company acknowledged challenges in transaction revenue decline and competitive pressures in the B2C space, indicating areas that require attention.
Record Annual Recurring Revenue (ARR)
The company celebrated a milestone achievement with $21 million in ARR, reflecting a 20% growth in FY 2025. Research Solutions is ambitiously aiming for a $30 million platform ARR target by the end of FY 2027, showcasing its commitment to sustained growth.
Strong Platform Subscription Revenue Growth
Platform subscription revenue saw a notable increase of 21% in Q4 2025 compared to the previous year. This growth was driven by both B2C and B2B platform revenue, highlighting the company’s successful expansion in these areas.
Improved Gross Margin
For the first time in its history, Research Solutions reported a gross margin exceeding 50% for a quarter, reaching 51% in Q4 2025. This 450 basis point improvement over Q4 2024 marks a significant achievement in the company’s financial performance.
Record Adjusted EBITDA
The company set a new record with an adjusted EBITDA of $1.6 million for Q4 2025, representing a 13% margin. For the full fiscal year, adjusted EBITDA was $5.3 million, a substantial increase from $2.2 million in fiscal 2024.
Significant Increase in Cash Flow
Research Solutions reported a remarkable increase in cash flow from operations, generating over $7 million in fiscal 2025. This figure is almost double the result from the previous year, indicating strong financial health.
Successful AI Strategy Implementation
The company’s AI-based products are experiencing rapid growth, nearly four times the pace of legacy products. Research Solutions anticipates strong tailwinds from AI in the coming quarters, reinforcing its strategic focus on innovation.
Decline in Transaction Revenue
Despite overall positive performance, transaction revenue for Q4 2025 declined to approximately $7.3 million from $7.9 million in the prior year quarter. The company continues to face challenges with declining order volumes.
Challenges in B2C ARR Growth
The B2C ARR experienced a modest sequential decline, attributed to seasonal difficulties from late spring into summer. This highlights a potential area for strategic adjustment.
Competitive Pressures in B2C Space
Research Solutions is facing competitive pressures in the B2C space, which could impact near-term growth. The company is likely to strategize on how to navigate these challenges effectively.
Headwinds in Transactions Business
The transactions business has encountered headwinds, with declines in paid transaction order volumes starting from February 2025. This remains a concern for the company moving forward.
Forward-Looking Guidance
Research Solutions outlined its strategic focus on becoming a vertical SaaS company, leveraging AI to enhance customer value and drive growth. The company aims to reach $30 million in ARR by FY 2027 and is concentrating on API-first strategies and integrations with large language models (LLMs) to sustain its growth trajectory.
In conclusion, Research Solutions’ earnings call conveyed a positive sentiment with substantial growth in key financial metrics and strategic advancements. While challenges in transaction revenue and competitive pressures in the B2C space were acknowledged, the company’s focus on AI and strategic shifts position it well for future growth. Investors and market watchers will be keen to see how these strategies unfold in the coming quarters.