Rimini Street, Inc. (RMNI) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed outlook: while there are positive signs such as increased cash balance, deferred revenue, and RPO, the decline in adjusted EBITDA and diluted EPS are concerning. The Q&A reveals optimism in AI solutions and longer contract durations, yet management's lack of specific metrics and cautious guidance tempers enthusiasm. The absence of clear year-over-year comparisons and the decision not to raise guidance despite revenue outperformance suggest a cautious market reaction, leading to a neutral stock price prediction.
Key Financial Performance
Revenue $105.5 million, a year-over-year increase of 1.2%. Excluding support services for PeopleSoft products, revenue increased by 5.2% year-over-year. FX movements impacted first quarter revenue negatively by 0.5%.
Annualized Recurring Revenue (ARR) $400.8 million for the first quarter, a year-over-year increase of 1.2%.
Revenue Retention Rate for Service Subscriptions 88%, with approximately 81% of subscription revenue noncancelable for at least 12 months.
Billings $95.3 million, an increase of 19.9% year-over-year. When excluding billings associated with support services for PeopleSoft products, the year-over-year increase was 22.9%.
Gross Margin 59.0% of revenue for the first quarter compared to 61.0% of revenue for the prior year first quarter. On a non-GAAP basis, gross margin was 59.5% of revenue for the first quarter compared to 61.5% of revenue for the prior year first quarter. The decline was due to investments pulled forward in the year and select non-subscription engagements with large, front-loaded start-up costs.
Sales and Marketing Expense as a Percentage of Revenue 36.6% for the first quarter compared to 32.9% of revenue for the prior year first quarter. On a non-GAAP basis, it was 35.8% for the first quarter compared to 32% of revenue for the prior year first quarter. The increase was due to investments pulled forward in the year to take advantage of market opportunities.
General and Administrative Expenses as a Percentage of Revenue 16.9% of revenue for the first quarter compared to 16.8% of revenue for the prior year first quarter. On a non-GAAP basis, it was 15.7% of revenue for the first quarter compared to 15.6% of revenue for the prior year first quarter.
Net Income Attributable to Shareholders $1.4 million or $0.01 per diluted share compared to the prior year first quarter of $0.04 per diluted share. On a non-GAAP basis, net income for the first quarter was $4 million or $0.04 per diluted share compared to the first quarter of the prior year of $0.10 per diluted share.
Adjusted EBITDA $8.9 million for the first quarter or 8.4% of revenue compared to the prior year's first quarter of $15.7 million or 15.1% of revenue.
Cash Balance $132.2 million compared to $122.6 million of cash for the prior year first quarter.
Operating Cash Flow Increased $24.5 million compared to the prior year's first quarter increase of $33.7 million.
Deferred Revenue $277.3 million compared to deferred revenue of $256.4 million for the prior year first quarter.
Remaining Performance Obligations (RPO) $643.6 million as of March 31, 2026, compared to $553.1 million for the prior year first quarter, an increase of 16.4%. When excluding RPO relating to support services for PeopleSoft products, the year-end balance increased 18.2%.
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Operating Highlights
Rimini Agentic AI ERP solutions: Investments in next-generation AI ERP solutions that can be deployed over existing ERP software without costly upgrades or migrations.
Rimini Agentic UX: AI-driven experience and automation layer that transforms ERP software into an autonomous system of action, delivering innovation and modernization quickly and economically.
New client transactions: Closed 11 new client transactions with over $1 million in TCV, totaling $33 million, compared to 5 transactions totaling $5.6 million in the same period last year.
New logos: Added 50 new logos, including global and regional brands.
Operational savings: Clients have realized over $10 billion in operational savings by avoiding costly ERP upgrades and leveraging Rimini solutions.
Cost reduction: Examples include Cleanera cutting SAP and Oracle maintenance costs by 50%, and Elmort redirecting budget from maintenance to growth initiatives.
Strategic partnerships: Strengthened indirect sales ecosystem with new partner managers and accretive sales transactions globally, leveraging partnerships to expand reach and influence.
PeopleSoft support wind-down: Progress in reducing PeopleSoft support clients and related revenues, with revenue from PeopleSoft services decreasing to 3% of total revenue.
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Risk or Challenges
PeopleSoft Support Wind-down: The company is in the process of winding down support and services for Oracle's PeopleSoft software, which has already reduced revenue from this segment from 8% to 3% of total revenue. This could lead to further revenue declines as the wind-down progresses.
Gross Margin Decline: Gross margin decreased to 59.0% from 61.0% year-over-year, impacted by investments pulled forward and non-subscription engagements with large, front-loaded start-up costs. This could affect profitability if not managed effectively.
Sales and Marketing Costs: Sales and marketing expenses increased as a percentage of revenue, rising to 36.6% from 32.9% year-over-year. This increase, driven by investments pulled forward, could pressure margins if revenue growth does not offset these costs.
Litigation Costs: Although litigation expenses are expected to be immaterial going forward, any residual legal costs are now included in general and administrative expenses, which could still impact financial performance.
Foreign Exchange Impact: FX movements negatively impacted revenue by 0.5% in the first quarter, which could continue to be a risk depending on currency fluctuations.
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Guidance & Outlook
Revenue Guidance for Q2 2026: The company expects revenue to be in the range of $106 million to $108 million.
Full Year 2026 Revenue Growth: The company reiterates its guidance of revenue growth in the range of 4% to 6%.
Adjusted EBITDA Margins for Full Year 2026: The company expects adjusted EBITDA margins to be in the range of 12.5% to 15.5%.
PeopleSoft Support Wind-Down: The company will complete the wind-down of its support and services for Oracle's PeopleSoft software by July 31, 2028. Revenue from PeopleSoft support services has been reduced to 3% of total revenue in Q1 2026, down from 7% in Q1 2025.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you provide any quantifiable context on the stronger bookings trends since the second half of '25, including year-over-year comparisons, booking totals, or book-to-bill?
A:Seth Ravin mentioned that there has been an uptick in bookings and billings since mid-last year, with indicators such as larger contracts and longer-term contracts. For example, 60% of deals with TCV over $1 million were in North America this year compared to none last year. However, specific year-over-year comparisons or booking totals were not provided, and the team will provide those details later.
Q:What are you seeing in terms of contract duration, and how has it changed?
A:The average contract length has increased from about 2.5-2.6 years to longer-term contracts. Customers are looking for longer-term solutions due to the upcoming technology transitions and the lack of ROI or competitive advantage from certain changes.
Q:Can you update us on the 26 customers testing Argentic AI solutions, their feedback, timelines to production, and how you want to be measured over the next 18 months?
A:Seth Ravin stated that the focus is on growth, aiming for mid-single-digit growth this year and a Rule of 20 between top-line and bottom-line growth. The company is also targeting a Rule of 40 in the future. While specific updates on the 26 customers or timelines were not provided, the company emphasized the importance of creating a path for customers that doesn't require returning to the vendor, which is driving larger contracts and demand.
Q:What is the near-term opportunity that required pulling forward expenses, and why wasn't the annual guidance raised despite revenue outperformance?
A:The company invested in areas like the U.S. federal team, PE sales, and Agentic AI ERP solutions, as well as expanding the sales team to over 80 sellers. Despite revenue outperformance, the company chose to maintain its mid-single-digit growth guidance to remain cautious and gain more confidence after another quarter.
Q:How should we think about churn and customer retention over the next several quarters?
A:The trailing twelve-month (TTM) retention rate is 88%, but the company aims to return it to over 90%. Internal retention numbers have improved, and the company expects this to reflect in the TTM metrics starting next quarter.
Q:Is the increase in active clients in Q1 due to increased demand for AI solutions or a year-round sales process?
A:The increase in active clients is attributed to improved lead conversion, higher-quality pipelines, and growing demand for AI solutions. The company is well-positioned to help customers through technological transitions, including AI implementation and composable ERP systems.
Q:How much should we expect to see in the new research and development (R&D) line item going forward?
A:The R&D investments are expected to increase throughout the year, exiting at about 1% of revenue. These investments are focused on technological advancements and new offerings, and they are incorporated within the existing guidance.
Q:Will revenue from the Agentic AI solution pick up in the second half of the year, and will there be a metric to track its contribution?
A:Revenue from Agentic AI solutions is currently modest but expected to grow in the second half of the year and into next year. While no specific metric was mentioned, the company highlighted that the vision and path provided by Agentic AI are already driving increased demand and sales.
Q:Review of Unclear Management Responses
A:Management avoided providing specific year-over-year comparisons, booking totals, or book-to-bill metrics for the stronger bookings trends. Additionally, no detailed updates or timelines were given for the 26 customers testing Argentic AI solutions, and there was no mention of a specific metric to track revenue contribution from Agentic AI solutions.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI ERP
AI analytics
AI challenge
AI era
AI experience
AI modernization
ARR obligation
Agentic AI
Cleanera paper
Cubic defense
ERP Today
ERP client
ERP enterprise
ERP software
ERP solution
Elmort support
Rimini Agentic
Rimini Street
SAP Oracle
VMware
advantage client
client ERP
client transaction
control
core ERP
disruption
ecosystem
environment
generation Rimini
maintenance
methodology
path
profitability
return
road map
software advantage
software release
software support
software upgrade
solution ERP
RMNI Transcript
Rimini Street, Inc. (RMNI) Q1 2026 Earnings Call Transcript
Unknown5-1
The earnings call presents a mixed outlook: while there are positive signs such as increased cash balance, deferred revenue, and RPO, the decline in adjusted EBITDA and diluted EPS are concerning. The Q&A reveals optimism in AI solutions and longer contract durations, yet management's lack of specific metrics and cautious guidance tempers enthusiasm. The absence of clear year-over-year comparisons and the decision not to raise guidance despite revenue outperformance suggest a cautious market reaction, leading to a neutral stock price prediction.
Rimini Street, Inc. (RMNI) Q4 2025 Earnings Call Transcript
Positive2-20
The earnings call highlights a positive outlook with strong RPO growth, new strategic partnerships, and increased sales pipeline post-litigation. Despite a decline in EBITDA, cash reserves have improved. Management's optimistic guidance, strategic investments, and anticipated growth in North America further bolster sentiment. However, the lack of clarity on stock buybacks and early-stage adoption of new products temper expectations. Overall, the positive factors outweigh the negatives, suggesting a stock price increase in the near term.
Rimini Street, Inc. (RMNI) Q3 2025 Earnings Call Transcript
Unknown10-30
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.
Rimini Street, Inc. (RMNI) Q2 2025 Earnings Call Transcript
Unknown7-31
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.
RMNI Report
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