Rimini Street(US:RMNI)2020-08-07 11:26Financial Data and Key Metrics Changes - The company achieved record quarterly revenue of $78.4 million, a year-over-year increase of 12.2% [9][40] - Net income for the second quarter was $3.5 million, compared to $6.1 million in the prior year [50] - Non-GAAP net income was $8.1 million for the second quarter 2020, up from $7.3 million in the prior year [50] - Total cash at quarter end was $73 million, a 45% increase compared to $50.3 million for the prior year [52] - Deferred revenue as of June 30, 2020, was approximately $218.5 million, up 6.7% from $204.8 million a year ago [52] Business Line Data and Key Metrics Changes - The revenue retention rate for subscriptions remained above 90%, with more than 70% of subscription revenue being non-cancelable for at least 12 months [9] - The company completed 160 geographically diverse sales transactions during the second quarter [17] - The annualized subscription revenue for the second quarter was $311 million, a year-over-year increase of 12% [40] Market Data and Key Metrics Changes - Clients within the United States comprised 61% of total revenue, while international clients contributed 39%, with international growth led by operations in Asia Pacific [41] - The company reported a year-over-year revenue growth rate of 30.4% for international clients [41] Company Strategy and Development Direction - The company is focusing on improving free cash flow and growing GAAP profitability while adapting to the pandemic's challenges [11][38] - Investments have been accelerated to meet increasing global demand for the expanded product and service portfolio due to the pandemic [12] - The company is expanding its Application Management Services (AMS) offerings, which are expected to create a unique value proposition for clients [28][91] Management's Comments on Operating Environment and Future Outlook - Management believes the opportunities created by the pandemic outweigh the risks, with a strong balance sheet providing business flexibility [14] - The company expects to see significant demand for its services as organizations look to cut IT operating costs [12][66] - Management noted that execution challenges exist globally due to the pandemic, affecting deal closures [66] Other Important Information - The company announced the development of new artificial intelligence software to improve client case resolution times by 23% [24] - The company is seeing growing interest in its Advanced Database Security and Advanced Middleware solutions [29] Q&A Session Summary Question: What caused the deceleration in deferred revenue growth? - Management indicated that the pandemic caused disruptions, leading to delays in deal closures, but noted record invoicing for customers paying in advance [57][60] Question: Is the pipeline for the second half of the year expected to be back-end loaded? - Management confirmed that the pipeline is among the largest ever seen, with government deals also contributing to growth [63][64] Question: What is the status of the application management service offerings? - Management stated that AMS is a growing revenue stream, with clients satisfied with the service, but emphasized a cautious approach to scaling [91] Question: Are there any pricing concessions for struggling customers? - Management explained that while some concessions were made, they are careful not to set low pricing benchmarks for the future [99][100] Question: Is there increased discounting from competitors like SAP and Oracle? - Management confirmed that competitors are offering more aggressive discounts to retain customers, but emphasized the superior value of their offerings [104][106] Question: What are the expectations for margin expansion going forward? - Management provided guidance on reducing sales and marketing expenses while aiming for long-term margin improvements [109][112]