Research Solutions (RSSS) Q1 2026: B2B ARR Jumps 21% as Platform Margins Expand to 88%
Research Solutions delivered a record-setting first quarter in B2B annual recurring revenue (ARR), propelled by disciplined sales execution and a deepening pivot to high-margin SaaS and AI offerings. Platform subscription revenue growth and improved product mix drove gross margin expansion, even as transaction revenue remained pressured by concentrated customer churn. The company signals further upside in B2B pipeline momentum, AI monetization, and operational leverage, with management emphasizing continued ARR and ASP growth as the year’s top priorities.
Summary
- B2B ARR Acceleration: Largest-ever new logo deals and platform expansion are reshaping the revenue base.
- Margin Expansion via SaaS Mix: Platform gross margin climbed to 88%, highlighting the shift away from transactions.
- AI Monetization Inflection: Early AI rights traction and publisher partnerships position RSSS for new SaaS upsell streams.
Performance Analysis
Research Solutions’ Q1 2026 results underscore a pivotal transition toward SaaS and AI-driven growth. Total revenue edged up to $12.3 million, but the real story is the 18% surge in platform subscription revenue and a 21% increase in total ARR, now at $21.3 million. This ARR growth was overwhelmingly B2B-driven, with incremental B2B ARR reaching $561,000—more than quadruple the prior year’s Q1, reflecting the impact of larger, higher-value contracts and improved sales processes.
Gross margin expanded to 50.6%, up 270 basis points year-over-year, propelled by the ongoing revenue mix shift toward the higher-margin platform business, which itself posted an 88.1% margin. Transaction revenue, now 58% of the total, continued its decline, mainly due to a handful of large corporate customers reducing or ending spend. Despite this, the company delivered its second-best adjusted EBITDA ever and maintained strong operational cash flow, even after a $1.3 million earn-out payment for the site acquisition.
- Platform Mix Drives Profitability: Platform revenue climbed to 42% of the total, up from 36% last year, structurally lifting blended margins.
- Transaction Segment Headwinds: Transaction revenue fell to $7.2 million, with the decline concentrated in three corporate accounts, underscoring exposure to large customer dynamics.
- Cash Flow Resilience: Operating cash flow grew 31% year-over-year, funding both organic growth and acquisition obligations without drawing on credit.
Seasonality remains a factor, but management expects a less pronounced Q2 dip and aims for outperformance versus FY25 in each remaining quarter.
Executive Commentary
"It is the strongest organic first quarter B2B results on record. Total ARR for the quarter is up 21% driven by that strong B2B performance. That performance includes closing some of the largest deals in the company's history, including new platform sales to Real Chemistry, a top 10 pharma company, and others."
Roy W. Olivier, President and CEO
"We have made a concerted effort to keep general and administrative costs contained as we increase investment in other parts of the business. Cash flow from operations was $1.1 million compared to $843,000 in the first quarter of fiscal 2025, a 31% increase."
Bill Northern, Chief Financial Officer
Strategic Positioning
1. SaaS and AI Platform Expansion
RSSS is rapidly transforming from a transaction-driven business to a SaaS-first model, with AI capabilities at the core. The launch of RightsDell, an AI rights product within Article Galaxy, allows enterprises to acquire AI usage rights for research content, creating new revenue streams and deeper publisher partnerships. Early customer wins and publisher sign-ups suggest growing acceptance, but management acknowledges that attach rates and revenue impact will become clearer over the next few quarters.
2. B2B Sales Force Revamp
Over half the sales team has been upgraded and retrained in value-based selling, resulting in materially higher average selling prices (ASPs) and record contract sizes. Management projects that new logo teams are generating more than $1 in new ARR for every $1 invested, with payback periods of just over one year on products with six to eight-year lifespans. Upsell and churn management teams are improving, but remain a focus area for operational enhancement.
3. B2C to B2B Pipeline Leverage
The company’s B2C segment, while seasonally soft, is increasingly serving as a lead generator for B2B enterprise deals. The B2C-to-B2B pipeline swelled from $50,000 a year ago to over $1 million this quarter, reflecting improved product quality and targeted marketing. Churn in B2C is down and lifetime value is up, but conversion from trial to paid remains below targets, partly due to heightened competition and evolving user needs.
4. Operational Efficiency and Cost Discipline
General and administrative expenses have been tightly controlled, aided by organizational streamlining and the redeployment of resources toward growth areas. AI tools are being adopted internally to accelerate product development and support, though management notes these gains will likely be redirected into higher-value work rather than pure cost reduction.
5. Transaction Segment Stabilization
Transaction revenue remains under pressure, with three customers (one churn, two spend reductions) accounting for the bulk of the decline. The academic segment is growing, partially offsetting corporate softness. Management is innovating in the transaction space to return it to flat or slow growth, but visibility remains limited, especially for the second half of the year.
Key Considerations
The quarter marks a strategic inflection for Research Solutions, as the company’s SaaS and AI-led transformation begins to meaningfully reshape financial and operational metrics. Investors should weigh both the accelerating platform momentum and the ongoing transaction drag.
Key Considerations:
- Platform Revenue Mix: Continued shift toward SaaS and AI platforms is structurally improving margins and recurring revenue quality.
- Sales Execution: Upgraded sales process and team are driving higher ASPs and larger deal sizes, with early payback on investment.
- AI Rights Monetization: RightsDell and publisher AI partnerships represent a new, potentially significant ARR stream, though ramp remains early.
- B2C as B2B Pipeline: The B2C channel is now a meaningful source of enterprise leads, amplifying the value of product improvements and marketing spend.
- Transaction Revenue Volatility: Concentrated customer churn and spend reductions expose the legacy business to ongoing risk, with limited near-term visibility on stabilization.
Risks
Transaction revenue remains exposed to large customer churn and macro-driven spend reductions, with three accounts driving most of the decline. AI rights and platform upsell attach rates are unproven at scale, and heightened competition in B2C could dampen conversion and growth. Management’s ability to sustain cost discipline while funding innovation will be key as the business mix evolves. Uncertainties around publisher adoption, regulatory shifts in AI usage, and customer research priorities further complicate the outlook.
Forward Outlook
For Q2 2026, Research Solutions expects:
- A typical seasonal dip in adjusted EBITDA, but less pronounced than prior years
- Continued ARR and ASP growth, supported by strong B2B pipeline and sales execution
For full-year 2026, management aims for:
- Outperformance in every remaining quarter versus fiscal 2025
- Expansion in operational cash flow and overall ARR
Management highlighted:
- Focus on improving B2C net ARR growth through product and messaging enhancements
- Ongoing cost management to progress toward a weighted rule of 40
Takeaways
Research Solutions is executing a high-velocity pivot from a transaction-heavy model to a SaaS and AI-led business, with record B2B ARR growth and platform margin expansion as proof points.
- Platform and AI Upside: The company’s SaaS and AI offerings are gaining traction, with RightsDell and publisher partnerships opening new ARR streams and reinforcing the value of the platform model.
- Sales Force Leverage: Investments in sales team upgrades and process discipline are translating into higher ASPs and record contract wins, with the B2C channel now fueling B2B pipeline growth.
- Transaction Drag and Visibility: Legacy transaction revenue remains a risk, highly sensitive to large customer actions and macro research trends, with stabilization not yet assured.
Conclusion
RSSS’s Q1 performance validates its strategic pivot to SaaS and AI, with B2B ARR and platform margins at record highs. The company’s ability to sustain ARR growth, monetize AI rights, and manage transaction headwinds will define its trajectory through fiscal 2026 and beyond.
Industry Read-Through
RSSS’s rapid expansion of AI rights and SaaS platform revenue signals a broader industry shift toward monetizing AI usage in scientific content and research workflows. The emergence of AI-specific licensing and analytics products is likely to become a standard across research publishing and digital content platforms, with publishers and SaaS providers seeking new ways to capture value from AI-enabled consumption. Transaction-based models face persistent risk from customer consolidation and macro research spending, while B2C-to-B2B funnel strategies are increasingly critical for SaaS growth. Competitors should watch for accelerating demand for AI-compliant tools and publisher partnerships as end users and enterprises seek more integrated, compliant research solutions.