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Rimini Street Announces Fiscal Third Quarter 2020 Financial Results

LAS VEGAS, November 5, 2020Rimini Street, Inc. (Nasdaq: RMNI), a global provider of enterprise software products and services, the leading third-party support provider for Oracle and SAP software products and a Salesforce partner, today announced results for the third quarter ended September 30, 2020.

“For the third quarter, we continued to execute well against our strategic growth plan. We achieved record quarterly revenue above guidance, record new sales invoicing and backlog, calculated billings growth of 33.3% year-over-year, quarterly gross margin above guidance, maintained a revenue retention rate over 90 percent, produced another consecutive quarter of net income, further strengthened the balance sheet with record total cash of $83.7 million at quarter end and generated $31.8 million in year-to-date operating cash flow, a 51.7% year-over-year improvement,” stated Seth A. Ravin, Rimini Street co-founder, CEO and chairman of the board. “We also continued making investments to take advantage of growing global demand for Rimini Street’s support solutions, including our new AMS services, and additional demand driven by the pandemic and global economic challenges. Today, we are issuing guidance for fourth quarter revenue, raising the full year 2020 revenue guidance range and affirming our continued commitment to the long-term goals of improving free cash flow and growing GAAP profitability.”

Third Quarter 2020 Financial Highlights

  1. Revenue was $82.5 million for the 2020 third quarter, an increase of 19.3% compared to $69.2 million for the same period last year.
  2. Annual Recurring Revenue was $327 million for the 2020 third quarter, an increase of 18.6% compared to $275 million for the same period last year.
  3. Active Clients as of September 30, 2020 were 2,365, an increase of 16.4% compared to 2,032 Active Clients as of September 30, 2019.
  4. Revenue Retention Rate was 92% for both the trailing 12 months ended September 30, 2020 and for the comparable period ended September 30, 2019.
  5. Gross margin was 61.2% for the 2020 third quarter compared to 62.5% for the same period last year.
  6. Operating income was $4.5 million for the 2020 third quarter compared to $2.2 million for the same period last year.
  7. Non-GAAP Operating Income was $10.5 million for the 2020 third quarter compared to $7.1 million for the same period last year.
  8. Net income was $3.3 million for the 2020 third quarter compared to $1.4 million for the same period last year.
  9. Non-GAAP Net Income was $9.3 million for the 2020 third quarter compared to $6.3 million for the same period last year.
  10. Adjusted EBITDA for the 2020 third quarter was $11.0 million compared to $7.3 million for the same period last year.
  11. Basic and diluted net income (loss) per share attributable to common stockholders was a net loss per share of $(0.05) for the 2020 third quarter compared to a net loss of $(0.08) for the same period last year.
  12. Employee count as of September 30, 2020 was 1,384, a year-over-year increase of 13%.
  13. Subsequent to the third quarter close, the Company repurchased $5 million face value of Series A preferred stock for an approximate 10% discount to face-value (par); no make-whole payments were required and the purchased preferred shares were retired.

Reconciliations of the non-GAAP financial measures provided in this press release to their most directly comparable GAAP financial measures are provided in the financial tables included at the end of this press release. An explanation of these measures, why we believe they are meaningful and how they are calculated is also included under the heading “About Non-GAAP Financial Measures and Certain Key Metrics.”

Third Quarter 2020 Company Highlights

  1. Completed a follow-on public offering of approximately 6.1 million shares of the Company’s common stock, with net proceeds of approximately $25.1 million.
  2. On October 1, 2020, announced the appointment of seasoned finance leader Michael L. Perica as executive vice president and CFO to support the next phase of the Company’s growth.
  3. Announced several client successes with new and existing clients which have switched from Oracle or SAP to Rimini Street Support or have increased their subscription services with Rimini Street, including:
    1. Hyundai-Kia Motors, one of the world’s leading auto manufacturers, which extended its support agreement with the Company to include all of its overseas branches and affiliates worldwide;
    2. Vedacit, a leading manufacturer of construction products based in Brazil;
    3. FP Corporation, the largest maker of plastic food containers and packaging materials in Japan;
    4. Green Cargo, the Swedish state-owned rail logistics operator, who renewed its support agreement;
    5. Rassini NHK Automotive, a parts and accessories manufacturer in Brazil; and
    6. Elders, a leading agribusiness in Australia.
  4. Closed more than 8,300 support cases across 46 countries, and delivered more than 14,000 tax, legal and regulatory updates to clients in 38 countries, while achieving an average client satisfaction rating on the Company’s support delivery of over 4.8 out of 5.0 (where 5.0 is rated excellent).
  5. Announced the further enhancement of the Company’s industry-leading service response guarantee for clients, with new SLAs shortened from 15 minutes to 10 minutes for critical Priority 1 cases, and from 30 minutes to 15 minutes for serious Priority 2 cases.
  6. Won eight awards for excellence in client service and Company product and employee engagement innovations, including Gold Stevie awards for Company of the Year, Employer of the Year and Innovation of the Year.
  7. Presented at 15 virtual CIO, CFO and IT and procurement leader events worldwide including CXOsync in Washington, D.C., IDG’s Future IT in Boston, and MIT Sloan CIO Digital Learning Series.
  8. Donated to 32 charities around the world through the Rimini Street Foundation.

2020 Revenue Guidance

The Company is providing fourth quarter 2020 revenue guidance to be in the range of $82.5 million to $83.5 million. The Company is also raising full year revenue guidance to be in the range of $321.5 million to $322.5 million, up from a range of $314 million to $320 million.

Webcast and Conference Call Information

Rimini Street will host a conference call and webcast to discuss the third quarter 2020 results and select fourth quarter 2020 performance to-date commentary at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time on November 5, 2020. A live webcast of the event will be available on Rimini Street’s Investor Relations site at https://investors.riministreet.com. Dial-in participants can access the conference call by dialing (800) 708-4540 in the U.S. and Canada and enter the code 49989778. A replay of the webcast will be available for at least 90 days following the event.

Company’s Use of Non-GAAP Financial Measures

This press release contains certain “non-GAAP financial measures.” Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with disclosures required by U.S. generally accepted accounting principles, or GAAP. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures determined in accordance with GAAP. A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release. Presented under the heading “About Non-GAAP Financial Measures and Certain Key Metrics” is a description and explanation of our non-GAAP financial measures.

About Rimini Street, Inc.

Rimini Street, Inc. (Nasdaq: RMNI) is a global provider of enterprise software products and services, the leading third-party support provider for Oracle and SAP software products and a Salesforce partner. The Company offers premium, ultra-responsive and integrated application management and support services that enable enterprise software licensees to save significant costs, free up resources for innovation and achieve better business outcomes. To date, more than 3,700 Fortune 500, Fortune Global 100, midmarket, public sector and other organizations from a broad range of industries have relied on Rimini Street as their trusted application enterprise software products and services provider. To learn more, please visit http://www.riministreet.com, follow @riministreet on Twitter and find Rimini Street on Facebook and LinkedIn. (IR-RMNI)

Forward-Looking Statements

Certain statements included in this communication are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “may,” “should,” “would,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “seem,” “seek,” “continue,” “future,” “will,” “expect,” “outlook” or other similar words, phrases or expressions. These forward-looking statements include, but are not limited to, statements regarding our expectations of future events, future opportunities, global expansion and other growth initiatives and our investments in such initiatives. These statements are based on various assumptions and on the current expectations of management and are not predictions of actual performance, nor are these statements of historical facts. These statements are subject to a number of risks and uncertainties regarding Rimini Street’s business, and actual results may differ materially. These risks and uncertainties include, but are not limited to, the duration of and operational and financial impacts on our business of the COVID-19 pandemic and related economic impact, as well as the actions taken by governmental authorities, clients or others in response to the COVID-19 pandemic; catastrophic events that disrupt our business or that of our current and prospective clients, changes in the business environment in which Rimini Street operates, including inflation and interest rates, and general financial, economic, regulatory and political conditions affecting the industry in which Rimini Street operates; adverse developments in pending litigation or in the government inquiry or any new litigation; our need and ability to raise additional equity or debt financing on favorable terms and our ability to generate cash flows from operations to help fund increased investment in our growth initiatives; the sufficiency of our cash and cash equivalents to meet our liquidity requirements; the terms and impact of our outstanding 13.00% Series A Preferred Stock; changes in taxes, laws and regulations; competitive product and pricing activity; difficulties of managing growth profitably; the customer adoption of our recently introduced products and services, including our Application Management Services (AMS), Rimini Street Advanced Database Security, and services for Salesforce Sales Cloud and Service Cloud products, in addition to other products and services we expect to introduce in the near future; the loss of one or more members of Rimini Street’s management team; uncertainty as to the long-term value of Rimini Street’s equity securities; and those discussed under the heading “Risk Factors” in Rimini Street’s Quarterly Report on Form 10-Q filed on November 5, 2020, and as updated from time to time by Rimini Street’s future Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings by Rimini Street with the Securities and Exchange Commission. In addition, forward-looking statements provide Rimini Street’s expectations, plans or forecasts of future events and views as of the date of this communication. Rimini Street anticipates that subsequent events and developments will cause Rimini Street’s assessments to change. However, while Rimini Street may elect to update these forward-looking statements at some point in the future, Rimini Street specifically disclaims any obligation to do so, except as required by law. These forward-looking statements should not be relied upon as representing Rimini Street’s assessments as of any date subsequent to the date of this communication.

 

RIMINI STREET, INC.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

ASSETSSeptember 30,
2020
 December 31, 2019
Current assets:   
Cash and cash equivalents$83,410   $37,952  
Restricted cash333   436  
Accounts receivable, net of allowance of $889 and $1,608, respectively67,335   111,574  
Deferred contract costs, current13,075   11,754  
Prepaid expenses and other11,569   15,205  
Total current assets175,722   176,921  
Long-term assets:   
Property and equipment, net of accumulated depreciation and amortization of $11,041 and $9,847, respectively4,988   3,667  
Operating lease right-of-use assets16,585   —  
Deferred contract costs, noncurrent19,847   16,295  
Deposits and other1,624   3,089  
Deferred income taxes, net1,546   1,248  
Total assets$220,312   $201,220  
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:   
Accounts payable$3,969   $2,303  
Accrued compensation, benefits and commissions35,574   27,918  
Other accrued liabilities17,034   23,347  
Operating lease liabilities, current4,309   —  
Deferred revenue, current179,512   205,771  
Total current liabilities240,398   259,339  
Long-term liabilities:   
Deferred revenue, noncurrent24,785   29,727  
Operating lease liabilities, noncurrent13,256   —  
Accrued PIK dividends payable1,182   1,156  
Other long-term liabilities2,234   2,275  
Total liabilities281,855   292,497  
Redeemable Series A Preferred Stock:   
Authorized 180 shares; issued and outstanding 159 shares and 155 as of September 30, 2020 and December 31, 2019, respectively. Liquidation preference of $158,729, net of discount of $19,213 and $155,231, net of discount of $23,915, as of September 30, 2020 and December 31, 2019, respectively139,516   131,316  
Stockholders' Deficit:   

Preferred Stock, $0.0001 par value per share. Authorized 99,820 shares (excluding

180 shares of Series A Preferred Stock); no other series has been designated

—   —  
Common Stock, $0.0001 par value. Authorized 1,000,000 shares; issued and outstanding 76,207 and 67,503 shares as of September 30, 2020 and December 31, 2019, respectively   
Additional paid-in capital105,587   93,484  
Accumulated other comprehensive loss(1,320)  (1,429) 
Accumulated deficit(305,334)  (314,655) 
Total stockholders' deficit(201,059)  (222,593) 
Total liabilities, redeemable preferred stock and stockholders' deficit$220,312   $201,220  

...
 

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