Roy Olivier: Yes. That’s a great question. I think our strategy is to have a superior product in the categories that we participate in, which include discovery tools, which is where Scite and Resolute come in. We continue to add functionality to Article Galaxy, which is our core access or document delivery platform. And we continue to add functionality to the references product, which is the reference management software. So moving forward, as we more tightly integrate these tools together, we think that’s a competitive advantage and that you’re not exporting from one tool and importing into the next tool. And integrating some of the unique features like the Scite badge and additional AI capability into the platforms, we think adds real value.
In addition to the fact that our objective is to simply be the easiest and fastest research tool out there today. So it’s a much longer conversation with that, but I feel like we have made progress and continue to have a good strategy to be competitive and take share as we move forward.
Jacob Stephan: Got it. Understood. And maybe just one more. You guys had a solid quarter and kind of B2C expansion. You noted kind of sales and marketing efforts are going to be implemented kind of in Q4 here. But I guess, how should we think about kind of sales and marketing moving forward? We saw your first quarter over $1 million in expense here in Q3. But maybe just any sense on how we can see that trending over the near term here.
Roy Olivier: Yes. I’ll let Bill comment on the numbers. I mean, big picture, as Bill mentioned, we will invest a bit more in digital ad spend as we continue to experiment with the right spend that drives trials and subscribers on the B2C side. On the B2B side, we don’t expect any big changes as we roll into Q4. We may add some additional costs as we go into next year, but I think it will be negligible. But Bill, any comments?
Bill Nurthen: Yes, a couple. First, this was the first quarter that we fully had Scite represented from a cost base perspective. And so that’s what’s kind of pushing us to the $1.1 million we had this quarter. And I do think that’s sort of a reasonable run rate with the one exception of marketing spend. I think we’re going to — we’ll experiment. We’ll probably do anywhere, $150,000, maybe $200,000 of additional marketing spend in the quarter. And there are metrics that we’ll be looking at to see what kind of return we’re getting on that expenditure and whether that will kind of continue going forward or not. And so it is something that, one, we get a very quick read on how it’s working. And then two, we can adjust quite rapidly, turn on or turn off if we’re not seeing the results that we want. So, I think that’s how I would look at that line on the P&L on a go-forward basis.
Jacob Stephan: Okay. Yes. I appreciate that. And maybe — sorry, just hop in with one more. Maybe kind of help us think about the overall B2C opportunity. Obviously, it was a nice quarter of ARR growth. But how are you thinking about kind of the overall opportunity here and growth rate — growth expectations?
Roy Olivier: Yes. I think B2C is new to us, and we don’t know what we don’t know relative to what really are good churn rates. I mean, when we compare it to the churn rates of the B2B business, they’re obviously materially different, but the onboarding rate of new customers is also very, very different. So in terms of TAM for that business, we know that there’s roughly — I’m looking at the exact number, 25 million to 50 million researchers out there or when I say out there, I mean, that subscribe to a platform that focuses on research. So, we think there’s a very large TAM, especially in comparison to how many users we have today. The question is, can we continue to deliver value to expand the lifetime value of the customer that signs up in addition to continuing to onboard customers?
And so far, as we’ve increased spend, we’ve not seen a material change in terms of the cost per trial or the trial, the subscriber conversion rate. And that’s why, as Bill mentioned, I mentioned, we’re going to dial up that spend and see where the point is where we see any material change in those numbers. All that said, it has more seasonality than the rest of our business. So, we’re dialing up spend this much — this month, I’m sorry. We’re going to be careful about June, July, August and then dial-up spend again as people get back to school. Anything you want to add, Bill?
Bill Nurthen: No, I think that covers it, Roy.
Operator: [Operator Instructions] We’ll hear next from Allen Klee at Maxim Group.
Allen Klee: You gave your fiscal 2026 guidance for annual recurring revenue. How do you think about how it ramps up over the next two-plus years to get there? Does it kind of accelerate in your mind? Or is it kind of a steady Eddie? Or how do you think about that?
Roy Olivier: Yes. Just to be clear, I wouldn’t call our $30 million target guidance. For me, it’s a BHAG. It’s a big hairy goal that we’re chasing. And we typically don’t provide guidance on the top or the bottom, but as you know, three years ago, I provided a BHAG of $20 million. That’s what we were chasing, and now I’ve moved it to $30 million. Back to your question, though. No, I think we’ll see acceleration in the number. Keep in mind, we’ve not fully integrated the products. We haven’t built all of the new products we’re going to build out of the combination of the three companies; Research Solutions, Scite and Resolute. We’ve also not finished implementation of a lot of things we think will drive road into the future. So me being relatively conservative, I’m looking for $1.5 million or $1.44 million in growth — net ARR growth per quarter, but we won’t hit that in these early quarters, but I believe we’ll outperform that as we start to get into certainly the second half of FY ’25 and then throughout ’26.
Allen Klee: That’s great. Just a housekeeping question. What’s your current share count?
Roy Olivier: Bill?
Bill Nurthen: Yes. It’s right around [30 million to 35 million], I want to say, let me just confirm, $32.3 million roughly.
Allen Klee: And you announced two new products or features recently. Can you talk about those features and if you can give any sense of the opportunity from them?
Roy Olivier: Yes. We think within the organizations we serve, there’s typically departments that are focused on clinical trial or tech landscape. And the way those products work is we’re basically using one of our search engines to allow you to put in criteria. It will then gather together a tremendous amount of information. Some of it is in the peer-reviewed scientific articles. Some of it is in the external data sets that Resolute has, and it will literally write a summary of the tech landscape for the subject matter you search for or write a summary of the clinical trial research that you ask it to run. So effectively, what it does is it dramatically reduces the amount of time it takes to do those functions within heavy research-intensive organizations.
These tools, we don’t expect to be 10s of millions, but we do expect them to grow over time. However, I think the TAM for that is certainly smaller than Article Galaxy or Scite. Any of the versions of Scite’s simply because the research organizations in the companies that are our targets are typically 10s, hundreds, even thousands of researchers, whereas the departments that are doing that type of work are much smaller. So, they’re exciting products. They line up with our strategy of helping all the various steps and departments involved in the research process. But I would not think of them as an opportunity anywhere near the size of Scite, SciPro or Article Galaxy or Article Galaxy references.
Allen Klee: Last question on your increase in sales and marketing as you’ve gotten good results for that. How do you think about like the hopeful, the cost to acquire, if you spend an extra dollar in sales and marketing, what you hope to get for that?
Roy Olivier: Yes. I mean, I can pull something up here and give you some context. When we invest — well, Bill, do you want to comment on the B2C side, and I’ve got a couple of comments on the B2B side.
Bill Nurthen: Yes. So typically, on B2C side, we’re typically looking at two metrics. One is the customer acquisition cost and the time to pay back that cost and the other is the lifetime value of that customer as a ratio compared to the cost to acquire that customer. And so, obviously, as we’re spending more, we’re looking to see if those metrics are improving, not improving, and where can we kind of optimize those. In general, looking for pretty quick payback like under six months or so, under 12 months is more of the standard, but we’re looking maybe a little bit more aggressive there and trying to minimally be above kind of 3x lifetime value to CAC. So, those are things we’re looking at, but it’s really more — are these trends? Are these numbers improving as we add spend? Are they starting to deteriorate? And that’s what we’re monitoring.
Roy Olivier: Yes. We have a similar approach on the B2B side. Just the numbers are a bit different. So, we typically have experienced between 12- and 18-month payback period, and we typically have a very large kind of lifetime value because customers don’t churn out at a fast rate. So, again, our CAC LTV numbers there are very good, and that’s another area of the business where I think we’ve done a nice job in the past few months of calibrating spend to maximize traffic that converts into sales pipeline. So, I think we’ve got — made a lot of progress there. And I think that will start to show up in the numbers as we get into beginning of FY ’25.
Operator: And this does conclude our Q&A session for today’s conference. I’m happy to turn the floor back to Mr. Olivier for any additional or closing remarks.
Roy Olivier: Well, thank you, and thanks, everyone, for joining in the call today. We will be participating in the Three Part Advisors IDEAS Conference in New York City on June 12. Hope to see you there. Qualified investors that would like to attend or schedule a meeting should contact Three Part Advisors, and we look forward to speaking with you again in September to discuss our full-year and fourth quarter fiscal 2024 results. Have a great day.
Operator: This does conclude today’s teleconference, ladies and gentlemen, and we thank you for your participation. You may now disconnect your lines.
