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Rimini Street Announces Fiscal Fourth Quarter and Annual 2018 Financial Results

Quarterly revenue of $67.7 million, up 17% year over year
Fiscal year revenue of $252.8 million, up 19% year over year
Fiscal year gross margin of 62.0%, up from 61.0% in 2017
Fiscal year operating income of $25.4 million, up 15% year over year
1,802 active clients at fiscal year-end, up 15% year over year
Signed largest client contract in Company history, approximately $26 million over 3 years

LAS VEGAS, March 14, 2019Rimini 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 both the fourth quarter and fiscal year ended December 31, 2018.

„We ended fiscal 2018 on a high note by signing the largest client contract in Company history and achieved record revenue and billings for the fourth quarter and fiscal year,“ stated Seth A. Ravin, Rimini Street co-founder, CEO and Chairman of the Board. „Additionally, we improved our balance sheet and made significant investments in new products and services, support capabilities, geographic expansion and sales and marketing infrastructure. We continue to see growing global demand for our enterprise software support products and services, and plan to continue making significant investments in 2019 to support growth.“

„Revenue in the fourth quarter and full fiscal year 2018 exceeded the high end of our guidance range and gross margin increased while managing sales and marketing spend within our guidance range,“ stated Tom Sabol, Rimini Street CFO. „In addition, we reduced our total debt obligations by $133 million to less than $3 million, reduced expected financing related costs by approximately $95 million through 2021, and eliminated all debt-related operating covenants from our prior credit facility with the closing of our Series A preferred stock transaction in July 2018, and ended the year with increased cash. In addition to our focus on revenue growth and gross margin expansion, we remain committed to the long-term goals of improving free cash flow and eventually achieving GAAP profitability.“

Fourth Quarter 2018 Financial Highlights

  • Revenue was $67.7 million for the 2018 fourth quarter, an increase of 17% compared to $57.9 million for the same period last year.
  • Annualized Subscription Revenue was approximately $269 million for the 2018 fourth quarter, an increase of 16% compared to $232 million for the same period last year.
  • Active Clients as of December 31, 2018 were 1,802, an increase of 15% compared to 1,566 Active Clients as of December 31, 2017.
  • Gross margin was 64.4% for the 2018 fourth quarter compared to 57.0% for the same period last year.
  • Operating income was $3.6 million for the 2018 fourth quarter compared to $4.3 million for the same period last year.
  • Non-GAAP Operating Income was $10.0 million for the 2018 fourth quarter compared to $5.6 million for the same period last year.
  • Net income was $2.3 million for the 2018 fourth quarter compared to a net loss of $3.9 million for the same period last year.
  • Basic and diluted net loss per share attributable to common stockholders was $0.06 per share for the 2018 fourth quarter compared to a net loss of $0.07 per share for the same period last year.
  • Non-GAAP Net Income was $8.7 million for the 2018 fourth quarter compared to Non-GAAP Net Loss of $8.5 million for the same period last year.
  • Adjusted EBITDA for the 2018 fourth quarter was $9.9 million compared to $6.0 million for the same period last year.

Full Year 2018 Financial Highlights

  • Revenue was $252.8 million for 2018, an increase of 19% compared to $212.6 million for 2017.
  • Revenue Retention Rate was 91% for the year ended December 31, 2018.
  • Gross margin increased to 62.0% for 2018 compared to 61.0% for 2017.
  • Operating income was $25.4 million for 2018 compared to $22.0 million for 2017.
  • Non-GAAP Operating Income was $31.0 million for 2018 compared to $29.8 million for 2017.
  • Net loss was $68.0 million for 2018 compared to a net loss of $53.3 million for 2017.
  • Basic and diluted net loss per share attributable to common stockholders was $1.28 per share for 2018 compared to a net loss of $1.65 for 2017.
  • Non-GAAP Net Loss was $8.7 million for 2018 compared to $32.9 million for 2017.
  • Adjusted EBITDA was $31.3 million for 2018 compared to $32.1 million for the 2017.

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.“

2018 Company Highlights

  • Signed the largest client contract in Company history for approximately $26 million over three years.
  • Expanded operations and investment in the Asia-Pacific region, launching Rimini Street New Zealand Limited, and opening a new office in Auckland to address the growing demand for the Company’s services.
  • Hired several new senior executives, including Anthony DeShazor, senior vice president and chief client officer, Mark Armstrong, group vice president and general manager, EMEA Theatre, and Tim DeLisle, group vice president and general manager, North America Theatre.
  • Announced the extension of our award-winning support model and global capabilities to SaaS products with the launch of services for Salesforce Sales Cloud and Service Cloud products.
  • Launched and sold Rimini Street Mobility and Rimini Street Analytics solutions that cost-effectively modernize ERP systems with the latest features and capabilities without requiring expensive upgrades of the ERP software.
  • Added to the US Russell 2000® Index.
  • Closed a record number of support cases – nearly 30,000 across 55 countries – and delivered nearly 50,000 tax, legal and regulatory updates while achieving an average client satisfaction rating on the Company’s support delivery of 4.8 out of 5.0 (where 5.0 is rated excellent).
  • Saved clients approximately $3 billion in total maintenance costs since the Company’s inception.
  • Achieved a flawless ISO 9001 audit for the seventh consecutive year, and a flawless ISO 27001 audit for the fifth consecutive year for the Company’s information security management framework.
  • Honored with 33 company awards, including 21 awards for delivering outstanding customer service, and a Stevie American Business Award for Company of the Year.
  • Recognized as a Bay Area „Top Workplace“ by the Bay Area News Group for the fifth time.
  • Presented at 51 CIO and IT and procurement leader events worldwide, including Gartner’s IT Symposiums in Orlando, Florida, Brazil, Japan, Australia and Spain, IDC’s CIO Summit in South Korea, Gartner CIO & IT Executive Summit in Canada, and IDG’s IT Roadmap Conference in Washington D.C.
  • Partnered with 56 charities around the world through the Rimini Street Foundation, providing financial contributions, in-kind donations and more than 1,200 employee volunteer hours.

Subsequent Events

On March 4, 2019, the U.S. Supreme Court issued a unanimous decision, ruling that Oracle must return $12.8 million in non-taxable expenses (plus interest) that Rimini Street paid to Oracle in 2016. This refund is in addition to the $21.5 million that Oracle previously returned to Rimini Street on March 31, 2018, following a decision and order by the U.S. Ninth Circuit Court of Appeals. In addition, Rimini Street is still seeking the return of an additional $28.5 million paid to Oracle, among other requested relief, from the U.S. Ninth Circuit Court of Appeals.

On March 7, 2019, the Company closed a follow-on Series A preferred stock financing with a face value of $6.5 million. The Company will continue to evaluate potential new financings from time to time, including additional issuances of up to $3.5 million of its Series A preferred stock.

2019 Revenue Guidance

The Company is currently providing first quarter 2019 revenue guidance to be in the range of approximately $64.5 million to $66.0 million, and for full year 2019 revenue guidance to be in the range of approximately $265 million to $280 million.

Webcast and Conference Call Information

Rimini Street will host a conference call and webcast to discuss the fourth quarter and full year 2018 results at 5:00 p.m. Eastern / 2:00 p.m. Pacific time on March 14, 2019. 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 9980865. 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, 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.

 

2018 Q4-1

2018 Q4-2

2018 Q4-3

About Non-GAAP Financial Measures and Certain Key Metrics

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 Subscription 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 (loss), EBITDA, and adjusted EBITDA. 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.

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 Subscription 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 Subscription 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, net of related recoveries and stock-based compensation expense. The exclusions are discussed in further detail below.

Non-GAAP Net Income (Loss) is net income (loss) adjusted to exclude: litigation costs, net of recoveries, post-judgment interest on litigation appeal awards, stock-based compensation expense, write-off of deferred debt financing costs, extinguishment charges upon payoff of credit facility, and gains or losses on changes in fair value of embedded derivatives and redeemable warrants. 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, Net of Related Recoveries: 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, rather than to motivate or reward operational performance for any particular period. As a result, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.

Post-judgment Interest on Litigation Appeal Award: Post-judgment interest resulted from our appeal of ongoing litigation and does not relate to the day-to-day operations or our core business of serving our clients.

Write-off of Deferred Debt Financing Costs: The write-off of deferred financing costs related to certain costs that were expensed in 2018 due to an unsuccessful debt financing.

Extinguishment Charges Upon Payoff of Credit Facility: These costs included interest expense and other debt financing expenses, including the make-whole applicable premium and the write-off of debt discount and issuance costs that resulted from the payoff of our former credit facility on July 19, 2018. Since these amounts related to our debt financing structure, we have excluded them since they do not relate to the day-to-day operations or our core business of serving our clients.

Gain (Loss) on Change in Fair Value of Embedded Derivatives and Redeemable Warrants: Our former credit facility included features that were determined to be embedded derivatives requiring bifurcation and accounting as separate financial instruments. Until October 2017, we also had redeemable warrants that were required to be carried at fair market value with changes in fair value resulting in gains and losses in our statements of operations. We have determined to exclude the gains and losses on embedded derivatives and redeemable warrants related to the change in fair value of these instruments given the financial nature of this fair value requirement. We were not able to manage these amounts as part of our business operations nor were the costs core to servicing our clients so we have excluded them.

Other Debt Financing Expenses: Other debt financing expenses included non-cash write-offs (including write-offs due to payoff), accretion, amortization of debt discounts and issuance costs, and collateral monitoring and other fees payable in cash related to our former credit facility. Since these amounts related to our debt financing structure, we have excluded them since they do not relate to the day-to-day operations or our core business of serving our clients.

EBITDA is net income (loss) adjusted to exclude: interest expense, income tax expense, and depreciation and amortization expense.

Adjusted EBITDA is EBITDA adjusted to exclude: litigation costs, net of related recoveries, post-judgment interest on litigation appeal award, stock-based compensation expense, write-off of deferred financing costs, gain (loss) on change in fair value of embedded derivatives and redeemable warrants, and other debt financing expenses, as discussed above.

Über Rimini Street, Inc.

Rimini Street, Inc. (Nasdaq: RMNI), ist ein internationaler Anbieter von Produkten und Serviceleistungen für Enterprise-Software, der führende Drittanbieter von Supportleistungen für Oracle- und SAP-Softwareprodukte sowie Salesforce-Partner. Das Unternehmen bietet ein ultra-reaktives, integriertes Premium-Applikationsmanagement und Support-Dienste, mit denen Lizenznehmer von Unternehmenssoftware bedeutende Kosten einsparen, Ressourcen für Innovationen freisetzen und bessere Geschäftsergebnisse erreichen können. Nahezu 2.100 Fortune-500-, Fortune-Global-100-, mittelständische Unternehmen, Organisationen des öffentlichen Sektors und andere Organisationen aus einem breiten Spektrum von Branchen vertrauen auf Rimini Street als ihren vertrauenswürdigen Anbieter von Unternehmenssoftwareprodukten und -dienstleistungen. Wenn Sie mehr erfahren wollen, besuchen Sie http://www.riministreet.com, folgen Sie @riministreet auf Twitter und besuchen Sie Rimini Street auf Facebook und LinkedIn.

Zukunftsgerichtete Aussagen

Bei bestimmten Aussagen in dieser Mitteilung handelt es sich nicht um historische Tatsachen, sondern um zukunftsgerichtete Aussagen im Sinne der Safe-Harbor-Bestimmungen des Private Securities Litigation Reform Act von 1995. Zukunftsgerichtete Aussagen werden im Allgemeinen begleitet von Wörtern wie „möglicherweise“, „sollte“, „würde“, „planen“, „beabsichtigen“, „annehmen“, „glauben“, „schätzen“, „vorhersagen“, „potenziell“, „scheinen“, „anstreben“, „weiterhin“, „zukünftig“, „werden“, „erwarten“, „Prognose“ oder anderen ähnlichen Wörtern, Wendungen oder Ausdrücken. Diese zukunftsgerichteten Aussagen enthalten unter anderem Aussagen bezüglich unserer Erwartungen hinsichtlich zukünftiger Ereignisse, zukünftiger Chancen, unserer globalen Expansion und anderer Wachstumsinitiativen sowie unserer Investitionen in diese Initiativen. Diese Aussagen basieren auf verschiedenen Annahmen sowie auf den aktuellen Erwartungen der Geschäftsführung. Bei diesen Aussagen handelt es sich weder um Vorhersagen tatsächlicher Ergebnisse noch um historische Tatsachen. Diese Aussagen unterliegen einer Reihe von Risiken und Ungewissheiten hinsichtlich der Geschäfte von Rimini Street und die tatsächlichen Ergebnisse können wesentlich davon abweichen. Diese Risiken und Unwägbarkeiten umfassen unter anderem die Dauer und die wirtschaftlichen, betrieblichen und finanziellen Auswirkungen der COVID-19-Pandemie auf unser Geschäft sowie die Maßnahmen, die von Regierungsbehörden, Kunden oder anderen als Reaktion auf die COVID-19-Pandemie ergriffen werden; katastrophale Ereignisse, die unser Geschäft oder das unserer aktuellen und zukünftigen Kunden stören; Änderungen im Geschäftsumfeld, in dem Rimini Street tätig ist, einschließlich Inflation und Zinssätze sowie allgemeine finanzielle, wirtschaftliche, regulatorische und politische Bedingungen, die die Branche, in der Rimini Street tätig ist, beeinflussen; nachteilige Entwicklungen in anhängigen Rechtsstreitigkeiten oder in der staatlichen Untersuchung oder in neuen Rechtsstreitigkeiten; unser Bedarf und unsere Fähigkeit, zusätzliche Eigen- oder Fremdfinanzierung zu günstigen Bedingungen zu beschaffen, und unsere Fähigkeit, Cashflows aus der Geschäftstätigkeit zu generieren, um erhöhte Investitionen in unsere Wachstumsinitiativen zu finanzieren; die Angemessenheit unserer liquiden Mittel, um unseren Liquiditätsbedarf zu decken; die Bedingungen und Auswirkungen unserer ausstehenden 13,00 % Vorzugsaktien der Serie A; Änderungen bei Steuern, Gesetzen und Vorschriften; wettbewerbsfähige Produkte und Preisgestaltung; Schwierigkeiten bei der profitablen Verwaltung des Wachstums; die Kundenakzeptanz unserer kürzlich eingeführten Produkte und Dienstleistungen, einschließlich unserer Application Management Services (AMS), der erweiterten Datenbanksicherheit bei Rimini Street und der Dienstleistungen für „Salesforce Sales Cloud“- und „Service Cloud“-Produkte, zusätzlich zu anderen Produkten und Dienstleistungen, die wir voraussichtlich in naher Zukunft einführen werden; den Verlust eines oder mehrerer Mitglieder des Management-Teams von Rimini Street; die Ungewissheit über den langfristigen Wert der Beteiligungspapiere von Rimini Street; und die unter der Überschrift „Risikofaktoren“ im Quartalsbericht von Rimini Street auf Formular 10-Q, der am 7. Mai 2020 eingereicht wurde und von Zeit zu Zeit durch zukünftige Jahresberichte von Rimini Street auf Formular 10-K, Quartalsberichte auf Formular 10-Q, aktuelle Berichte auf Formular 8-K und andere Einreichungen von Rimini Street bei der Securities and Exchange Commission aktualisiert wird. Weiterhin kommen in den zukunftsgerichteten Aussagen die Erwartungen, Pläne oder Prognosen von Rimini Street hinsichtlich zukünftiger Ereignisse und Ansichten zum Datum dieser Mitteilung zum Ausdruck. Rimini Street geht davon aus, dass nachfolgende Ereignisse und Entwicklungen zu einer Veränderung der Einschätzungen von Rimini Street führen werden. Während sich Rimini Street das Recht vorbehält, diese zukunftsgerichteten Aussagen zu einem späteren Zeitpunkt zu aktualisieren, lehnt Rimini Street diesbezügliche Verpflichtungen ausdrücklich ab, sofern sie nicht gesetzlich vorgeschrieben sind. Es wird darauf hingewiesen, dass diese zukunftsgerichteten Aussagen in Bezug auf die Einschätzungen von Rimini Street nach dem Datum dieser Mitteilung nicht als verbindlich angesehen werden dürfen.

© 2020 Rimini Street, Inc. Alle Rechte vorbehalten. „Rimini Street“ ist eine in den USA und anderen Ländern gesetzlich geschützte Marke von Rimini Street, Inc., und Rimini Street, das Rimini Street-Logo und Kombinationen davon sowie weitere mit TM gekennzeichnete Marken sind Marken von Rimini Street, Inc. Alle sonstigen Marken bleiben Eigentum ihrer jeweiligen Inhaber, und sofern nichts anderes angegeben ist, erhebt Rimini Street keine Ansprüche auf eine Zugehörigkeit zu, Billigung von oder Verbindung mit derartigen Markeninhabern oder anderen in dieser Mitteilung genannten Unternehmen.

Ansprechpartner für Investor Relations
Dean Pohl

Rimini Street, Inc.

+1 925 523-7636 dpohl@riministreet.com
Ansprechpartner für Presse
Michelle McGlocklin

Rimini Street, Inc.

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