Quarterly revenue of $87.9 million, up 12.6% year over year
Gross Margin of 61.5%, up from 61.3% year over year
Quarterly Billings of $81.0 million, up 24.2% year over year
2,550 active clients at March 31, 2021, up 22.8% year over year
LAS VEGAS, May 10, 2021 – Rimini 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 the first quarter ended March 31, 2021.
“For the first quarter, we remain on track to achieve our strategic growth plan to achieve $1 billion in annual revenue by 2026. We achieved record revenue of $87.9 million, up 12.6% year over year, a record active client count of 2,550, up 22.8% year over year, ended the quarter with strong billings growth of 24.2% and delivered a gross margin greater than 61%,” stated Seth A. Ravin, Rimini Street co-founder, CEO and chairman of the board. “We also continued making investments to take advantage of growing global demand for Rimini Street’s expanded breadth of support solutions, including our Support, Application Management, Security, Interoperability, Monitoring and Professional services.”
“We further strengthened the balance sheet with record cash of $153 million at March 31, 2021 and generated $24.5 million of operating cash flow for the quarter,” stated Michael L. Perica, Rimini Street chief financial officer. “Today, we are issuing guidance for the second quarter ending June 30, 2021, maintaining full year 2021 guidance and re-affirming our continued commitment to the long-term goals of increasing operating cash flow and growing GAAP profitability.”
First Quarter 2021 Financial Highlights
- Revenue was $87.9 million for the 2021 first quarter, an increase of 12.6% compared to $78.0 million for the same period last year.
- Annual Recurring Revenue was $349 million for the 2021 first quarter, an increase of 12.8% compared to $310 million for the same period last year.
- Active Clients as of March 31, 2021 were 2,550, an increase of 22.8% compared to 2,077 Active Clients as of March 31, 2020.
- Revenue Retention Rate was 91% for the trailing 12 months ended March 31, 2021 and 92% for the comparable period ended March 31, 2020.
- Gross margin was 61.5% for the 2021 first quarter compared to 61.3% for the same period last year.
- Operating income was $1.9 million for the 2021 first quarter compared to $3.7 million for the same period last year.
- Non-GAAP Operating Income was $9.3 million for the 2021 first quarter compared to $8.9 million for the same period last year.
- Net loss was $3.6 million for the 2021 first quarter compared to net income of $2.5 million for the same period last year.
- Non-GAAP Net Income was $8.5 million for the 2021 first quarter compared to $7.7 million for the same period last year.
- Adjusted EBITDA for the 2021 first quarter was $10.7 million compared to $9.2 million for the same period last year.
- Basic and diluted net loss per share attributable to common stockholders was a net loss per share of $0.13 for the 2021 first quarter compared to a net loss per share of $0.06 for the same period last year.
- Employee count as of March 31, 2021 was 1,501, a year-over-year increase of 15.3%.
- Completed a follow-on public offering of 7.75 million shares of the Company’s common stock, with net proceeds to the Company of approximately $57 million.
- On January 5, 2021, completed the buyback of $10 million face-value of Series A preferred stock for an approximate 10% discount to face-value (par); no make-whole payments were required. The purchased preferred shares were retired.
- On April 16, 2021, completed the buyback of $60 million face-value of Series A preferred stock, plus make-whole of approximately $2.3 million, reducing the outstanding Series A preferred liquidation value to approximately $87 million as of April 16, 2021. The purchased preferred shares were retired.
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.”
First Quarter 2021 Company Highlights
- Appointed three new regional general managers of North America to accelerate growth and help achieve the Company’s $1 billion in annual revenue by 2026 goal. Also announced the appointment of Phil Cullen to the newly created role of senior vice president for Global Operations.
- Announced several new clients globally who made the switch from vendor support to Rimini Street Support to extend the life and ROI of their existing enterprise software including:
- Homeplus Co., a Korean grocery and outlet retailer;
- Nottinghamshire County Council, serving a local population of more than 800,000 in the UK;
- Ampol Limited, Australia’s largest petrol and convenience network;
- Poplar Co. Ltd, a national convenience store chain in Japan;
- Kent Countyy Council, the largest County Council in England; and
- Hankook Tire, a leading global tire company headquartered in Korea.
- Also announced that Iguatemi, Brazil’s leading shopping center management company, extended its SAP support agreement with Rimini Street to include Application Management Services (AMS) for SAP, enabling them to benefit from an integrated, one provider approach to their SAP landscape.
- Closed nearly 10,000 support cases and delivered over 32,000 tax, legal and regulatory updates for 36 countries. Also achieved an average client satisfaction rating on the Company’s support delivery of 4.9 out of 5.0 (where 5.0 is “excellent”).
- Released an Oracle Database survey report which highlights that top challenges with Oracle Database include cost, quality and value of vendor support – issues resolved with Rimini Street Support.
- Announced that the Company is now an approved supplier on the New Zealand Government Marketplace, enabling agencies to more easily procure Rimini Street’s services.
- Awarded a Best and Brightest Companies to Work For® Grand Trophy for delivering exceptional HR practices and commitment to the Company’s employees across the U.S.
- Honored with a Stevie® Sales & Customer Service award in the “Best Use of Technology in Customer Service” category for Rimini Street’s innovative AI Support Applications.
- Presented at 10 CIO, IT and finance leader conferences globally.
- Supported more than 25 charities around the world through the Rimini Street Foundation, providing financial contributions, personal protective equipment and hygiene essentials to regions in great need.
2021 Revenue Guidance
The Company is providing second quarter 2021 revenue guidance to be in the range of $88.5 million to $90.5 million. The Company is maintaining full year revenue guidance to be in the range of $370 million to $380 million.
Webcast and Conference Call Information
Rimini Street will host a conference call and webcast to discuss the first quarter 2021 results and select second quarter 2021 performance to-date commentary at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time on May 10, 2021. A live webcast of the event will be available on Rimini Street’s Investor Relations site at https://investors.riministreet.com. Dial-in participants can access the conference call by dialing (800) 773-2954 in the U.S. and Canada and enter the code 50137607. 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, 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 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.
RIMINI STREET, INC.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
ASSETS | March 31, 2021 |
December 31, 2020 | |||||
Current assets: | |||||||
Cash and cash equivalents | $ | 153,163 | $ | 87,575 | |||
Restricted cash | 334 | 334 | |||||
Accounts receivable, net of allowance of $1,088 and $723, respectively | 83,928 | 117,937 | |||||
Deferred contract costs, current | 13,989 | 13,918 | |||||
Prepaid expenses and other | 15,746 | 13,456 | |||||
Total current assets | 267,160 | 233,220 | |||||
Long-term assets: | |||||||
Property and equipment, net of accumulated depreciation and amortization of $11,508 and $10,985, respectively | 4,743 | 4,820 | |||||
Operating lease right-of-use assets | 16,068 | 17,521 | |||||
Deferred contract costs, noncurrent | 20,511 | 21,027 | |||||
Deposits and other | 1,453 | 1,476 | |||||
Deferred income taxes, net | 1,633 | 1,871 | |||||
Total assets | $ | 311,568 | $ | 279,935 |
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 2,372 | $ | 3,241 | |||
Accrued compensation, benefits and commissions | 33,840 | 38,026 | |||||
Other accrued liabilities | 19,063 | 21,154 | |||||
Operating lease liabilities, current | 3,806 | 3,940 | |||||
Deferred revenue, current | 219,453 | 228,967 | |||||
Total current liabilities | 278,534 | 295,328 | |||||
Long-term liabilities: | |||||||
Deferred revenue, noncurrent | 30,544 | 27,966 | |||||
Operating lease liabilities, noncurrent | 15,023 | 15,993 | |||||
Accrued PIK dividends payable | 1,051 | 1,193 | |||||
Liability for redeemable warrants | 6,790 | 2,122 | |||||
Other long-term liabilities | 2,514 | 2,539 | |||||
Total liabilities | 334,456 | 345,141 | |||||
Redeemable Series A Preferred Stock: | |||||||
Authorized 180 shares; issued and outstanding 146 shares and 155 as of March 31, 2021 and December 31, 2020, respectively. Liquidation preference of $146,104, net of discount of $14,497 and $154,911, net of discount of $17,057, as of March 31, 2021 and December 31, 2020, respectively | 131,607 | 137,854 | |||||
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 85,140 and 76,406 shares as of March 31, 2021 and December 31, 2020, respectively | 9 | 8 | |||||
Additional paid-in capital | 152,762 | 98,258 | |||||
Accumulated other comprehensive loss | (2,682) | (318) | |||||
Accumulated deficit | (304,584) | (301,008) | |||||
Total stockholders’ deficit | (154,495) | (203,060) | |||||
Total liabilities, redeemable preferred stock and stockholders’ deficit | $ | 311,568 | $ | 279,935 |
RIMINI STREET, INC.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended | |||||||
March 31, | |||||||
2021 | 2020 | ||||||
Revenue | $ | 87,895 | $ | 78,032 | |||
Cost of revenue | 33,836 | 30,199 | |||||
Gross profit | 54,059 | 47,833 | |||||
Operating expenses: | |||||||
Sales and marketing | 30,383 | 28,412 | |||||
General and administrative | 16,603 | 12,001 | |||||
Impairment charge related operating right of use assets | 393 | — | |||||
Litigation costs and related recoveries: | |||||||
Professional fees and other costs of litigation | 4,763 | 2,752 | |||||
Insurance costs and recoveries, net | — | 921 | |||||
Litigation costs and related recoveries, net | 4,763 | 3,673 | |||||
Total operating expenses | 52,142 | 44,086 | |||||
Operating income | 1,917 | 3,747 | |||||
Non-operating income and (expenses): | |||||||
Interest expense | (47) | (13) | |||||
Loss on change in fair value of redeemable warrants | (4,668) | — | |||||
Other income (expenses), net | 772 | (218) | |||||
Income (loss) before income taxes | (2,026) | 3,516 | |||||
Income tax expense | (1,550) | (971) | |||||
Net income (loss) | $ | (3,576) | $ | 2,545 | |||
Net loss attributable to common stockholders | $ | (9,845) | $ | (4,085) | |||
Net loss per share attributable to common stockholders: | |||||||
Basic and diluted | $ | (0.13) | $ | (0.06) | |||
Weighted average number of shares of Common Stock outstanding: | |||||||
Basic and diluted | 78,733 | 67,863 |
RIMINI STREET, INC.
GAAP to Non-GAAP Reconciliations
(In thousands)
Three Months Ended | |||||||
March 31, | |||||||
2021 | 2020 | ||||||
Non-GAAP operating income reconciliation: | |||||||
Operating income | $ | 1,917 | $ | 3,747 | |||
Non-GAAP adjustments: | |||||||
Litigation costs and related recoveries, net | 4,763 | 3,673 | |||||
Stock-based compensation expense | 2,233 | 1,510 | |||||
Impairment charge related to operating right-of-use assets | 393 | — | |||||
Non-GAAP operating income | $ | 9,306 | $ | 8,930 | |||
Non-GAAP net income reconciliation: | |||||||
Net income (loss) | $ | (3,576) | $ | 2,545 | |||
Non-GAAP adjustments: | |||||||
Litigation costs and related recoveries, net | 4,763 | 3,673 | |||||
Loss on change in fair value of redeemable warrants | 4,668 | — | |||||
Stock-based compensation expense | 2,233 | 1,510 | |||||
Impairment charge related to operating right-of-use assets | 393 | — | |||||
Non-GAAP net income | $ | 8,481 | $ | 7,728 | |||
Non-GAAP Adjusted EBITDA reconciliation: | |||||||
Net income (loss) | $ | (3,576) | $ | 2,545 | |||
Non-GAAP adjustments: | |||||||
Interest expense | 47 | 13 | |||||
Income tax expense | 1,550 | 971 | |||||
Depreciation and amortization expense | 584 | 449 | |||||
EBITDA | (1,395) | 3,978 | |||||
Non-GAAP adjustments: | |||||||
Litigation costs and related recoveries, net | 4,763 | 3,673 | |||||
Loss on change in fair value of redeemable warrants | 4,668 | — | |||||
Stock-based compensation expense | 2,233 | 1,510 | |||||
Impairment charge related to operating right-of-use assets | 393 | — | |||||
Adjusted EBITDA | $ | 10,662 | $ | 9,161 | |||
Billings: | |||||||
Revenue | $ | 87,895 | $ | 78,032 | |||
Deferred revenue, current and noncurrent, as of the end of the period | 249,997 | 222,654 | |||||
Deferred revenue, current and noncurrent, as of the beginning of the period | 256,933 | 235,498 | |||||
Change in deferred revenue | (6,936) | (12,844) | |||||
Billings | $ | 80,959 | $ | 65,188 |
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, Annual 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.
Annual 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 Annual 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 impairment charge related to operating right-of-use assets. The exclusions are discussed in further detail below.
Non-GAAP Net Income is net income adjusted to exclude: litigation costs and related recoveries, net, loss on change in fair value of redeemable warrants, stock-based compensation expense and impairment charge related to operating right-of-use assets. 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.
Loss on Change in Fair Value of Redeemable Warrants: We have determined to exclude the gains and losses on redeemable warrants related to the change in fair value of these instruments given the financial nature of this fair value requirement. We are not able to manage these amounts as part of our business operations nor are the costs core to servicing our clients and have excluded them.
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.
Impairment charge related to operating lease right-of-use assets: This relates to an impairment charge related to our leased assets for a portion of one of our locations as we no longer use the space.
EBITDA is net income adjusted to exclude: interest expense, income tax expense, and depreciation and amortization expense.
Adjusted EBITDA is EBITDA adjusted to exclude: litigation costs and related recoveries, net, loss on change in fair value on redeemable warrants, stock-based compensation expense and impairment charge related to operating right-of-use assets, as discussed above.