This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machine-assisted output provided is partly edited and is designed as a guide.:.

0:03 Good afternoon, everyone. And thank you for participating in today’s conference call to discuss Research Solutions Financial and Operating Results for its Fiscal Second Quarter ended December 31, 2021. As a reminder, this conference is being recorded.

0:19 I would now like to turn the conference over to your host, Steven Hooser, Investor Relations..

0:28 Thank you, Carl. And good afternoon, everyone. Thank you for joining us today for Research Solutions Second Quarter Fiscal 2022 Earnings Call. On the call with me today are Roy W. Olivier, President and Chief Executive Officer and Bill Nurthen, Chief Financial Officer.

0:46 After the market closed this afternoon, the company issued a press release announcing its results for the second quarter of fiscal 2022. That release is available on the company’s website at researchsolutions.com.

1:00 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. 1:29 Also on today’s call, management will reference certain non-GAAP financial measures, which we believe provide useful information for investors.

A reconciliation of those measures to GAAP measures is included in the earnings press release issued this afternoon. 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. 1:50 With that, I will now turn the call over to Roy Olivier.

Go ahead, Roy?.

1:57 Thank you, Steven. And thanks to everyone joining us today. We continue to make good progress in aligning our executives with the interests of our shareholders, focusing the team on issues that will deliver shareholder value and improving accountability throughout the organization.

Our second quarter results underscore that our product and sales strategy is starting to demonstrate results. We had more new customers adopt the platform and have seen record upsells as existing customers upgrade features and seek counts.

2:32 In fact our net churn rate, which includes churn or dollars lost, and upsells, which includes upsells for features and additional seats has historically been a high-single digit number, meaning our upsells have outpaced our churn by high-single digits on a percentage basis. During Q2, we moved into the double digits for the first time.

In other words, our upsells outpaced our churn by over 10% on annual recurring revenue. 3:04 Both the new and existing customer sales teams are performing at a high level, setting a record of 56 net new platform deployments for the quarter.

When combined with our low-churn and upselling of renewal customers, we reported a 36% year-over-year increase in ARR, 56 new platforms and 566,000 of net ARR growth, the ladder of two were both records.

3:33 Further, I'm excited that we're very close to a net ARR growth of $500,000 per quarter going into the second half of the year, which is typically stronger than the first half.

For our first six months of fiscal 2022, we had a 93 net new deployments, and 185 deployments on a trailing 12-month basis, up from 60 and 123 net new deployments for the same periods last year. 4:03 The improvements we have made regarding our total addressable market or TAM is starting to add value in terms of expanding our prospecting database.

In parallel to expanding our prospect database, we're seeing strong performance from our sales teams, including those recently added.

This translates into me having a lot of confidence in our performance for the second half of the year and more importantly reinforces that our strategy to expand our TAM and add more sales resources will help us drive strong performance in FY23. 4:37 Revenue and our transaction segment increase for the first time in six quarters.

Recently, transactions revenue has been flat to declining due to the conversion of customers toward our platform offerings, and an increase in customer downloads through non-revenue sources like tokens or open access.

It is too early to tell if this trend will continue long-term, but we have confidence that our overall platform growth and some changes we are making will help continue to improve transaction revenue in the short-term. 5:11 As a reminder, our platform helps customers optimize spin on articles in several ways.

It presents the most cost effective options to the Researcher, which in the long-term drives down their average article costs.

One example of that is reuse rights, which is helping a researcher looking at an article understand that someone else in their organization has already purchased that article and it came with reuse rights allowing it to be downloaded again for free.

5:43 In addition, our platform helps researchers more easily find free or Open Access articles, or use subscriptions and tokens to obtain articles through our platform without a research solution fee. This is a great value to our customers but as a headwind and growing are article sales year over year.

That said this revenue savings for our customers translates to a higher return on their platforms investment, which results in a low churn rate for us.

In fact, our churn rates, I'm sorry, in fact, our churn turns negative as well as upsell features -- I'm sorry, in fact, our churn turns negative as we upsell the features a number of users during the renewal process. 6:31 In summary, our second quarter performance sets us up very well as we enter the seasonally stronger portion of the fiscal year.

I'll provide some additional detail on our transaction customer count – I'll provide some additional detail on our recent activities and strategic direction in a minute, but now I'll pass the call over to Bill to walk through our fiscal second quarter results.

Bill?.

6:58 Thank you, Roy. And good afternoon, everyone. Total revenue for the second quarter of fiscal year 2022 was $7.9 million, a 5.7% increase compared to the second quarter of fiscal 2021. As we experienced growth in our SaaS platform business as well as some modest growth in the transaction revenue.

7:22 Platform revenue increased 31% to $1.6 million, primarily driven by a net increase of platform deployments from last year, including 56 net new deployments in the second quarter, and strong upsells of current platform customers.

As Roy mentioned, the 56 net new customers in the quarter was a company record, topping the previous company high of 51 net new deployments, which occurred in the third quarter of fiscal year 2021. 7:58 Also, a record was the incremental annual recurring revenue or ARR added in the quarter, which was $566,000.

We have now added $1.8 million of ARR to the platform over the last 12 months. As a result, annual recurring revenue at the end of the quarter stood at $6.8 million, up 9% sequentially and 36% year-over-year, reflecting our continued sales and upselling efforts and low churn of existing platform customers.

8:35 Please see today's press release for our definition and use of annual recurring revenue and other non-GAAP terms. Transaction revenue for the quarter was $6.3 million compared to $6.2 million from the prior year quarter. This represents the first increase in transaction revenue since the fourth quarter of 2020.

Although transaction revenue has declined over time as our platform's core value is that it saves our customers on transaction costs, we do feel there will be a point where transaction revenue can potentially begin to grow again, as we add more incremental customers to the platform.

9:19 We are not ready to make a call that this is a return to growth for transactions, especially given the Q2 performance from a year ago was a low bar. However, we do view the result this quarter as a positive indicator.

Transaction customer count for the quarter was 1179 versus 1153 in the first quarter of fiscal 2022 and 1109 in the year ago quarter. The increase was driven by an increase in both corporate and academic customers. 9:56 The platform business recorded gross margin of 85.6% a 340 basis point increase from the prior year quarter.

We have previously quoted a gross margin target range for the platform business of high 70% to low 80% and now feel comfortable elevating this target range to between 80% and 85%. As we have continued to be able to onboard customers with proportionally less labor cost. 10:27 Gross margin in our transaction business increase 110 basis points to 23.4%.

The increase was primarily attributable to reduced copyright costs as we were able to lighten some of our copyright reserves in the quarter. On a normalized basis, we expect transaction gross margin to stay roughly at 22%. 10:53 Total gross margin for the second quarter was 36%, up from 32% in the second quarter of fiscal year 2021.

The overall result was somewhat positively impacted by the improvement in transaction gross margin in the quarter. However, even if you normalize that the results still represents five straight quarters of company gross margin growth.

We feel this is one of the most meaningful metrics for the business, and one we will continue to focus on in the future, as it demonstrates our ability or our ability to profitably scale the business as we continue to grow platform revenue. 11:34 Turning to operating expenses.

One item of note is that in Q2, we booked all of the costs associated with the transition of the CFO role, which took place in the Quarter. This resulted in about $172,000 in additional operating expenses and about $147,000 in additional stock compensation expense in Q2.

11:57 Total operating expenses in the quarter were $3.3 million, compared to $2.7 million in the prior year quarter, due primarily to higher technology and product development and G&A costs. Net loss for the quarter was $482,000 or $0.02 per share, compared to a net loss of $261,000 or $0.01 per share in the prior year quarter.

Adjusted EBITDA was negative $165,000 compared to positive $161,000 in the year ago quarter. 12:32 Turning to our balance sheet cash and cash equivalents as of December 31, 2021 were $10.7 million versus $11 million on June 30, 2021.

The year-over-year performance from a bottom line profitability and cash flow perspective was expected as we have intentionally made investments in product development and sales. We remain comfortable to make these investments providing we are seeing corresponding growth in platform revenue and corporate gross margin.

However, it is something we will continue to monitor over time. 13:06 On a final note, there were no outstanding borrowings under our $2.5 million revolving line of credit and we have no long term debt or liabilities. Our line of credit is scheduled to expire this month.

However we are in the process of renewing the line for another two-year period on similar terms. I'll now turn the call back over to Roy.

Roy?.

13:30 Thanks, Bill. The two main drivers related to increasing shareholder value come down to accelerating growth and acquisitions. I will now provide a brief update on the status of each.

Regarding accelerating growth, we've been working hard to fully understand our TAM by country, by segment and by vertical, and to build out a prospect database of decision makers and researchers contact information. 14:02 We are making great progress on this project, which will continue for some time.

This is giving us the confidence that the TAM is there and that we have the contact information to generate our growth targets. We also have been adding additional salespeople which are helping with our new customer growth.

We have historically had around 6 sales people and we plan to grow that number by more than 2x by the end of FY, fiscal year ’22, to set us up for even more organic growth in fiscal ’23. 14:37 We feel good about our plans to accelerate our market share penetration in the countries segments and verticals we choose to serve.

We've also strategically increased our spend on product management and software engineers to accelerate our pivot from primarily a document delivery to a platform that supports researchers during each step of the research journey. Article galaxy 3.0, or AG3 as we call it, released in the first half of FY22 and was the foundation for this pivot.

And we're making great progress adding value to that platform. Over the next two quarters, we were released full reference management tools, enhanced search capabilities, and new analytics reporting to establish us as the innovative leader in the space.

15:27 We are now releasing new significant features monthly and have received positive feedback from both prospects and existing customers. As I have discussed previously, we're investing in two new products article galaxy scholar was formally released last month, and we continue to make progress with this academic platform.

We've also started full development on an additional new product that solves a different problem in our customer base that utilizes some of AG3s capability. We are encouraged by our progress with both products and we'll monitor and report on their progress in future quarters.

16:07 Regarding acquisitions, we continue to actively review and engage with several opportunities. While we've had a lot of interesting conversations and other activity, valuations continue to be a challenge in today's market, primarily due to unrealistic valuations.

That said, we have found some interesting opportunities that we believe represent a strong cross sell and product differentiation opportunity for us. I hope to have more to report in this area soon. 16:39 In conclusion, we are pleased with our strong performance for the first half of the year.

And with the progress we're making on investments to drive future growth. We're excited about the future and believe that we are on the right track. 16:52 With that, I'd like to turn it turn the call back over the operator for Q&A. Operator..

16:59 Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Alan Klee of Maxim Group. Please go ahead..

17:30 Hi, good job on the quarter question. I heard you say that you're increased your range for the platform gross margin to 80% to 85% and I believe this quarter you did a little better than the high of that range.

Could you talk about what drove that this quarter? And why would that wouldn't kind of maybe stay at that level?.

17:59 Sure. Yeah. So this quarter again, we have continued to see that we are as we onboard more and more customers. It's taking proportionately less labor cost to support those customers and proportion less system cost is well.

I think the move is that, in looking at this, we've looked at that gross margin and seemed to have consistently beaten that and we're now feeling more comfortable that we can raise the range.

The reason I'm not sort of comfortable raising it beyond the 80 to 85 that we talked about, it's just that I want a little more time to pass, we on boarded, as we noted a record amount of customers in this quarter and so I want to see how that plays out over time.

And if we're comfortable with our presence staffing or if we need to, to make some changes there, but it is something where we feel good about where the metric is trending, and hopefully, maybe able to raise it a little more in the future.

Should we see how this plays out as we onboard? This amount of customers?.

19:05 Thank you. I have two other questions. One is maybe talk a little about what the drivers are for this year's fiscal second half seasonality.

And then second, you said that you've historically had around 6 sales people you plan to double that by the end of the fiscal year? Have you added any yet? Or you know, where does that stand? Thank you very much..

19:31 Yeah, in terms of the seasonality, it's, it's the only answer I have is the historic seasonality of the business, I'm not sure that I can tie it to anything particular.

In the academic segment, which is a very small portion of our business today, there is pretty strict budgetary approval cycles, and then funds release cycles that suggest that our Q4 and our Q1 are better than the middle part of the year. And the corporate side, we typically don't have that type of dynamic.

So I can simply say that the seasonality of the business is something we see looking at this historic data over the last several years in terms of new bookings. And because of new bookings, of course, that's where a chunk of the renewals come up, which impacts the upsell part of the business.

20:20 So it's just last three to four years, the second half of the year is always stronger than the first. In regards to your second question, no, well, we hired one, but our plan is to get kind of people in seats in our fiscal Q4, for training and ramping to start them off in FY23. So we're on plan to do that. But we're not.

We're not trying to put people in seats today. We're doing the work to get ready to do a recruiting blitz at the end of Q3 and start putting people in seats in Q4..

20:57 Thank you..

21:03 The next question comes from Richard Baldry from ROTH capital. Please go ahead..

21:09 Thanks. Can we talk about, where do you see the opportunities to deploy those new sales heads would be vertical, geographic, US International.

So we get an idea of where they'll be added in the opportunities they're looking at?.

21:25 Yeah, great question. There's kind of a couple of answers. First off, we're going to segment our sales rep by user – by the number of users in an account. So when you think about selling to AstraZeneca, that has 1000s of users, or even a mid-tier company that might have 200 users, that's a different sales cycle than, sub 20 users as an example.

So we will continue to have kind of our executive level salespeople that are used to dealing with large accounts, focused on things that are a little larger from a user account perspective, the new team will be brought in to work on the smaller accounts, which will be kind of a lower OTE role, mostly a telemarketing job, and will pursue the 100,000 to 150,000 accounts that we've identified that fall into that segment from a user – from a number of users perspective.

Does that help?.

22:23 Yep. Then it kind of looking backwards at the gross margin on the platform side, the dollars actually have been down now two quarters in a row, even while the revenues are going up. So can maybe talk about the components of that cost are the fixed versus variable.

And you've talked about the labor costing down, but it's, so we can decide where that that should flatline on total cost and call a turn and start climbing with the with the revenues?.

22:52 Yeah, good question. By the way, let me add one thing to your sales rep question. When we're doing the analysis today, we think that the number of kind of larger user seats sales reps we have in the United States is the right number. We think we need to add people in Europe. Now this is not the kind of below 10 below 20 seat group.

This is the executive group that deals with larger accounts. So we will add some larger account people primarily in Europe. As I mentioned on previous calls, we have one person in Japan today that's running our Japanese business.

And we are looking for partners in China, which is the number two research and patent market in the world today, so no real progress report there, but some of our marketing spins is going to be trying to expand what's going on in Japan and China.

So what's going on in Japan and China specifically? 23:46 And I'm sorry, could you repeat your question?.

23:49 Yeah, just on the platform cost side, because the dollars have been narrowly falling. But going down while the revenues were up, it's very curious to sort of fixed versus variable, the components in there.

How do we think about when that the total spend should turn and start climbing with the revenue?.

24:06 And just to be clear, you're talking about cost, not ARPU?.

24:06 No the cost side of the platform..

24:14 So Bill, you want to address up?.

24:19 Yeah, so a couple I guess a couple things. One, just to clarify, I mean the – from a standpoint of the gross – the total dollar gross profit that we're seeing from the platform that has been going up over the last few quarters.

Really the there's two components, one is labor, which is the largest component that will go into the cost to be delivering on the platform. And then there is the sort of hosting component to it as well.

The labor is the largest portion, and that has been going up relatively lightly compared to what you're seeing in the platform of growth year-over-year. 25:03 The hosting component is a smaller component. But that does increase more dramatically with the growth but not proportionately at the same rate..

25:17 Okay. Given every headline I hear lately is talking about inflation, can you talk about your ability to pass along to our pricing to match any internal costs that would be rising.

How you feel about sort of a price taker versus a price setter positioning in your space?.

25:38 Yeah, that's a that's a hot topic. And we have kind of three levers in that area. One is the platform itself. The second is the cost of the article. The third is the service fee, we charge for delivery the article, our service fees are typically set as part of an annual agreement.

Most of those agreements do not necessarily have a limit on our ability to renegotiate the service fee. But a fee will have caps tied to consumer Index or PPE or something. But for the most part, we leave service fees alone and make very, very few adjustments to them.

And they do require a contract renegotiation, which most of our contracts renew annually. 26:23 On the article costs, which is the bulk of our cost structure associated with transaction business, those we can change whenever we need to change them, we typically change them once a year. And that's actually in January.

However, we had an incident mid-year last year where a publisher raise prices mid-year, and we simply pass that price increase. So we're pretty proactive about moving transaction costs.

26:51 On the platform side, you know, as I mentioned earlier, we've got kind of double digit net churn to the positive and that is a result of us increasing seat count features, and in some cases, just raising prices.

Although for the most part, what we end up doing, we kind of have a land and expand mentality from a sales point of view, the new sales team, which is selling new customers that have not bought transactions from us before we give them flexibility to land that account.

Once we land that account, the renewal team does a fantastic job each year and uplifting number of users uplifting features and moving them more toward what we refer to as our standard calculator price.

Does that help?.

27:38 Yep, that's helpful. Thank you..

27:43 The next question comes from Adam Wilk of Graystone Capital Management. Please go ahead..

27:50 Hey, guys, thanks for taking my question. A couple of my questions were already asked or you touched on that and your prepared comments. I appreciate all the color that you give. Really impressive quarter from you guys.

I guess my only question a little bit on the unpredictable side, but are we able to expect continued increase in transactions moving forward? Or is this kind of a one off quarter? How are you guys sort of thinking about that segment moving forward?.

28:21 Yeah, that's a great question. And unfortunately, my crystal balls not as good as I'd like it to be.

I mentioned that we would expect positive news in the short-term the data and we do tremendous data analysis on this since I've gotten here and Bill's gotten here we bill and I look at it every Monday and it suggests that the decline is flattening that we may be near the trough.

But as Bill mentioned, we're not ready to make that commitment externally, I'd like to get another couple of quarters under our belt to see what's going to happen there. But I am comfortable in the short-term, because of some things we're doing, frankly with pricing, that will not have the level of declines we've seen over the last year or two.

Bill, anything you want to add to that?.

29:16 Yeah, I think that's that's pretty spot on Roy. I think the one view that we have is that at some point here, as we add these customers to the platform, we do feel like it has to make a turn, we're just trying to, as Roy said, it's kind of hard to see right now, when that turn is going to happen.

We do feel it'll happen at some point, but I'm not ready to make a call this yet..

29:41 Yeah, we're gonna add color..

29:42 Yeah, please go ahead..

29:46 If I can add just a touch of color, when you think about, we have 650 some odd platform customers now, a little less than 300 of those came on before 2017. And those were typically our largest transaction customers, the big guys jumped on board first. So they drive a tremendous amount of the transaction volume and dollars.

And because they've been here since 2017, they've also seen the most savings in terms of reuse, right, and tokens and subscriptions and all of that stuff. So when you look at the – their decline, and year-over-year transaction dollars, it's driven by the fact that the platform works.

One of the other pieces of analysis we did is we took all the customers that we brought on board over the last couple of years. And we looked at their trends, and we were pleased to find out that they spend around three times the platform cost on transactions.

So when we bring on 10,000 our customer, they're typically buying between $25,000 and $35,000 worth of transactions. And that number seems to be holding pretty steady. So what we have as older, huge customers that are declining because the platform is doing its job.

And as we start to pivot to more of these new customers that are bringing in three [Indiscernible] whatever we're charging them for the platform, that should be where we hit that trough and start growing.

Does that help?.

31:13 It does, yeah, that's helpful. Thank you.

And then you touched on M&A activity, obviously, is it? I guess the absence of a deal at this stage? Is it really just a function of valuations? Or is there – have you made it kind of further down the road with anything significant, it would have been nice to sort of see a deal completed by the end of last year, early this year.

And clearly, public market valuations have come down pretty significantly in some areas and I, I guess private markets typically lag behind a little bit.

And I'm wondering if you've maybe seen any improvement on your end, or any maybe flinching from people in the private market world? Again, I know you touched on it, but any, any other commentary would be helpful if there's anything? Thanks..

31:59 Yeah. No, I mean, you're spot on valuations continue to be kind of a challenge.

And then, of course, our ability to fund a deal, you know, brings whatever the – if you think about a wide net to do deals, if you had unlimited cash, our ability to do them as a much narrower net, because we simply can only raise a certain amount of capital to get something done.

I would say I have not seen any foreign training from people that we've talked to over the last three or four months where we may have made an offer, and they turned us down over evaluation. We'll see if that changes.

But like I said, I think we have found some interesting opportunities that are actionable, and I hope to have something to talk about in the near future. But like you on this point, we didn't get something done in that first nine months. That would have been fantastic.

But it's definitely proven to be a tougher road than last time Bill and I were doing this back in 2016 through 2020..

33:00 Great, yeah. Thanks. That's helpful. And I appreciate you taking my questions. Great job. Thank you..

33:07 Thank you..

33:09 The next question comes from Peter Rabover of Artko Capital. Please go ahead..

33:13 Hey, guys, thanks for taking my call. Hey, I know we were talking about inflation and passing off prices, but I noticed that the ASP or the average price has trended down this quarter, 2% or 3%.

Any – could you give us some color and why that is?.

33:34 Yeah, I mentioned a moment ago that our 2017, previous under 300 customers were our largest customers. So that's a pretty high ARPU, because these are guys that had a ton of seats. And then as we've continued to sell into the base, we focused on SMB where that ARPU is lower.

So a lot of the new sales, the ARPU is not that 10,000 to $11,000 number. So I think we've kind of telegraphed this on previous calls, we would expect that ARPU to continue to come down, I think occasionally, we'll sign kind of one huge deal that will give us a bump for that quarter.

But generally, we're selling into the SMB space, which is sales between 10 seats and maybe 50 seats, we do an occasional, like we did a 300 seat sale last couple days. But to get to those 500,000 seat deals, those don't come along very often. And those are the ones that pull up our ARPU. Bill.

I don't know if you have any additional commentary on that one..

34:36 No, that I think that's, that's accurate as well, I would expect it to come down, the newer sales are coming in predominantly at smaller ASP, although we do feel like that there's a big market out there for those sales..

34:51 Hello? Hey sorry, you guys cut off there for a second.

Can you hear me?.

34:55 Yeah, we can hear you..

34:57 Okay, so I'm sorry, but, during the call the operator kind of cut into to ask a question. I must have missed it.

Did you say you signed a 300 to deal?.

35:12 Yeah, we signed a deal yesterday. It's an unusual deal for us in many regards. One is it's up to 300 seats, so we won't – they won't sign and pay for 300 seats tomorrow. But they'll grow into 300 seats over time..

35:26 Okay. Wow. That's, that's fantastic. That's great to hear. So, I had a question that doesn't really have a direct answer. But maybe you could share now that you're close to like 700 deployments, or I guess, maybe almost 1000.

To talk about where you, like, just try to talk about your customer base and your growth base, like, where you came the most growth and just something to think about it, is it pharma, is it manufacturing, is it biotech like, so something to kind start thinking about granularity?.

36:07 Yeah. that's a great question. We have some data on that, but we're doing a bunch of analysis so that we can have what I call effective territory sales plans as we go into FY23.

In other words, instead are just given a guide territory and say you got to generate 200,000, we want to give our rep territory and we want to tell them here's all your accounts in the territory. Your market share is 3% to 6% and here's the accounts we watching to pursue to do it. 36:35 And so we're doing a lot of analysis now.

However, to your question, [Indiscernible] of our business is still pharma and biotech. We do have stalls in 62 other verticals.

Some of those are growing as we add content or functionality that appealing to that vertical or and maybe as simple as the sales reps more aggressively calling in that vertical like food or cosmetics? But the line share of our business continues to be pharma and biotech.

But by the next call, I can probably have a lot better info for you guys on a deep dive in terms of what I'm looking for is, what user group has growing in the fastest? Is it the 10 to 20, is it 20 to 50, is it the 100 over, where are we seeing most of those sales, where we seeing the most gross margin contribution total including transactions because that helps us identify the sweet spot of what we want.

Our sales teams to be calling on as opposed as just generally looking to drag in 200 grand a matter where it comes from..

37:38 Okay. Thanks. I appreciate that – that’s all I have [Indiscernible] answered..

37:46 Thank you..

37:50 The next question comes from George Melas from MKH management. Please go ahead..

37:57 Thank you. Good afternoon, gentlemen. Good job on the continued sales growth. My question is about sort of the transactions just, it is a very, very important part of to the business. You have some direct competitors on the transaction side.

Is the growth of the platform business and the investment that you making on the platform side where AG3 [Indiscernible] some of the new things that you are planning there, could that have an impact on the competitive dynamic for the transaction business?.

38:41 Well, yes, I think it will, And AG3 and AGS as well as the new product we haven't really talked a lot about. They all have a transaction element.

So each one of those are products that can drive up the transaction revenue are the number of transactions that we're processing, through the various platforms, some of the things we're doing is we identified a series of improvements to our software that we think will help with driving more transaction business.

For example, we don't suggest upsell, I think that's how you and I would think about it.

But in future versions of our software, we will literally proactively tell the researcher, one of two things, either, hey, here's five other articles that are similar to this search you did and these articles that you acquired or we actually want to get to the point where we can say over the last week, these new articles were released by these publishers that are related to the research project that you're working on.

So we have a series of about a half a dozen product initiatives that we're not going to be able to implement all at once, but like one of them will be in this month's release, that are all intended to help improve transaction uptake in our existing customer base. And these are features will be deployed to all 650 to 700 customers on the same day.

So these are things that we will be able to immediately know if they're working or not..

40:09 Okay. Okay.

And maybe just under AG Scholar, can you try to size up the TAM there and how you're going to let us know your new initial steps to try to reach that TAM?.

40:29 Yeah, I apologize. I don't know the TAM numbers off the top of my head. But I can, we'll see if we can pull those together. But we do have the TAM. We do think it's a sizable business. It's certainly larger. Well, I would say it's a – it's a sizable business, I'll have to pull the exact numbers. I don't remember them off top my head..

40:53 Okay, and I use the voting one salesperson to do that at first or….

40:59 We have two people on it now. So two people are working it. We have a pretty active marketing campaign that includes webinars and a lot of conferences and a lot of presentations to library consortiums. You know, in fact, we had two webinars in the last month and both of them were very well attended.

I think the first webinar was around 100 people in attendance second webinar was 53 in attendance, and the 53 when we did morning, East Coast time, which was probably a mistake. But anyway, those are generation nice leads into the group.

And, over the next few months, we will be attending a whole bunch of conferences, as well as additional webinars and frankly, I think the biggest mover for us and EGS is presenting to consortiums of libraries, where we're presenting to a bunch of them at once. And that's a pretty active part of our marketing plan..

41:58 Okay, and is there a clear competitor in that space? Or is it kind of not very penetrated at all?.

42:09 There's not a clear competitor, other than a librarian that works in the library that makes the decisions whether or not you as a student, or you as a professor can buy the article that you want to buy.

In many cases, what our technology does, it allows that library to set limits and set rules around what people can buy and cannot buy and get out of the middle of that buying decision. And we've had – we have some libraries where they just set it up and let it run.

We have other libraries that are – we have one library that made a pretty high risk decision to cancel all their subscriptions and tokens and simply use the platform and buy the articles one at a time. 42:51 And as it turns out, it actually saved them a significant amount of money. I mean, high six figures, low seven figures.

So there's an interesting ROI developing from people that are using the platform. But, not every customer is going to do with that one customer did..

43:09 Okay, great. Thank you very much for taking my question..

43:13 Thank you..

43:16 [Operator Instructions] The next question comes from Allen Klee of Maxim Group. Please go ahead..

43:32 Hi, for article gallery.

Galaxy scholar, can you talk just go through again, kind of what you're doing in terms of the addition, the additions that you're providing, and how you're thinking about the rollout of the good, better best strategy?.

43:52 Yeah, I mean, good, better best was, of course, initially applied to the corporate version, which is AG3, the article, the AGS, or article, Galaxy scholar version was actually just updated to include a bunch of AG3 features and will eventually be updated to include the good, better best features.

In terms of what we're doing for the library, I mentioned a second ago, what we do is we help systematize the acquisition of articles for students or faculty, as opposed to students or faculty doing the researcher and then having to go through a librarian who will make the decision of whether they buy it or not.

44:31 There are some unique integration things we have to do in the library in terms of single sign on and integrating to other sources of information, because they obviously want our platform to check other sources for that article before they acquire the article. And those sources are different than what we do in the corporate space.

But it's a very similar platform, it actually looks the same, you do the search the same, you do the acquisition process, very similar. Only there are some checks that are going on in the background that are different from corporate. Did that answer your question..

45:02 Yeah, thank you. And then just your comments on plans to double your sales force is and at least to get the bodies seated by your fiscal fourth quarter.

Does that kind of imply that your kind of sales and marketing costs on a run rate will kind of double from from a current run rate?.

45:27 Not necessarily, because the OTE of the smaller farm of biotech salespeople is going to be materially lower than the existing team. So think about the existing team is kind of account executives that are -- they're working assigned accounts.

Those are typically higher paid people that are working more complex deals, like of the small account team is more of like a geography rep and some companies that are just founding a territory, looking for smaller opportunities, those smaller opportunities have a lower average revenue per unit and they also come with a lower OTE.

So I would think the OTE of those people is going to be half or a little more than half of our existing teams. But we'll have a little bit more data for you on the next call of the actual economic impact of those teams. We bring them on board..

46:21 Okay, thank you so much..

46:26 This concludes the question and now First session, I would like to turn the conference back over to Roy Olivier for any closing remarks..

46:35 All right, well thanks everyone for joining us today on our call. As a reminder, we will be participating in the Roth Capital Partners conference in March. For more information on this event, please contact your Roth Sales rep. We look forward to speaking to you again in May to discuss our third quarter results and we hope you have a great day..

46:57 This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day..