Rimini Street (RMNI) 1 Nov 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Rimini Street Third Quarter 2023 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your speaker today, Dean Pohl, Vice President, Investor Relations. Please go ahead.

Thank you, operator. everyone Street's welcome Earnings Quarter to Call. Conference like to Third Rimini XXXX I'd

has with press of is financial been An can A non-GAAP we GAAP review me measures CEO discussion provided our call a Investor third the taking may with risks measures turn the the remarks. SEC the Seth. financial On most today Relations. tables our is to XX, Form September price.Now metrics, today's reminder, from on cause affect also our are today. and certain press of stock encourage these believe for XXXX, that and Perica, website.As available that discussion results statements We our statements the With future outlook. of quarter earnings under or press uncertainties that I'd included ended questions, today will is for subject we'll including like and in of Seth to Michael XX-Q our before These our key found our to filed our reflect recent differ forward-looking reconciliation you we in begin CFO.Today, about which materially heading measures they forward-looking release. results that, statements to statements risks non-GAAP the current meaningful in on issued copy explanation a a made which to actual and following prepared release why the the to and under be President; financial release our Ravin, website are include filings, call may over

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

implementation, configure software. operational database specialize to on run, protect, support, While in mission-critical instead and area customize, specialized manage, enterprise and Rimini IT and focuses most connect, needs technology of IT optimize strategic application, providers Street service very monitor, the software

countries, are by minutes, XX average score time onboarding support to spread and operations X X,XXX an XXX services where support capabilities on average XXX, other software global by of over broad X,XXX with delivering We clients have Global support Oracle organizations XX senior with X served third-party employees satisfaction across excellent.Today, and our for than provider and industries. we X.X delivery of and have response less client Fortune urge an SAP leading XXX, and a engineering of to X sector the is mid-market, X, date, out across range of over public Fortune

SaaS such delivered enable cloud We better clients improved are operating in and clients.Operating opportunity our business innovation, believe over of We We advantage and profits, billion costs, $X we achieve reinvestment have increased in and savings also markets, partners investment to respectively. Salesforce competitive results. to growth. AWS outcomes, and as accelerated lower increased

continue XXXX, the being For and the improving on solutions focusing of our globally. sales full quarter of able deliver of third solutions execution portfolio portfolio across we expanded to

full value portfolio. solutions and prospective our are responding the and buying portfolio, more clients the positively they our of and current offerings unique As expanded across about learn

believe solution, by part and quarter saw and execution.To strategic the we help close ONE and for globally, large For expanded outsourcing gain where our lead the further our the full-service increasingly we of third opportunity end-to-end driven part and maturing portfolio accelerate and pipeline by enhance current is and of continue and in development by go-to-market prospects ERP products valued environment XXXX, macroeconomic clients our more our in SAP solutions traction to and our additional technology grow deliver globally United competitive with globally, by third-party innovation leverage and events States and meetings and we increased portfolio including for workforce prospect the prospective current transactions, capabilities advantage. solutions continue attendance our senior that Street hundreds executives, To sales our in of to our extensive provides meetings with and continue full and growth.Demand in-person backed and clients. myself, profitability and Rimini client environment executive Rimini of

IT We partner IT recognized transaction mission-critical demand allow services consolidate service to heightened to broader of we clients products continue faced figure are can developing as today and of current that We as and them strategy industry years.Oracle to better a to power achieve need about well their has and that more and the streamlined help Organizations in Rimini and and navigate litigation preferred the a management, to to deliver macroeconomic help out Street end-to-end both outcomes. IT key just litigation portfolio for global And aggregated can maps organizations complex growth that the for to goals solutions years. every road Rimini and system revenue proven, competition providers Oracle needed XX plan their see meet vendor profitability. been for organizations reliable needs over support coming strong in have positioned for than purchasing increased services, update. provider evolving service building an Street from now execution. to that IT how be partner increased believe the of mission-critical

orders.With such the should schedule a parties are what costs fees Corp. Inc. in to reserves content rights briefing appeal. lines. U.S. the appeal compliance now, district courts District long amount in by II, company respect dispute, which provides International to compliance ago and fees proceedings, costs in to injunction the XXXX Oracle and both that primarily reasonable certain X dispute support yet which Court and Street relate has reasonable Street all have Court. Rimini to attorneys' Street District for confirmed third-party related any related have Oracle's presently U.S. court October be. software the has matter Rimini attorneys' of filed reimburse product proceedings Oracle, Rimini determined and respect active and versus to not District legal, with the Oracle Rimini the been lawsuit, we Street Rimini Court the The of Rimini With the the support While services is to in injunction manner ordered X

of the has report, Court decision and to the is of our appeal As the Appeals in through not the an this a process. place of date yet administrative on issued of motion stay Rimini the Injunction stay injunction II

Additionally, to current November growth, must and right continuing decided provide Court disclosures the decided Please statements SEC time, filings filings court not our enhance U.S. a has that remain able and we accelerate motion and of continued bring our filing with District Court material by court with Oracle regarding disclosures analysis right impacts Securities the the to the are in because are and and litigation and We to District be Injunction investments results, the and this and the motion. court quarterly briefing are Court's we nor activity.Summary. at XXXX, Rimini Rimini the will the confident beyond Appeals additional with before increase be and our releases guidance motion also in provide additional information the see injunction in successful stay conclusion. financial on impacts II findings to future on another yet in engaged on profitability, note we're actions potential commentary unable additional the that report still litigation litigation press an appeal nor consider with Rimini Oracle, please making Oracle filed related disclosures shareholder will company's and Form X, the XX-Q Commission. provide the to also information respect value to to Exchange company's that take pending we II.For Street

business.Now matters various Street in However, on litigation the ultimately described not does a on filings, SEC Michael. if prevail Rimini to have over you, it could material impact our

you, increase Revenue and the of us X.X%. million, everyone. Thank for gross third and year-over-year thank for was billings quarter Seth, a $XXX.X joining you Revenue, margin.

currency in negatively X.X% was impacts the to a movements, having year-to-date impacted On quarter revenue revenue basis, growth the again were X.X%. Our currency quarter. unfavorable impact in by a negative

was XX within XX.X% year for On the revenue non-GAAP basis, For for quarter compared represented increase million for which subscriptions, for gross an quarter, XX.X% for Annualized $XX.X trailing year of revenue to for other XX.X% of the excludes third Revenue retention the States third third stock-based third third for in margin XX% of detailed a to revenue rate $XXX.X months, million prior increase a clients at quarter. third the up contributed our our the compensation quarter, months.Billings XX% more of the press third quarter the XX.X% XX for were year and million with X.X%. of the quarter $XX.X to revenue, subscription the XX% for XX.X% earnings the was compared compared XX.X%. was margin total prior noncancelable Gross clients quarter. while prior international makes service expense total release, revenue. least than the XX.X% for of revenue, which of revenue was quarter, of year-over-year recurring United items

global investment recognition, in offerings may going required by forward.Operating Continued gross negatively expenses. engineering margin the the of as revenue in of team many our advance pressure new

other XX.X% and for to was the quarter third the still stock-based and revenue, advantage earnings of release, global excludes are a the On compared our value basis, third to and third for sales all revenue in G&A While the in in expenses with as both detailed items prior of revenue expense On compared to for to performance XX% were attractive of percentage a to third inflationary talent expense prior costs, percentage compared the XX.X% our high stock-based quarter.General were footprint basis, year revenue litigation for release, higher-priced XX.X% XX.X% pressures margin for we excludes remain quarter. the of and compared retain and prior persistent outside Moreover, compensation and revenue marketing of for revenue percentage of quarter. the excellence of a revenue key prior for year third talent. a press to markets. as administrative across centers for third the quarter quarter. non-GAAP compared attract theaters, and of other skilled expenses which excluding was Sales items third costs the quarter talent expenses marketing compensation the continue non-GAAP quarter XX.X% underscores for and press third as XX.X% year labor geographies our earnings of the XX.X% detailed for which the our year a

earnings investments calls are We year-over-year initial expanded behind are the the in improvement seeing portfolio were and our required in to and largely develop substantial launch noted past G&A required of that restructuring a us. to due previously spend solutions good

in-house is litigation be due expense ongoing as quarter the year's for decreased was and third depending due will necessary and percentage third compliance $X.X G&A our compared current by to for the other continue compared a to of The third peers our prior However, part compared costs to to activity vary made in quarter-to-quarter for million spend compliance legal litigation costs during Oracle outside expenses to large revenue ongoing XXXX the million activity. prior elevated and of activities.Net teams and the the expenses to year-over-year quarter litigation year-to-year, quarter. Litigation reduction third year on quarter. in $X.X

compensation, basis, for margin, We stock-based income million net shareholders was of quarter, $X.X share with was non-GAAP X.X% per was third for quarter for XX.X% and cash operating third million income as third facility XXXX. of outstanding compared diluted consisting of bringing net $XXX of On quarter. investments diluted September or the million, to prior $X.XX or The of Deferred ended prior third quarter third declined flow $X.X a approximately XX, billed decline quarter year basis, the of prior million treasuries Our per for income loss XX, equivalents prior to and the until of outside per compared $XXX year $XXX,XXX impacts to $X.XX of or continuing excludes revenue $XXX.X with $XXX.X results million September quarter.For was includes share third U.S. million $XX.X sum million On a is to of revenue million increased and the credit share the from third revenue third current third the EBITDA Backlog, year improved diluted is prior million as spend which $XX to compared clarity million for XXXX XXXX, and securities, the year of $X.X XXXX. a balance noncancelable a short-term sheet. September short-term quarter. as million future XX, third the quarter.Business courts Adjusted for company's federal non-GAAP activity on and company million to which net $XX.X quarter for $XXX the the million million September XX% to $X.X million to the outlook. or to XX.X% suspend investments prior flow $XXX third a the deferred short-term more diluted or before quarter. third for to of $XXX.X year Oracle. agency compared versus the ongoing million to financial for per U.S. cash as prior $XX.X in to net or The compared a litigation quarter.Balance to compared totaled operating litigation litigation plus the quarter of compared revenue, share revenue from around there quarter. revenue cash guidance year the $XX.X of future $X.XX cash year attributable XX, third $XX principal

quarterly please our on litigation X, prepared concludes with XXXX, with company's remarks. company's For disclosures Exchange XX-Q November Form information take Securities on questions. now Commission.This filed additional and our the the disclosures the report Operator, we'll and Oracle, in regarding see U.S.

question [Operator Wood the of our from And Instructions] Cowen. first line from come Derrick

is Derrick. This Co [ ] on for

Looking new at the last clients, this quarter-over-quarter in the X the best was quarters. net

what I that... more drove color just So was hoping on

Seth. is This Sure.

the SAP. I increase think, for as quarter XX% saw the third their in cycles the in roughly the in you prepared of maintenance remarks, SAP to So we on business side renewals of quarter for increase a is mentioned We that year-over-year, substantial know due big world saw, business. this a very over billings the I us

better SAP ago, off And positioning an very in of particular cliff set we're messaging, on third year. offering and which came our marketing, you messaging last then came We of clients. clock into in those SAP fell we a the services As sort where quarter on back with better you prior for was year, a over cleaned services know, this the the marketplace. had improvement we with years X year strong better the remember, very,

driver increase force So that actually had the sales we on us was substantial was a business driver.Second certainly one for the in AMS.

also and services. saw we We our security increased professional business, across increases

rebalance growth of we clients. existing part in business. a we recent to our sales saw But all and a to think this quarter, were the of business. you quarters I lot on were up new logo existing equally the And and a logo bit, bit whole and little team selling a combination evolution saw you and And over open of to were that's a those new increasing the quarter in demand also get to bag able of focused bring So new to team drove cross-sell going products, you're little in additional able logo just of able of logo also fall the this off we we clients, that natural were when saw bringing strong. balance you goes that start new and the out very back those have acquisition. the that to it's We

helpful. Very

have paying quarter. and off kind seem bit. like looks that changes from me. [ give year-over-year How pay go-to-market U.S. of made It ROA end that Just about go-to-market dividends is reorganization accelerated to The for a any some just and exchanges the guys of seeing you last ] more working the X% changes one through more far out? U.S. be

X, about talking North I We're about America U.S. talking we we a North reliable want seeing market, at steps execution think ANZ U.S. When are U.S. be. seeing and not EMEA we where to. are America, not in good really That's basis. consistently we're -- the we all that And the seeing executing level the -- still strong, again, say quarters. market, have in we'd we're where we've the the regions very taken to really improvement market. need on really consistent We're you're you're X the not U.S.,

renewals selling of We on some a new excellent have of We're right in we're lot getting consistency done. weaker portfolio. quarters, We're great some bringing focused We're a that full it's clients, logos. the execution now.

planned literally yet to those in numbers. particular able consistently these we're regions basis all to have global So areas, X but making progress be deliver our a just on

you there of as just executions. up as moving we'd those like would we consistently little a in why the general, that's are so direction. like And as as fast right and down. and bit in We're we see moving the But in not

[Operator Jeff come Our the Instructions] of line Van will from next question from Craig-Hallum. Rhee

you the resolved side be bit Just got guidance, guidance again? giving One, a start as start to legal going respect What the on, the what a said, guidance triggers goes here. the couple specific for on as quite I relates legal that's a it issues mean would need decade, to again? to with to suspect longer. it be to giving process

-- the Sure, focus now several We a years, II, been on are things Rimini Jeff. is continued middle certainly The have a Good regularly. the provide we right and for XX we've by court. of question guidance finding the one, Rimini difference we've The there. in we to II. litigation in key it's

had could a that would implement the court have be could They not put only damage was as of We as troubling the third of a has impacts. know, financial injunction are in II. a there in are also the on as as it impacts appeals said well and to The as in stay we've business by there, injunction lot potential in court, expense challenges process, in that to well put to irreparable the decisions but the cause as things the the you courts parties. with if that significant the we There us company there of business. place it, the, Rimini

in pay. and is arguing very play side, courts the still now, coming that matter, of stayed that court the content the in And stay the to we that's moment.On has fees the much eventually, be appeal have other ordered the legal we're injunction at that will then so the in fact that, particular right but over us

We amount. The be any legal haven't And court There's today, ordered also hasn't on amount. be there an but an fees order no could legal fees. There agreed side. application. on Rimini be could II, could there that in

financial feel decisions. And might we business out court these can potential that figure and on to So are impacts they we other the we ascertain possibly be. don't have have amounts on side, that we dependent what even

litigation scheduled I I is and we briefing can't come open through are you example, because says, in So got what court.Now my to and that's February. management of is have read decisions until too provide legal look a months, more recommend a again, fee want It's everybody to the would disclosure reputable team at went really But that discussions, kind for I what's over on date have way matters guidance if got more going and they to XX-Q, you remarks. the of take line, detailed these you've coming components will out the the and I who these the time variables give you the than through prepared it. schedule all resolved many the place by a

what's the I you answers financials. to XX XXXX. given going we with that, it, second have which then the give you XX still we're would so going as will the year whether make normally guidance think, Jeff, in where think we believe you a know, been the out the are take briefing year by I when from and we decisions, court. understanding results the K how could appeals, feel even we evaluate really the and out resume be probably and fashion actions of the K, court, the with and that look for know of I to what know, the until an won't provide decision include decision any in days is quarter as fourth to affects when take next position where schedules place to that.But likely XXXX that you we their doesn't look And to as come don't into And have what the to take XXXX to say we in at have at And made we those come just our late we a are, probably can which, we to get we what business we're quarter sense do courts when a then after would in a that we normal that as decisions guidance the when

moving Okay. Yes. of Got helpful. it. there. parts lot Understood, A that's and

where specifically, the as impacts quarter? So of starting similar in -- seeing under pipeline it But the a then you're think and the the court to have it you most actually ago? in time a impact your get a did billings are in on billings ruling. quarter, belt And recent improvement. SAP I as an on -- you is the obviously, what court was from year somewhat relates more said ruling? What little billings now question, versus good the just to

Well, let's grow. start first with pipeline. Pipeline continues to

around they know, market you even according for want what of a strive as company, bit We their XX% That's our strive higher. Xx of close are deals licenses fall-off little have of most we and rate close generally complexity that been in we, Xx challenges for always more our all means though a sort to in XX%, We that pipe. a pretty pipeline terms range. our to XX% which As business, to companies plan. around unique have because and higher little for a is your sorts consistent a pipeline would

have pipeline is opportunity bigger a business. to more growing so we that close means And

the So the that of results to of II all let's latest far the continued trial. has again, litigation, about part Rimini talk as forward.As impacts move -- the

had of pulled we the then talk the recent court. appeal results some that the hearing by the and Let's back and content about of the then findings where

for products answer quarter about the how know. SAP in and Oracle I the was were year-over-year. don't billings over services XX% mentioned is we really X%. think I up down

group. we try with a We very were reach. SAP, sell Oracle. for to same and and so busy conclusion seller it's easy that you as we some That's could didn't say, it's busy were SAP Now things the example, much could read in, selling you

all the So have so the what been to if may seen not one, you join wait decided they're decisions these concerned that Oracle come as hearings have on see less and court of unclear you're and just that clarified. number. sense that how about could everyone's down get may saw have they litigation. happened. not to those any mix it selling have are could to would or to us There combo reasonable understanding much I it's and But conclusions who is what We us think But focused other. driven trying X% not customers have that as from all because impacts kind of have

Our Brian next Alliance line Instructions] Kinstlinger from comes from the AGP. [Operator of question

with I the plan see quarter, to company, clearly that thinking was were of ruling I'm about where value. And you Oracle what's the of I'm for outside sales investment and with discussed and creating Oracle to rulings of and good that sure you to not shareholder which execution the you're It's react. happen is right Oracle. stock discussed. your But when sales earnings happened if stronger power, unsure think, the last going the how

any So in off and the going you earning did you company, better with like thoughts and holding flexing than of investing of the on today, kind what power thought to all quarter we more marketing. this sales are there about have market

We opportunity. the know, as a business. I'd Well, Brian, answer we're I market think feel as mentioned, you the that, is, contrarian on very not think we bullish

have appropriate rougher expansion help out very the in economic Street companies same minus it grew increase at tight of capabilities that that services policy, I even and business to economics, see are economic you taking well we We going said a begin set needed amount advantage history. are pandemic, do could tight our We all I the of setting during to not times up a But market very when the were through these to to of management as would there, We that comes tight now we're a of through executing biggest again, and has of strategy enough portfolio so all the perspective. hires that times, were that that challenges is be Rimini that the we working we for and liquidity. services much confident we saw for think issues profits and the XX demand accelerate the that when the have monetary we court costs sellers to And we during reduce the from services time.And us think felt go-to-market that take sales bringing to that we and aside, with open are. strong move that not demand market.

that We have of not changed were position.We aim year. end we sellers by the said the going to for XX

still are aiming We for XX sellers.

we're and the reacceleration We increased plan. have set, of of side. aside part part set business to driving all our cash. And It's profitability. it's committed That's a of the on revenue the

know, hire and we more to well we of about for more to order that get as you to us, in think XX a got talk we've Rule table. continually the sellers that, take to I want And do goal off as business to mark.

ago, seeing think, decisions customers the the I decisions? you road? more sounds down, like strong get SAP still right saying, strong Maybe delayed we'll year, changes X environment. current in the lot can is, second bookings, years customers what and kick X a see through go you saying seeing in are My maybe now Are today's wait down rebound question effort what make to the at to Okay. from after on great it growth. it's Are least

seeing make we're decisions. that think I people

waiting reassessing. where saw the that that think during we pandemic, people I the reassessing budgets, period were of sort

to up interest are understand rates stay now likely up stay and think I people longer.

budgets problematic for and its They all to coming a higher. lot a as are you upcoming they companies way to going everybody's through renegotiations. of due. of Those where have that's for work very think companies, be I of they starting That lines cost credit will loans, understanding. significantly lot have be know, have means capital the

are those You heavily are very got -- are seen example, for into into tight. you've can margin other that, manufacturers, where several bankruptcy.So those margins also very very, additional make to areas and retail, contract reducing profile, see cost We've tight obviously, in us very the a where to very, need go X%. that in them anywhere that moving move businesses we they investment technology quickly help These enabling forward.

to is of the business healthy deals. were $XXX,XXX you've last the I cake there used that and so build talk yes, and bread those. the as what a a good -- which quarters. missing gaps.And you business remember, and under spot, the those also you healthy your the When we pans, is take $XXX,XXX, butter that $XXX,XXX look think, and $XXX,XXX in about around few this centered the on pipeline I on then $XXX,XXX your the deal, want to we includes and healthy in pots was We fill closes increasing and sweet range they at year call think deal a anything of got SAP them the in sort And the a wide quarter, that your you set deals strong. a of in really seen rebound quarter, mix this we've us a million-dollar-plus deals. good yields for was icing that good to for closed look a then type always So to

we but were we We smaller some in some lot remember lot we that deals. a of times we missing may missing big You mid several that We talked where really that mid-$XXX,XXX didn't had a to deals, section. -- $XXX,XXX. of about calls, were had on sort

did And I And TCV now $X with did you're top over seeing midsection fill We we saw I million. that -- think seeing the We think the XX out deals that drive are growth over business. on nicely. we end.

again, And realizing we take and is CIOs think and that have And solutions biggest service that Rimini So know have best around kind think the of today problems strong of in set part to the enough bringing to some get.Our have significant at. reflecting and the portfolio were we direction who I the is challenge it's do to the execution in and to with contact and points is terms have the merit solve market adoption direction. that the that a of as that's choices of CFOs over them the of world do I still hoping full look map they very in well. other that and a for that we table offer, programs business we vendor services Street the strategy not we are, market the road

resolve. for So of call That's of know have can phone issues they them getting us types up that front in the front marketing these they it's we and matter so real the we who we focus and us recognition and pick us, can the still a when is right can for of business are in getting people. of

wondering, in is there the that something to we expenses, seasonal? In marketing I from to still spend terms should cuts? Were there And and knowing XX any how sellers? dollar about I'm Great. you drop, think, the question, third think sales second marketing the if significant quarter, get you My plan can and sales touch Michael. saw on last we sequentially. quarter a

the the seasonal, what we in saw question. for thanks Seth a factors of outlined Brian, call external I wouldn't QX. discussed. for greater would QX healthy we're I guidance, pace going Again, versus in and internal at events timing forward, as say, providing it not So

However, of putting the see to we and for on outlined we're sales still as noted, folks, you stands -- creep up. the that opportunities to together, the on our that this ramp as execute could us it Seth reason ahead getting

-- seeing not expect have And we of that I out should But put not that add ranges to we're Brian, that you're forth. just to to think to as or going be you're that, going our say long-term we of target model the bottom we our talk kind in know, to that drive it billion model, XX% of about and you marketing $X sales we line want. at annual scale revenue, which

we clearly, have in might that downs So of XX% We've sort XX% to along and range. some been that ups lines.

under can little a little you to we force. up, that be at think there we're a while it, not want if see range at guidance providing on sales expect down, are you that So while the in $X to at just grow think a bound we billion, maybe sort look I that and you we I operate where of would look with into where there's we model a

as So well. that could happen

to end Ravin session. would that Seth remarks. I the that, back with Q&A for will like conference to And now turn our closing

look as Until way, the so And we 'XX additional to possible, for and in you I in to Thank forward select a good all providing the quarter where earnings the performance Street us regarding you our who charitable call. next our need everyone to colleagues having joining quarter litigation and harm's which much. We impacts the and for results the discuss information support you the third the potential Oracle quarter health. around for seeing Rimini our first as again continued earnings XXXX And as conflicts we many commentary. substantial. thank in forward to-date soon want efforts thank were always I XXXX then, those thoughts world. want suffering again all third we're and call, continued wish fourth we'll to again, quarter, join look

very always -- So sure Have to them in there.Thank that make keep you want I our day. we much, a and everybody. good thoughts,

concludes Thank this for you conference today's participating. And call.

disconnect. now great have may day. You a Everyone,