Rimini Street(RMNI)2024-10-30 10:35Company 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].