Rimini Street ((RMNI)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Rimini Street’s Latest Earnings Call: A Mixed Bag of Achievements and Challenges
The recent earnings call from Rimini Street presented a mixed outlook for the company. While there were significant achievements such as new client wins, strategic partnerships, and a resolution in the Oracle litigation, the company also faced challenges with declines in revenue, recurring revenue, and gross margins. Additionally, Rimini Street is navigating the impact of the PeopleSoft wind down and increased operating expenses.
New Client Sales and Increased Total Contract Value
Rimini Street reported closing 17 new client sales transactions with a total contract value (TCV) of $63.1 million. This marks an increase from the previous year’s 19 new client sales, which had a TCV of $48.7 million. This growth in TCV reflects the company’s ability to attract and secure high-value contracts.
Record RPO Backlog
The company achieved a record remaining performance obligation (RPO) backlog of $611.2 million, representing a 6.4% increase year-over-year. This record backlog underscores the strength and growth potential in Rimini Street’s core business operations.
SAP Support Sales and VMware Contracts
Rimini Street experienced record third-quarter SAP support sales and surpassed 100 VMware support contracts. These accomplishments highlight the company’s expanding footprint in key technology support areas.
Strategic Partnerships and Federal Opportunities
The company entered a strategic partnership with American Digital and was added to the US GSA Multiple Award Schedule. This inclusion facilitates easier procurement by government agencies, opening new avenues for growth in the federal sector.
Settlement with Oracle
Rimini Street completed a settlement agreement with Oracle, resolving ongoing litigation. This resolution allows the company to focus more on its business operations and strategic initiatives.
Revenue Decline
The third quarter saw a revenue decline to $103.4 million, a 1.2% decrease year-over-year. This decline is attributed to the planned wind-down of Oracle PeopleSoft services.
Annualized Recurring Revenue Decrease
Annualized recurring revenue decreased by 2.6% year-over-year, amounting to $391 million. This decline reflects challenges in maintaining recurring revenue streams.
Lower Gross Margin
The gross margin for the third quarter was 59.9%, down from 60.7% in the previous year. The decrease in gross margin is a point of concern for the company’s financial health.
PeopleSoft Wind Down Impact
Revenue from PeopleSoft was approximately 5% of total revenue, down from 8% the previous year. This decline is part of the planned wind-down agreement with Oracle.
Increased Operating Expenses
Operating expenses increased, with sales and marketing expenses rising to 36.7% of revenue from 34.2% the previous year. General and administrative expenses also saw an increase, impacting overall profitability.
Forward-Looking Guidance
Rimini Street’s forward-looking guidance highlighted several key metrics and strategic focuses. The company reported a 1.2% year-over-year revenue decrease, primarily due to the PeopleSoft wind-down. Excluding PeopleSoft, revenue increased by 2.5%. The company achieved a record RPO backlog and reported a 6.7% increase in adjusted billings, excluding PeopleSoft-related billings. Rimini Street plans to continue expanding its sales leadership in international regions and leverage partnerships and AI ERP solutions for future growth.
In conclusion, Rimini Street’s earnings call presented a mixed picture of achievements and challenges. While the company made significant strides in new client acquisitions and strategic partnerships, it also faced revenue declines and increased expenses. The resolution with Oracle and strategic focus on growth areas provide a pathway for future success, but the company must navigate current challenges to maintain its momentum.