Q4 2024 Research Solutions Inc Earnings Call

Good day, and welcome to the Research Solutions Inc. North Quarter, 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.

Operator: 24 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two.

After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchstone phone. To withdraw your question, please press star then two.

Operator: Please note this event is being recorded.

John Beisler: I would now like to turn the conference over to John Beisler. Please go ahead.

Please note this event is being recorded.

I would now like to turn the conference over to John Beisler. Please go ahead.

John Beisler: Thank you, Nick, and good afternoon, everyone. Thank you for joining us today for Research Solutions 4th quarter and full fiscal year 2024 earnings call.

John Beisler: Thank you for joining us today for research solutions fourth quarter and full fiscal year 2024 earnings call.

John Beisler: On call today are Roy W. Olivier, President and Chief Executive Officer, and Bill Nurthen, Chief Financial Officer.

Speaker Change: on call today, our WWLVA, President and Chief Executive Officer, and Bill Nurthen, Chief Financial Officer.

John Beisler: After the market closed this afternoon, the company issued a press release announcing its results for the 4th quarter and full year fiscal 2024. The release is available on the company's website at ResearchSolutions.com.

Speaker Change: After the market closed this afternoon the company issued a press release announcing it results for the fourth quarter in full year fiscal 2024. The release is available on the company's website at researchstolutions.com.

John Beisler: Before Roy and Bill begin their prepared remarks, I would like to remind you that some of the statements made today will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied due to a variety of factors. We refer you to Research Solutions' recent filings with the SEC for a more detailed discussion of the risks that could impact the company's future operating results and financial condition.

Speaker Change: Before I'm right and don't begin their prepared remarks, I would like to remind you that some of the statements made today will be forward-looking and are made under the private security's litigation reform act of 1995.

Speaker Change: Actual results may differ materially from those expressed or implied due to a variety of factors.

Speaker Change: We refer you to research solutions, recent findings with the SEC for a more detailed discussion of the risk that could impact the company's future operating results and financial condition.

John Beisler: Also, on today's call, management will reference certain non-GAAP financial measures, which we believe provide useful information for investors. The reconciliation of those measures, the gap measures, is included in the earnings press release issued this afternoon.

Speaker Change: Also, in today's call management, we'll reference certain non-gap financial measures, which we believe provides useful information for investors.

Speaker Change: Reconciliation of those measures the gap measures is included in the earnings press release issue this afternoon.

John Beisler: Finally, I would like to remind everyone that this call will be recorded and made available for replay via a link on the company's website.

Speaker Change: Finally, I would like to remind everyone this call will be recorded and made available for retry via a link on the company's website.

John Beisler: I would now like to turn the call over to Roy W. Olivier, right?

Roy W. Olivier: Thank you, John. Overall, it was a strong year for the company as we showed continued progress in many strategic areas of the business, resulting in a transformational year. We completed the acquisitions of Resolute.ai in July of 2023 and site.ai in December of 2023. Both advanced our leadership position and discovery and analysis capability to our growing suite of research tools. Site continues to outperform on better than expected B2C sales and strong execution on our cross cell efforts for the B2B side. Site B2B business was about 400,000 when we closed the acquisition, and you may recall we added about 250,000 in Q3.

Speaker Change: I would now like to turn the call over to Roy WLBA, right?

Roy WLBA: Thank you John. Overall it was a strong year for the company as we showed continued progress in many strategic areas of the business resulting in a transformational year.

Speaker Change: We completed the acquisitions of Resolut.ai in July of 2023 and site.ai in December of 2023. Both advanced our leadership position and discovery and analysis capability to our growing fleet of research tools.

Speaker Change: Site continues to outperform on better than expected B2C sales and strong execution on our cross-cell efforts for the B2B side.

Speaker Change: Sites B to B Business was about 400,000 when we closed the acquisition and you may recall we added about 250,000 in Q3. In Q4 we added approximately 290,000 which further approves our robust cross-selling strategy progress.

Roy W. Olivier: In Q4, we added approximately 290,000, which further proves our robust cross-selling strategy progress. We remain uniquely positioned to maintain and build on our strong position as a leading vertical SaaS and AI company supporting research-intensive organizations. Some of our other meaningful accomplishments during the year that further strengthen our overall value proposition include building a predictable B2C demand generation engine that will produce results as seasonality subsides in the early fall.

Speaker Change: We remain uniquely positioned to maintain and build on our strong position as a leading vertical SaaS and AI company supporting research intensive organizations.

Speaker Change: Some of our other meaningful accomplishments during the year that further strengthened our overall value proposition and include building a predictable D to C demand generation engine that will produce results as seasonality subsides in the early fall.

Roy W. Olivier: Rebranding to create a cohesive messaging across our portfolio products and drive internal alignment, which launched this week publicly. growing the B2B pipeline by simplifying messaging and execution and refocusing on cross-cells and upsells. We integrated Article Galaxy and site to further strengthen our research platform value prop. We achieved our highest levels of automated delivery in Q4; 76.8% of articles with DOIs were delivered instantly to our researchers. We also realigned the software engineering and product management organizations to improve execution, speed the market, and to better align execution with our strategy.

Speaker Change: Rebranding to create a cohesive messaging across our portfolio products and drive internal alignment which launched this week publicly.

Speaker Change: Growing the B2B pipeline by simplifying messaging and execution and refocusing on cross-cells and upcells.

Speaker Change: We integrated Article Galaxy Insight to further strengthen our research platform value prop.

Speaker Change: We achieved our highest levels of automated delivery in Q4, 76.8% of articles with DOI's were delivered instantly to our researchers.

Speaker Change: We also realign the software engineering and product management organizations to improve execution, speed, the market, and to better align execution with our strategy.

Roy W. Olivier: Moving to our financial accomplishments, the company generated $44.6 million in revenue, including $14 million in platform revenue and $30.7 million in Doctal or transactions revenue during the year, all company records. In addition, we generated $2.2 million in EBITDA and $3.6 million in cash flow from operations. Keep in mind that this is in spite of over $1 million in costs associated with the proxy matter we dealt with in the year. ARR stands at $17.4 million and 84% year-over-year improvement, and our platform customer account exceeded $1,000 for the first time in the company's history. Overall, we're proud of the results and excited about the future of our business.

Speaker Change: Moving to our financial accomplishments, the company generator 44.6 million in revenue, including 14 million in platform revenue, and 30.7 million in docked-L or transactions revenue during the year, all company records.

Speaker Change: In addition, we generated 2.2 million in EBITDA and 3.6 million in cash flow from operations.

Speaker Change: Keep in mind that this is in spite of over $1 million in cost associated with the proxy matter we dealt with in the beer.

Speaker Change: Air R stands at 17.4 million and 84% year-over-year improvement at our platform customer count exceeded 1,000 for the first time in the company's history.

Speaker Change: Overall, we're proud of the results and excited about the future of our business.

Roy W. Olivier: I'd like to discuss the business outlook in more detail and provide some context regarding FY25 later in the call.

Speaker Change: I'd like to discuss the business outlook in more detail and provide some context regarding FY25 later in the call.

John Beisler: For now, I'll pass the call over to Bill to walk you through our fiscal fourth quarter and full year 2024 financial results in detail, and then I'll wrap up with some comments and outlook for fiscal 2025.

Speaker Change: for now I'll pass the call over to Bill to walk you through our fiscal fourth quarter and full year 2024 financial results in detail and then I'll wrap up with some comments and outlook for our fiscal 2025. Bill.

Bill Nurthen: Bill?

Bill Nurthen: Thank you, Roy, and good afternoon, everyone. I will begin with a recap of our results for the fourth quarter of fiscal 2024. Total revenue from the fourth quarter of fiscal 2024 was $12.1 million, a 22% increase from the fourth quarter of fiscal 2023, and a new company high for quarterly revenue. Our platform subscription revenue increased 86% to approximately 4.3 million. The growth was primarily driven by platform revenue from the site acquisition and a net increase of platform deployments from last year on our core article Galaxy platform. We ended the quarter with $17.4 million in annual recurring revenue, or ARR, of 84% year-over-year and a little over 5% sequentially.

Bill Nurthen: Thank you Roy, and good afternoon everyone.

Bill Nurthen: How will we get with a recap of our results for the fourth quarter of fiscal 2024.

Bill Nurthen: Total revenue from the fourth quarter of fiscal 2024 was 12.1 million, a 22% increase from the fourth quarter of fiscal 2023, and a new company high for quarterly revenue.

Bill Nurthen: Our platform subscription revenue increased 86% to approximately 4.3 million.

Bill Nurthen: The growth was primarily driven by platform revenue from the site acquisition and a net increase of platform deployments from last year on our core article Galaxy Class Forum.

Bill Nurthen: We ended the quarter with 17.4 million in annual recurring revenue or AR, up 84% year over year, and a little over 5% to quenchily.

Bill Nurthen: We added about 867,000 of incremental ARR in the quarter, split relatively evenly between V2B and V2C ARR. Site growth in both V2B and V2C ARR in the quarter was strong and remains above expectations. Additionally, we continue to have good cross-sell success of site within our article Galaxy customer base. Of the $17.4 million in ARR at fiscal year end, about $12.1 million is V2B ARR and approximately $5.4 million is ARR associated with site's V2C platform.

Bill Nurthen: We added about 867,000 of incremental AR in the quarter, split relatively evenly between V2B and V2C AR.

Bill Nurthen: White growth in both B2B and B2C ARR in the quarter was strong and remains above expectations.

Speaker Change: Additionally, we could do you have good cross-cell success of sight within a article Galaxy customer base.

Speaker Change: of the 17.4 million in ARR at fiscal year end, about 12.1 million is B2B ARR, and approximately 5.4 million in ARR associated with sites B2C platform.

Bill Nurthen: Please see today's pressure lease for how we define and use annual recurring revenue, another non-GAAP term. for the fourth quarter was approximately $7.9 million, a 2.6% increase from the prior year quarter. Our total active customer count for the quarter was 1,398 compared to 1,404 in the same period a year ago. Gross margin for the fourth quarter was 46.5%, a 710 basis point improvement over the fourth quarter of 2023, and a new company high mark for blending gross margin. The increase is due to ongoing revenue mix shift towards our higher margin platforms business. To provide some perspective on this mix shift, two years ago, in our fourth quarter, platform revenue accounted for about 22% of the total revenue, and we had a blended gross margin of 38.3%.

Speaker Change: Please see today's press release for how we define and use annual recurring revenue in other non-gap terms.

Speaker Change: Transaction revenue for the fourth quarter was approximately 7.9 million, a 2.6% increase from the prior year quarter.

Speaker Change: Our total active customer count for the quarter was 1,398 compared to 1,444 in the same period a year ago.

Speaker Change: Gross margin for the fourth quarter was 46.5%.

Speaker Change: the 710 basis point improvement over the fourth quarter of 2023.

Speaker Change: and a new company, Highmark, for Blending Gross, Margin.

Speaker Change: The increase is due to ongoing revenue mixed shift towards our higher margin platforms business.

Speaker Change: To provide some perspective on this mixed shift, two years ago, in our fourth quarter, platform revenue accounted for about 22% of the total revenue, and we had a blended gross margin of 38.3%.

Bill Nurthen: Today, the platform revenue mix has been raised to 35% of revenue, and that has moved the blended gross margin to 46.5%. In Q4, the platform business contributed 65% of the total gross profit. As the revenue mix shift continues to move in the direction of platform revenue, gross margin should continue to go up, and this will ultimately drop more to our bottom line. The platform business recorded gross margin of 85.3%, a decrease compared to 88.1% in the prior year quarter, but within our target gross margin range of low to mid 80%. The decrease is related to the inclusion of Resolute AI's revenues, which generate a lower gross margin.

Speaker Change: Today, the platform revenue mix has been raised to 35% of revenue and that has moved the blend and gross margin to the 46.5%.

Speaker Change: In Q4, the platform business contributed 65% on the total gross profit.

Speaker Change: As the revenue mix shift continues to move in the direction of platform revenue, gross margins should continue to go up and this will ultimately drop more to our bottom line.

Speaker Change: The platform business record at gross margin of 85.3% a decrease compared to 88.1% in the prior year quarter. But within our target gross margin range of low to mid 80%.

Speaker Change: The decrease is related to the inclusion of breast loon AIs revenues which generate a lower gross margin.

Bill Nurthen: Gross margin in our transaction business increased 60 basis points to 25.4%. The increase was primarily attributable to increased copyright margins. This is at the high end of our range, and we should expect that transaction gross margin should stay in a range of roughly 24.5% to 25.5%. Total operating expenses in the quarter were 5 million compared to 3.7 million in the prior year quarter. The increase is fully attributable to the addition of the cost basis brought over from the resolute AI and site acquisitions, including the non-cash depreciation and amortization associated with those acquisitions. Note, there is some seasonality in the Q4 number, which likely reduces the expenses between 200,000 and 300,000 for the quarter.

Speaker Change: Gross margin in our transaction business increased 60 basis points to 25.4%.

Speaker Change: The increase was primarily a charitable to increase copyright margins.

Speaker Change: This is at the high end of our range, and we should expect that transaction gross margin should stay in a range of roughly 24.5% to 25.5%.

Speaker Change: Total operating expenses in the quarter were 5 million compared to 3.7 million in the prior year quarter.

Speaker Change: The increase is fully attributable to the addition of the cost basis brought over from the Resolut AI and site acquisitions, including the non-cash depreciation and amortization associated with those acquisitions.

Speaker Change: Note, there is some seasonality in the Q4 number which likely reduce the expenses between 200,000 and 300,000 for the quarter. So this quarter's result should not be assumed to be a straight line run rate for our SGA expense going forward.

Bill Nurthen: So this quarter's results should not be assumed to be a straight-line run rate for our SDNA expense going forward. Our improved gross margin in the containment of operating expenses in Q4 produced a strong income from operations result. Operating income was 662,000 compared to 255,000 in the prior year quarter, a 159% increase, and also a new company record. Other expense for the quarter total 3.5 million, which includes a 4.3 million charge related to increasing the urn out assumption for site, offset by a reduction in the urn out assumption for Resolute AI, which now sets that urn out expectation to zero.

Speaker Change: Our improved gross margin in the containment of operating expenses in Q4 produced a strong income from operations results.

Speaker Change: Operating income was 662,000 compared to 255,000 in the prior year quarter, a 159% increase and also a new company record.

Speaker Change: Other expense for the quarter total 3.5 million, which includes a 4.3 million charge related to increase in the earn-out assumption per site.

Speaker Change: Popset by a reduction in the urnout assumption for Residue AI, which now sets that urnout expectation to zero.

Bill Nurthen: The increase in the site urn out assumption is based upon the strong activity in the second half of fiscal 2024. and our expectations for the remainder of their urn out period in fiscal year 2025. It should be noted that this number could change again, either upwards or downwards, as we move closer to the final determination of sites' turn out in May 2025.

Speaker Change: The increase in the cycle and out of assumption is based upon the strong activity in the second half of fiscal 2024.

Speaker Change: and our expectations for the remainder of their turnout period in fiscal year 2025.

Speaker Change: It should be noted that this number could change again, either upwards or downwards as we move closer to the final determination of sites burnout in May 2025.

Bill Nurthen: Net loss for the quarter was $2.8 million, or $0.9 per diluted share, compared to net income of $376,000 for one cent per diluted share in the prior year quarter. Adjusted EBITDA for the quarter reached a new high at $1.4 million compared to $825,000 in the year-ago quarter, a 70% increase.

Speaker Change: Net loss for the quarter was 2.8 million or 9 cents per diluted share compared to net income of 376,000 or 1 cent per diluted share in the prior year quarter.

Speaker Change: Adjusted even after the quarter reached a new high at 1.4 million compared to 825,000 in the year ago quarter, a 70% increase.

Bill Nurthen: Now let me turn to our results for the full year fiscal 2024. Before I begin, I'd like to remind everyone that our full year fiscal 2024 includes results of approximately 11 months of contribution from Resolute AI and 7 months from Site. Total revenue for fiscal 2024 was $44.6 million and an 18% increase from fiscal year 2023. Platform subscription revenue increased 61% to approximately $14 million. Total deployments at year end were $1,021, a net increase of 186 deployments from the end of fiscal 2023. Transaction revenue for fiscal 2024 was $30.7 million, a 5.7% increase from the prior year.

Speaker Change: Now let me turn to our results for the full year fiscal 2024.

Speaker Change: Before I begin, I'd like to remind everyone that our full-year fiscal 2024 includes results of approximately 11 months of contribution from Resilute AI and 7 months from site.

Speaker Change: Total revenue for fiscal 2024 was 44.6 million and 18% increase from fiscal year 2023.

Speaker Change: Platform subscription revenue increased 61% to approximately 14 million.

Speaker Change: Total deployments at year end were 1,021 on that increase of 186 deployments from the end of fiscal 2023.

Speaker Change: Transaction revenue for fiscal 2024 was 30.7 million, a 5.7% increase from the prior year.

Bill Nurthen: This year's results include a full contribution from the customer contracts acquired from Fizz Carl's Roo, compared to just six months in fiscal 2023.

Speaker Change: This year's results include a full contribution from the customer contracts acquired from Finn's Carlscrew compared to just six months in fiscal 2023.

Bill Nurthen: Going forward, we expect revenues from the transaction segment to be flat to low single budget positive as transaction purposes for new customers are offset by the benefits within offered within our software platform. Gross margin for fiscal 2024 was 44%, a 500 basis point improvement over fiscal 2023. And again, the improvement is due to the ongoing shift to platform revenue. Total operating expenses in fiscal 2024 were $20.4 million compared to $14.5 million in the prior year.

Speaker Change: Going forward, we expect revenues from the transaction segment to be flat to low single budget positive as transaction purposes from new customers offset by the benefits within an offered within our software platform.

Speaker Change: Gross margin for Fiscal 2024 was 44% of 500 basis point improvement over Fiscal 2023. And again the improvement is due to the ongoing mixed shift to platform revenue.

Speaker Change: Total operating expenses in fiscal 2024 were $20.4 million compared to $14.5 million in the prior year.

Bill Nurthen: The increase is primarily attributable to the addition of the cost basis associated with Resolute AI and site, as well as about 1.5 million in proxy and M&A related expenses incurred in the fiscal year, and then additionally some modest growth in our core cost base. That law for fiscal 2024 was $3.8 million for $13 per diluted share compared to net income of $572,000 or $2 cents per diluted share in the prior year. Adjusted EBITDA for the quarter was $2.2 million or for the year, excuse me, was $2.2 million compared to $2 million in fiscal 2023 and an 11% increase.

Speaker Change: The increase is primarily attributable to the addition of the cost-based as associated with resolute AI and site, as well as about 1.5 million in proxy and M&A related expenses incurred in the fiscal year.

Speaker Change: and then additionally some modest growth in our core cost base.

Speaker Change: That law for fiscal 204 was 3.8 million. For 13 cents per diluted share compared to net income of 572,000 or 2 cents per diluted share in the prior year.

Speaker Change: Adjusted even for the quarter was 2.2 million, or for the years, excuse me, was 2.2 million, compared to 2 million in fiscal 2023, and 11% increase. The Adjusted Evened Result includes 1.4 million of the aforementioned proxy and eminent-related expenses experienced in the fiscal year.

Bill Nurthen: The adjusted EBITDA result includes $1.4 million of the aforementioned proxy and M&A related expenses experienced in the fiscal year.

Bill Nurthen: Turning to cash flow and our balance sheet, the business continues to deliver strong cash flow. Cash flow from operations in the last half of our fiscal year was approximately $4 million. Recall after we did the site acquisition, our cash balance on December 31, 2023, was $2.7 million. that balance at fiscal year end now stands at 6.1 million in cash and cash equivalents.

Speaker Change: Turning to cash flow in our balance sheet, the business continues to deliver strong cash flow. Cash flow from operations in the last half of our fiscal year was approximately $4 million.

Speaker Change: Recall after we did the site acquisition, our cash balance on December 31, 2023 was 2.7 million.

Speaker Change: That balance at fiscal year and now stands at 6.1 million in cash and cash equivalents.

Bill Nurthen: I will note that Q3 and Q4 are seasonally our best times for cash flow, so I would not expect anything nearly as strong in the first quarter of 2025. And last year, recall we actually burned cash in Q1, as this is the time we pay out our fiscal year-end bonuses. That said, borrowing any acquisition activity, we do expect to increase cash throughout the year, and the vast majority of that increase will come in Q3 and Q4 of fiscal 2025. As a fiscal year end, there were no outstanding borrowings under our new $500,000, 500,000 revolving line of credit, and we have no debt.

Speaker Change: I will note that Q3 and Q4 are seasonally our best times for cash flow, so I would not expect anything nearly as strong in the first quarter of 2025 and last year recall we actually burn cash in Q1. Is this the time we pay out our fiscal year and bonuses?

Speaker Change: That said, varring any acquisition activity, we do expect to increase cash throughout the year, and the vast majority of that increase will come in Q3 and Q4 of fiscal 2025.

Speaker Change: As a fiscal year end, there were no off-dealing barwings under our new 500,000 cars, yeah 500,000 revolving line of credit and we have no debt.

Bill Nurthen: Looking back on fiscal 2024, I did mention that I thought Q3 and Q4 would be pretty clean, and that they would give us an opportunity to demonstrate the profit and cash flow potential in the business. We do believe this has played out well. It has served to validate Carthesis for profit expansion as the platform revenue becomes a larger and larger component of our overall revenue mix.

Speaker Change: Looking back on fiscal 2024, I did mention that I thought Q3 and Q4 would be pretty clean and that they would give us an opportunity to demonstrate the Crawfet and cash flow potential in the business.

Speaker Change: We do believe this has played out well and has served to validate our thesis for profit expansion as the platform revenue becomes a larger and larger component of our overall revenue mix.

Bill Nurthen: As we look ahead to fiscal 2025, I will note that our early use shows some softness in Q1 ARR growth. Some of this has to do with the seasonality in B2C ARR, which slows in the summer months, and some of this is in our B2B ARR, where we are experiencing longer sales cycles. That said, we still have some time left in the quarter, and our pipelines remain strong. B2C revenue has already started picking up in September. Overall, the profit profile and potential for the business has not changed. We believe we remain on track to deliver long-term value to our shareholders.

Speaker Change: As we look at the physical 2025.

Speaker Change: I will note that our early use show some softness in P1 ARR growth.

Speaker Change: Some of this has to do with the seasonality in B to C-A-R-R, which flows in the summer months. And some of this is in our B to B-A-R-R, where we are experiencing longer sales cycles.

Speaker Change: That said, we still have some time left in the quarter and our pipelines remain strong. V2C revenue has already started picking up in September.

Speaker Change: Overall, the profit profile and potential for the business has not changed.

Speaker Change: We believe we are made on track to deliver long-term value to our shareholders.

Roy W. Olivier: I'll now turn the call back to Roy.

Roy W. Olivier: Roy? Thanks, Bill. As I mentioned before, in many ways, it was a transformational year for research solutions. The two acquisitions increased our total address on the market, through providing us with retools, analysis tools, and a new revenue segment with the B2C business. In addition, Site Broad unique capability with the AI assistant, full-text search capability of STN content, the site badge, and supporting and contrasting snippets, all of which help researchers better evaluate researcher research, and further strengthen our overall value proposition.

Speaker Change: I'll now turn the call back to Roy. Roy?

Roy WLBA: Thanks, Bill. As I mentioned before, in many ways, it was a transformational year for research solutions. The two acquisitions increased our total addressable market through providing us with re-tools analysis tools and a new revenue segment with the B to C business.

Roy WLBA: Interdition.

Roy WLBA: Safe Broad Unique capability with the AI Assistant.

Roy WLBA: Full Tech Search capability of SDM content, the site badge, and supporting and contrasting snippets, all of which help researchers at better evaluate researcher research and further strengthen our overall value proposition.

Roy W. Olivier: Moving forward, some of these changes will impact the seasonality of the business. The B2C revenue segment, which is over 30% of the ARR, is impacted by the academic calendar. A large portion of that business is driven by students who tend to take the summer and part of December and January off, which impacts our turn and sign-up rates in that business.

Roy WLBA: Moving forward, some of these changes will impact the seasonality of the business. The B2C revenue segment, which is over 30% of the ARR, is impacted by the academic calendar.

Roy WLBA: A large portion of that business is driven by students who tend to take the summer and part of December and January off, which impacts our turn and side-up sign-up rates in that business.

Roy W. Olivier: Turning to the B2B side of the business, academic enterprise sales is largely driven by the budget cycles of universities. Those institutions typically budget and buy at two points during the year, covering the December to January and June and July periods. B2B academic is the strongest year-over-year growth segment within research. In FY25, we are deliberately splitting our single sales team into a corporate team and an academic team, as we have broader product offerings to support higher growth in the academic segment. We will continue to innovate, offering new products and rolling out new features across our Article Galaxy, Article Galaxy Scholar, and site platforms. Over the year, we launched many new features in our three main sources of revenue, including smart folders and Article Galaxy, which automatically populate with scientific, technical, or medical content results based on your search criteria.

Roy WLBA: Turning to the B2B side of the business, academic enterprise sales is largely driven by budget cycles of universities. Those institutions typically budget and buy at two points during the year covering the December to January and June and July periods.

Roy WLBA: B2B academic is the strongest year of your growth segment within research solutions.

Speaker Change: In FY25, we are deliberately splitting our single sales team into a corporate team and an academic team as we have broader product offerings to support higher growth in the academic segment.

Speaker Change: We will continue to innovate, offering new products and rolling out new features across our article galaxy, article galaxy scholar and fake platforms.

Speaker Change: Over the year, we launched many new features in our three main sources of revenue, including smart folders and article galaxy, which automatically populate with scientific, technical or medical content results based on your search criteria.

Roy W. Olivier: We added instant in-platform delivery in the article Galaxy Scholar or academic version of that platform, and through integration with Article Galaxy, we added pricing and availability of STM content and search results in the site platform. We also continue to add new publishers to the site platforms' full service capability in the last half of FY24. We added four new publishers and have several more in the works. We also continue to build relationships to provide the most available and accurate access to information possible to our users, as evidenced by our partnership with JISC, announced earlier this summer, providing more than 280 higher education research institutions in the UK to access site's capabilities.

Speaker Change: We had an instant in platform delivery in the article Goxie Scholar or academic version of that platform.

Speaker Change: and through integration with article Goxie, we had a pricing and availability of STM content and search results in the site platform.

Speaker Change: We also continue to add new publishers to the site platforms, full service capability in the last half of FY24. We added four new publishers and have several more in the works.

Speaker Change: We also continue to build relationships to provide the most available and accurate access to information possible to our users as evidenced by our partnership with.

Speaker Change: JISC announced earlier this summer providing more than 280 higher education research institutions in the U.K.A. to access site's capabilities.

Roy W. Olivier: Macro-economic headwinds continue to restrict budgets across the corporate and academic customer base. Yesterday's rate cut announcement by the Fed should be the first step to reignite venture capital funding within the biotech sector, but time will tell how much it will truly free customer capital constraints. We continue to work diligently with our existing customers for them to recognize the efficiency and cost savings available through our core platform offerings.

Speaker Change: Macrock and Edwin's continues restrict budgets across the corporate and academic customer base. Yesterday's rate cut announcement by the Fed should be the first step to re-ignite venture capital funding within the biotech sector, but time will tell how much it will truly for your customer capital constraints.

Speaker Change: We continue to work diligently with our existing customers for them to recognize the efficiency and cost savings available through our core platform offerings.

Roy W. Olivier: We also remain highly focused in searching and evaluating M&A opportunities with the business and have several active conversations ongoing. As a reminder, our strategy is to focus on opportunities that align with our product and company strategy, are accrued to our growth and EBITDA goals, and represent our sizable cross-sell opportunity for us. Valuations continue to be lower than 24 months ago, and we will capitalize on that if the target fits our overall objectives.

Speaker Change: We also remain highly focused in searching and evaluating M&A opportunities with the business and have several active conversations on going.

Speaker Change: As a reminder, our strategy is to focus on opportunities that align with our product and company strategy, are a creative to our growth and even the goals and represent a sizable cross-sell opportunity for us.

Speaker Change: Valueations continue to be lower than 24 months ago, we will capitalize on that if the target fits our overall objectives.

Roy W. Olivier: I want to reiterate that we remain uniquely positioned to maintain and build on our strong position as a leading vertical SaaS and AI company supporting research-intensive organizations.

Speaker Change: I want to reiterate that we remain uniquely positioned to maintain and build on our strong position as a leading vertical SaaS and AI company supporting research and intensive organizations.

Roy W. Olivier: During the past year, we experienced a number of one-time external distractions. However, we maintained our strong financial performance with multiple records and improved positioning from a year ago. Those one-time items are predominantly behind us and believe our current record financial performance and future quarterly performance where we will see profitability in EBITDA continue to strengthen will not go unnoticed in the market.

Speaker Change: During the past year, we experienced the number of one-time external distractions, however, we maintained our strong financial performance with multiple records and improved positioning from a year ago.

Speaker Change: Those one-time items are predominantly behind us and believe our current record, financial performance and future quarterly performance where we will see profitability even a continued strength and will not go unnoticed in the market.

Roy W. Olivier: I'd like to thank for their continued support and our entire team for driving another record year.

Speaker Change: I'd like to thank her.

Speaker Change: is for their continued support and our entire team for driving another record year.

Operator: With that, I'd like to turn it back over to the operator for Q&A. Operator. Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one, on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.

Speaker Change: with that. I'd like to turn it back over to the operator for Q and A operator.

Speaker Change: Thank you. We will now begin the question and answer session. Do ask a question, you may press star, then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys.

Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then too.

Operator: At this time, we will pause momentarily to assemble our roster.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Jacob Stefan: And our first question today comes from Jacob Stefan with Lake Street. Please go ahead.

Speaker Change: And our first question today comes from Jacob Estefan with Lake Street. Please go ahead.

Roy W. Olivier: Yeah, hey guys, thanks for taking the questions. I just wanted to talk about maybe some of the cross-line success that you're seeing with the site in Article Galaxy. Maybe it would be kind of helpful if you could help us understand, you know, what percentage of Article Galaxy customers also subscribe to site, or maybe just any commentary around that.

Jacob Estefan: Yeah, hey guys, thanks for taking the questions.

Speaker Change: I just wanted to talk about maybe some of the crosslines success that you're seeing with the site in article galaxy. Maybe it would be kind of helpful if you could help us understand what percentage of article galaxy customers also subscribe to site or maybe just any commentary and around that.

Roy W. Olivier: Yeah, we have not publicly disclosed those numbers, but I would say it's a single-digit percentage of the Article Galaxy customer base. So we still have a tremendous amount of opportunity to achieve our target, which is well under the double-digit cross-sells.

Speaker Change: Yeah, we have not publicly disclosed those numbers, but I would say it's a single-digit percentage of the article Galaxy customer base, so we still have a tremendous amount of opportunity.

Speaker Change: to achieve our target, which is well under the double digit cross-cells.

Jacob Stefan: Okay, that's helpful.

Jacob Stefan: Maybe, you know, some comments you made regarding the Q-125 stop miss in ARR growth. I wanted to see if you could kind of help us think about overall impact here. Maybe is this kind of like a flat quarter-over-quarter ARR growth, or is this kind of low mid-single digit? I guess what are you seeing there?

Speaker Change: Okay, God, that's helpful. Maybe some comments made regarding the Q125 softness and ARR growth. I wanted to see if you could kind of help us think about overall impact here.

Speaker Change: is this kind of a flat quarter over quarter ARR growth or is this kind of low mid-single digit I guess what are you seeing there?

Roy W. Olivier: Yeah, I don't, you know, I'm uncomfortable providing guidance because we typically do have a very strong end-of-quarter push. You know, B2C has been challenging because you have basically, you know, June, July, August, in the summer months, and then you start to see a pickup in the first-second week of September. So we've seen a strong pickup, you know, in September, but the first two months of the quarter were not great. They were where we expected them to be, but they're not going to show the kind of improvement that we saw in Q3 and Q4 last year.

Speaker Change: Yeah, I don't, you know, I'm uncomfortable providing guidance because we typically do have a very strong end of quarter push.

Speaker Change: You know, B2C has been challenging because you have basically, you know, June, July, August is the summer months and then you start to see a pickup in the per second week of September.

Speaker Change: So we've seen a strong pickup on September, but the first two months of the quarter were not great. They were where we expected them to be, but they're not going to show the kind of improvement that we saw in Q3 and Q4 last year.

Roy W. Olivier: On the B2B side, you know, we continue to see a lot more deliberation around making decisions to move forward. We have not seen our win or loss rate materially change. What we've seen is the days to sale continue to extend. At one point, you know, our days to sale was around 90 days. You know, today it's running in excess of 120 days. However, our customer acquisition costs on the B2B side continue to be in what I would consider to be good, but not necessarily great territory. And what I mean by that is we're running 18, 19 months, a pack on B2B versus if you go back 18 months or two years, we were running 13 or 14 months.

Speaker Change: on the B2B side, you know, we continue to see some a lot more.

Speaker Change: Deliberation around making decisions to move forward. We have not seen our win or loss rate.

Speaker Change: Materially Change, what we've seen is the days to sail continue to extend.

Speaker Change: at one point in our days to see how it was around 90 days.

Speaker Change: Today, it's running in excess of 120 days.

Speaker Change: However, our customer acquisition costs on the B2B side continue to be in what I would consider be good but not necessarily great territory and what I mean by that is what we're running.

Speaker Change: 1819 months, a cac on B2B versus if you go back 18 months or two years we were running 13 or 14 months. So, and that is directly related just the extension.

Roy W. Olivier: So, and that is directly related to just the extensions.

Roy W. Olivier: So, you know, we're cautious about Q1, but we'll see how the Q4 ends.

Speaker Change: So...

Speaker Change: We're cautious about Q1 but we'll see how the quarter inch.

Bill Nurthen: Yeah, and maybe, so it sounds like, you know, has. Sorry, go ahead, Bill. Yeah, so I was just going to add to that. Yeah, I think the main, the main thing is, you know, if you look back, Q3, Q4 on the B2B side, we had really tremendous growth there. I mean, I think Q3 was almost less like 950,000 Q4 via 460,000.

Speaker Change: and maybe it so sounds like you know as sorry go ahead though.

Speaker Change: Yeah, so I was just gonna add to that. Yeah, I think the main thing is, you know, if you look back, you treat you four on your B to C side and we had really tremendous growth there.

Speaker Change: I think C3 was almost like 950,000 to 4,000 to 460,000.

Bill Nurthen: I think the main thing we're trying to communicate is it's just not going to be near that on the B2C side. You know, at least that's our expectation right now, just given, you know, with the seasonality in the business, it has been picking up towards the end. We'll see where it ends up, but I think we're just trying to set some expectation mainly around that, just given we've had two really good, strong quarters. I will say we did sort of budget for some of this as well. And so it's not completely out of expectation. And our budget plan still ends in a nice place at the end of the fiscal year.

Speaker Change: I think the main thing we're trying to communicate is it's just not going to be near that on the B2C side. You know, at least that's our expectation right now just given.

Speaker Change: Um...

Speaker Change: You know, with the seasonality in the business, it has been picking up towards again. We'll see where it ends up, but I think we're just trying to set some expectation mainly around that just given we've had two really good strong quarters.

Speaker Change: I will say we did sort of budget for some of this as well and so it's not completely out of expectation and our budget plan still ends in a nice place at the end of the fiscal year and additionally, as I said, I might sort of comments, our profit potential remains intact and

Bill Nurthen: And additionally, as I said, I might sort of comment; our profit potential remains intact. And, you know, so even if there is some softness there, it's we're still going to have a pretty, pretty nice EBITDA quarter, you know, in the business. So I just want to add those comments as well.

Speaker Change: So even if there are some softness there, we're still going to have a pretty nice ebit recorder in the business. So I just want to add those comments as well.

Jacob Stefan: Okay. Got it.

Jacob Stefan: No, appreciate that.

Richard Baldery: That's all the questions I had. Our next question comes from Richard Baldery with Roth Capital. Please go ahead.

Speaker Change: Okay, gotta know, appreciate that. That's all the questions I had.

Speaker Change: [inaudible]

Speaker Change: Our next question comes from Richard Baldry with the Roth capital. Please go ahead.

Roy W. Olivier: Thanks. Very curious given, you know, the strengths you've had this year on the back of the acquisitions.

Richard Baldry: Thanks for curious given, you know, the strength you've had this year on the back of the acquisitions.

Roy W. Olivier: How far do you think you are through the integration process on sort of the cost side, the integrating the teams, and then second, you know, how far along, which is called like a full pipeline alignment on the cross sale side. Do you think you've managed to climb? I'm not sure I'm saying the last part of the question about how far along we are on alignment of the pipeline into cross sale, but let me answer the first part first. In terms of integration of cost, I think we're largely complete. I'll let Bill comment on that. He's got some extra comments here in a second.

Speaker Change: How far do you think you are through the integration process on the cost side, the integrating the teams?

Speaker Change: and then second, you know, how far along.

Speaker Change: How could you call like a full-papeline?

Speaker Change: Alignment on the cross sail side, do you think you've managed to climb?

Speaker Change: I'm going to do this for you.

Speaker Change: I'm not sure I'm just in the last part of the question about how far along are we on alignment of the pipeline and the cross-cell, but let me answer the first part first.

Speaker Change: In terms of integration of cost, I think we're largely complete, I'll let Bill come in on that. Peace got some extra comments here in a second.

Roy W. Olivier: I think in terms of the, you know, integration of site, resolute, Article Galaxy, Article Scholar, I would say that, you know, site is integrated with Article Galaxy, Article Galaxy Scholar to the extent that there is a single sign on in place. We have pricing and availability in site. You can click to obtain an article in site. You can see all of the site badges and information within Article Galaxy. You can click to, you know, read the snippets and read everything. So that integration is largely, is largely complete, and the two products work together very, very well.

Bill Nurthen: I think in terms of the integration of site-resolute particle-galaxy or a scholar.

Bill Nurthen: I would say that.

Speaker Change: You know, sight is integrated with Article Goxie, Article Goxie scholar to the extent that

Bill Nurthen: There is a single sign-on in place. We have pricing and availability in sight. You can click to obtain an article inside.

Bill Nurthen: You can see all of these site badges and information within Article Galaxy. You can click to read the snippets and read everything. So that integration is largely complete and the two products work together very, very well.

Roy W. Olivier: I think what's left to do is to streamline the user interface and kind of the workflow so that it's not two things that are working well together. It's one seamless workflow as you work through research. And that will be done in the first half of the fiscal year, along with our, you know, typical monthly releases that improve our platform products.

Bill Nurthen: I think what's left to do is to streamline the user interface.

Bill Nurthen: and kind of the workflow so that it's not two things that are working well together, it's one seamless workflow as you work through research.

Bill Nurthen: and that will be done in the first half of the fiscal year, along with our, you know, typical monthly releases that improve our platform products, where we're typically doing releases, at least every month in many cases, every two weeks.

Roy W. Olivier: We're in regards to a resolute, a resolute; we've not integrated fully with either product. We are planning on integrating a sum of the resolute data into the site product. That will happen after we have reworked the workflow of the two products working together. The delay in getting that done is simply prioritizing the products that are generating results and revenue and growth over products that have not been performing where we'd like them to perform. So the due to resolutes results, we've just scheduled that behind getting site and article galaxy more tightly integrated than they already are.

Speaker Change: In regards to a Resolute, a Resolute, we've not integrated fully with either product we are planning on integrating some of the Resolute data into the site product.

Speaker Change: That will happen after we have reworked the workflow of the two products working together.

Speaker Change: The delay in getting that done is simply prioritizing the products that are generating results in revenue and growth.

Bill Nurthen: Over products that have not been performing, where we'd like them to perform. So the due to the results, we've just scheduled that behind getting site and article got to be more tightly integrated than they already are. Any want to add to that bill?

Bill Nurthen: Anyone add to that bill? I think that makes sense. The other thing just on the cross selling is we do have basically the sales team pretty much fully or trained on being able to sell site now. So again, some of the early cross-sell success that we had was basically with, you know, some of the sales force just not even being trained yet on it. And so we've been able to do that.

Speaker Change: I think that makes sense. The other thing just on the cross-selling is we do have, basically, the sales team pretty much fully cropped. I trained on being able to sell site now.

Speaker Change: So again, some of the early cross-cell success that we had.

Speaker Change: was basically, you know, some of the sales force just not even being trained yet on it. And so we've been able to do that and I think that'll help us get some more penetration into our existing customer base.

Bill Nurthen: And I think that'll help us get some more penetration into our existing customer base as well as some new sales as we move forward.

Bill Nurthen: From the cost side of things, most of the integration cost-wise is done. The one thing we've been working on, which we're hoping to see some improvement on this year, is I do mention in my comments a lot that the year-over-year platform growth margin is down because Resolute has some costs that is dragging that down. And we have been working to take that cost out of the business and have had some success there recently. And so my hope is that we can start to, you know, interest that platform grows up margin up a little bit more as we build through the year here.

Speaker Change: as well as some new sales as we move forward. From the cost side of things, most of the integration cost-wise has gone to one thing we've been working on which we're hoping to see some improvement on this year.

Speaker Change: I do mention in my comments a lot that year over year platform gross margin is down because it doesn't really have any cost that is dragging that down.

Speaker Change: and we have been working to take that cost out to the business and have had some success there recently and so my hope is that we can start to, you know, intersect that platform grows up margin up a little bit more as we built through the year here.

Richard Baldery: The last one would be, when we think about the M&A pipeline and prospects for it, do you feel like there's an ample number of targets to go after that on a reasonable hit rate?

Speaker Change: Great. The last should be when we think about the emanate pipeline.

Benny: and prospects for it. Do you feel like there's an ample number of targets to go after that on a reasonable hit rate you think there's meaningful emanating to come and then Benny sort of put that against the back drop of those, you know, how.

Roy W. Olivier: Do you think there's meaningful M&A to come and then maybe sort of put that against the backdrop of how large or how frequently do you feel like you have the bandwidth internally to do these? You know, is fiscal 24 sort of a good model in your mind, above pace, below pace, or you know, as you get larger, you know, is there a scale up that kind of typically could happen with the M&A at the same time? Yeah, I think I would say in terms of your question, is there targets out there? Yeah, there's a universe of targets out there ranging from a lot of very, very interesting startups, which you probably read about every day in the AI space.

Benny: How large or how frequently do you feel like you have the bandwidth internally to do these.

Benny: You know, is fiscal 24th or a good model in your mind above pace below pace or as you get larger, you know, is there a scale up that that kind of typically could happen with the M&A at the same time?

Speaker Change: Yeah, I think I would say in terms of your question, is there targets out there, yeah, there's a universe of targets out there ranging from a lot of very, very interesting startups, which you probably read about every day in the AI space.

Roy W. Olivier: But a number of businesses that are, you know, a few hundred thousand, a million to five million revenue; there's even a few we look at that are north of ten million revenue. Obviously, those become beyond our capacity to execute on them for the most part. So, I believe that, you know, we can do one, possibly two, depending on size and whether or not they can run independently, deals a year.

Speaker Change: But a number of businesses that are, you know, a few hundred thousand a million to five million in revenue, there's even a few we look at that are north of 10 million in revenue. Obviously those become beyond our capacity to execute on them.

Speaker Change: for the most part.

Speaker Change: So I believe that you know we can do one.

Speaker Change: Possibly Two.

Speaker Change: Depending on size and whether or not they can run independently deals a year.

Roy W. Olivier: I don't expect to do another deal in calendar 2024, but we do have a number of conversations, and we have a number of the backlog that are kind of scheduled behind that. So, you know, for us, we're going to be a little more choosy now about things that are accrued to our growth objectives and our EBIT objectives and fit our product strategy.

Speaker Change: I don't expect to do another deal in calendar 2024, but we do have a number of conversations and we have a number of the backlog that are kind of scheduled behind that. So for us, we're looking to be a little more choosing now about things that...

Speaker Change: are created to our growth objectives and our even objectives and fit our product strategy. So I don't know if that helps building anyone else.

Bill Nurthen: So, I don't know if that helps, Bill. Anyone have?

Richard Baldery: No, I think you covered that one good. Great, thanks for your help.

Speaker Change: No, I think you covered that one good.

Speaker Change: Great, thanks for your help.

Operator: Again, if you have a question, please press star, then one.

Speaker Change: [inaudible]

Speaker Change: Again, if you have a question, please press star then 1.

Alan Clee: Our next question comes from Alan Clee with a Maxim Group LLC. Please go ahead.

Speaker Change: Our next question comes from Alan Klee with a Maxine Group LLC. Please go ahead.

Bill Nurthen: Good afternoon. Could you go into explaining a comment you made that seasonality in fiscal 4Q numbers reduced operating expenses by around 200,000? What is behind that, and does that mean that all else being equal? That will jump 200,000 next quarter?

Alan Klee: Good afternoon. Could you please go into explaining a comment you made that?

Alan Klee: These are now in fiscal for Q numbers reduced operating expenses by around 200,000. What is behind that and does that mean that all else being equal? That will jump 200,000 next quarter. Thank you.

Bill Nurthen: Thank you.

Bill Nurthen: Yeah, sure. Yeah, so essentially, yeah, we tend to hold a lot of our accruals on the sales team through the fiscal year, as they can, you know, we've seen in the past, where a number of them can get on a hot streak towards the end of the year and, you know, over, you know, hit their target, get into accelerators and things like that. And so, so basically at the end of, you know, Q4 over the last couple of years now, we've had, you know, we've basically gotten to the end and some people didn't make their numbers and we've reversed some of those monosacruals.

Speaker Change: Yeah, so yeah. So essentially, yeah, we tend to hold a lot of our accruals on the sales team.

Speaker Change: through the fiscal year as they can, you know, we've seen in the past where a number then can get on a lot of street towards the end of the year and, you know, over, you know, hit their target, get into accelerators and things like that. And so.

Speaker Change: So basically at the end of, you know, Q4 over the last couple years now, we've had, you know, we've basically gotten to the end and some people didn't make their numbers and we've reversed some of those bonus accruals.

Bill Nurthen: And that's really what's taken down the number to the 200,000, 200,300,000, I mentioned. So, yeah, if you straight line out, you should look; you should add that back in.

Speaker Change: and that's really what's taken down the number to the 200 to 300,000 I mentioned. So yeah, if you straight line out, you should have that back in and I think, you know, Q3's run rate is probably a more representative run rate of our SGA expense.

Bill Nurthen: And I think, you know, Q3's run rate is probably a more representative run rate of our SG&A expense versus Q4.

Speaker Change: versus Q4.

Alan Clee: Thank you. And then you talk about that most of your growth opportunities are in academic and that you're splitting a sales force for that.

Speaker Change: That's helpful. Thank you.

Speaker Change: And then you talked about that most of your growth opportunities are in academic.

Roy W. Olivier: Could you talk a little bit about why you think academic is more attractive and what the type of opportunities you're going to get? No, just to be clear, what I said is academic is our fastest growing segment. The three segments we play in are corporate, academic, and government. So because site has a very strong academic product and because of the investments we've made in improving article galaxy scholar plus some industry trends around more and more content is being delivered via OA or it's free. Yet subscription prices for universities from publishers continue to go up, even though a bigger and bigger percentage of that content is free.

Speaker Change: and you're splitting a sales force for that. Could you talk a little about why you think academic is more attractive and with the type of opportunities you're coming after?

Speaker Change: I know just to be clear what I said is academic is our fastest growing segment. The three segments we play in are corporate academic and government.

Speaker Change: So, because site has a very strong academic product, and because of the investments we've made in improving the product and the Galaxy Scholar.

Speaker Change: Plus some industry trends around more and more.

Speaker Change: Content is being delivered the O.A. Horat's free.

Speaker Change: Yes.

Speaker Change: Subscription prices for universities from publishers continue to go up even though a bigger bigger percentage of that content is free.

Roy W. Olivier: We have seen more libraries adopt Article Galaxy as a way to manage their costs, and we've seen a number of libraries acquire and be interested in the site platform on the enterprise side. So it's simply the site product plus the AG product are performing well, and that segment is growing faster than our government segment for our corporate segment. That said, we will continue to focus heavily on the corporate segment where we think our market share is single digit.

Speaker Change: We have seen more libraries adopt article galaxy as a way to manage their costs.

Speaker Change: and we've seen a number of libraries acquire and be interested in the site platform on the enterprise side. So it's simply the site product plus the AG product are performing well and that segment is growing faster than our government's segment for our corporate segment.

Speaker Change: That said, we will continue to focus heavily on the corporate segment where we think our market share a single digit. We will just simply have dedicated.

Roy W. Olivier: We will just simply have dedicated academic salespeople because the workflow in a university library is different from the workflow in a corporate setting and budget cycle, decision makers, all that is quite a bit different from a corporate environment. So we think that we can accelerate the sales of both areas, corporate and academic, by having dedicated salespeople that understand the sales process, the decision making process, the workflow, etc. So we're not splitting it because we think academic is better than corporate; we're splitting it to get more focus on both and accelerate the growth on both.

Speaker Change: Academic Sales People because the workflow in the University of Library is different from the workflow in corporate setting. And budget cycle, decision makers, all that is.

Speaker Change: quite a bit different from the corporate environment.

Speaker Change: Joe.

Speaker Change: We think that we can accelerate the sales of both areas, corporate and academic by having dedicated salespeople that understand.

Speaker Change: The sales process, the decision-making process, the workflow, etc., so we're not splitting it because we think academic is better than corporate, we're splitting it to get more focus on both and accelerate the growth on both.

Bill Nurthen: Anything you want to add, Bill? No, I think that makes sense.

Speaker Change: I think you want to have a bill.

Alan Clee: Noted. Thank you so much.

Speaker Change: No, I think that makes sense.

Alan Clee: That's it for me.

Speaker Change: Thank you so much, that's it for me.

Avi Fisher: And our next question comes from Avi Fisher with a Long Cast Advisors.

Speaker Change: And our next question comes from Avi Fisher with a long cast advisors. Please go ahead.

Avi Fisher: Please go ahead. Hey guys, thanks for taking my questions. I mean 12% EBITDA margins; you've hit the double-digit side.

Avi Fisher: Hey guys, thanks for taking my questions.

Avi Fisher: I mean 12% of EBITDA margins, you've hit the double digit side. Is that sustainable? Do you think going forward?

Bill Nurthen: Is that sustainable, do you think, going forward?

Bill Nurthen: Bill, you want to address that? Yes, yeah, sure. Yeah, no, I do think it's sustainable. Again, I think we will have; we will continue to have the seasonality in the business that we have, where we will build EBITDA. My expectations, we will build EBITDA onward from Q1 through Q4.

Avi Fisher: so

Avi Fisher: Bill, you want to drift off? Yes. Yeah.

Bill Nurthen: Sure. Yeah, no, I do think it's just terrible. Again, I think we will have we will continue to have the

Bill Nurthen: the seasonality in the business that we have, where we will build, be bit of, I, my expectations, we will build, be bit of onward from, from T1 through T4. So,

Bill Nurthen: So you know, from that perspective, you may see it sort of dip below as we kind of go into Kiwani. We have the Alp performance in Q3, Q4, like you saw this year. But, you know, we do think the business is capable of that.

Bill Nurthen: You know, from that perspective, it'll hit you, you may see it sort of dip below as we kind of go into Keywani, have that, the out performance in Key 3, Key 4 like you saw this year.

Bill Nurthen: You know, the one caveat is we always, you know, manage on basically that rule of 40. And if we see more opportunities and we see opportunities for growth and laying down more advertising expense and things like that, we'll do that. But we'll also communicate that to everybody as well. I still think it's probably, you know, low double digits, but I do think it's possible to maintain that on a fiscal year basis.

Bill Nurthen: But, you know, we do think the business is capable of that, you know, the one caveat is we always, you know, manage on.

Bill Nurthen: basically that rule of 40, and if we see more opportunities and we see opportunities for growth and laying down more advertising expense and things like that, we'll do that.

Bill Nurthen: but we'll also communicate that to everybody as well. I still think it's probably, you know, low double digits, but I do think it's possible to maintain that on a fiscal year basis.

Avi Fisher: I mean, that's great.

Avi Fisher: If you look at one Q24, if you back out the proxy expenses, you were at about 4%; so it sounds like, you know, one Q25 should jump over that. Even if it steps down from 12% sequentially. Yes.

Speaker Change: I mean, that's great. If you look at 1 Q24, if you back out, the proxy expenses, you were at about 4%. So it sounds like, you know, 1 Q25 should jump over that. Even if it steps down from 12% sequentially.

Avi Fisher: Great. I mean, I think the EBITDA margin growth and the operating cash flow is incredible. You guys are doing great work.

Speaker Change: Yes.

Speaker Change: Great, I mean, I think the EBITDA margin growth and the operating cash flow is incredible. You guys are doing great work. I have a question about the days to sales.

Roy W. Olivier: I have a question about the days to sales expanding. You, so you've been trying to expand your corporate customer base, right? I would side of the core customers into new markets. And I'm curious about how that's going and how much that plays into the increased days to sales. Are you going after different customers? Are you adjusting your sales effort towards that? I just wondered if you could offer some color around that.

Speaker Change: Expanding you.

Speaker Change: So you've been trying to expand your corporate customer base, right, outside of the core customers into new markets and I'm curious about...

Speaker Change: how that's going and how much that plays into the increased days to sales. Are you going after different customers? Are you adjusting your sales effort towards that? I just wonder if you could offer some color around that. Thank you.

Roy W. Olivier: Thank you.

Roy W. Olivier: Yeah.

Roy W. Olivier: That's a great question. And I think we're still focused on largely the same customers. In other words, the same verticals underneath the corporate segment and academic libraries underneath the academic segment. Having multiple products adds some complexity. So we have to be careful as we're selling to not over complicate the sales process, which drags out your days to sale by trying to sell multiple products in the first contract. So, you know, in my past life, we always tried to keep it simple: land and expand. Here we try to do the same thing, but a lot of people, when we're talking to them about product day, find out we have product.

Speaker Change: Yeah, that's a great question. I think we're still focused on largely the same customer's, in other words, the same verticals underneath the corporate segment and academic libraries underneath the...

Speaker Change: Academic segment. Having multiple products adds some complexity, so we have to be careful as we're selling to not over-complicate the sales process, which drags out your days to sale by trying to sell multiple products in the first contract.

Speaker Change: So, you know, in my past life, we always try to keep simple land and expand.

Speaker Change: Here we try to do the same thing.

Speaker Change: But a lot of people when we're talking about product day and they find out we have product be either like oh that's interesting We've been sitting that as well and that adds a little bit to the days to sail

Roy W. Olivier: They're like, "Oh, that's interesting." We'd be interested in that as well. And that adds a little bit to the days to sale. I will say, though, my interpretation of some of the stretching of the days to sale; there's a part of it. And I don't think it's the majority of it that is related to just increased number of products and complexity of the sale associated with trying to sell multiple products. I think a lot of it is we're seeing customers who absolutely run a comparison between our product and other products. Which adds time to the process.

Speaker Change: I will say though my interpretation of some of the stretching of the days to sail, there's a part of it and I don't think it's a majority of it that is related to just increased number of products and complexity of the sales associated with trying to sell multiple products. I think a lot of it is we're seeing customers who

Speaker Change: Absolutely run a comparison between our product and other products, which adds time to the process. We've seen a lot of customers.

Roy W. Olivier: We've seen a lot of customers do longer procurement processes, which includes more IT involvement to evaluate our security posture and those sorts of issues. And we've seen involvements where customers ask us to score against a lot of different things around environmental and other issues that add time to sale. So a lot of it seems to be really driven by a longer process on the procurement side of the customers that are making the buying decisions. But, as I mentioned earlier, we haven't seen a material change in our... 1% of pipeline that closes. We've not seen a material change in deals marked one or deals marked loss to competition.

Speaker Change: A longer procurement process which includes more IT involvement to evaluate our security posture and those sorts of issues and we've seen involvement.

Speaker Change: where customers ask us to score against a lot of different things around environmental.

Speaker Change: and other issues that add time to sale. So a lot of it seems to be really driven by a longer process on the procurement side of the customers that are making the buying decisions, but as I mentioned earlier, we haven't seen a material change in our...

Speaker Change: 1% of pipeline the closets.

Speaker Change: We've not seen a material change in deals marked one or deals marked lost to competition. So, you know, it appears to us to be simply companies being more delivered and more thoughtful before they pull the trigger than two years ago.

Roy W. Olivier: So, you know, it appears to us to be simply companies being more deliberate and more thoughtful before they pull the trigger than two years ago. So you're describing the marketplace as it is for your existing customers? No, I'm describing as it is for any customer we talk to, and Bill mentioned we have 186 net new logos in the quarter. We run between, you know, 186 quarter. Vast majority of those are new new. In other words, the people we have, these are not cross cells. These are new into a new customer. Okay. All right. And so it's just two years ago compared to new customers two years ago.

Speaker Change: So your describing is the marketplace as it is for your existing customers.

Speaker Change: Now I'm describing as it is for any customer we talk to and Bill mentioned we have 186 net new logos in the quarter we run between you know 186 quarter vast majority of those are new new the people we have these are not cross-cells

Speaker Change: These are new into a new customer.

Speaker Change: Okay, all right. And so it's just two years ago compared to new new customers, two years ago.

Avi Fisher: I get that.

Roy W. Olivier: And you mentioned earlier, you expect, you talked about some of the complexity of having two products. So that way you expect that to go away by the end of fiscal 25 because you're going to be further integrating things? No, we'll continue to sell these products as modules. They'll be better integrated. I think the workflow and value to the customer will be more apparent. But we will sell discovery tools, which is site and resolute. We will sell access tools, which is article galaxy and article galaxy scholar. And we will sell reference management tools. And if you buy multiple, you may get a package discount for buying multiple, but they are individual products on the contract.

Speaker Change: I get that. And you mentioned earlier, you expect.

Speaker Change: You talked about some of the complexity of having two products, so that you expect that to go away by the end of.

Speaker Change: This is called 25 because you're going to be further integrating things.

Speaker Change: Now we'll continue to sell these products as modules. They'll be better integrated. I think the workflow and value of the customer will be more apparent, but we will sell discovery tools which is site and resaleute. We will sell access tools which is the best for the customer.

Speaker Change: and we will sell reverence management tools and if you buy multiple, you may get a package discount for buy multiple but they are individual products on the contract, the carrying individual price.

Avi Fisher: They carry an individual price. Okay.

Avi Fisher: Doesn't sound that complicated to me, but of course, I'm not a corporate customer.

Speaker Change: Okay.

Speaker Change: Doesn't sound that complicated to me, but of course I'm not a corporate customer. I appreciate your taking the questions and I'll follow up later. Thank you.

Avi Fisher: I appreciate you're taking the questions.

Avi Fisher: And I'll follow up later. Thank you.

Speaker Change: Thank you.

Operator: Clues are question and answer session.

Speaker Change: Thank you.

Roy W. Olivier: I would like to turn the conference back over to Roy Olivier for any closing remarks. All right. Thanks, everybody, for joining us on our call today.

Speaker Change: Luke's our question and answer session. I would like to turn the conference back over to Roya Olivier for any closing remarks.

Roy W. Olivier: I look forward to speaking to you in November to discuss our first quarter fiscal 2025 results.

Roya Olivier: Alright, thanks everybody for joining us on our call today. I look forward to speaking to you in November to discuss our first quarter fiscal 2020-2025 results. Have a great day.

Roy W. Olivier: Have a great day.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Operator: You may now disconnect. Thank you.

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.