Research Solutions, Inc., the Nevada-based provider of cloud-based research platforms, recently delivered a solid Q3 2024 earnings call, showcasing a record-breaking performance in adjusted EBITDA and cash flow from operations. But beneath the celebratory headlines, a quiet revolution is brewing, one that seems to have escaped the notice of most analysts: the company's bold foray into the B2C market.

While the initial focus, understandably, has been on the impressive growth figures and the integration of their recent acquisitions, Scite and ResoluteAI, a closer examination of the Q3 2024 earnings call transcript reveals a strategic pivot with the potential to redefine Research Solutions' future. The B2C segment, powered by Scite's platform, is quietly amassing a user base, generating nearly $5 million in annual recurring revenue (ARR) at the end of Q3.

What's intriguing is that this B2C growth, achieved through a combination of product features and strategic advertising spending, might be far more significant than a mere revenue stream. Could it be that Research Solutions is cleverly cultivating a future gold mine, a Trojan Horse cleverly disguised within the belly of its B2B operations?

Consider this: the B2C segment, primarily composed of individual subscribers - students and research professionals - provides Research Solutions with direct access to the end users of scientific research. This is unprecedented for a company historically focused on serving institutional clients.

This direct user engagement offers invaluable insights into research habits, user preferences, and pain points, information that can be leveraged to refine existing B2B products and develop new, targeted solutions. Imagine the possibilities: a personalized research experience seamlessly integrated with document delivery, tailored to specific research disciplines and workflows.

Furthermore, the B2C segment acts as a powerful incubator for product innovation. Features that resonate with individual researchers can be readily adapted for institutional deployment, creating a virtuous cycle of product development driven by real-world user feedback.

The Path to $30 Million ARR

Let's delve into the numbers. Research Solutions aims to reach $30 million in ARR by FY 2026. While the ResoluteAI acquisition has faced some churn, the combined ARR of their B2B platforms, including Article Galaxy, stands at over $10 million. To achieve the $30 million target, they require a net ARR growth of roughly $1.5 million per quarter. This figure, while ambitious, seems achievable considering the potential of the fully integrated Scite and ResoluteAI platforms.

But here's the kicker: what if the B2C segment, currently growing at a robust rate, plays a larger role in hitting this target? With nearly $5 million in ARR already, a sustained growth rate of 6% per quarter, compounded over the next eight quarters, could add another $2.5 million to $3 million in ARR. This would significantly accelerate their path towards the $30 million goal, even surpassing it.

The B2C gamble, therefore, might be more than just a gamble; it could be a strategic masterstroke. By engaging directly with researchers, Research Solutions is not only generating a new revenue stream but also gaining a treasure trove of insights and a fertile ground for product innovation.

Could this B2C segment be the Trojan Horse that catapults Research Solutions into a dominant position in the research platform landscape? The answer, quite possibly, is a resounding yes.

"Fun Fact: Did you know that the average researcher spends over 20 hours per week just searching for relevant scientific articles? Research Solutions' platforms are designed to significantly reduce this time, freeing up researchers to focus on what matters most: making groundbreaking discoveries."

"Key Takeaways: Research Solutions' B2C segment is showing strong growth, generating nearly $5 million in ARR. This direct engagement with researchers provides valuable insights for product development. The B2C segment could accelerate Research Solutions' path to $30 million ARR by FY 2026."