10/30/2024 | Press release | Distributed by Public on 10/30/2024 05:13
LAS VEGAS, October 30, 2024 - Rimini Street, Inc. (Nasdaq: RMNI), a global provider of end-to-end enterprise software support, products and services, the leading third-party support provider for Oracle and SAP software, and a Salesforce and AWS partner, today announced results for the fiscal third quarter ended September 30, 2024.
The Company is continuing to suspend guidance until there is more clarity around impacts from current litigation activity before the U.S. Federal courts in the Company's ongoing litigation with Oracle.
Rimini Street will host a conference call and webcast to discuss the third quarter 2024 results and select fourth quarter 2024 performance-to-date commentary at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time on October 30, 2024. A live webcast of the event will be available on Rimini Street's Investor Relations site at Rimini Street IR events link and directly via the webcast link. Dial-in participants can access the conference call by dialing 1-800-836-8184. A replay of the webcast will be available for one year following the event.
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 within 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.
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."
RIMINI STREET, INC.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
ASSETS | September 30, 2024 | December 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $119,494 | $115,424 |
Restricted cash | 429 | 428 |
Accounts receivable, net of allowance of $1,053 and $656, respectively | 66,996 | 119,430 |
Deferred contract costs, current | 16,637 | 17,934 |
Short-term investments | - | 9,826 |
Prepaid expenses and other | 25,190 | 25,647 |
Total current assets | 228,746 | 288,689 |
Long-term assets: | ||
Property and equipment, net of accumulated depreciation and amortization of $20,794 and $18,231, respectively | 10,431 | 10,496 |
Operating lease right-of-use assets | 6,895 | 5,941 |
Deferred contract costs, noncurrent | 20,836 | 23,559 |
Deposits and other | 4,743 | 6,109 |
Deferred income taxes, net | 72,191 | 59,002 |
Total assets | $343,842 | $393,796 |
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | ||
Current liabilities: | ||
Current maturities of long-term debt | $3,093 | $5,912 |
Accounts payable | 4,559 | 5,997 |
Accrued compensation, benefits and commissions | 33,867 | 38,961 |
Other accrued liabilities | 74,284 | 18,128 |
Operating lease liabilities, current | 4,384 | 4,321 |
Deferred revenue, current | 202,281 | 263,115 |
Total current liabilities | 322,468 | 336,434 |
Long-term liabilities: | ||
Long-term debt, net of current maturities | 67,959 | 64,228 |
Deferred revenue, noncurrent | 21,033 | 23,859 |
Operating lease liabilities, noncurrent | 6,806 | 6,841 |
Other long-term liabilities | 2,350 | 1,930 |
Total liabilities | 420,616 | 433,292 |
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 90,841 and 89,595 shares, respectively | 9 | 9 |
Additional paid-in capital | 175,125 | 167,988 |
Accumulated other comprehensive loss | (5,651) | (4,167) |
Accumulated deficit | (245,141) | (202,210) |
Treasury stock, at cost | (1,116) | (1,116) |
Total stockholders' deficit | (76,774) | (39,496) |
Total liabilities and stockholders' deficit | $343,842 | $393,796 |
RIMINI STREET, INC.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended | Nine Months Ended | |||
September 30, | September 30, | |||
2024 | 2023 | 2024 | 2023 | |
Revenue | $104,672 | $107,453 | $314,540 | $319,386 |
Cost of revenue | 41,135 | 40,110 | 126,230 | 118,802 |
Gross profit | 63,537 | 67,343 | 188,310 | 200,584 |
Operating expenses: | ||||
Sales and marketing | 35,781 | 35,593 | 112,299 | 107,356 |
General and administrative | 16,528 | 18,384 | 54,460 | 55,475 |
Reorganization costs | 1,431 | - | 4,639 | 59 |
Litigation costs and related recoveries: | ||||
Litigation expense | 58,512 | - | 58,512 | - |
Professional fees and other costs of litigation | 879 | 2,127 | 5,406 | 5,475 |
Litigation costs and related recoveries, net | 59,391 | 2,127 | 63,918 | 5,475 |
Total operating expenses | 113,131 | 56,104 | 235,316 | 168,365 |
Operating income (loss) | (49,594) | 11,239 | (47,006) | 32,219 |
Non-operating income and (expenses): | ||||
Interest expense | (1,577) | (1,413) | (4,401) | (4,139) |
Other income (expenses), net | (642) | 990 | 1,814 | 1,799 |
Income (loss) before income taxes | (51,813) | 10,816 | (49,593) | 29,879 |
Income taxes | 8,713 | (4,015) | 6,662 | (13,171) |
Net income (loss) | $(43,100) | $6,801 | $(42,931) | $16,708 |
Net income (loss) attributable to common stockholders | $(43,100) | $6,801 | $(42,931) | $16,708 |
Net income (loss) per share attributable to common stockholders: | ||||
Basic | $(0.47) | $0.08 | $(0.48) | $0.19 |
Diluted | $(0.47) | $0.08 | $(0.48) | $0.19 |
Weighted average number of shares of Common Stock outstanding: | ||||
Basic | 90,776 | 89,228 | 90,343 | 88,942 |
Diluted | 90,776 | 89,357 | 90,343 | 89,322 |
RIMINI STREET, INC.
GAAP to Non-GAAP Reconciliations
(In thousands)
Three Months Ended | Nine Months Ended | |||
September 30, | September 30, | |||
2024 | 2023 | 2024 | 2023 | |
Non-GAAP operating income reconciliation: | ||||
Operating income (loss) | $(49,594) | $11,239 | $(47,006) | $32,219 |
Non-GAAP adjustments: | ||||
Litigation costs and related recoveries, net | 59,391 | 2,127 | 63,918 | 5,475 |
Stock-based compensation expense | 2,174 | 3,131 | 7,137 | 9,056 |
Reorganization costs | 1,431 | - | 4,639 | 59 |
Non-GAAP operating income | $13,402 | $16,497 | $28,688 | $46,809 |
Non-GAAP net income reconciliation: | ||||
Net income (loss) | $(43,100) | $6,801 | $(42,931) | $16,708 |
Non-GAAP adjustments: | ||||
Litigation costs and related recoveries, net | 59,391 | 2,127 | 63,918 | 5,475 |
Stock-based compensation expense | 2,174 | 3,131 | 7,137 | 9,056 |
Reorganization costs | 1,431 | - | 4,639 | 59 |
Non-GAAP net income | $19,896 | $12,059 | $32,763 | $31,298 |
Non-GAAP Adjusted EBITDA reconciliation: | ||||
Net income (loss) | $(43,100) | $6,801 | $(42,931) | $16,708 |
Non-GAAP adjustments: | ||||
Interest expense | 1,577 | 1,413 | 4,401 | 4,139 |
Income taxes | (8,713) | 4,015 | (6,662) | 13,171 |
Depreciation and amortization expense | 917 | 752 | 2,650 | 2,001 |
EBITDA | (49,319) | 12,981 | (42,542) | 36,019 |
Non-GAAP adjustments: | ||||
Litigation costs and related recoveries, net | 59,391 | 2,127 | 63,918 | 5,475 |
Stock-based compensation expense | 2,174 | 3,131 | 7,137 | 9,056 |
Reorganization costs | 1,431 | - | 4,639 | 59 |
Adjusted EBITDA | $13,677 | $18,239 | $33,152 | $50,609 |
Calculated Billings: | ||||
Revenue | $104,672 | $107,453 | $314,540 | $319,386 |
Deferred revenue, current and noncurrent, end of the period | 223,314 | 238,399 | 223,314 | 238,399 |
Deferred revenue, current and noncurrent, beginning of the period | 262,793 | 285,324 | 286,974 | 299,921 |
Change in deferred revenue | (39,479) | (46,925) | (63,660) | (61,522) |
Calculated billings | $65,193 | $60,528 | $250,880 | $257,864 |
To provide investors and others with additional information regarding Rimini Street's results, we have disclosed the following non-GAAP financial measures and certain key metrics. We have described below Active Clients, Annualized Recurring Revenue and Revenue Retention Rate, each of which is a key operational metric for our business. In addition, we have disclosed the following non-GAAP financial measures: non-GAAP operating income, non-GAAP net income, EBITDA, Adjusted EBITDA and Billings. Rimini Street has provided in the tables above a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. Due to a valuation allowance for our deferred tax assets, there were no tax effects associated with any of our non-GAAP adjustments. These non-GAAP financial measures are also described below.
The primary purpose of using non-GAAP measures is to provide supplemental information that management believes may prove useful to investors and to enable investors to evaluate our results in the same way management does. We also present the non-GAAP financial measures because we believe they assist investors in comparing our performance across reporting periods on a consistent basis, as well as comparing our results against the results of other companies, by excluding items that we do not believe are indicative of our core operating performance. Specifically, management uses these non-GAAP measures as measures of operating performance; to prepare our annual operating budget; to allocate resources to enhance the financial performance of our business; to evaluate the effectiveness of our business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of our results with those of other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and in communications with our board of directors concerning our financial performance. Investors should be aware however, that not all companies define these non-GAAP measures consistently.
Billings represents the change in deferred revenue for the current period plus revenue for the current period.
Active Client is a distinct entity that purchases our services to support a specific product, including a company, an educational or government institution, or a business unit of a company. For example, we count as two separate active clients when support for two different products is being provided to the same entity. We believe that our ability to expand our active clients is an indicator of the growth of our business, the success of our sales and marketing activities, and the value that our services bring to our clients.
Annualized Recurring Revenue is the amount of subscription revenue recognized during a fiscal quarter and multiplied by four. This gives us an indication of the revenue that can be earned in the following 12-month period from our existing client base assuming no cancellations or price changes occur during that period. Subscription revenue excludes any non-recurring revenue, which has been insignificant to date.
Revenue Retention Rate is the actual subscription revenue (dollar-based) recognized over a 12-month period from customers that were clients on the day prior to the start of such 12-month period, divided by our Annualized Recurring Revenue as of the day prior to the start of the 12-month period.
Non-GAAP Operating Income is operating income adjusted to exclude: litigation costs and related recoveries, net, stock-based compensation expense and reorganization costs. The exclusions are discussed in further detail below.
Non-GAAP Net Income is net income adjusted to exclude: litigation costs and related recoveries, net, stock-based compensation expense and reorganization costs. These exclusions are discussed in further detail below.
Specifically, management is excluding the following items from its non-GAAP financial measures, as applicable, for the periods presented:
Litigation Costs and Related Recoveries, Net: Litigation costs and the associated insurance and appeal recoveries relate to outside costs of litigation activities. These costs and recoveries reflect the ongoing litigation we are involved with, and do not relate to the day-to-day operations or our core business of serving our clients.
Stock-Based Compensation Expense: Our compensation strategy includes the use of stock-based compensation to attract and retain employees. This strategy is principally aimed at aligning the employee interests with those of our stockholders and to achieve long-term employee retention. As a result, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions in any particular period.
Reorganization Costs: The costs consist primarily of severance costs associated with the Company's reorganization plan.
EBITDA is net income adjusted to exclude: interest expense, income taxes, and depreciation and amortization expense.
Adjusted EBITDA is EBITDA adjusted to exclude: litigation costs and related recoveries, net, stock-based compensation expense and reorganization costs, as discussed above.