Rimini Street(US:RMNI)2022-11-03 02:58Financial Data and Key Metrics Changes - Revenue for Q3 2022 was a record $101.9 million, representing a year-over-year increase of 6.6% [37] - Annualized recurring revenue reached $399.8 million, up 6.2% year-over-year [37] - The revenue retention rate for service subscriptions, which constitutes 98% of total revenue, was 94% [37] - Gross margin decreased to 61.5% from 65.1% year-over-year, attributed to increased labor costs and investments in service delivery [42] - Net loss attributable to shareholders was $0.4 million, compared to a loss of $6.7 million in the prior year [52] Business Line Data and Key Metrics Changes - The client base grew by 7.8% year-over-year to over 3,010 active clients [10] - Billings for Q3 were $49.7 million, a decrease of 32.5% year-over-year, impacted by challenges in new client acquisitions and reduced deal sizes [39] - Advanced support services payments beyond the first year were significantly lower year-over-year, affecting billings comparisons [40] Market Data and Key Metrics Changes - Clients in the United States represented 52% of total revenue, while international clients contributed 48% [38] - Year-over-year revenue growth in the U.S. was 5.8%, while international growth was 7.4% [38] - Total revenue growth on a constant currency basis was negatively impacted by 2.1% due to foreign exchange fluctuations [38] Company Strategy and Development Direction - The company is focused on improving global sales execution and maturing service offerings, with a strong emphasis on cross-selling strategies [12][17] - A new go-to-market roadmap was implemented for Application Managed Services (AMS) and security products, aiming for pipeline and sales growth [17] - The company aims to leverage its expanded portfolio of IT solutions to optimize client IT spending and drive growth [9][12] Management's Comments on Operating Environment and Future Outlook - Management noted that the global macroeconomic environment is causing organizations to refocus their IT investments, leading to delays in procurement decisions [11] - Despite challenges, management expressed confidence in the company's positioning to benefit from increased demand for its services [12][20] - The company anticipates fourth quarter 2022 revenue guidance in the range of $103 million to $105 million, tightening full-year guidance to $404 million to $406 million [58] Other Important Information - The company has been involved in ongoing litigation with Oracle for over 12 years, with two active proceedings currently [30] - The company completed enhancements to its service portfolio, including the launch of Rimini Protect, which adds security solutions [18] - The cash balance at the end of Q3 was $119 million, with total readily available cash of $130 million [54] Q&A Session Summary Question: Can you discuss bookings trends and sales execution? - Management indicated that sales execution improved, with successful multimillion-dollar deals, but noted that many deals were delayed rather than lost [63][64] Question: Why does the fourth quarter guidance imply deceleration in revenue growth? - Management attributed the deceleration to macroeconomic challenges affecting deal closures and visibility into future transactions [68][69] Question: What changes have been made in the Americas and when can growth be expected? - Management expects to see acceleration in North America in 2023, contingent on macroeconomic stability [82] Question: When can billings growth be expected to return? - Management indicated that changes made in sales execution would take time to reflect in billings growth, with improvements anticipated in 2023 [88][94] Question: What factors contributed to the increase in G&A expenses? - Management highlighted conscious decisions to invest in compliance and infrastructure to support growth, which contributed to the increase in G&A expenses [103][106]