RSSS - NASDAQ

To all sites on hold, we do appreciate your patience in holding and ask that you please continue to stand by. We will begin in approximately two minutes. Thanks again, everyone. Please stand by. We are about to begin. Good afternoon, everyone. Welcome to the Research Solutions Incorporated First Quarter Fiscal 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. Also, today's call is being recorded. If you need any operator assistance during the call today, please press star zero. Now, at this time, I will turn things over to Mr. Steven Whozer, Investor Relations. Please go ahead, sir.

Thank you, Beau, and good afternoon, everyone. Thank you for joining us today for Research Solutions' first quarter fiscal year 2025 earnings call. On the call with me today are Roy Olivier, President and Chief Executive Officer, and Bill Nurthen, Chief Financial Officer. After the market closed this afternoon, the company issued a press release announcing its results for the first quarter of fiscal 2025. The release is available on the company's website at researchsolutions.com. Before Roy and Bill begin their prepared remarks, I would like to remind you that some of the statements made today are 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 and uncertainties that could impact the company's future operating results and financial condition. Also, on today's call, management will reference certain non-GAAP financial measures, which we believe provide useful information for investors. Reconciliation of those measures to GAAP measures is located in today's earnings press release as well. Finally, I would like to again remind everyone that this call will be recorded and made available for replay via a link on the company's website. I would now like to turn the call over to President and CEO, Roy Olivier.

Thank you, Steven. Our first quarter results reflect the financial scalability of our model, as our net income and adjusted EBITDA growth outpaced our top line on a year-over-year basis, even when factoring in some one-time expenses from the prior year. Deployments in the quarter were below our historical range, but we are seeing growth rebound in the second quarter. I am particularly pleased to report a 20% increase in total revenue and a 67% increase in platform revenue for the quarter. A 60% increase in ARR, with B2B contributing $12.2 million and B2C contributing $5.4 million. An outstanding improvement in adjusted EBITDA and cash flows generated from operations of $1.3 million in EBITDA and $800,000 in cash flow resulting in almost $4 million in adjusted EBITDA on a TTM basis and $5.1 million in cash flow in the same period. Our first quarter deployments and incremental ARR were lower than average due to several factors including lower B2C subscription revenue growth during the summer months and the impact of the traditional European vacation period. As we enter the fall, our B2C subscriptions have materially picked up and our B2C subscription ARR is currently approaching $6 million. Net platform deployments continue to be affected by a longer sales cycle where customers are increasing their due diligence periods and extending budgetary reviews. Under the surface, the new logo team hit their quarterly targets but that was offset by higher than normal churn and lower productivity from the upsell team. We saw higher than expected non-controllable churn driven primarily by acquisitions of our customers and customers closing their business. That was over half of our churn. On a positive note, we lost fewer customers to competitors in Q1. My hope is that the conclusion of this election provides some clarity for the near term and will allow for companies to make decisions as we approach the window for 2025 budgets to be finalized. I will review some of the steps we are taking to improve our sales performance, but first, I would like to pass it over to Bill to walk through our fiscal first quarter financial results in detail and then I will wrap it up with some comments and outlook for fiscal 2025. Bill?

Thank you, Roy. And good afternoon, everyone. Before I start, I would like to make a couple of reminders regarding year-over-year comparisons. First, for our prior fiscal year 2024, we had approximately two months of activity from Resolute AI, which closed on July 28, 2023. Second, in that same quarter, there was no impact from Syte as that transaction closed on December 1, 2023. Total revenue for the first quarter of fiscal 2025 was $12 million, a 20% increase from the first quarter of fiscal 2024. Our platform subscription revenue increased 67% to $4.3 million. The growth was primarily driven by the acquisition of Syte, and a net increase of platform deployments and upsells from last year. If you look at that growth from a pro forma perspective, assuming we had Resolute and Syte for the full quarter last year, the growth rate was roughly 27%. Platform revenue accounted for about 36% of our total revenue for the quarter, compared to approximately 26% in the prior year quarter. We ended the quarter with $17.6 million of annual recurring revenue or ARR, up 60% year-over-year, which is comprised of roughly $12.2 million in B2B ARR and approximately $5.4 million in ARR associated with Syte B2C platform subscribers. On a pro forma basis, the year-over-year ARR growth was roughly 22%. Sequential ARR growth in the quarter was modest with B2B ARR growing about $128,000 and B2C ARR growing roughly $68,000. We mentioned on our prior call that we expected lower growth to occur this quarter and that some of this was related to seasonality primarily in our B2C business. As Roy mentioned, I am happy to report that from a B2C perspective, we have seen that seasonality reverse as we entered the fall academic semester and we are off to a strong start in B2C ARR growth for Q2. Please see today's press release for how we define and use annual recurring revenue and other non-GAAP items. Transaction revenue for the first quarter was $7.7 million, a 3.4% increase from the prior year quarter. Our total active customer count for the quarter was 1,390 compared to 1,395 in the same period a year ago. Gross margin for the third quarter was 47.9%, a 780 basis point improvement over the first quarter of 2024, and once again, a new company record for blended gross margin. The increase is due to the ongoing revenue mix shift. In Q1, the platforms business contributed almost two-thirds of the gross profit. As this mix shift continues, we are starting to see the reality of being able to push our blended gross margin above 50%, which we expect to happen in the next 12 to 15 months if not sooner.

Platform business recorded gross margin of 87.4%, a 210 basis point increase compared to the prior year quarter. The increase is primarily related to lower personnel costs, and some steps we have taken to reduce our hosting costs. I will say this is a high result and we may see this fall back slightly in future quarters. All things considered, however, we expect it will remain above 85%. Gross margin in our transaction business increased 140 basis points to 25.7%. The increase was primarily attributable to increased copyright revenues and similar to platforms, this result was very strong for the quarter. We may experience slightly lower results in future quarters but still expect results above 24.5% in the near term. Total operating expenses in the quarter were $5.1 million, relatively flat to the prior year quarter. Last year's first quarter included approximately $1.2 million in acquisition and proxy-related expenses, but also did not have any impact from Syte and only two months of activity from Resolute. When you offset these two things, it basically translates into some very modest year-over-year growth in the SG&A expense base. Our revenue mix shift continues to move in favor of the platform and our blended gross margin continues to improve, and we are seeing that fall to the bottom line and generate cash flows for the business. Net income for the quarter was $669,000 or $0.02 per diluted share, compared to a net loss of $988,000 or negative $0.04 per share in the prior year quarter. Adjusted EBITDA for the quarter was $1.3 million, a 10.6% margin compared to negative $441,000 in the year-ago quarter. It is important to note that with respect to adjusted EBITDA, on a trailing twelve-month basis, we have now generated just under $4 million of adjusted EBITDA, an 8.5% margin. We expect that result to improve as we complete our second quarter. Turning to our balance sheet, cash and cash equivalents as of September 30, 2024, was $6.9 million versus $6.1 million on June 30, 2024. We generated $843,000 in positive cash flow from operations compared to a cash burn of $756,000 in the prior year quarter. Also important to note is that over the last twelve months, we have now generated over $5.1 million in cash flow from operations. On a trailing twelve-month basis, our cash flow is outpacing our adjusted EBITDA by a factor of approximately 1.3 times, which we believe is a good indicator of the strong quality of our earnings. As of quarter-end, there were no outstanding borrowings under our revolving line of credit, and we have no long-term debt or liabilities. As we look ahead, I think Q2 will be another strong quarter for earnings. I will note, however, that there is some seasonality negatively affecting the transactions business in Q2, given the impact of the holidays, and we should also see some increase in SG&A as we had some delays in hiring newly budgeted headcount in the quarter. As a result, we will likely see an adjusted EBITDA result that, while being an increase year-over-year, is sequentially down a bit from Q1. This will step back up again in Q3 and Q4, which are seasonally our strongest quarters for transactions, as well as overall profitability and cash flow. Overall, we feel like we have reached an inflection point in the SaaS revenue mix shift of our business. In addition to demonstrating the profit potential of our business model, this increasing profitability and cash flow is better positioning us to take advantage of strategic opportunities such as M&A going forward. Overall, we are pleased with the result for Q1 and look forward to posting another record year of earnings. I will now turn the call back to Roy.

You know, as we approach the one-year anniversary of the acquisition of Syte, we continue to be pleased with its growth and the upsell opportunities it presents within our platform. We recently hired Sefton Cohen as our new Chief Revenue Officer. Sefton comes with a proven track record of building high-performance sales teams generating significant ARR growth. He will help us create a strategic and standardized framework around a common language, improving sales process and accountability as a professional sales organization. Our entire team will go through training starting in January as we roll out the new process. We are excited to have Sefton join us, and we are very confident in his ability to help us execute moving forward. Turning to M&A, we have started to see valuations come down and have seen an increase in opportunities, including multiple inbound opportunities we have recently evaluated. This increase in deal flow is primarily due to more realistic valuation expectations and the recent transaction executions of Resolute and Syte demonstrating our ability to get deals closed, as well as our stronger balance sheet, thanks to our increased profitability and cash flow. We continue to evaluate M&A opportunities and remain highly focused on looking at businesses that have the right valuation and fit into either our product strategy or something where we can unlock cross-selling opportunities to create higher organic growth. Confidence in our organic plan remains high. Turning back to B2B sales, we did have some nice successes in the quarter. A few of those include Encarta Therapeutics, which is an Article Galaxy Pro plus Syte deployment. It was a competitive takeaway initiated by a past Article Galaxy user who suggested that Encarta look at our solutions. The win was due to the trust and past experience with Research Solutions. Backsight, which is an Article Galaxy Pro deployment. This was also a past user that had used AG in our two previous companies. They looked at competition during the trial period and ended up choosing us due to past positive experience. We also closed a large academic deal with the University of California for our Article Galaxy Scholar product that will cover eleven libraries. In summary, despite the longer sales cycles we are currently experiencing, we remain well-positioned within the research process, and I believe there is significant opportunity to further strengthen our financial position as the economy improves. We have seen our strongest sales pipelines in the company's history and feel confident in our future. From a product perspective, we continue to focus on developing the capacity as a SaaS and AI company by enhancing our core offerings in Syte, Article Galaxy, and references. Today, all of our applications are SaaS-based and include an AI assistant to help researchers ask natural language questions and get results based on peer-reviewed STM content with limited hallucinations or bad results. Syte has unique capability in terms of a citation index on steroids when compared to competition, and a powerful AI assistant that focuses on near full-text search of most of the content outside or behind paywalls. Syte is unique in both of those areas. Most of the newly announced companies that claim to do this only have access to OA or free content and do not have the rights to search behind the paywalls. The Article Galaxy family of products is unique in that it is one of the only publisher-independent solutions that offers access to the world's content in one system, including access to electronic or print source materials. Print source means the article can only be found in a printed book. In addition, our reference management product continues to develop its overall feature set and AI capability, which is helping us appeal to our core customer segment and help with the competitive takeaways like Encarta, which I mentioned earlier. We will continue to focus on expanding our capability in AI by continuing to work on integrating Syte and AG products, have signed several new publishers to the Syte indexing agreements, which allow us to provide near full-text search on those articles. We will continue to focus on adding additional publishers to the Syte platform. In addition, we have started offering publishers an amendment in which our customers can purchase the text and data mining rights or TDM rights for articles they have already purchased in addition to rights when they purchase new articles. We believe we are in a great position to offer the long tail of small and medium publishers to help our large customers achieve their AI objectives by delivering that long tail of TDM rights with one offering. With that, I would like to turn the call back over to the operator.

Thank you, Mr. Olivier. Ladies and gentlemen, at this time, if you do have any questions, please press star one. If you find your question has already been addressed, you may remove yourself from the queue by pressing star two. Once again, star one please for questions. We will go first to Richard Baldry of Roth Capital. Richard, please go ahead.

Thanks. When I look into the spending in the quarter, it looked like the platform cost side actually fell, and we have not really seen that ever go down. Sort of curious, like, was there a reversal of some prior costs or how does that fall, and, you know, is that sustainable forward?

Well, yeah. Sure. Yeah. There were a couple of things contributing to it. One is we removed some labor in that area. And the other is that we basically did some things to rework some of our hosting costs to bring that hosting cost down, which had been running kind of high, especially in the Resolute business. So I do think there are some sort of permanent reductions there from what we have seen before, but you could see it tick back up a little bit. We might add a little bit of headcount back in, and there is also some time to time where we need to run some things from an experimental basis that drive our hosting cost up. We just did not have a lot of that quarter. It is just an unusually light quarter. And that is why I said in my remarks, you know, you could see this result where this margin that we had of the 87.4% does fall back lower than that. Still think it will be above 85 easily. But it was just sort of a unique quarter where we were able to keep the hosting costs way down.

And look below into the OpEx side. The G&A was fairly level sequentially, but kind of flipped sales and marketing went up a decent amount and the R&D came down, you know, a decent amount. How do we think about what those levels should look like on sort of a steady-state basis? You know, is first quarter sort of indicative of where you think you would be or something sort of unusual about there?

Yeah. I think for first quarter, the only thing you might see some, you will probably see some step up as we move into Q2 and beyond. In sales and marketing and in a little bit less, so to speak, maybe in tech and product development. In the sales and marketing side, we, you know, we got into some of those summer months. We did cut back a little bit on the advertising spend on the B2C side. So we are sort of ramping that up as we head into the fall here and are gaining ground on subscribers. And then on the other side of things, as Roy mentioned, we did hire a new CRO. So that will be some additional headcount in the business as well, which will drive some of that product development. I think you will see some modest increase as well. So I think, you know, overall, if you look at SG&A, it is probably going to look more like Q3 from last year, just in total. With some of the caveats I mentioned in the buckets there. Could be a little bit higher than that, but that is kind of where we are targeting right now. Then the commentary around expectations in M&A, you know, valuations are coming in. You tell, you know, is that where you would have overlapping customer bases? Is that, you know, where you would have complementary sort of opportunities to cross-sell, or is it, you know, pretty much across the board and I think there was a comment around, you know, some more inbound inquiries or directionally people coming to you. Yeah. Is that, you know, do you think that is still a decent way to find things that fit properly, or, you know, are these people that you have done business with and that is why they are familiar with you so that fit, you know, sort of makes sense from the get-go? Thanks.

Yeah. This is Roy. I made a couple of comments. So I think part of the inbound is just we are now recognized as somebody who does do deals with, you know, companies in the space. So people reach out to us as a result of that. Part of it is also related to the founder, Josh, of Syte, who is very high profile in the industry, especially among startups. And so a lot of folks saw what he did and want to explore a similar path. To your other question, you know, what we are looking for specifically is primarily things that enhance our product strategy. So when we think about the research workflow that the various user personas that we sell to utilize, we look at that workflow through the lens of what steps are we providing today, what steps are other people providing today, where should we partner, where should we acquire. And for me, the acquisition has to fit a few criteria. It has to give us a clear strategic advantage. It has to be something that from a valuation point of view makes sense. And it has to have a very strong cross-sell opportunity into our base because I think a lot of value creation out of these acquisitions, very little of it is going to come from expense reduction. A vast majority of that value creation is coming from cross-selling into the base. We certainly like to look at direct competitor takeout, but there are just not that many of those left that are. So it is primarily what I mentioned a minute ago.

Alright. Thanks.

Thank you. We go next now to Jacob Stephan of Lake Street.

Yeah. Hey, guys. Thanks for taking the questions. Roy, you noted there are some lower deployments in the quarter. You know, I am just curious what was kind of the driver despite the comments about the new logo team hitting their targets?

Yeah. I had mentioned in the previous call that one of the new segments we are pursuing much more aggressively than we have historically is academic, and that is on the back of a strong Syte academic product as well as us continuing to enhance the Article Galaxy Scholar product, which is our academic product. And to give you some idea of numbers, you know, in the first quarter after we acquired Syte, we did about $240,000 to $250,000 of ARR growth. That was off of their base when we acquired them of about $400,000. The second quarter, which is our fiscal Q4, did about $280,000 to $290,000 in growth, and about half of that growth was academic. In our fiscal Q1, that academic growth number was tens of thousands. It was less than $50,000 because in the academic space, a lot of decisions were made around the December, January time frame, a lot of decisions were made around the June, July time frame. And so we expected and actually budgeted for Q1 to be materially lower from a deployments point of view than Q4 was. That said, the two other things that affected our numbers negatively during that quarter were underperformance by our upsell team, and more churn than we expected. So, you know, there are various things hitting that. Some of it is seasonality. Some of it is sales execution, and then some of it is just a general slowness that we have seen in the market in the last quarter.

Okay. Got it. That makes sense. And maybe just kind of contrast that with the comments you made about the demand rebounding here that you are seeing in Q2. Would you say that is kind of, you know, the demand is rebounding back to above baseline or not quite the baseline or, you know, at kind of what you would expect?

Yeah. On the B2C side, you know, I think we did somewhere like $50,000 or $60,000 in ARR growth in Q1. We are already over, as I think I made a comment, we are approaching $6 million. So that means we are around $500,000 in ARR growth on the B2C side as of now, and we are halfway through the quarter. I would not flatline that to a Q3 number because we will see slowness and some churn in December as students no longer are in school. But I think we will have a very good quarter from a B2C perspective. Early indicators are we are seeing some nice activity on the B2B side. I mentioned we have got record pipelines. We just have to execute. And I think the other thing we need to do is do a better job managing churn. We have made some changes to how we run that process. And I think the combination of improving execution there plus our new CRO plus some of the leading indicators we see, to me, give me hope that we will see a nice bounce back as we get into toward the end of this quarter. You know, I am also really excited to report, I mean, for the first time since I have been here, we have got $2 million pipelines, which is a pretty nice pipeline for us, and that is all being generated by the new marketing VP who joined us a little bit less than a year ago. You know, he is doing a nice job filling those pipelines and driving conversations, which ultimately, for us, result in the sale.

Great. And maybe just one last one. With the new Chief Revenue Officer coming in, maybe give us the top two or three priorities as they kind of look at their role.

Yeah. He walked in with a 90-day plan, you know, his first month is really just to learn. So he is spending a lot of time with a lot of our people learning how we do what we do. You know, as we get into January, we will, as I mentioned in the call, have a standardized training, not just addressing sales, it will address sales, the CSMs, the executives of the company, anything that kind of touches sales. And, you know, his successful track record is coming in whether it is a new company, whether it is a turnaround, or whether it is just trying to accelerate growth in an existing sales team that does a pretty good job. He has a very structured process and has done a nice job fairly dramatically increasing ARR growth in the companies he has joined. So, you know, I am excited about what we think he can do here because I think sales execution is something we do pretty well, but I think we can do it better.

Okay. Very helpful. Thank you, guys.

Thank you.

And ladies and gentlemen, just a quick reminder, we go next now to Derek Greenberg of Maxim Group.

Hi, guys. Thanks for taking my questions. Wanted to touch on adjusted EBITDA, the margins, the cadence there. You noted that there would be a little bit of a sequential decline in the second quarter, but then we should see improvement from strong performance in the third and fourth quarter. I was wondering if you think the third quarter may be an improvement upon the first quarter even. Or if you think it will still be a little bit under what we saw this quarter just due to the rapid cost.

Yeah. Sure. Yeah. No. I think, you know, traditionally, our third and fourth quarters have been our best quarters of the year if you kind of just look back. And so, you know, it is a bit early, but our goal is to have that quarter be an improvement over the first quarter. You know, typically, we will have a nice Q1. You might take a little bit of a step down in Q2, like I talked about just because of some of the seasonality. And usually, we are bringing some additional costs in for the new year. But then, you know, our goal in Q3 would be definitely to outperform what we have done here in Q1.

Okay. Great. Thank you. That is helpful. And then wanted to touch on you were talking about how some of the B2B sales is kind of being extended by longer review processes and other factors. I was wondering, I think you had cited a metric on the last call that days to sale had expanded to over 120. Whereas historically, it had been closer to around 90. I was wondering if there were any updates there or if we are still kind of seeing similar levels to what we saw in the last quarter.

Yeah. That is a good question. I did not look at our days to sales statistics before the call, but I can tell you our CAC, which is our customer acquisition cost, you know, it is running one month better than it was in the previous actually, three quarters of. So it shortened a little bit, which would lead me to believe because we have not reduced expenses, that, you know, the time involved is a little bit lower. But I would have to look up days to sale. I think it is still about where it was when we had our last earnings call, but it may be a little bit different, but I do not think it is materially changed.

Okay. Got it. And then my last question is just on Resolute AI, how is that tracking, and I think more recently, you had said you are potentially planning some cost reductions in that segment. So I was just wondering what the outlook looks like there.

Yeah. I mean, I think Resolute continues to be a concern. We still see value in the databases and Resolute and ultimately adding them into the combined Syte AG platform. Resolute as a standalone platform has had a few sales in the last six months, but a bulk of our sales are coming from either Syte or one of the Article Galaxy products. So, you know, AG, I am sorry, Resolute is certainly underperforming to where we thought it would be in terms of new sales. But that said, you know, we have pivoted a lot of our activity to Article Galaxy and Syte and getting that integration done in order to drive growth in those products which have been much more successful.

Okay. Got it. Thanks for taking my question.

Thank you. We go next now to Avi Fisher of LongCast Advisors.

Hi. Thanks for taking the call. I was wondering if you could talk about two different things. One is sort of the difference between academic and a corporate customer. I mean, is there a difference in the margin profile at all either way?

I think the gross margin, Bill can comment, is very similar. The average sale price is lower for an academic customer. The price is probably $3,500 to $4,000. And as you know, the average sales price on the business overall is about $11,000. So it is a lower ASP but has a lot more transactional revenue typically associated with it. But that is the big difference financially. Bill, do you want to comment on the gross margin?

Yeah. The gross margin is similar. It is just typically a lower price point as Roy noted. And the flip side being they, as a percentage of their platform fee, they tend to generate a lot more transaction revenue, which is lower margin but does help the bottom line a bit.

Right. And what is the expected transaction revenue from a new academic customer? Is it significant or?

Well, I think I mentioned in previous calls that, you know, on average, a customer spends about two and a half times their platform fee in transaction revenue. In the academic side, it is, you know, it is much, much higher than that. I mean, it is, you know, sometimes it is twenty times. However, there is a lot of variability depending on the size of the library. So, for example, we have no idea sitting here today what University of California is going to be. But we will start to see that in the next quarter and maybe able to comment as to what impact that is going to have on the transaction side of the business.

That is my other question. In terms of the University of California, when do we expect that to roll out? And can you talk a little bit about that competitive environment that you, it sounds like a big win.

Yeah. I think it was a good win for us. You know, they looked at everybody in the space, but we have a very unique offering in the workflow and library. So there is frankly nobody out there that can do what we do in terms of Article Galaxy Scholar. And so that has been a nice win. And, you know, that is also a library that at some point, we would like to circle back to and talk about Syte as a search solution for them. But, yeah, it was a nice win, and it was a competitive win.

Hey. Could you also talk about the competitive environment you are seeing in the corporate side? The corporate customer side, I mean, you sound a little cautious on what you are seeing in corporate new ads. You are talking a lot about churn. Customers going out of business and you have not touched on the competitive side, and I am curious about that.

It is interesting. Yeah. When I was running the analysis for a board meeting recently, I was very surprised frankly to see that, you know, churn to competitors is down double digits year over year in terms of year to date and a forecast for the full year, which for us, we just look at the first four months of the year and flat lining it and see where the numbers come out compared to last year. And it is down double digits. Now that is a lumpier part of churn. In other words, you know, there could be one medium-sized deal that moves that number, but the point is we are not seeing a lot of competitor to competitor losses. What we are seeing is customers wanting to dial back on their budget, which means fewer users. Customers going out of business, customers cutting the budget entirely, customers being acquired by someone else and forced to use their tech platform. But there is an element of churn that is controllable by us in terms of the ROI of the software, or other things they need the software to do. And we are very, very sharply focused on correcting those issues, you know, to control what we can control and the rest of it we really cannot control.

Are your competitors leaving the space, or are they just not as aggressive in marketing in the space? Or have, I mean, has a softball question, or have you just improved so much?

I do not think they are leaving the space. I think we have improved and, you know, I think in some cases, we execute better than them, and there are cases where they execute better than us. But I think all in all, we stack up very well against our competitors because Syte has some unique capabilities, Article Galaxy has some unique capabilities. And I think if we communicate effectively to the customer, it is a pretty easy decision. You know, we have lost deals where I get pretty frustrated because when I listen to the call, because we can, we record all the calls with an AI engine. I can listen to them. You know, we may not share some of the differentiating features that I think make the difference for us, and that is where I think sales execution comes in. But all in all, I think we, you know, we execute pretty well. They are not leaving the space. And I think our products are very competitive with their products.

Appreciate it. And I am just going to ask one more quick question and then jump off the call. You have reported about 1,074 corporate customers. Can you sort of paint for us sort of a pie chart of sorts? What percentage of those customers are pre-revenue? What percent of those customers are, you know, zero to ten million revenue and, you know, different scale ten to a hundred million or something like that?

Bill might have some color on that. I do not think we have any left that are pre-revenue. Most of those got killed, you know, a year or two ago during the economic kind of meltdown. I guess the VC would no longer fund them or whatever. So I think most of our customers have revenue and my gut feel is most of our customers have significant revenue. We have some smaller customers that are ten seat, fifteen seat, but let me put it this way. I mean, I think 60% of our revenue comes from the top third of our customers. So, you know, there are some small ones there, but they are typically smaller chunks of revenue. Bill, do you have anything you want to add?

Yeah. I think that so the metric, I think, Roy, was quoted was more on the platform spend, but that 1,074 count is basically, I think, the account you are referencing is the transaction customer. So that is probably more representative of the entire customer base, Avi. And Roy said, to be in that account, you have to be actively doing transactions. So there is nobody pre-revenue in there.

Alright. And I expect, yeah, I expect the concentration is probably, again, a little bit more spread out than the 60% number that Roy gave, but it is accurate that we have certain customers that are doing a bigger chunk of the business.

Yeah. I always confuse this. Could a customer be both a platform and transaction customer? I apologize. But just, I mean, within the platform space, do you still have, are there whale customers you are trying to sell to or, like, large whale customers trying to sell to? Or are you trying to sell to sort of medium and small-sized businesses? I am just trying to understand that process.

Well, I think if you look at trailing four-month deployment numbers, a bulk of those are, you know, kind of medium-sized customers. There are a few smalls in there, but there are mediums. But, yes, we are, you know, we released a stat that says we are in 70% of the top 20 pharma. You know, we think it is our right to get the other 30. And then there is a whole other chunk of very large customers below that top 20 line that, certainly, we chase. Those are longer, more complex sales cycles, but they are the ones that really move the needle. But, you know, those are priorities for us because those.

I appreciate you taking the question. Thank you.

Thank you.

Thank you. And, gentlemen, it appears you have no further questions this afternoon. Mr. Olivier, I would like to turn things back to you, sir, for any closing comments.

Thanks. As a quick reminder, Bill and I will be participating in the Southwest Ideas Conference on November 20th in Dallas. If you are interested in participating, please reach out to Three Part Advisors. Thanks for your time today, and we look forward to speaking to you in February about our Q2 results. Have a great day.