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
LAS VEGAS, August 9, 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 second quarter ended June 30, 2018.
"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.
- 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.
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.