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01/10 16:01
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights a revenue decline, ongoing litigation risks, and suspended guidance, which are significant concerns. Despite some positive aspects like improved gross margins and promising partnerships, these are overshadowed by the lack of shareholder return plans and the negative impact of foreign exchange. The Q&A session did not alleviate these concerns, as management's responses lacked clarity on key issues. The absence of guidance and the litigation uncertainty suggest a negative short-term outlook, likely leading to a stock price decline of -2% to -8% over the next two weeks.
Revenue $104.2 million, a year-over-year decrease of 2.4%. The decrease was attributed to foreign exchange movements negatively impacting total revenue by 1%.
Annualized Recurring Revenue $396.2 million, a year-over-year decrease of 4.7%.
Billings $79.4 million, up 7.2% year-over-year. The growth was driven by a mix of new subscriptions and project-based professional services.
Gross Margin 61% of revenue, compared to 59.8% of revenue for the prior year first quarter. This improvement was due to operational leverage through improved systems and processes.
Net Income $3.4 million or $0.04 per diluted share, compared to the prior year first quarter net income of $0.01 per diluted share.
Non-GAAP Net Income $8.4 million or $0.09 per diluted share, compared to the prior year first quarter of $0.08 per diluted share.
Non-GAAP Operating Income $14.5 million or 13.9% of revenue, compared to 8.3% for the prior year first quarter.
Adjusted EBITDA $15.3 million or 14.7% of revenue, compared to the prior year first quarter of 10% of revenue.
Cash Balance and Short-term Investments $122.6 million, compared to $129 million for the prior year first quarter.
Operating Cash Flow Increased by $33.7 million compared to the prior year first quarter increase of $11.1 million.
Deferred Revenue $256.4 million, compared to deferred revenue of $254.3 million for prior year first quarter.
Backlog (Remaining Performance Obligation) $553.1 million, compared to $556.9 million for prior year first quarter.
PeopleSoft Revenue Approximately $7.0 million or 7% of revenue, compared to approximately $8.2 million or 8% of revenue for the prior year first quarter.
New Support Subscriptions for VMware: Notable acceleration in sales of our new support subscriptions for VMware across a broad set of industries and geographies.
Application Management Services for Workday: Rimini Street is now offering to run Workday software for clients, lowering operating costs and improving system operation.
Global Alliances and Partnerships Expansion: Continued investment in the expansion of global alliances, including a go-to-market rollout with ServiceNow.
New Partnerships: Announced partnerships with Vali Cyber, Workday, and T-Systems North America to enhance service offerings.
Cost Optimization Plan: Operating expenses as a percent of revenue declined 5.8% year-over-year due to ongoing cost optimization.
Gross Margin Improvement: Gross margin for Q1 was 61%, up from 59.8% year-over-year, reflecting operational efficiencies.
Wind Down of PeopleSoft Services: Decided to continue the wind-down plan for Oracle’s PeopleSoft product, reducing related revenue.
Focus on Sales Execution: Emphasis on driving leads, building pipeline, and closing business through disciplined sales execution.
Litigation Risks: Rimini Street has been involved in litigation with Oracle for over 15 years, with ongoing cases that may impact future operations and financial results. The company is currently appealing certain injunctions and seeking the return of $58.7 million in Oracle’s attorneys’ fees.
Regulatory Risks: The company is unable to provide additional material information regarding its litigation with Oracle, which may affect investor confidence and stock price.
Economic Factors: Shifts and uncertainties in deglobalization trends and global trade policy are causing organizations to reassess their IT plans and spending, which could impact Rimini Street's business.
Revenue Retention Risks: The revenue retention rate for service subscriptions is 88%, indicating potential risks in client retention and subscription revenue stability.
Foreign Exchange Risks: Foreign exchange movements negatively impacted total revenue by 1% during the quarter, which could affect future financial performance.
PeopleSoft Revenue Decline: The decision to wind down services for Oracle’s PeopleSoft product has led to a decrease in related revenue, which may continue to impact overall revenue.
Global Alliances and Partnerships: Continued investment in the expansion of global alliances, partnerships, and channels to drive sales leverage beyond the global sales force.
ServiceNow Partnership: Executed go-to-market rollout with ServiceNow, including training sales teams and collaborating on joint projects.
New Partnerships: Announced partnerships with Vali Cyber, Workday, and T-Systems North America to enhance service offerings and support.
Cost Optimization Plan: Maintained focus on cost optimization, resulting in a 5.8% year-over-year decline in operating expenses as a percentage of revenue.
PeopleSoft Wind-Down: Decided to continue the wind-down of PeopleSoft services, reducing related revenue.
Revenue Guidance: The company is suspending guidance until there is more clarity around impacts from current litigation activity with Oracle.
Future Revenue Expectations: The company believes that shifts in global trade policy may ultimately benefit their business.
Cost Structure Optimization: Expect to incur additional reorganization costs during 2025 as they continue to optimize their cost structure.
Litigation Outlook: Continuing to seek the return of $58.7 million in Oracle’s attorneys’ fees and costs.
Backlog: Remaining performance obligation (RPO) was $553.1 million as of March 31, 2025.
Shareholder Return Plan: Rimini Street has not announced any share buyback program or dividend program during the Q1 2025 earnings call.
The earnings call reflects mixed signals. The company has positive developments, such as partnerships and international growth, but faces challenges like declining U.S. bookings and unclear financial metrics. The Q&A highlights optimism in strategic shifts and AI integration, yet lacks immediate financial impact and precise data. The absence of guidance and deferred metrics create uncertainty, balancing positives like reduced litigation costs and public sector initiatives. Overall, the sentiment is neutral due to the blend of potential growth with current financial ambiguities.
The earnings call reflects challenges such as a revenue decline, suspended guidance due to litigation, and reduced cash balance. While there are some positive aspects like increased gross margin and backlog, the litigation with Oracle and its impact on customer engagement overshadow these. The Q&A reveals management's uncertainty regarding future growth and litigation's impact. Despite some positive growth drivers and partnerships, the overall sentiment leans negative due to the suspended guidance and ongoing uncertainties.
The earnings call highlights a revenue decline, ongoing litigation risks, and suspended guidance, which are significant concerns. Despite some positive aspects like improved gross margins and promising partnerships, these are overshadowed by the lack of shareholder return plans and the negative impact of foreign exchange. The Q&A session did not alleviate these concerns, as management's responses lacked clarity on key issues. The absence of guidance and the litigation uncertainty suggest a negative short-term outlook, likely leading to a stock price decline of -2% to -8% over the next two weeks.
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