Research Solutions Inc (NASDAQ:RSSS), the AI-powered research workflow platform provider, stock fell 8.25% (As on September 19, 11:24:08 AM UTC-4, Source: Google Finance) after the company reported mixed fourth quarter results with earnings exceeding expectations but revenue falling short of analyst estimates. The company’s Annual Recurring Revenue (ARR) grew 20% YoY to $20.9 million, which includes approximately $14.2 million of B2B recurring revenue and $6.7 million of B2C recurring revenue. Platform revenue up 21% to $5.2 million. Transaction revenue was $7.3 million, compared to $7.9 million in the fourth quarter of fiscal 2024. The decrease was due to lower paid order volume.  The transaction active customer count for the quarter was 1,338, compared to 1,398 customers in the prior-year quarter. Adjusted EBITDA increased 15% to a company record of $1.6 million. Net income of $2.4 million, compared to net loss of $2.8 million last year. This quarter’s result includes a $1.1 million favorable adjustment related to the final earnout adjustment for Scite.  Last year’s result included a negative adjustment charge in other expense of approximately $4.3 million related to the projected earnout for Scite. In fiscal 2025, cash flow from operations of $7.0 million, a Company record, compared to $3.6 million.  The Company ended the fiscal year with $12.2 million in cash and cash equivalents.

In addition, the company used the Scite acquisition to help build out the AI capabilities in the product set and the company continues to actively pursue additional opportunities that enhance, complement and strengthen the current product offerings.  The growth rate of the AI-based Scite product is over 40%.

RSSS in the fourth quarter of FY 25 has reported the adjusted earnings per share of $0.07, beating the analysts’ estimates for the adjusted earnings per share of $0.04. The company had reported the adjusted revenue growth of 3 percent to $12.4 million in the fourth quarter of FY 25, missing the analysts’ estimates for revenue of $12.83 billion. The revenue shortfall was primarily driven by transaction revenue of $7.3 million, down from $7.9 million in the same quarter last year due to lower paid order volume. Despite this, the company’s gross margin improved significantly, rising 450 basis points to 51%, crossing the 50% threshold on a blended basis for the first time in the company’s history. Gross profit up 12%.