Rimini Street, Inc. Q2 FY2025 earnings call

• Second quarter results were solid with growing sales momentum, including new logo sales, strong ARR subscription renewals, and billings driven by new subscriptions and professional services. - Rimini Street has evolved from a single-product company to offer a portfolio of solutions across 3 pillars: support, optimize, and innovate. - Growth drivers include investment in alliances, partnerships, and channels; notable partner achievements in the quarter with companies like Apsen Farma and Merlin Cyber. - Oracle litigation update: Settled Rimini II case, received ~$37.9 million from Oracle, and plan to wind down PeopleSoft services by June 30, 2028. - Financial results: Net income to shareholders was $30.3 million or $0.32 per diluted share; non-GAAP net loss was $79,000 or $0 per diluted share; non-GAAP operating income was $10.9 million or 10.4% of revenue; adjusted EBITDA was $13 million or 12.4% of revenue.

Revenue for the second quarter was $104.1 million, a year-over-year increase of 1%. Clients within the United States represented 47%, while international clients represented 53% of total revenue for the quarter. Excluding PeopleSoft, revenue increased 3.6% versus the prior year. Annualized recurring revenue was $394.1 million for the second quarter, a year-over-year decrease of 1.3%. Revenue retention rate for service subscriptions (making up 95% of revenue) was 90%, with approximately 83% of subscription revenue noncancelable for at least 12 months. Gross margin for the second quarter was 60.4% of revenue compared to 59.1% for the prior year second quarter. On a non-GAAP basis, gross margin was 60.8% of revenue. Billings were $110.6 million, down 0.9% year-over-year. Adjusted billings, excluding PeopleSoft associated billings, increased 3.9% on a year-over-year basis. PeopleSoft revenue was approximately 6% of revenue for the 3 months ended June 30, 2025, compared to approximately 8% for the prior year second quarter.

Plan to reinitiate guidance at Analyst Day, expected in the fourth quarter with more details to come. Continue to focus on driving sales growth, improving profitability, and achieving Rule of 40 goals.

Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made. Risks include those discussed in recent SEC filings, such as uncertainties related to litigation, market conditions, and execution of growth strategies.

Q: Congrats on the Rimini II settlement. Could you give a sense of how often litigation was a blocker for deals and how removal helps in pipeline/build?

A: There was a group of customers whose legal departments were hesitant until settlement; removal of litigation should help by opening up more potential clients and shortening sales cycles.

Q: Can we expect litigation costs to pretty much go away next year?

A: There are wind-down elements related to PeopleSoft wind down, but litigation spend will be less, with more insights at Analyst Day.

Q: Give sense of second half outlook, retention, channels goals?

A: See top line growth and profitability improvement; retention continues to be a focus; channels aim for partnerships to generate at least 10% of pipeline.

Q: How long before evaluating improvement of bookings from Oracle support excluding PeopleSoft?

A: Early signs already seen, but filter time needed; expect to see benefit sooner but hard to pinpoint exact time.

Q: Last few years trend of Oracle-related business?

A: Business was impacted by litigation rulings, but with settlement and reversal, expect to grow Oracle business revenue going forward, but exact percentage not yet clear.

Q: How long until evaluate PeopleSoft revenue impact?

A: PeopleSoft revenue is global, with more in North America; wind-down of PeopleSoft business will mask some figures, but focus is on post-litigation clarity at Analyst Day.

Q: Thoughts on returns of capital, buybacks?

A: Board authorized $12.5 million per year with $50 million aggregate; surplus and event behind us make returns of capital more top of mind, with inorganic avenues also in consideration.