Rimini Street (RMNI) Q3 2025 Earnings Transcript

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]