Rimini, Street

Rimini Street Announces Fiscal Second Quarter 2018 Financial Results

10.08.2018 - 07:00:31

Business Wire India

Quarterly revenue of $62.6 million, up 20% year over year
Quarterly gross margin 58.4%
1,622 active clients at June 30, 2018, up 21% year over year


(Nasdaq: RMNI), a global provider of enterprise software products and services, and the leading third-party support provider for Oracle and SAP software products, today announced financial results for its second quarter ended June 30, 2018.

 

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20180809005664/en/

 

Rimini Street Announces Fiscal Second Quarter 2018 Financial Results (Photo: Business Wire)

Rimini Street Announces Fiscal Second Quarter 2018 Financial Results (Photo: Business Wire)

“We believe the recently completed refinancing of our credit facility with a $140 million private placement equity transaction removes the constraints to our revenue growth by eliminating covenants on sales and marketing spend,” stated Seth A. Ravin, Rimini Street co-founder and CEO. “Completion of the refinancing allows us to aggressively invest in global sales, marketing and service delivery capacity and capabilities in order to drive future revenue. Based on our 13 year track record of sales performance, we expect these investments to lead to growth and improved operating leverage in 2019 and beyond.”

 

“Revenue for the second quarter of 2018 came in above our guidance range and was driven by growth across all geographies,” stated Tom Sabol, Rimini Street CFO. “We also made significant progress in our goal to reduce our cost of capital with the refinancing of our credit facility by providing us an expected reduction in debt-related costs of approximately $95 million over the next three years. In addition, the refinancing extended the expected maturity until July 2023, when the convertible preferred equity may be redeemed by the holders in full, unless it has been previously converted into common stock.”

 

Second Quarter 2018 Financial Highlights

 
  • Revenue was $62.6 million for the second quarter of 2018, an increase of 20% compared to $52.0 million for the second quarter of 2017, and included approximately $1.2 million of non-subscription revenue recognized in the quarter.
  • Annualized Subscription Revenue was approximately $246 million for the second quarter of 2018, an increase of 18% compared to $208 million in the second quarter of 2017.
  • Active Clients as of June 30, 2018 were 1,622, an increase of 21% compared to 1,335 as of June 30, 2017.
  • Revenue Retention Rate was 93.2% for the trailing 12-months ended June 30, 2018 compared to 93.8% for the comparable period ended June 30, 2017.
  • Gross Margin was 58.4% for the second quarter of 2018 compared to 62.5% for the second quarter of 2017, reflecting investments to support new product and service offering launches, costs for the Company’s biannual global service delivery training event held in May 2018, and costs related to a new 10-year employee service award benefit.
  • Operating Loss was $6.0 million for the second quarter of 2018 compared to Operating Income of $7.5 million for the second quarter of 2017. The change was the result of increased litigation costs and planned increased spending on sales and marketing.
  • Non-GAAP Operating Income was $4.2 million for the second quarter of 2018 compared to Non-GAAP Operating Income of $8.1 million for the second quarter of 2017.
  • Net Loss for the second quarter of 2018 was $25.4 million, or a loss of $0.43 per basic share, compared to a Net Loss of $25.9 million, or a loss of $1.05 per basic share for the second quarter of 2017.
  • Non-GAAP Net Loss for the second quarter of 2018 was $7.8 million compared to a Non-GAAP Net Loss of $16.9 million for the second quarter of 2017.
  • Operating Cash Flow for the second quarter of 2018 was $8.5 million, compared to Operating Cash Flow of $28.5 million for the second quarter of 2017, which included an insurance settlement of $19.3 million.
  • Adjusted EBITDA for the second quarter of 2018 was $3.8 million compared to $8.9 million for the second quarter of 2017.
  • Reduced the Company’s credit facility obligation by $21.0 million with proceeds refunded and received from Oracle for certain court awards that had been previously paid by the Company, and that were subsequently overturned in Rimini Street’s favor on appeal.
  • Entered into a $140 million equity financing agreement on June 18, 2018, which subsequently closed on July 19, 2018, and resulted in repayment of all remaining outstanding obligations under the credit facility totaling $132.8 million, consisting of principal, make-whole applicable premium, interest and fees. Following repayment, the credit facility was terminated.

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 and how they are calculated is also included under the heading “About Non-GAAP Financial Measures and Certain Key Metrics.”

 

Second Quarter 2018 Company Highlights

 
  • Announced the extension of Rimini Street’s proven, award-winning support model and global capabilities to SaaS products with support services for Salesforce Sales Cloud and Service Cloud products.
  • Expanded the Company’s family of Extensibility Solutions with the launch of Rimini Street Mobility and Rimini Street Analytics. These products join the Rimini Street Advanced Database Security product launched in 2017. The products help organizations to quickly and cost-effectively modernize their current enterprise software with the latest desired features and capabilities, future-proof technical platforms against yet-unknown technology changes, and secure systems against a constantly evolving threat environment.
  • Closed more than 7,300 support cases across 44 countries, and once again achieved an average client satisfaction rating on the Company’s support delivery of 4.8 out of 5.0 (where 5.0 is “excellent”).
  • Presented at 12 CIO and IT and procurement leader events worldwide, including Gartner CIO & IT Executive Summit in Canada and IDC CIO Summit in South Korea.
  • For the fifth time, named one of the Bay Area Top Workplaces by the Bay Area News Group for work environment, communication policies, employee benefits and corporate culture.
  • Honored with six Stevie® Awards, including Company of the Year, Customer Service Department of the Year, and Customer Service Executive of the Year, in the 16th Annual American Business Awards®.
  • Received an updated accreditation for the UK government’s procurement system and selected as a third-party support provider under the UK government’s Technology Services 2 (TS2) Framework for IT support procurement.
  • Added to the US Russell 2000® Index.

Revenue Guidance

 

The Company is providing third quarter 2018 revenue guidance to be in the range of approximately $61.0 million to $63.0 million, and updating full year 2018 revenue guidance to be in the range of approximately $240 million to $250 million.

 

Webcast and Conference Call Information

 

Rimini Street will host a conference call and webcast to discuss the second quarter 2018 results at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time on August 9, 2018. A live webcast of the event will be available on Rimini Street’s Investor Relations site at https://investors.riministreet.com/events-and-presentations/upcoming-and-past-events. Dial-in participants can access the conference call by dialing (855) 213-3942 in the U.S. and Canada and enter the code 7489219. 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. These non-GAAP financial measures supplement, and are not intended to represent a measure of operating performance in accordance with disclosures required by 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 elsewhere 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, and the leading third-party support provider for Oracle and SAP software products. The Company has redefined enterprise software support services since 2005 with an innovative, award-winning program that enables licensees of IBM, Microsoft, Oracle, Salesforce, SAP and other enterprise software vendors to save up to 90 percent on total maintenance costs. Clients can remain on their current software release without any required upgrades for a minimum of 15 years. Over 1,620 global Fortune 500, midmarket, public sector and other organizations from a broad range of industries currently rely on Rimini Street as their trusted, third-party support 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 as to benefits of the financing transaction described herein, including projections of expected cash savings over the next three years and accelerated growth, future events, future opportunities and growth 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, continued inclusion in the Russell 2000 Index in the future, 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 litigation developments or in the government inquiry; the final amount and timing of any refunds from Oracle related to our litigation; our ability to raise additional equity or debt financing on favorable terms; the terms and impact of our newly issued 13.00% Series A Preferred Stock; changes in taxes, laws and regulations; competitive product and pricing activity; difficulties of managing growth profitably; the success of our recently introduced products and services, including Rimini Street Mobility, Rimini Street Analytics, Rimini Street Advanced Database Security, and services for Salesforce Sales Cloud and Service Cloud products; 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, including its common stock and its Preferred Stock; and those discussed under the heading “Risk Factors” in Rimini Street’s Quarterly Report on 10-Q filed on August 9, 2018, which disclosures amend and restate the disclosures appearing under the heading “Risk Factors” in Rimini Street’s Annual Report on Form 10-K filed on March 15, 2018, and as updated from time to time by Rimini Street’s future 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.

 

Salesforce, Service Cloud, Sales Cloud and others are trademarks of salesforce.com, inc.

 

© 2018 Rimini Street, Inc. All rights reserved. “Rimini Street” is a registered trademark of Rimini Street, Inc. in the United States and other countries, and Rimini Street, the Rimini Street logo, and combinations thereof, and other marks marked by TM are trademarks of Rimini Street, Inc. All other trademarks remain the property of their respective owners, and unless otherwise specified, Rimini Street claims no affiliation, endorsement, or association with any such trademark holder or other companies referenced herein.

 
         
Rimini Street, Inc.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
         
   

June 30,

  December 31,

ASSETS

 

2018

 

2017

Current assets:        
Cash and cash equivalents   $ 24,853     $ 21,950  
Restricted cash     10,634       18,077  
Accounts receivable, net of allowance of $293 and $51, respectively     63,416       63,525  
Prepaid expenses and other     8,706       8,560  
         
Total current assets     107,609       112,112  
         
Long-term assets:        

Property and equipment, net of accumulated depreciation and amortization of $7,805 and $6,947, respectively

    3,899       4,255  
Deferred debt issuance costs, net     2,834       3,520  
Deferred offering costs     2,831       500  
Deposits and other     1,387       1,065  
Deferred income taxes, net     940       719  
         

Total assets

  $ 119,500     $ 122,171  
         
LIABILITIES AND STOCKHOLDERS’ DEFICIT        
Current liabilities:        
Current maturities of long-term debt   $ 3,677     $ 15,500  
Accounts payable     12,416       10,137  
Accrued compensation, benefits and commissions     18,420       18,154  
Other accrued liabilities     28,509       22,920  
Deferred insurance settlement     -       8,033  
Liability for embedded derivatives     7,800       1,600  
Deferred revenue     167,879       152,390  
         

Total current liabilities

    238,701       228,734  
         
Long-term liabilities:        
Long-term debt, net of current maturities     72,364       66,613  
Deferred revenue     32,506       29,182  
Other long-term liabilities     5,825       7,943  
         

Total liabilities

    349,396       332,472  
         
Stockholders’ deficit:        

Preferred stock, $0.0001 par value per share. Authorized 100,000 shares; no shares issued and outstanding

    -       -  

Common stock; $0.0001 par value. Authorized 1,000,000 shares; issued and outstanding 60,005 and 59,314 shares as of June 30, 2018 and December 31, 2017, respectively

    6       6  
Additional paid-in capital     97,663       94,967  
Accumulated other comprehensive loss     (1,219 )     (867 )
Accumulated deficit     (326,346 )     (304,407 )

Total stockholders' deficit

    (229,896 )     (210,301 )

Total liabilities and stockholders' deficit

  $ 119,500     $ 122,171  
                 
Rimini Street, Inc.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
         
    Three Months Ended
    June 30,
   

2018

 

2017

         
Net revenue   $ 62,649     $ 52,048  
Cost of revenue     26,084       19,537  
         
Gross profit     36,565       32,511  
         
Operating expenses:        
Sales and marketing     23,097       15,801  
General and administrative     10,324       8,928  
Litigation costs and related recoveries:        
Professional fees and other defense costs of litigation     9,113       3,426  
Insurance recoveries, net     -       (3,125 )
         
Total operating expenses     42,534       25,030  
         
Operating income (loss)     (5,969 )     7,481  
         
Non-operating expenses:        
Interest expense     (9,323 )     (14,541 )
Other debt financing expenses     (1,339 )     (10,859 )
Loss from change in fair value of redeemable warrants     -       (7,648 )
Loss from change in fair value of embedded derivatives     (6,700 )     (700 )
Other income (expense), net     (1,568 )     225  
         
Loss before income taxes     (24,899 )     (26,042 )
Income tax benefit (expense)     (547 )     183  
         
Net loss   $ (25,446 )   $ (25,859 )
         
Net loss per share:        
Basic   $ (0.43 )   $ (1.05 )
Diluted   $ (0.43 )   $ (1.05 )
         
Weighted average number of shares of Common Stock outstanding: (1)        
Basic     59,800       24,561  
Diluted     59,800       24,561  
______________        
(1)   For the three months ended June 30, 2017, the weighted average number of shares have been restated to give effect to the reverse recapitalization consummated on October 10, 2017.
     
Rimini Street, Inc.
GAAP to Non-GAAP Reconciliations
(In Thousands)
         
    Three Months Ended
    June 30,
   

2018

 

2017

         
Non-GAAP operating income reconciliation:        
Operating income (loss)   $ (5,969 )   $ 7,481  
Non-GAAP adjustments:        
Litigation costs, net of related recoveries     9,113       301  
Stock-based compensation expense     1,098       353  
         
Non-GAAP operating income   $ 4,242     $ 8,135  
         
         
Non-GAAP net loss reconciliation:        
Net loss   $ (25,446 )   $ (25,859 )
Non-GAAP adjustments:        
Litigation costs, net of related recoveries     9,113       301  
Write-off of deferred debt financing costs     704       -  
Stock-based compensation expense     1,098       353  
Loss from change in fair value of embedded derivatives     6,700       700  
Loss from change in fair value of redeemable warrants     -       7,648  
         
Non-GAAP net loss   $ (7,831 )   $ (16,857 )
         
Non-GAAP Adjusted EBITDA reconciliation:        
Net loss   $ (25,446 )   $ (25,859 )
Non-GAAP adjustments:        
Interest expense     9,323       14,541  
Income tax expense     547       (183 )
Depreciation and amortization expense     466       496  
         
EBITDA     (15,110 )     (11,005 )
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