Core Insights - Rimini Street, Inc. (RMNI) has experienced a significant slowdown in revenue growth, moving away from its previous double-digit growth rates [1] - The company operates in a large and underpenetrated market, raising concerns about potential structural headwinds affecting its future performance [1] Company Performance - Recent results indicate a clear deceleration in revenue growth for Rimini Street, which may suggest underlying issues within the company's operational framework [1] Market Context - The large and underpenetrated market in which Rimini operates presents both opportunities and challenges, highlighting the importance of understanding market dynamics and competitive positioning [1]

Back in August, I called Rimini Street, Inc. ( RMNI ) a Buy primarily because the company was getting out of the woods from the legal overhang with Oracle, and the underlying growth was good. It's 3 monthsI’m Emmanuel Onwusah—a financial analyst, writer, and recovering engineer. I hold FMVA® and BIDA® certifications from the Corporate Finance Institute, and I spend most of my time creating pitch decks, building models, analyzing companies, and trying to make sense of where value meets narrative. My backgrou ...

Back in August, I called Rimini Street, Inc. ( RMNI ) a Buy primarily because the company was getting out of the woods from the legal overhang with Oracle, and the underlying growth was good. It's 3 monthsI’m Emmanuel Onwusah—a financial analyst, writer, and recovering engineer. I hold FMVA® and BIDA® certifications from the Corporate Finance Institute, and I spend most of my time creating pitch decks, building models, analyzing companies, and trying to make sense of where value meets narrative. My backgrou ...

Core Insights - A global survey reveals that Oracle Database customers are evolving their database strategies due to high costs, support challenges, and the need for advanced AI/ML capabilities [1][2][3] Customer Support Challenges - A majority of Oracle Database customers express frustrations with Oracle's support, with 63% citing high support costs and 87% indicating slow resolution times as problematic [2][3] - Only 16% of customers find their initial Oracle support engineer to be very skilled, leading to delays in issue resolution [2] Adoption of Third-Party Support - The survey indicates a growing trend towards third-party support, with 25% of organizations currently using such services and 30% considering it [3] - Key areas for third-party support include cloud database management (37%), data migration (36%), performance tuning (34%), and backup and recovery (32%) [3] Diversification of Database Strategies - Many Oracle Database customers are exploring alternative database options due to high costs (58%) and support gaps (31%), with 77% deploying new applications on non-Oracle databases in the past 36 months [6] - Popular alternatives include SQL Server (59%), MySQL (45%), PostgreSQL (40%), and Amazon RDS (28%) [6] Interest in AI/ML Capabilities - While 47% of respondents desire native support for large language models (LLMs), many are unaware that Oracle has already integrated LLM support in versions 19c and 23ai [7]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Core Insights - Rimini Street (RMNI) reported quarterly earnings of $0.08 per share, missing the Zacks Consensus Estimate of $0.10 per share, and down from $0.22 per share a year ago, representing a -20.00% earnings surprise [1] - The company posted revenues of $103.43 million for the quarter ended September 2025, which was 1.22% below the Zacks Consensus Estimate and a decrease from $104.67 million year-over-year [2] - Rimini Street shares have increased approximately 71.9% year-to-date, significantly outperforming the S&P 500's gain of 17.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.10 on revenues of $105.69 million, and for the current fiscal year, it is $0.29 on revenues of $418.72 million [7] - The estimate revisions trend for Rimini Street was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Internet - Software industry, to which Rimini Street belongs, is currently ranked in the top 30% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $103.4 million, a year-over-year decrease of 1.2%, with the U.S. representing 45% and international 55% of total revenue [13] - Annualized recurring revenue (ARR) was $391 million, a year-over-year decrease of 2.6% [13] - Billings for Q3 were $66.5 million, up 2% year-over-year, while adjusted billings, excluding PeopleSoft-associated billings, were $63.9 million, an increase of 6.7% [13][14] - Gross margin for Q3 was 59.9% of revenue compared to 60.7% for the prior year [14] - Net income attributable to shareholders for Q3 was $2.8 million, or $0.03 per diluted share, compared to a net loss of $0.47 per diluted share in the prior year [17] Business Line Data and Key Metrics Changes - Closed 17 new client sales transactions in Q3 with total contract value (TCV) of $63.1 million, compared to 19 transactions for $48.7 million in the prior year [5] - Achieved record RPO backlog of $611.2 million, up 6.4% year-over-year [5][19] - PeopleSoft revenue was approximately 5% of total revenue for Q3, down from 8% in the prior year [20] Market Data and Key Metrics Changes - The company added 79 new logos in Q3, with sales spanning various industries and geographies [5] - International sales growth was driven by SAP, which is a larger product than Oracle in the international market [40] Company Strategy and Development Direction - The company is focusing on its three core service pillars: support, optimize, and innovate, with a new emphasis on agentic AI ERP solutions [4][12] - A strategic partnership with American Digital aims to provide full-stack solutions, enhancing customer offerings without requiring costly upgrades [10][59] - The company plans to leverage its GSA Multiple Award Schedule to enhance its business with U.S. government agencies [9][50] Management's Comments on Operating Environment and Future Outlook - Management noted that the Oracle litigation settlement has positively impacted engagement levels with prospects and partners [42] - The company expects to provide forward-looking guidance at the Analyst and Investor Day on December 3, 2025, outlining market opportunities and financial goals [21] - Management believes that the combination of support services and new AI technology will drive growth and improve profitability [28][29] Other Important Information - The company plans to wind down its support for Oracle PeopleSoft products by July 31, 2028, as part of the Oracle settlement [11][20] - Operating cash flow for Q3 increased significantly due to litigation settlement proceeds, with a cash balance of $108.7 million at the end of the quarter [18][19] Q&A Session Summary Question: Can you expand on the 24 agentic AI wins with ServiceNow? - Management confirmed 26 customers are engaged with the ServiceNow component, with expectations to monetize these by 2026 [26][27] Question: What will it take to return to double-digit top-line growth? - Management indicated that becoming the support and agentic AI ERP company will drive growth, leveraging existing systems and technology [28][29] Question: What is the current status of indirect sales channels? - Management stated that indirect sales channels are maturing and will be detailed further at the upcoming investor day [30][32] Question: How has engagement changed post-Oracle settlement? - Management noted an increase in engagement from prospects and partners who were previously hesitant due to litigation concerns [42][43] Question: What impact do you expect from the GSA schedule? - Management sees the GSA schedule as a significant opportunity for government contracts, allowing direct procurement without competitive processes [50][51]

Core Insights - The company achieved record third quarter SAP support sales and surpassed 100 VMware support contracts, indicating strong growth in support services [1][2] - The introduction of the AgenTic AI ERP solution powered by ServiceNow AI is expected to enhance the company's market position and drive future sales [1][10] - The company plans to provide further insights into its AgenTic AI ERP solutions at the upcoming analyst and investor day on December 3, 2025 [1][24] Sales Performance - Third quarter sales bookings improved, with 17 new client sales transactions each exceeding $1 million, totaling $63.1 million, compared to 19 transactions totaling $48.7 million in the previous year [2] - The company added 79 new logos and achieved a record remaining performance obligation (RPO) backlog of $611.2 million, reflecting a 6.4% year-over-year increase [2][21] - The growth in billings was driven by new annual recurring revenue (ARR) subscriptions and project-based professional services [1][12] Strategic Developments - The company simplified its go-to-market strategy focusing on three core service pillars: Support, Optimize, and Innovate, which are designed to help clients save costs while leveraging AI [3][5] - The company was added to the United States GSA multiple award schedule, allowing government agencies to procure its services directly, which is expected to enhance sales opportunities [5][6] - A strategic partnership with American Digital aims to provide full-stack solutions, helping clients modernize with AI without costly migrations [7][60] Financial Overview - Revenue for the third quarter was $103.4 million, a year-over-year decrease of 1.2%, with a 2.5% increase when excluding Oracle PeopleSoft revenue [11][12] - Annualized recurring revenue was $391 million, down 2.6% year-over-year, with a revenue retention rate of 89% for service subscriptions [11][12] - Operating cash flow increased significantly due to litigation settlement proceeds, with a cash balance of $108.7 million at the end of the quarter [20] Cost Management - The company incurred reorganization charges of $752,000 in the third quarter as part of its cost optimization plan, with total charges amounting to $7.7 million since the plan's inception [14] - Sales and marketing expenses as a percentage of revenue increased to 36.7% from 34.2% year-over-year, indicating a focus on driving growth [15] - General and administrative expenses also rose to 17.6% of revenue, impacted by non-recurring international transaction tax costs [16] Litigation Update - The company settled its litigation with Oracle, which allows it to wind down support for Oracle's PeopleSoft products by July 31, 2028 [8][9] - The settlement is expected to positively impact the company's business relationships and sales opportunities moving forward [48] Future Outlook - The company plans to provide forward-looking guidance at the Analyst Investor Day on December 3, 2025, outlining market opportunities and financial goals [24] - The focus on AI and the new AgenTic AI ERP model is expected to drive future growth and enhance the company's competitive position in the market [32][51]

Revenue Performance - Revenue for Q3 2025 was $103.4 million, a decrease of 1.2% compared to $104.7 million in Q3 2024; excluding Oracle's PeopleSoft support wind down, revenue increased by 2.5%[3] - U.S. revenue was $46.3 million, down 10.3% year-over-year; excluding the wind down, it decreased by 4.4%[3] - International revenue was $57.2 million, an increase of 7.7% year-over-year; excluding the wind down, it increased by 8.6%[3] - Total revenue for Q3 2025 was $103,428, a decrease of 1.2% compared to $104,672 in Q3 2024[19] - Gross profit for Q3 2025 was $61,938, down from $63,537 in Q3 2024, reflecting a gross margin of 59.9%[19] Client Metrics - Active Clients increased to 3,155, representing a growth of 1.9% year-over-year[3] - Active clients increased, indicating growth in business and effectiveness of sales strategies[24] Financial Performance - Net income for Q3 2025 was $2.8 million, compared to a net loss of $43.1 million for the same period last year[8] - Operating income for Q3 2025 was $4,385, compared to a loss of $49,594 in Q3 2024[19] - Net income for Q3 2025 was $2,766, a significant improvement from a net loss of $43,100 in Q3 2024[19] - Non-GAAP Operating Income was $8.5 million, compared to $13.4 million for the same period last year[8] - Non-GAAP operating income for Q3 2025 was $8,544, compared to $13,402 in Q3 2024[21] Revenue Obligations and Billings - Remaining Performance Obligations (RPO) reached $611.2 million, an increase of 6.4% year-over-year[3] - Adjusted Calculated Billings were $63.9 million, up 6.7% from the prior year[3] - Adjusted calculated billings for Q3 2025 were $63,943, up from $59,939 in Q3 2024[21] - Calculated Billings represent the change in deferred revenue plus revenue for the current period[32] - Adjusted Calculated Billings exclude those associated with PeopleSoft services[33] Recurring Revenue - Annualized Recurring Revenue was $391.0 million, a decrease of 2.6% year-over-year; excluding the wind down, it increased by 1.0%[3] - Annualized recurring revenue provides insight into expected revenue from existing clients, excluding non-recurring revenue[25] Assets and Liabilities - Total current liabilities decreased to $275,302 from $324,592 year-over-year[19] - Total assets decreased to $352,860 from $369,063 year-over-year[19] Future Guidance - The Company plans to provide forward-looking guidance at its Analyst and Investor Day on December 3, 2025[5] Costs and Adjustments - Stock-based compensation expense is utilized to align employee interests with stockholders and achieve long-term retention, leading to variability unrelated to operational decisions[29] - Reorganization costs primarily consist of severance costs related to the company's reorganization plan[30] - EBITDA is defined as net income adjusted for interest expense, income taxes, and depreciation and amortization[31] - Adjusted EBITDA excludes litigation costs, stock-based compensation expense, and reorganization costs[31]

Revenue Performance - For the three months ended September 30, 2025, the company generated revenue of $103.4 million, a decrease of 1% compared to $104.7 million in the same period of 2024[128]. - Approximately 45% of the company's revenue for the three months ended September 30, 2025, was generated in the United States, while 55% was generated in foreign jurisdictions[128]. - Revenue related to services for Oracle PeopleSoft products accounted for approximately 6% of total revenue for the nine months ended September 30, 2025, down from 8% for the same period in 2024[130]. - Total revenue for Q3 2025 was $103.4 million, down from $104.7 million in Q3 2024, a decrease of 1.2%[146]. - Revenue decreased from $314.5 million for the nine months ended September 30, 2024 to $311.7 million for the nine months ended September 30, 2025, a decline of $2.8 million or 1%[161]. - Subscription revenue for Q3 2025 was $98 million, accounting for 95% of total revenue, compared to $100 million or 96% in Q3 2024[139]. - Annualized recurring revenue decreased from $402 million in 2024 to $391 million in 2025, reflecting a decline of 2.7%[140]. - The Wind Down process for Oracle PeopleSoft services is expected to significantly reduce revenue, although the pace of reduction is currently unknown[130]. Client Metrics - The company employed over 2,000 professionals and supported over 3,150 active clients globally, including 81 Fortune 500 companies and 21 Fortune Global 100 companies[127]. - Active clients increased from approximately 3,097 in 2024 to 3,155 in 2025, representing a growth of 1.9%[136]. - Unique clients rose from approximately 1,577 in 2024 to 1,590 in 2025, indicating a growth of 0.8%[137]. - The company has experienced clients not renewing services due to global economic uncertainty and inflationary pressures[132]. Financial Position - The company has an accumulated deficit of $202.1 million as of September 30, 2025[128]. - The company had a working capital deficit of $41.4 million and an accumulated deficit of $202.1 million as of September 30, 2025[175]. - As of September 30, 2025, the company had available cash, cash equivalents, and restricted cash of $109.9 million[175]. - The company had cash and cash equivalents of $109.9 million as of September 30, 2025, expected to meet future cash needs[182]. Profitability and Expenses - Net income improved from a loss of $43.1 million in Q3 2024 to a profit of $2.8 million in Q3 2025, a turnaround of $45.9 million[145]. - Net income for the nine months ended September 30, 2025 was $36.4 million, a significant increase of $79.3 million compared to a net loss of $42.9 million for the same period in 2024[160]. - Gross profit margin declined from 60.7% in Q3 2024 to 59.9% in Q3 2025, a decrease of 80 basis points[144]. - General and administrative expenses rose by 10% from $16.5 million in Q3 2024 to $18.2 million in Q3 2025[151]. - Income tax expense increased to $15.5 million for the nine months ended September 30, 2025, compared to a tax benefit of $6.7 million for the same period in 2024, due to an increase in income before taxes[174]. Debt and Financing - The company refinanced its credit facility in April 2024, resulting in outstanding term loan borrowings of $70.3 million and no borrowings on the revolving line of credit as of September 30, 2025[176]. - The 2024 Credit Facility includes interest rates based on SOFR (2.75% to 3.50%) or Base Rate (1.75% to 2.5%) with annual minimum principal payments of 5%, 5%, 7.5%, 7.5%, and 10% over five years[177]. - As of September 30, 2025, the outstanding debt under the 2024 Credit Facility was $70.3 million, with no borrowings under the revolving line of credit[209]. - The company may seek additional debt or equity financing to support long-term capital requirements, which could be impacted by economic downturns[183]. Cash Flow - For the nine months ended September 30, 2025, cash flows from operating activities were approximately $40.7 million, including $37.9 million from litigation settlement proceeds[186]. - Cash utilized in financing activities for the nine months ended September 30, 2025, was $21.8 million, primarily for principal payments on the 2024 Credit Facility[195]. - Cash used in investing activities for the nine months ended September 30, 2025, totaled $3.9 million, primarily for capital expenditures[193]. Foreign Currency and Economic Impact - A hypothetical 10% change in foreign currency exchange rates would have impacted income before income taxes by plus or minus $0.9 million and cash flow by plus or minus $3.7 million[206]. - The company has not engaged in hedging foreign currency transactions to date but is evaluating future hedge transactions[205]. - The favorable foreign currency translation impact was $5.7 million for the nine months ended September 30, 2025, compared to an unfavorable impact of $1.9 million in the prior year[184]. Accounting Standards - The company is assessing the impact of the adoption of ASU 2025-05 and ASU 2025-06 on its Consolidated Financial Statements[201][203]. - ASU 2025-05 is effective for annual periods beginning after December 15, 2025, while ASU 2025-06 is effective after December 15, 2027[202][203]. - The company believes that no other recently issued accounting standards will have a material impact on its financial statements[204].