UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission File Number: 001-37397 Rimini Street, Inc. (Exact name of registrant as specified in its charter) Delaware 36-4880301 (State or other jurisdiction ...

Core Insights - Waratek has named Rimini Street as its exclusive Pinnacle Partner, recognizing its premier global capability in the third-party support market [1][3] - Rimini Street has been instrumental in shaping innovation at Waratek over the past seven years, leveraging its extensive experience in implementing and supporting Waratek's solutions [3][5] - The partnership allows Rimini Street to provide unique protection for Java SE 5-based applications, which are still in use despite vendor support having ended a decade ago [3] Company Overview - Waratek, based in Dublin, Ireland, specializes in active security platforms that secure business-critical applications by fixing vulnerabilities in real-time [7] - Rimini Street, a Nasdaq-listed company, is a leading provider of end-to-end enterprise software support and innovation solutions, particularly known for its third-party support for Oracle, SAP, and VMware software [8] - Rimini Street has signed thousands of contracts with major organizations, achieving significant operational savings and enabling investments in AI and other innovations [8] Partnership Dynamics - As the Pinnacle Partner, Rimini Street has developed exclusive expertise in creating custom rules for the Waratek engine, unmatched by any other company [2][4] - Rimini Street's team of over 75 security professionals provides continuous support and innovation, ensuring a seamless user experience for clients [5] - Customer feedback plays a crucial role in driving continuous innovation and enhancing the security of enterprise software [6]

Financial Data and Key Metrics Changes - Revenue for Q4 2024 was $114.2 million, a year-over-year increase of 1.9%, while full-year revenue was $428.8 million, a decrease of 0.6% [23] - Annualized recurring revenue (ARR) was $414.8 million for Q4 2024, a year-over-year decrease of 4.1% [24] - Billings for Q4 2024 were $172.1 million, up 7.1% year-over-year, while full-year billings were $423 million, an increase of 1.1% [25] - Gross margin was 63.7% for Q4 2024 and 60.9% for the full year, compared to 61% and 62.3% for the prior year respectively [26] - Net income attributable to shareholders for Q4 was $6.7 million, or $0.07 per diluted share, compared to $0.10 per diluted share in the prior year [33] Business Line Data and Key Metrics Changes - The company achieved 22 new client sales transactions in Q4 with total contract value (TCV) over $1 million [11] - PeopleSoft revenue was $8 million for Q4 2024, representing 7% of total revenue, compared to $8.5 million in Q4 2023 [37] Market Data and Key Metrics Changes - Client revenue for Q4 2024 within the United States represented 47%, while international clients represented 53% [23] - The billings improvement was led by the LatAm, EMEA, and Asia-Pacific regions [12] Company Strategy and Development Direction - The company is focusing on a new go-to-market strategy in the Americas, adopting a hunter-farmer sales model to drive growth [13] - Strategic partnerships, such as with ServiceNow, are aimed at providing enterprise application modernization solutions without costly upgrades [17] - The company is expanding its services to more software products, particularly VMware, which is expected to drive significant growth [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth and higher profitability, indicating that the company is on the "upside of the U" in terms of recovery [44][82] - The company is currently suspending guidance until there is more clarity around ongoing litigation with Oracle, but expects to return to providing guidance in 2025 [38][76] Other Important Information - The company has been involved in litigation with Oracle for over 15 years, with recent positive developments in the Rimini II case [19] - The company ended Q4 2024 with a cash balance of $88.8 million, down from $125.3 million in the prior year [35] Q&A Session Summary Question: Can you talk about the changes you've made in sales and the pipeline? - Management indicated that they believe they are on the path to recovery and have seen positive metrics in sales execution and pipeline growth [44][82] Question: How has the litigation impacted the pipeline? - Management acknowledged that the litigation had an impact on the pipeline but expressed optimism about future growth following recent court decisions [47] Question: Can you clarify the cost savings mentioned? - Management clarified that the $22 million in net annualized savings is as of the midpoint of Q1 2025, with a net reduction of $18 million by the end of Q4 2024 [49][51] Question: What areas are contributing to the strength in billings? - Management noted that the strength in billings is due to improved execution globally, with notable performance outside the U.S. [61] Question: What is the status of the partnership with ServiceNow? - Management stated that the partnership is progressing well, with significant pipeline development and alignment of teams [87] Question: What are the expectations for VMware's contribution to sales? - Management expressed excitement about VMware's potential, indicating it will be a substantive part of sales in 2025 [90]

Rimini Street, Inc. (NASDAQ:RMNI) Q4 2024 Earnings Conference Call February 27, 2025 5:00 PM ET Company Participants Dean Pohl - Vice President, Treasurer and Investor Relations Seth Ravin - CEO, President & Chairman of the Board Michael Perica - EVP & Chief Financial Officer Conference Call Participants Brian Kinstlinger - AGP Jared Jungjohann - TD Cowen Jeff Van Rhee - Craig-Hallum Richard Baldry - ROTH Capital Operator Good afternoon, ladies and gentlemen, and welcome to the Rimini Street Q4 2024 Earning ...

Core Insights - Rimini Street (RMNI) reported quarterly earnings of $0.12 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, but down from $0.19 per share a year ago, representing an earnings surprise of 9.09% [1] - The company achieved revenues of $114.21 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 16.43% and showing an increase from $112.11 million year-over-year [2] - Rimini Street shares have increased approximately 21% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.08 on revenues of $96.07 million, and for the current fiscal year, it is $0.34 on revenues of $386.46 million [7] - The estimate revisions trend for Rimini Street is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Internet - Software industry, to which Rimini Street belongs, is currently ranked in the top 33% 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 Performance - Revenue for Q4 2024 was $114.2 million, an increase of 1.9% year over year[2] - Billings for Q4 2024 reached $172.1 million, up 7.1% year over year[2] - Total revenue for Q4 2024 was $114.213 million, a slight increase from $112.111 million in Q4 2023, while annual revenue decreased to $428.753 million from $431.496 million[21] - Gross profit for Q4 2024 was $72.712 million, compared to $68.399 million in Q4 2023, resulting in a gross margin of approximately 63.7%[21] - Operating income for Q4 2024 was $14.878 million, up from $11.547 million in Q4 2023, while the annual operating loss was $(32.128) million compared to a profit of $43.765 million in 2023[21] - Net income for Q4 2024 was $6.659 million, down from $9.351 million in Q4 2023, leading to a net loss of $(36.272) million for the year compared to a profit of $26.059 million in 2023[21] - Non-GAAP operating income for Q4 2024 was $19.059 million, slightly down from $19.313 million in Q4 2023, with annual non-GAAP operating income at $47.747 million compared to $66.122 million in 2023[23] Client Metrics - Active Clients increased by 1.4% to 3,081 as of December 31, 2024[5] - Active clients increased, indicating growth in the business and effectiveness of sales and marketing strategies[27] Revenue Composition - U.S. revenue decreased by 6.5% to $53.1 million, while international revenue increased by 10.5% to $61.1 million in Q4 2024[5] - Annualized Recurring Revenue was $414.8 million, down 4.1% compared to the same period last year[5] - Annualized Recurring Revenue (ARR) reflects the subscription revenue recognized during the fiscal quarter, multiplied by four, providing insight into future revenue potential[28] - Revenue Retention Rate measures the dollar-based subscription revenue recognized over a 12-month period from existing clients, indicating client retention and satisfaction[29] Costs and Liabilities - Rimini Street incurred reorganization costs of $1.1 million in Q4 2024 as part of its cost optimization efforts[5] - Total current liabilities decreased to $324.592 million in 2024 from $336.434 million in 2023, while total liabilities increased to $438.508 million from $433.292 million[20] - Cash and cash equivalents decreased to $88.792 million in 2024 from $115.424 million in 2023, reflecting a significant reduction in liquidity[20] Non-GAAP Measures - Non-GAAP Operating Income excludes litigation costs, stock-based compensation, and reorganization costs[30] - Non-GAAP Net Income is adjusted for litigation costs, stock-based compensation, and reorganization costs[31] - EBITDA is adjusted to exclude interest expense, income taxes, and depreciation and amortization[34] - Adjusted EBITDA further excludes litigation costs, stock-based compensation, and reorganization costs[34] Strategic Initiatives - The company announced a partnership with ServiceNow to enhance enterprise software support and innovation[12] - The company is suspending guidance until there is more clarity regarding ongoing litigation with Oracle[8]

Revenue and Financial Performance - The company recorded a net loss of $36.3 million for the year ended December 31, 2024, with an accumulated deficit of $238.5 million as of the same date [188]. - Revenue declined from $431.5 million for the year ended December 31, 2023, to $428.8 million for the year ended December 31, 2024, representing a 1% decrease [190]. - Approximately 62% of total revenue was derived from services provided to clients using Oracle software products [175]. - The Rimini II Injunction, if effective, would limit support services for Oracle's PeopleSoft software, which accounted for approximately 8% of total revenue for the year ended December 31, 2024 [170]. Litigation and Legal Risks - The company anticipates that ongoing litigation with Oracle may negatively impact client acquisition and retention, leading to potential revenue loss [176]. - Oracle was awarded $58.2 million in attorneys' fees and $0.3 million in costs related to the Rimini II litigation, totaling $58.7 million paid by the company for the year ended December 31, 2024 [166]. - The company plans to continue to appeal the District Court's award of attorneys' fees and costs to Oracle, with the opening brief due on March 11, 2025 [167]. - The company is subject to ongoing litigation with Oracle related to copyright infringement claims, which could adversely impact marketing and sales [202]. Competition and Market Dynamics - The company faces significant competition from enterprise software vendors like Oracle and SAP, which may have more resources and broader customer relationships [186]. - Competition is expected to increase, particularly if the company prevails in its appeal of the Rimini II litigation, potentially impacting sales and renewals [187]. - The market for independent software support services remains relatively undeveloped, which may hinder the company's growth prospects [184]. Operational Challenges - The company relies on its management team, and the loss of key personnel could adversely affect business operations [197]. - Attracting and retaining qualified personnel is challenging due to competitive hiring environments, particularly in the San Francisco Bay Area [199]. - New sales personnel typically take nine to twelve months to reach expected productivity levels, impacting the return on investment in sales efforts [200]. - The sales cycle for the company's products typically ranges from six to twelve months, which may delay revenue recognition [195]. - Retention rates are critical, as clients are not obligated to renew agreements after the expiration of non-cancelable terms, impacting future revenue [193]. Financial Stability and Debt Management - The company may need to incur additional debt under its 2024 Credit Facility if it cannot fund future growth or service its debt through operating cash flows [201]. - As of December 31, 2024, the company's outstanding indebtedness under its 2024 Credit Facility and finance leases totaled $87.2 million [246]. - The company expects to rely primarily on cash generated from operations to pay expenses and amounts due under its 2024 Credit Facility, which may be affected by various uncontrollable factors [247]. - The 2024 Credit Facility imposes operating and financial restrictions, including limitations on incurring additional indebtedness and engaging in certain transactions [248]. Cybersecurity and Data Protection - Cybersecurity threats are increasing, and any compromise of data security measures could harm the company's reputation and business [220]. - The company has experienced an increase in cybersecurity threats, including a successful phishing incident in 2021 that resulted in unauthorized sharing of client data, although it did not significantly impact business relationships [222]. - The company faces risks related to the unauthorized use of generative AI technology, which could expose proprietary information to unauthorized recipients [228]. Regulatory and Compliance Risks - The company is subject to various international privacy laws, including the General Data Protection Regulation (GDPR), which can impose fines of up to 4% of global annual revenue or €20 million for serious infringements [228]. - The company is currently under audit in several jurisdictions, which could lead to substantial tax liabilities and penalties for past sales [238]. - The company is subject to various global regulatory requirements, and noncompliance could result in significant penalties or sanctions [270]. Strategic Investments and Future Outlook - The company continues to invest in research and development, including partnerships with Salesforce and managed services for SAP and Oracle products [218]. - The company plans to continue investing significantly in sales and marketing operations to expand service offerings and enter new markets [189]. - Future acquisitions may divert management's attention and could result in dilutive issuances of equity securities or the incurrence of debt [266]. Market and Economic Conditions - Economic uncertainties, including rising inflation, may adversely affect demand for the company's products and services, resulting in delayed sales cycles and loss of clients [183]. - The company faces risks associated with global operations, including currency exchange rate fluctuations and regulatory changes [213]. - Catastrophic events, including natural disasters and geopolitical instability, could disrupt the company's business operations and adversely affect financial results [269]. Stockholder and Governance Matters - Approximately 37.9% of the company's outstanding capital stock is controlled by two stockholders, which may limit other stockholders' influence on key transactions [253]. - The company does not currently intend to pay dividends on its Common Stock, focusing instead on retaining earnings for business operations [256]. - The company's stock price may be volatile, influenced by various factors including large stockholder sales and the issuance of Common Stock upon the exercise of warrants [252].

Financial Performance - Rimini Street reported quarterly earnings of $0.22 per share, exceeding the Zacks Consensus Estimate of $0.07 per share, and up from $0.14 per share a year ago, representing an earnings surprise of 214.29% [1] - The company posted revenues of $104.67 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 5.31%, although this is a decrease from year-ago revenues of $107.45 million [2] Market Performance - Rimini Street shares have declined approximately 48.3% since the beginning of the year, contrasting with the S&P 500's gain of 22.3% [3] - The current Zacks Rank for Rimini Street is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.08 on revenues of $98.1 million, and for the current fiscal year, it is $0.32 on revenues of $407.36 million [7] - The estimate revisions trend for Rimini Street is mixed, and changes in earnings expectations may occur following the recent earnings report [6] Industry Context - The Internet - Software industry, to which Rimini Street belongs, is currently ranked in the top 33% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Revenue Performance - Revenue for Q3 2024 was $104.7 million, a decrease of 2.6% from $107.5 million in Q3 2023[2] - U.S. revenue decreased by 7.4% to $51.6 million, while international revenue increased by 2.7% to $53.1 million[2] - Subscription revenue accounted for 95.9% of total revenue at $100.4 million, down from 96.9% at $104.1 million in the prior year[2] - Revenue for Q3 2024 was $104.672 million, a decrease of 2.3% from $107.453 million in Q3 2023[13] Client Metrics - Active Clients as of September 30, 2024, were 3,097, a slight decrease of 0.1% from 3,099 clients a year earlier[2] - Active Clients are defined as distinct entities purchasing services, indicating business growth and sales success[18] Financial Losses - Operating loss for Q3 2024 was $49.6 million, compared to an operating income of $11.2 million in Q3 2023[2] - Net loss for Q3 2024 was $43.1 million, compared to net income of $6.8 million in the same period last year[2] - Net loss for Q3 2024 was $43.100 million, compared to a net income of $6.801 million in Q3 2023[13] Revenue Retention and Recurring Revenue - Annualized Recurring Revenue was $401.5 million, a decrease of 3.6% from $416.3 million in Q3 2023[2] - Revenue Retention Rate dropped to 89% from 94% in the previous year[2] - Revenue Retention Rate measures subscription revenue from existing clients over a 12-month period, providing insight into client retention[20] - Annualized Recurring Revenue is calculated by multiplying quarterly subscription revenue by four, indicating potential revenue for the next 12 months[19] Operating Expenses and Profitability - Total operating expenses increased significantly to $113.131 million in Q3 2024, compared to $56.104 million in Q3 2023[13] - Gross profit for Q3 2024 was $63.537 million, down from $67.343 million in Q3 2023, reflecting a gross margin of 60.7%[13] - Non-GAAP operating income for Q3 2024 was $13.402 million, down from $16.497 million in Q3 2023[14] - Adjusted EBITDA for Q3 2024 was $13.677 million, compared to $18.239 million in Q3 2023[14] Cost Management and Reorganization - The company incurred reorganization costs of $1.4 million in Q3 2024 as part of its cost optimization efforts[2] - Reorganization costs primarily consist of severance costs related to the company's restructuring efforts[24] Litigation Costs - The company reported a significant increase in litigation costs, totaling $59.391 million in Q3 2024, compared to $2.127 million in Q3 2023[13] Cash and Liabilities - Cash and cash equivalents increased to $119.494 million as of September 30, 2024, from $115.424 million at the end of 2023[12] - Total current liabilities decreased to $322.468 million from $336.434 million at the end of 2023[12] - Deferred revenue, current and noncurrent, at the end of Q3 2024 was $223.314 million, down from $238.399 million at the end of Q3 2023[14] Non-GAAP Financial Measures - Rimini Street reported key non-GAAP financial measures including non-GAAP operating income, non-GAAP net income, EBITDA, Adjusted EBITDA, and Billings[15] - Non-GAAP Operating Income excludes litigation costs, stock-based compensation, and reorganization costs, reflecting core operational performance[21] - Adjusted EBITDA excludes litigation costs, stock-based compensation, and reorganization costs, providing a clearer view of operational profitability[24] - The company emphasizes the importance of non-GAAP measures for consistent performance evaluation across reporting periods[16] Billings and Cash Flow - Billings represent the change in deferred revenue plus current period revenue, indicating cash flow dynamics[17] Compensation Strategy - The company’s compensation strategy includes stock-based compensation to align employee interests with shareholders[23]

Company Overview - As of September 30, 2024, the company employed approximately 2,070 professionals and supported over 3,090 active clients globally, including 76 Fortune 500 companies and 22 Fortune Global 100 companies[129]. - The company has designed and developed a new expanded solutions portfolio, including managed services for Oracle, SAP, IBM, Salesforce, and open-source database software[124]. - The company aims to expand its leadership position in independent enterprise software support and to sell management services (AMS) and Rimini ONE™ integrated services[117]. - The company is focused on attracting and retaining qualified personnel, including sales personnel, to enhance its operational capabilities[116]. - The company is exploring future acquisitions of or investments in complementary businesses, products, subscriptions, or technologies[116]. Financial Performance - Revenue for the three months ended September 30, 2024, was $104.7 million, a decrease of 3% from $107.5 million in the same period of 2023[148]. - The company recorded a net loss of $43.1 million for the three months ended September 30, 2024, compared to a net income of $6.8 million in the same period of 2023[147]. - Annualized recurring revenue decreased to $402 million as of September 30, 2024, down from $416 million in 2023, reflecting a decline in client retention[141]. - Revenue retention rate fell to 89% for the 12 months ended September 30, 2024, down from 94% in the previous year, attributed to client attrition[143]. - Gross profit margin decreased to 60.7% for the three months ended September 30, 2024, compared to 62.7% in the same period of 2023[145]. - Revenue declined from $319.4 million for the nine months ended September 30, 2023, to $314.5 million for the nine months ended September 30, 2024, a decrease of $4.8 million or 1.5%[164]. - Gross profit decreased from $200.6 million for the nine months ended September 30, 2023, to $188.3 million for the nine months ended September 30, 2024, a decrease of $12.3 million or 6%[166]. Expenses and Costs - Total operating expenses increased significantly to $113.1 million for the three months ended September 30, 2024, compared to $56.1 million in the same period of 2023[147]. - Sales and marketing expenses increased from $35.6 million for the three months ended September 30, 2023, to $35.8 million for the three months ended September 30, 2024, an increase of $0.2 million or 0.5%[152]. - General and administrative expenses decreased from $18.4 million for the three months ended September 30, 2023, to $16.5 million for the three months ended September 30, 2024, a decrease of $1.9 million or 10%[153]. - Reorganization costs recognized were $1.4 million for the three months ended September 30, 2024, compared to none for the same period in 2023[154]. - Litigation expense increased from no expense for the three months ended September 30, 2023, to $58.5 million for the three months ended September 30, 2024[156]. - Interest expense increased from $1.4 million for the three months ended September 30, 2023, to $1.6 million for the three months ended September 30, 2024[159]. Cash Flow and Liquidity - As of September 30, 2024, the company had available cash, cash equivalents, and restricted cash totaling $119.9 million[176]. - Deferred revenue amounted to $202.3 million as of September 30, 2024, reflecting the company's business model of collecting cash in advance for services[181]. - Cash flows used in operating activities for the nine months ended September 30, 2024, were approximately $1.2 million, driven by a net loss of $42.9 million[185]. - The company experienced a favorable change in operating assets and liabilities of approximately $41.0 million for the nine months ended September 30, 2024[185]. - Cash utilized in financing activities for the nine months ended September 30, 2023, was $5.1 million, attributed to principal payments of $3.9 million related to the Original Credit Facility and share repurchases totaling $1.0 million[195]. Debt and Financing - The company refinanced its Original Credit Facility with a new five-year senior secured credit facility totaling $110 million, consisting of a $75 million term loan and a $35 million revolving line of credit[204]. - As of September 30, 2024, the outstanding debt under the 2024 Credit Facility was $74.1 million, with no borrowings under the revolving line of credit until October 21, 2024, when $15 million was borrowed[205]. - The average interest rate on the new 2024 Credit Facility increased from 6.8% to 7.7% for the nine months ended September 30, 2024[174]. Market and Economic Conditions - The company anticipates that macro-economic trends, including inflation and changing interest rates, may impact its business operations[117]. - The decline in U.S. revenue was 7%, from $55.7 million in Q3 2023 to $51.6 million in Q3 2024, while international revenue grew by 3%[148]. - Approximately 51% of revenue for the three months ended September 30, 2024, was generated from international business, compared to 48% for the same period in 2023[201]. - A hypothetical 10% change in foreign currency exchange rates would have impacted income before income taxes by plus or minus $3.3 million as of September 30, 2024[203].