Rimini Street(US:RMNI)2023-08-03 02:22Financial Data and Key Metrics Changes - Billings for the second quarter were $104.4 million, an increase of 2.8% compared to $101.6 million in the prior year [1] - Revenue for the second quarter reached a record $106.4 million, a year-over-year increase of 5.2%, negatively impacted by currency movements [52][53] - Gross margin was 63% of revenue for the second quarter, slightly down from 63.1% in the prior year [1] - Net income attributable to shareholders was $4.3 million or $0.05 per diluted share, compared to $110,000 or $0.00 per diluted share for the prior year [56] - Adjusted EBITDA was $15.8 million for the second quarter, representing 14.8% of revenue, compared to 10.9% in the prior year [56] Business Line Data and Key Metrics Changes - Sales and marketing expenses as a percentage of revenue decreased to 35% from 35.8% in the prior year [2] - General and administrative expenses as a percentage of revenue, excluding litigation costs, was 17.7%, down from 18.6% in the prior year [9] - Non-GAAP operating margin improved to 14% of revenue for the second quarter, compared to 11.8% in the prior year [10] Market Data and Key Metrics Changes - Clients within the United States represented 50.7% of total revenue, while international clients contributed 49.3% [53] - Deferred revenue as of June 30, 2023, was approximately $285 million, down from $300 million in the prior year [11] - Backlog increased to $565 million as of June 30, 2023, compared to $551 million in the prior year [11] Company Strategy and Development Direction - The company is evolving from a single service provider to a global provider of end-to-end enterprise software support products and services [23] - The focus is on improving sales execution across an expanded portfolio of solutions and enhancing lead and opportunity development [25][27] - The company plans to expand its salesforce from 65 to potentially 90 sellers by the end of the year, targeting a different profile of sales representatives [60][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for their services, emphasizing the need for organizations to consolidate IT service providers for better outcomes [55] - The company suspended full-year 2023 revenue and adjusted EBITDA guidance due to uncertainties surrounding ongoing litigation with Oracle [58][60] - Management noted that while there are challenges in certain regions, particularly EMEA and ANZ, North America is showing strong performance [8][40] Other Important Information - The company has been in litigation with Oracle for over 13 years, with ongoing proceedings affecting its operations [28][29] - The company reported a net cash position of $64.7 million at the end of the quarter [52] - The company has filed an appeal regarding the recent court rulings and is awaiting further clarity from the court [12][31] Q&A Session Summary Question: Have you evaluated any expenses necessary to comply with a more manual process for PeopleSoft if the ruling is upheld? - Management is still compiling data and has filed an emergency motion to stay the injunction due to significant problems with compliance [12] Question: Are prospective clients asking about the court ruling? - Management indicated that while there have been inquiries, the majority of business outside the injunction's impact is continuing normally [60][61] Question: Can you provide clarity on the types of customers and verticals for the big deals? - Management noted a healthy mix of deal sizes, with significant contributions from North America and Asia, while facing challenges in EMEA and ANZ [15][40]