Research Solutions (NAS:RSSS) — mrkt cap $89mm; Price $2.73; EV/EBITDA 9
PASS. We researched this company seven years ago and even owned it briefly. Following a major management change in 2021, we revisited it. Research Solutions offers a SaaS platform (Article Galaxy) that provides access and workflow tools for scientific literature. While the transactional segment is flat, the SaaS platform has grown—but not meaningfully given the market size. The company has restructured and expanded its salesforce, now comprising roughly a third of its ~140-person workforce. This has helped lift platform deployments but has also pressured margins. While we believe they can keep selling, we do not think this product solves a critical need. It’s a convenience layer, not core infrastructure. Even in R&D-heavy SMEs, usage is episodic and most journal access is already handled through direct licenses or other means. We believe management is aware of this issue and has made small bolt-on acquisitions but the value proposition still feels thin. It may eventually fit best as a tuck-in within a broader software suite. For now, we will continue to view their SaaS solution as a solid product in search of a must-have use case.
Sonder Holdings (NYSE:SOND) — mrkt cap $25mm; Price $2.27; EV/EBITDA NA
PASS. Sonder is a hospitality company that leases and manages properties to offer them as short-term rentals, providing a consistent hotel-like experience in apartment and condo settings. Unlike ABNB, Sonder directly manages its listings, ensuring standard quality and amenities for guests. While there is demand, a big question mark is whether the business model is even economically feasible. Sonder has fallen almost 98% since it went public. Revenues have increased over 4x in the last five years but operating expenses have also increased in lockstep. The result is a 25mm market cap company that is on the precipice of bankruptcy. Add onto this significant accounting issues makes Sonder un-investable even as a speculative position.
Red Violet (NAS:RDVT) — mrkt cap $548mm; Price $39.32; EV/EBITDA 31
MORE RESEARCH NEEDED. Red Violet is a data fusion company that combines disparate data sources such as property records, court filings, social media, and utility data into a unified identity graph used for fraud prevention, identity verification, and investigative purposes. Its two core products, IDI and FOREWARN, serve around 9,000 institutions and over 300,000 users including law enforcement, financial services, and real estate professionals. Revenue grew 25% in 2024 to $75 million, with gross margins above 80% and FCF up over 100% percent yoy. While unit economics are strong, shares trade at ~6x revenue, which appears slightly expensive. The key open question is competitive moat. More research is needed to understand why public-data competitors cannot easily replicate Red Violet’s offering and whether its AI-driven features offer a lasting advantage.