Research Solutions, Inc. Q2 FY2026 earnings call

• Fiscal Q2 had mixed results with a year-over-year decline in transactions due to a churned account and larger customers reducing volume; excluding those, down ~2%.
• Focus on B2B annual and multiyear agreements as growth driver; making product and sales process improvements to increase conversion rate.
• B2B segment saw strong ARR bookings, 47 net new deployments, and 6% ASP increase during the quarter.
• Platform subscription revenue growth driven by net increase in deployments and upsells/cross-sells within existing customer base.
• Shift to API and AI integration and evolution from document delivery to Answers and Access platform, with API sales becoming infrastructure and Answers and Access focusing on providing answers first then access.

Total revenue for the second quarter of fiscal 2026 was $11.8 million. Platform subscription revenue increased roughly 14% to $5.2 million, contributing ~44% of the quarter's revenue. Transaction revenue was $6.6 million, down from $7.3 million in the prior year quarter. Annual recurring revenue (ARR) ended the quarter at $21.8 million, up 14% year-over-year, with $15.3 million in B2B ARR and $6.4 million in normalized B2C ARR. The Platform business had a gross margin of 88.1%, while the transaction business had a gross margin of 24%.

• Expect the decline in transactions to continue in the second half of the year.
• Work to return SaaS growth rate to 20-plus percent.
• Balance sheet well positioned with $12.3 million in cash and cash equivalents, no outstanding borrowings, and aim to grow cash balance in fiscal '26 while funding site earn-out obligations from operating cash flow.
• Objective to exceed fiscal 2025 EBITDA levels in remaining quarters of 2026 and drive further cash flow growth.

• Increased competition in the B2C segment with more competitive digital marketing spend and lower trial-to-subscriber conversion rates.
• Potential impact of AI on stock price and enterprise software disruption, though company believes unique capabilities and data are insulated.
• Churn in transaction segment due to one large churned account and volume reductions from other large customers.

Q: Transaction segment decline in second half?

A: Predominantly due to one large churned account, expecting second half to be stronger than first half but still year-over-year decline expected.

Q: Relationship with long tail of publishers?

A: Long tail has been sweet spot for decade, having discussions with publishers on AI rights, MCP, etc., with some traction but still small impact currently.

Q: New B2B customers embracing API?

A: API pricing floor is bigger than average contract price, pull is there due to easier testing and obvious value, with larger invoices reflecting this.