Research Solutions, Inc. Q4 FY2026 earnings call

• Revenue Mix Shift: The company is successfully shifting its revenue mix toward higher-margin platform subscriptions, which now represent 43% of total revenue compared to 38% in the prior year.
• AI Product Launches: Two new AI-based products called Model Context Protocols (MCPs) were released. These act as connectors integrating LLMs like ChatGPT and Claude into Article Galaxy and Site, supporting a 'headless' strategy where customers interact with data within their preferred AI tools.
• Churn Management: B2B churn remains a primary concern, with 46 logos lost ($398k ARR) against 61 new/upsell logos ($961k ARR). Management attributes most churn to low engagement or ROI issues rather than product dissatisfaction, and is implementing proactive re-engagement workflows and improved onboarding.
• B2C Improvement: The B2C segment shows signs of stabilization with flat MRR despite reduced digital ad spend. Customer Acquisition Cost (CAC) was reduced by 24%, and Lifetime Value (LTV) has increased due to better retention driven by MCP adoption.
• Resolute Integration: Curated databases from the Resolute acquisition (patents, clinical trials, grant data) have been integrated into the MCPs, allowing users to access broader research data directly through AI queries.
• Operational Discipline: Operating expenses decreased to $5.2 million from $5.7 million, driven by lower G&A and stock-based compensation, while maintaining investment in growth initiatives. This contributed to an adjusted EBITDA margin expansion.
• Future Roadmap: Development will continue to layer AI features into Article Galaxy for summaries and extraction, and expand the curated database integrations within MCPs to drive usage-based pricing models.

Total revenue was $12.1 million, down from $12.7 million in the prior year quarter. Platform subscription revenue increased approximately 7% to $5.2 million, accounting for about 43% of total revenue (up from 38% in the prior year). Transaction revenue decreased to $7 million from $7.8 million in the prior year quarter.

• Q4/FY2026 Outlook: Management aims to deliver adjusted EBITDA growth over the prior year in the final quarter of fiscal 2026.
• Drivers of Growth: Expected improvements include continued platform subscription growth, improved customer retention, stabilization in transaction volumes, and disciplined expense management.
• Cash Generation: The company expects to exit fiscal 2026 with stronger earnings power and cash generation, reinforcing the durability of its SaaS model.
• Transaction Business: While not fully recovered, monthly trends within Q3 showed meaningful directional improvement, suggesting early stabilization in the transaction business.

• Customer Churn: B2B churn continues to drag on top-line growth; specifically, uncontrollable factors (acquisitions, bankruptcies) account for one-third, but controllable churn due to low usage or lack of perceived ROI accounts for two-thirds.
• Seasonality: The B2C segment faces seasonal headwinds as universities enter summer breaks, potentially impacting trial and conversion rates.
• M&A Valuation Gap: Current trading multiples (2.7x to 3.4x EV/Revenue) are below seller expectations based on pre-SaaS software values, making acquisitions challenging due to AI-related market concerns.
• Market Adoption: The success of the headless/MCP strategy depends on customers adopting these new integration methods, though early pipeline interest is strong.

Q: Analyst asked about B2B churn pain points and reasons for customer departures.

A: Management identified limited engagement and lack of ROI as primary drivers. Customers often fail to see sufficient value because they do not use the platform enough or purchase enough articles. To combat this, the company is improving onboarding to ensure majority login within 90 days and deploying automated workflows to re-engage low-usage cohorts and promote high-renewal features.

Q: Analyst inquired about the B2C-to-B2B pipeline progress and the impact of MCPs on conversion.

A: The B2C-to-B2B pipeline increased by approximately 50%. The company plans to leverage MCP usage on the B2C side to convert power users and small teams into B2B contracts. Improved retention and engagement following MCP releases serve as a key pathway for this conversion, helping to flatten MRR despite reduced marketing spend.

Q: Analyst asked about the current usage mix of the headless strategy versus core platforms and future AI roadmap.

A: Usage via MCPs is significantly higher than traditional platform usage, as users interact with LLMs frequently. Management noted that MCPs are usage-based with limits, ensuring revenue captures the higher volume of interactions. The roadmap includes adding more curated Resolute databases (drug data, etc.) to MCP answers and eventually integrating these capabilities back into Article Galaxy and Site search results.

Q: Analyst asked about traction in new segments such as financial institutions and hedge funds.

A: Management stated that while there are some initial interests in financial verticals, the sales force remains heavily focused on corporate and academic sectors due to strong pipelines and Total Addressable Market potential. They will only hire dedicated resources for new verticals if inbound opportunities demonstrate significant yield, so far avoiding distraction from core growth areas.