Quarterly revenue of $62.6 million, up 17% year over year
Quarterly gross margin 64.5%
1,732 active clients at September 30, 2018, up 19% year over year
LAS VEGAS, November 8, 2018 – Rimini Street, Inc. (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 third quarter ended September 30, 2018.
"During the third quarter, we continued our stated plan to invest in global sales, marketing and service delivery capacity and capabilities in order to drive future revenue growth," stated Seth A. Ravin, Rimini Street co-founder and CEO. "We also launched new marketing campaigns and our new 'Business-Driven Roadmap' sales strategy to address the large and growing market opportunity for enterprise software support. Additionally, we continued our global expansion and filled key leadership positions. Global demand for our services continued to be strong, with revenue outside the United States growing 32% year over year in the third quarter 2018 and representing 36% of total revenue in the quarter."
"During the third quarter, we paid off and completed refinancing our former credit facility with a previously announced $140 million equity transaction, significantly reducing our total debt to approximately $3 million," stated Tom Sabol, Rimini Street CFO. "The streamlined capital structure improves the balance sheet and lowers our cost of capital going forward."
Third Quarter 2018 Financial Highlights
- Revenue was $62.6 million for the third quarter of 2018, an increase of 17% compared to $53.6 million for the third quarter of 2017.
- Annualized Subscription Revenue was approximately $250 million for the third quarter of 2018, an increase of 17% compared to $214 million for the third quarter of 2017.
- Active Clients totaled 1,732 as of September 30, 2018, an increase of 19% compared to 1,459 as of September 30, 2017.
- Revenue Retention Rate was 92.0% for the trailing 12 months ended September 30, 2018 compared to 94.5% for the comparable period ended September 30, 2017.
- Gross Margin improved to 64.5% for the third quarter of 2018 compared to 62.5% for the third quarter of 2017.
- Operating Income was $2.5 million for the third quarter of 2018 compared to Operating Income of $7.4 million for the third quarter of 2017. The change was the result of increased litigation costs and planned spending increases on sales and marketing since the Company is no longer constrained by financial and operating covenants in its former credit facility.
- Non-GAAP Operating Income was $10.7 million for the third quarter of 2018 compared to Non-GAAP Operating Income of $8.9 million for the third quarter of 2017.
- Net Loss for the third quarter of 2018 was $48.4 million, or a loss of $0.85 per basic and diluted share, compared to a Net Loss of $9.0 million, or a loss of $0.37 per basic and diluted share for the third quarter of 2017. The third quarter 2018 Net Loss was primarily due to a non-cash write-off of debt discount and issuance costs of $47.4 million related to the payoff and termination, on July 19, 2018, of the Company's former credit facility.
- Non-GAAP Net Income for the third quarter of 2018 was $6.7 million compared to a Non-GAAP Net Loss of $3.1 million for the third quarter of 2017.
- Operating Cash Flow for the third quarter of 2018 was an outflow of $9.6 million, compared to an outflow of $4.4 million for the third quarter of 2017.
- Adjusted EBITDA for the third quarter of 2018 was $10.8 million compared to $9.5 million for the third quarter of 2017.
- Completed a $140 million offering of common and redeemable preferred stock on July 19, 2018, which resulted in repayment of all remaining outstanding obligations under the Company's former credit facility totaling $132.8 million, consisting of principal, make-whole applicable premium, interest and fees.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."
Third Quarter 2018 Company Highlights
- Appointed Tim DeLisle as group vice president and general manager, North America. Mr. DeLisle has sales, service delivery and operational experience with leading firms such as EMC.
- Appointed Eric Robinson as group vice president and general manager, SAP Product Line. Mr. Robinson has extensive experience working with SAP products as a private-sector CIO.
- Appointed Pat Phelan as vice president of market research. Ms. Phelan was a veteran enterprise software analyst with Gartner, with extensive experience covering the enterprise software and software support markets, including third-party support offerings and competitors.
- Closed more than 7,500 support cases across 41 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").
- Achieved a flawless ISO 9001 audit for the seventh consecutive year, and a flawless ISO 27001 audit for the fifth consecutive year.
- Obtained the Australian Government's Australian Taxation Office (ATO) certification for Single Touch Payroll, well ahead of the deadline set by the ATO and ahead of the original software vendors.
- Received the Asia-Pacific Stevie Award for Customer Service Innovation for the second consecutive year.
- Won 14 additional awards from Stevie International Business Awards, Globee Awards and the Customer Sales & Service awards. Category wins include Customer Service Department of the Year, Customer Service Leadership of the Year, Customer Service Team of the Year, and Company of the Year.
- Presented at nine CIO and IT and procurement leader events globally including Gartner ITAM in London and Orlando, Florida, the IDC Digital Transformation Summit in Jakarta, and the Japan Users Association of Information Systems in Tokyo.
- Notified that the U.S. Supreme Court has agreed to hear the Company's appeal for $12.8 million in non-taxable costs that were previously awarded to Oracle in Oracle vs. Rimini Street.
The Company is providing fourth quarter 2018 revenue guidance to be in the range of $63.0 million to $65.0 million, and tightening full year 2018 revenue guidance to now be in the range of $248 million to $250 million, which is at the high end of our previous guidance.
Webcast and Conference Call Information
Rimini Street will host a conference call and webcast to discuss the third quarter 2018 results at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time on November 8, 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 6397126. 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 located 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.