Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rimini Street Inc (RMNI, Financial) achieved a 7.7% year-over-year improvement in quarterly billings, indicating positive momentum in sales.
- The company has formed a strategic partnership with ServiceNow, which is expected to enhance its enterprise software offerings and provide significant cost savings and transformation value to clients.
- Rimini Street Inc (RMNI) has successfully implemented a cost optimization plan, achieving $14.9 million in net annualized reductions, with a target of $35 million by Q1 2025.
- The company reported strong new client acquisition, with 19 new client sales transactions in the quarter, each with a total contract value over $1 million.
- Rimini Street Inc (RMNI) has a high client satisfaction score of 4.9 out of 5, reflecting the quality and responsiveness of its services.
Negative Points
- Rimini Street Inc (RMNI) experienced a 2.6% year-over-year decrease in revenue for Q3 2024, partly due to the wind down of Oracle Peoplesoft services.
- The company is facing ongoing litigation with Oracle, which has resulted in a $58.5 million payment for attorney's fees and costs, impacting financial results.
- Revenue retention rate for service subscriptions was 89%, indicating some challenges in retaining clients.
- Operating expenses remain elevated due to ongoing legal and compliance costs associated with the Oracle litigation.
- Rimini Street Inc (RMNI) has suspended guidance for future financial results due to uncertainties related to litigation outcomes and their potential impacts.
Q & A Highlights
Q: You highlighted completed portion of your cost-cutting objectives. Will the remainder be in the fourth quarter or will some of that also occur in the first quarter of next year?
A: We are planning and expect to complete the plan by the end of the current quarter, Q4, such that you should see in the first quarter of 2025 the appropriate comparison to the high water mark Q1 of 2024. - Michael L. Perica, EVP & Chief Financial Officer
Q: Can you concisely describe your role in the ServiceNow partnership and help size or manage expectations for this new offering in terms of revenue objectives?
A: Rimini Street will deploy the ServiceNow layer over and above the Rimini Street products we support. We do all the work to connect and design the layer and the connectivity to all those other products. The licenses will be sold directly by ServiceNow or one of their partners. We expect to see interest and sales as early as the end of the year or early next year. - Seth Ravin, CEO, President & Chairman of the Board
Q: How is the new ServiceNow offering expected to impact gross margins in the short term?
A: It is early in the investment, and typically in the earlier stages of new offerings, it does have a lower than the overall corporate average gross margin. We are managing our mix and investment timing to deliver an acceptable gross margin. - Michael L. Perica, EVP & Chief Financial Officer
Q: Can you explain the disconnect between cash flow and EBITDA, especially considering the payment to Oracle?
A: We see a typical pattern where we generate cash flow in the first half of the year and burn in the second half. The payment to Oracle will be a drain to the current quarter cash flow. - Michael L. Perica, EVP & Chief Financial Officer
Q: What is the impact of the Peoplesoft wind down on revenue, and when do you expect it to be completed?
A: We have around 170 contracts with varying lengths of commitment. We cannot give an exact revenue fall-off rate or timeline for when we will completely stop servicing Peoplesoft products. We are in discussions with clients about their plans and how we can assist them. - Seth Ravin, CEO, President & Chairman of the Board
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
