Rimini Street (RMNI) 3 Nov 222022 Q3 Earnings call transcript

Good afternoon ladies and gentlemen, and welcome to the Rimini Street Earnings Conference Call. At this time, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. I will now turn the call over to Dean Pohl, Vice President of Investor Relations. Mr. sir. begin, may you Paul,

Thank you, Rimini welcome to like I third quarter would Street call. to XXXX everyone operator. earnings conference

call following has measures release been also release statements provided on under believe to the reconciliation a non-GAAP for financial table An copy is these financial our the under the today third the of they quarter Michael financial website Today, non-GAAP about and measures with release. which press XX, press our measures heading GAAP the issued included of the XXXX, in is in September we certain press in and CFO. and Perica, A metrics. can we the Seth earnings Investor are explanation meaningful why our key of Relations. ended CEO; our On Ravin, me be found

will reminder, results future our made current statements encourage review These most forward-looking today’s that a XX-Q reflect that you our for filings, risks today. that recent or our cause Form price. As stock to may uncertainties our discussion discussion results from a including forward-looking to statements outlook. differ and materially of may subject affect include are We statements SEC risks to actual

questions, would taking will like before over we remarks. Seth. I prepared Now to begin call With that, with to turn the

you joining today us for QX thank everyone Dean, results. and Thank you, XXXX

We need our value in over engineering negatively our in We grew IT rate satisfaction and X.X% by for achieved global to inception industry renewals XXXX Street’s broader diverse and third year-over-year believe portfolio Our continued software support strong the XXXX, multimillion organizations existing in including that Global of estimate including our their or cases than today of wins headwinds maintained signed financial ROI excellent leading to in since industry client provides XXX able capability. onboarding. a environment. impacted solution base billion helped that rating provides have many more enterprise portfolio sales expanded $X they clients, industries, and extensions, Rimini sales new Sales services challenges and systems exchange X,XXX currency results. And increase their XXX companies. strategic and more dollar macro over in save solutions clients, our proven and quarter we our were we XXX clients we than reinvest operating leading We to around environment cross priorities. We Fortune client clients. active liberate have Fortune subscription

call, in decisions. I our noted current short-term, some quarter and to plans. in And refocus organizations macroeconomic second is the their earnings procurement IT and IT delayed As global service led investment IT businesses and frozen staffing their we environment it has including believe to the forcing

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wins. new and strong achieving see and our interest portfolio to continue global services of clients demand sale cross for growing increasing expanded We and our from at existing

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marketing service for October pipeline to I last than client and In of our products and services, changes revenue Services the monitoring in roadmap conjunction As a with go-to-market equipped global it and to improving opportunities of as Managed and to with emerging offerings, global improved more believe offerings, in XXX well focus formally for products and event kickoff our of execution integration globally. innovative our time strategy cross a stronger delivering messages, We improve leadership global implemented of lead its even annual pipelines Application already we event quarters. closing and the coming our dedicating engine with demand and that build stronger campaigns deeper development maturing to and pleased new and sales and at energy generation my XXXX security broader interoperability new services. planned I’m team and our the members our to a a very three now referred and early ramped as our skills. majority and greater of marketing service global up have set marketing will as for XXXX opportunity from sell accelerated cohesion, XXXX. made services, new entire lead execution, growth was call, the team I date professional global quarterly sales I detailed sales global our the AMS I event, sales services sales

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is the Technology of First Sidney. University

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support Rimini Street United compliance Appeals Oracle Oracle certain of presently With providing support to Rimini for to Street long the services Rimini which relating Oracle, compliance the and provides US confirmed ago, Circuit to States is support of Court. both proceedings injunction rulings manner have prohibited we lines. courts which While Court product. Rimini have of services dispute, the proceedings, the from relate filed certain the is in Ninth District any legal, Street to is two appeal with an the respect the for Injunction active third-party II the dispute of product not U.S.

of oral We expect the XXXX. first to take in half arguments likely place

II, another a respect case against could Street stage. to the a XX-months Rimini pretrial process the Oracle Oracle filed come later. Rimini nine in could filed or The earlier ruling and With case counterclaims. in to but to However, a appeals remains receive take XXXX ruling,

damages Oracle’s in tried District the of scheduled trial be any for II. counterclaims only disclosures filing United kind However, against a Rimini any relief to on of for The certain with on be CEO true under judge and see against and XXXX, Oracle its claims personally as decide its of in XX-Q in are monetary as a no all judge Oracle. regarding a of me XX, litigation known legal Street of jury relief there equitable November our bench remaining for to Federal the kind October litigation. a Street’s presently Nevada front any for Rimini jury XX, counterclaims of remaining with seeking and States XXXX. of in the Rimini latest this any claims now theory disclosures will Court longer Summary. since financial information and and instead in only additional Please trial are

successfully litigation solutions. have by balance the of market of key with major series achieving placed transactions, strengthening materially an delivering and past services and wins company strategic a a we protracted capital a position IT the through goals, new Oracle, years, Over stronger entire in portfolio key in two sheet launching our three

enhance now right are the making execution are and and the investments to are value. that growth, focused actions and confident shareholder right sales, reaccelerate We taking we growth and on we

Michael. to you, over Now

more recurring and at quarter a increase year-over-year up service revenue, X.X%, least rate for subscriptions, of you, results. X.X%. XX-months. revenue Thank which XX% the non-cancellable QX retention Seth, of revenue was XX% was for thank revenue a XXX.X year-over-year XX% XXX.X for everyone. of for our than makes increase million million Annualized with us subscription was third XXXX record of joining you Revenue a

XX% clients within XX%. while of contributed quarter, States third the international clients United For the total represented revenue,

growth growth noted. to size fluid aggregate States constant headwinds, United revenue expansion revenue XX.X million FX XX.X%. Billings by for Despite terms negatively cross new of to a were total Third compared year-over-year quarter a we strong and X.X% acquisitions and quarter growing million the We was decrease sales with due Seth reduced XX.X achieved for deal sales challenges on client that existing international clients impacted in due was basis third was mix. X.X%, while as dollar and the FX year-over-year, currency X.X%. growth to note client our U.S. and clients renewal to

shift large was excludes the been interest third quarter, in to on year the continued client third income core that and of impacted for and beyond portfolio selling use labor, delivering on for efforts of quarter last to we XXXX, to of our In of non-GAAP leveraged quarter stock-based revenue and preservation. a income XX.X% to fillings. we has been delivery solutions full-year XX.X% of which third end our by which XX.X% XX.X% range globally. payments decline and we in increased challenges, to cost labor both labor of of experiencing such drivers guide and services material offerings XX% compensation basis their lower continue clients expenses. component margin Operating billings revenue to investing for GAAP for expense and cost and in cost Like of the historically the quarter. titled Gross in control lower are margin this revenue economic year in non-GAAP substantially methodically advanced significant cash through comparisons year-over-year, gross first low support inflation as the and cost due part by process base margin for to margin of resource support service the of by technology, in ability an where XX% labor was non-GAAP expand year. compared organizations led all advanced be declined of margin revenue we XX% a payments in basis, of fees successfully are compared pressures of part globally, Nonetheless, to investments higher DSO efficiencies Gross revenue were to offset XX.X% addition, difficult of gross also also The prior expanded rates a are on a towards earn lengthened increased interest believe revenue and in gross on basis. We to fixed our geographies. categories. other short-term has global has

our XX to percentage of opportunities focused to percentage was higher revenue, into including We infrastructure quarter be sales XX% process expenses year-ago basis, ensure which year expenses leverage expenses our for to due for prior for than third the expenses, to as sales to and cost of we and quarter, costs continue the teams acquire talent the compensation to event a marketing the and non-GAAP the growth GAAP versus XX% points ranges. be the necessary and On all achieve our to in prior of aggressively the and Oracle revenue full-year we continues Sales XX.X% of stock-based part period, of XX.X% and XX.X% guidance making legal XX.X% made pull the our a compensation G&A sales the administrative basis in a to prior objectives. investments able on marketing continue the range revenue during to outside for a available see a compared investments to expense, was as need material profitability the the and to support making excludes marketing line revenue year third Outside and ongoing other as basis, a XX.X% XX% in our stock-based kickoff and one-time XX.X% growth the quarter. on to to a G&A in of are third in decision our expense, growth which needed XX% remain to the was quarter. needed systems, targets. costs XX% by expenses XX.X% from third options for litigation percentage year-ago period. compared was occurred non-GAAP forward the to compliance of General in XXXX thus and period. appropriate quarter and XXXX excluding capitalize compared standpoint, On the that talent the XXXX basis peers, litigation non-GAAP up excludes in-house We

be XXX full-year basis outside on matters. ranges. to prior XXXX we for expense see of Oracle third to of and and G&A GAAP expenses on third such, non-GAAP the XX.X% standpoint, a basis points for litigation from part now litigation prior range XX% XX.X% million As other a $X.X both was year up guidance Net due prior XX% year to the cost quarter quarter. to million in $X.X elevated a litigation This third year’s to compared and costs quarter the third quarter had in

timing litigation each not and fluctuate outside of the quarter, on spend can Our litigation based and is linear activities. nature

As the being XX, full-year Rimini litigation two year that in million resulting pulled costs in trial currently year into fiscal XXXX. forward XXXX range. expected scheduled we expense had Accordingly, to for on mid-XX cases Seth during XXXX, dollars litigation expect outside noted, now fiscal to the November incur material be we XXXX

million revenue loss to was net For of for X.X diluted loss million million the the was X.X diluted per XX non-GAAP shareholders million third share. On quarter prior for to EBITDA or breakeven $X.XX $X.XX or diluted net attributable year XX compared third a or million the attributable to shareholders negative share per diluted in quarter. year $X.XX share quarter, quarter. negative Adjusted loss per a basis, $X.X share third of the versus income or per prior the X.X% was third of

short-term of quarter stock-based balance remained million Balance ended to quarter, year the million totally basis operating operating and XX.X third quarter. generated we at a excludes XX for declined XXX third plus million margin, the prior cash securities, compensation We XX and investments in million double-digits nation outside XX.X non-GAAP million third the cash the of XXXX. compared cash treasuries for spend of consisting of revenue. for which litigation sheet. XXX and the Our with of million third to quarter available year flow On XXX to-date, cash compared readily flow year-to-date, XX.X% million

have bill aggressive from headwinds our to we is of Deferred inflationary base XX, environment existing, shift preservation. for leading addition sum of towards broad lower to compared clients has a Capital overall the approximately the to of non-cancelable and impacted million September approximately year revenue compared experienced which advanced cash includes payments as XXX revenue as third was that the quarter. XXX new million to million million the of quarter. deferred September XX, XXXX flow, prior In XXX FX XXX noted Backlog, with year future revenue third also prior and the XXXX, both markets transactions. cash as for

providing During expired. repurchased price guidance currently range XXX This that the shares I value to of to be be $XX.XX price in XXXX October with million. our also the quarter, Operator, million in warrants tightening the would an average to range questions. we million $XXX,XXX fourth XXX,XXX of note are on remarks. concludes Business XX.X in revenue of to quarter exercise common to the XXXX, outlook, guidance market like we of XX, the approximately full-year million third we with now our of XXX prepared $X.XX. revenue XXXX XXX take million all XXX will

comes our And from open. Instructions] line (A.G.P.) is your question Brian first Kinstlinger [Operator

execute, did your trouble year-ago better the Thanks If trends? and back it sales how that this level, discuss least then was freezes so had little growth Can taking team play this at you to a last just bit a I a or third compared sales play my much to in much of about hear a these I into closing during delays you deals, drop better much one rate. into for discussed think how led bookings didn’t at high questions. new how year did much force and year, the bookings quarter trends.

Thank Brian. you Seth very Hey, me. here. much, Excuse

good. So was percentage we of executed numbers. very actually well The I pipeline side. the the on close with was sales pleased

They would of and those back well to the SAP. come to this year, multimillion deals. million from much deal size to quarter. it did. We SAP any messaging. for in you really won we work third on it And $X.X pretty the did the in our we year, we last know We us. hand all to deals have us They stronger As over would we market said dollar quarter handed

nice really, Some wins really strategic the world. around

didn’t didn’t number the wasn’t the losses. wanted those pipeline was that really of, the deals to at numbers a So them It transactions lot And we all closing that get of numbers one, uh, deals enough get and the but didn’t line. make was issues of delayed the to those the just see getting line, quarter. and we hoped that the We do, SAP out get globally there over deals. done. for sufficient was had it We had rates over but just we

of numbers So world we names, qualitatively wanted to volume brand just excellent in We to get do big the lot able were with have have did we of I line delayed didn’t the lot of deals, even needed over from deals some the that that QX being slipped. the QX a we we And a that around that see make the but make. to macroeconomic. QX, it were customers

by in dealing slipped the with issues, company. signature In while of were processing people two other slipped one of fact, just hours, matters and into QX seven other figure them deals because

line make of So the numbers. say I challenge not well, think, again, enough executing pipe I salesforce would depth to

we the that of wanted. We globally that times to we close the normally that four times, all and us a to four depth didn’t prefer we allow have deals run need. Given opportunities fact pipeline close the a that we markets didn’t on all in number

up, and one I I have then will queue. back Great. in get follow the

think quarters? kind next quarters of few starting and actually for executed, why growth to the implies, last got midpoint that of delayed. to fault, wasn’t and the at there, revenue just what pipeline lack Given another it deceleration believe, two then have quarter Is guidance, how assume I should you at I when it the that the of fourth it the look said point were about low is probably your compared that we the

the issues, AMF the the I think with those of shipping us that chain still again, to services. but And with deals things. represent economic all with get challenges. we of shortages, thing supply even side, the think parts, the I you about to fact these visibility why the in are I very world replacing we some visibility that we having are again, the the products newbies and of tier think, in are positioned of like at challenges in this And we space, youngest the are said customers area and top I the largest QX, They costs, is all our mentioned AMS same companies on are inundated the who well hear that are end the challenges. in and ones players one the news serious IBM. FX done, are And and

we So are making are progress, it. maturing we

we the I to right line in well in deals something of the confidence Timing as those over really continue prior quarter. come think visibility think just trickier. as in now, just getting grow that we years. going is pipelines to know about areas. the particular whether don’t full these a much I did I have is don’t

you Thank Great. much. so

Sure. Brian. Thanks

question (Cowen Company). and And from Wood Derrick our next comes

is open. line Your

a little bit of Andrew the seen us It like change Seth, Great. kind is in in have so QX. far it It macro on has improved Hey, couple past through - improved for just guys. sounded of has Maybe, Derrick. Thanks. the walk months. wise you

would IT helpful. that just some Maybe on about be color movement to spend. any more or loosening talked You increased optimize

out are our customers we certainly. scope who our do a it, good. obviously, number for that will give unified increased support your play And of things us execution but officially to the the all environment off Andrew, looking they Yes, here run increased protect broad security, will the have point bigger services, more think connect do actually customer plate, at share very will not But continues it. a will fact your say think competing support, that, priorities. big is we and so their that want I products is overall, we And will demand services in take wallet to and These think, system, are will more sales wider now us the deals, many they to connect I we the sales think us launch can different we we I because we responsibility. for support, your the our really of in and products, we shortly. which of being challenge very The just level,

We to have that side this, three a - some the and got to bigger we been with love it, other just to wasn’t fires truly got do sometimes have get pushed want have we the put we the I but first really deals lost to that priorities causing out other We that them in in is And delays. is why quarter. noted, quarter. we it third lost we

with in are the organization. place. very, I’m have made sales progress we good in so we think really I very pleased And a and

to I position last XXXX to you sales a the I us in quarters again make start As the to necessary changes over in said, into put quarter, arena. to accelerate growth took sales going I when know, was really

through going bit little are transition. a we have go to to more So

to six a way know, to you their month all while you nine for have work changes takes when a it these As sales through, cycle.

fourth that probably take that the the we that, to will have have could sellers, coming the see through we in these it we So work up fourth effect. provide XXXX. take even to into the side additional the do done some think to skills think quarter better done, items I quarter I But for to training

Thanks. year year done stable? be Americas end accelerate, and when by U.S. can and you those on transition we are macro somewhat And maybe Seth update that next how early the do think an going or there, see to specifically, - the how will just the is made changes start growth you of assuming the the

see the in out expect all macro acceleration America But I North taking of to would picture, Yes, expect XXXX. from in globally. markets I that the

a moving but fact that, confident a are transaction about think priorities the dollars, only of alone over deals are mean, SAP our that, the sure alone half the were where did one customers plus make non-cancelable. contract I are that we we if to we XX getting I’m the north we of I can and are over five committed pretty higher one dealing just they well-positioned we million not deals side million line. these on with, year

we key complex that So in. global big lot telco, a really some had wins energy, the specialize on of we good markets

Great.

it guys. thanks pass on. will Okay, I

Sure. Thank you.

And (Craig-Hallum). Jeff from Van Rhee next our comes question

Your line is open.

follow-up the So, sales here. thread want on to I

dove aligned you obviously way have you things the in want So get them. are and trying to in there

Now why that maybe little as and back to business. you think on, at little growth but just When a a then a execution finer can touched I time sales was was more better point. Billings get you weak and do look you you get just was what as sense of in have working, wasn’t it think sales, had that

start you over push some and said some you growth here. think in a trying billings little but driving I it see start here to really in improvement to would QX, execution we further can when

push bag event prepared tackling, the the that to out, for here the Hey, at really I changes, if you nine was we people. in your back can in just True through event again, block flow upstream. cycle, month to figuring sales that kickoff all follow you to changes normal up amazing the six of the you you months October, look think and a went takes all products And those which to I Well, detailed moving is through. remarks, It if sell. XXX for six make training week

Here is buy people why them.

event, was how little to be sell team not was And able role-plays. and Even was to in reground for fabulous revenue messages. I is us we It together. Here these parade. the the did they global a true all on how PowerPoint it them marketing and our team training think sketchy some of just you fit a a products

So pulled back to in I get QX I think everybody what was, basics.

them that for are example an in now And not that are us, board Institute a to refresh ago. IT couple a current -- this a I in on big entire for administration services. taking deal is hear We and them want provider needs. a vendors. of Management everybody sure a to bigger deal much about We look, support we they helping services with a customers from wallet customer you selling make over we a running And told a a do to How and their support hundred think lot new IT will can’t give system anymore. meet provider, Let’s hundred was companies. we of redesign systems, vision boutique positioning student provider, brought we portfolio big four talked this us an vendors don’t us And are we what just grounded more that we share. years of give with their about we want

vendors number the going are down with. consolidate work to we of We

of build to going one are we that guys the you that ones And with. we are strategic We deeper, AMS. want And more with do them. relationships took to over

work. contracts and land when We and big there. as expand Really IBM fantastic process that this We new you’re threw watching out have got one well.

bullish getting think It about transactions need very is feel the done. ground. closing in We are simply but I’m are about it So I we closed, volume. seeing quality we that. what going very we transactions And for see optimistic to are more I’m I what XXXX. on

buyers recessions, sort on that broader even pitched years sell. long back to when now to products all end headlights. level argument XX% helpful. value from Based But past is recessions, prior off the service That experience, look it much has the portfolio how in of did take at you of of prop year when go been and higher for the

Rimini we delaying this. a of might when timing ahead become this I’m in to are of trying something as go a our okay, opposed We that tailwind should we a get move to to need actually is cycle. to, on and recession sense to,

Yes.

I think, XXXX, the XXXX, true have if environment. I you we bottom one a No through look again, XXXX, back a, very it ahead, a right, financial been knew unique meltdown, then was, was was the.com meltdown. was it think and where there all

years to for months people what we to our six I going on. nine think just saw took was ever. around head wrap months it best their And

while are got I I give new it the of of working cycle the a I lot got this Once a through end then players. points. execute of the and the deals third quarter of new it, trying growth. that said third when called I think saw to couple QX. But terms said for out and refigure data whether yield on this think still let plan they I high wereXXX are they footing. we third to quarter, sure a into not other as me we at think when do in the you quarter, in world deer it. headlights, done the start in see you would go I roll in said, people are I and do the

simul my it XXX people into the in was - things in we broadcast current an room was XXX, just symposium are Amazing. It alone. the and biggest a vendor. needle. to very giving move mall. Gartner, I the Gartner I XXXX the how that Orlando, in People for then amazing, of was just had that things. on they So budget operating ever going that largest I and session. it innovation have had get focused at was, And And being the rooms said for was are to the a optimize think registrations to had down there keynote a other

Gartner, of been placed one I Japan, they in our a Barcelona. ever just coming Gartner have where exactly were between of we have participation, Gartner, in event seen they we largest terms So to up Gartner overwhelmed, show they to Orlando, the again, Japan, of booths Europe And need are play. interest and the to levels play that did want where think vendor

the those there people I us. fast deals indicators interest transactions and of I events to would that potentially for you meetings. out think, super coming tell of And are that and the good first is people millions where some high, time, that expect again, will tracking met dollars already are of So I we with great alone, talked

the times, growth numbers get our of I get is more can that XXXX chiefs our If convinced and and see five in very do type procurement, goal would of those times recognition. in beyond. my number think CFOs, solutions So front that growth that in numbers some tremendous four strong world and we I’m to I services CISOs, us one prop teams pipeline would and assure CIOs, value our would

Great.

change Okay. I comprising basis there, two the up if last one or thinking - to as the I Michael, And last a can could one in slice bulk XXX deeper the mean, of What DNA layer points. the that you outlook to sneak quarter? side there what’s compared you the bumped is

So we Jeff, investments bring to as I conscious remarks, highlighted in incremental decision the versus prepared those. made deferring on

we we various. little well, to and re-accelerate so we we also place are a So growth planned can done were and but items There compliance with our we in our previously have as that, were seeing have have than as efforts. some are we one-time regard can And our beefing highlighted. compliance structure sooner so highlighted efforts our up they

investments. with a put a to our So we regard feeling whole but place, where those conscious issues, good now host of decision are in are we to

is kind the the we how gave might as in build obviously going persistent that levels about XXXX infrastructure you the of Will we things that or other then but at you level and get ahead one-time looking QX, off are game, it fall of to do things nature get G&A that think leverageable, the are for outlook XXXX? into into

onetime-ish recurring accurately think you Yes, you I at appropriately. baseline perspective. the outlook are expenditures, Jeff. it there, nature think I their in from their a are looking And So characterizing but

alright. for appreciate it. my questions. taking I Okay, Thanks

Thank you.

Thanks Jeff.

have we questions further And Instructions] queue. in [Operator no

for Great. much to call. want thank you and Well, the thank you us for very everyone I joining

our in But with out everyone, way, in we in are which comfortable glad are Just we so to to we always troubled who there difference. remind there about while are participate folks too. and good help reminder place, many to you there, make think and a live I more want a are foundation them to many we that harm’s really all hope help those a can need guys need

very guys, attending you So care. appreciate thank call with much the that, today. Take you and

concludes conference Thank call. attending. That you for today’s