Q4 2022 Rimini Street Inc Earnings Call

Speaker 1: Thank you for watching!

Speaker 2: Good afternoon ladies and gentlemen and welcome to the Remini Streets Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session.

Speaker 2: I will now turn the call over to Dean Pohl, Vice President, Investor Relations. Mr. Pohl, you may begin.

Speaker 3: Thank you, operator. I'd like to welcome everyone to Remi's 3rd quarter and fiscal year 2022 earnings conference call.

Speaker 3: On the call with me today is Seth Raisin, our CEO and President, and Michael Perica, our CFO .

Speaker 3: Today we'll issue our earnings press release for the fourth quarter and fiscal year ended December 31, 2022.

Speaker 3: A copy of which can be found on our website under investor relations.

Speaker 3: A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables following the financial statements in the press release.

Speaker 3: An explanation of these measures and why we believe they are meaningful is also included in the press release under the heading about non-GAAP financial measures and certain key metrics.IFEBye

Speaker 3: As a reminder, today's discussion will include forward-looking statements that reflect our current outlook. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. We encourage you to review our most recent FCC filings.

Speaker 3: including our Form 10-K filed today, for discussion of risks that may affect our future results or stock price.

Speaker 3: Now, before taking questions, we'll begin with prepared remarks. With that, I'd like to turn the call over to Seth.

Speaker 4: Thank you, Dean, and thank you everyone for joining us today.

Speaker 4: About Rameen E Street.

Speaker 4: Hermine Street is a global provider of end-to-end enterprise software support products and services.

Speaker 4: The company offers a comprehensive family of unified solutions to run, manage, support, customize, configure, connect, protect, monitor, and optimize client enterprise application, database and technology software platforms.

Speaker 4: We founded Remini Street in 2005 to disrupt and redefine the enterprise software support market by developing a delivery innovative new solutions that build a then unmet need in the enterprise software market.

Speaker 4: We became and remain the leading independent software support provider for Oracle and SAP products based both on the number of active clients supported and recognition by industry analyst firms.

Speaker 4: Over the years, as our reputation for technical capability, value, innovation, responsiveness, and trust and reliability grew, clients and prospects began asking us to expand the scope of our support, product, and service offerings.

Speaker 4: to meet other current and evolving needs and opportunities related to their enterprise software.

Speaker 4: We also heard from prospects and clients that their goals include reducing the number of IT vendors to more manageable numbers from a governance perspective, with a desire to select vendors who can provide a wider scope of IT services and become true trusted partners.

Speaker 4: To meet the needs of our clients and prospects and to service what we believe is a significantly expanded addressable market opportunity, we designed, developed, and are now delivering a new expanded solutions portfolio for a wider array of enterprise software and new solutions for application management, security, and security.

Speaker 4: interoperability, observability, and consulting.

Speaker 4: We also now offer an integrated package of our services as Remini1, a unique end-to-end turnkey outsourcing option for Oracle and SAP Landscapes designed to optimize our clients' existing technologies with a minimum 15 extended years of operating lifespan.

Speaker 4: and enable our clients to focus their IT talent and budget on potentially higher value innovative projects that will support competitive advantage and growth.

Speaker 4: due for in fiscal year 2022 results.

Speaker 4: We believe the growing adoption of ReminiStreet's expanded end-to-end enterprise software solutions is providing organizations the support, products, and services needed to meet their current and evolving needs around their enterprise software systems and delivering even more industry leading value, ROI, and engineering capability.

Speaker 4: to existing clients and achievement of a 6% growth in our client base year over year the 2020 active clients.

Speaker 4: During the quarter, we continue to make investments in execute activities. We believe will improve the effectiveness of our global marketing and sales execution as the pandemic air challenge is continued to diminish and our sales opportunities and pipelines increase.

Speaker 4: We believe these investments and activities will lead to re-exceleration of revenue growth and increased profitability over time.

Speaker 4: We also continue scaling up our global marketing and sales campaigns to reach a wider target of prospective clients who we believe can greatly benefit from our support, products, and services.

Speaker 4: Since our inception in 2005, we've signed and served over 5,000 clients, including more than 180 Fortune 500 and Fortune Global 100 companies, and estimate that we have helped our clients save more than $7 billion that they were able to add to cash or reinvest in their strategic priorities.

Speaker 4: that any global organization with annual revenue or an operating budget of at least $200 million is very likely to have one or more opportunities for remaining-street solutions.

Speaker 4: This is a significantly larger universe of prospective clients than a ministry historic we target it.

Speaker 4: As I previously noted in my 2022 earnings calls, the global macroeconomic environment forced organizations to replan, rebudget, and reprioritize their IT strategy, operations, and staffing models.

Speaker 4: Clients and prospects needed to adjust their plans and strategies for a slower growth, higher cost environment that was going to likely last for years, instead of months as originally thought post-pandemic.

Speaker 4: The replanting process froze and delayed IT and IT service procurement decisions and impacted 2022 sales for many technology companies including Rimini Street.

Speaker 4: However, in the fourth quarter we began seeing clients and prospects complete their replanting and rebudging projects and move forward with delayed IT and IT service procurement. Reministhree benefited with completion of substantial contracting activity. We believe that Reministhree is well positioned to meet the current and...

Speaker 4: IT spend in half. And in a sponsored survey that can be found on our website, it was found that a substantial number of IT leaders feel pressure from their board of directors to show increased return on IT spend, finding that a significant portion of the IT budget is allocated towards enterprise application software.

Speaker 4: telling a majority of the IT leaders survey seek to reduce the total cost of ownership for existing, mature, and a price software by switching to third-party support programs, with almost half of participants looking to outsource support and maintenance services to free up their IT teams to work on more strategic.

Speaker 4: Innovation Focus projects in exact alignment with Remini Street's vision and expanded portfolio of solutions.

Speaker 5: held execution.

Speaker 4: Fourth quarter sales deals included large support transactions wins against both SAP and Oracle.

Speaker 4: significant AMS wins against IBM and other providers, and sales across the full portfolio solutions including security, interoperability, observability, and professional services.

Speaker 4: Close rates on quarter opening pipe were healthy, with strong close rates on proposals that continued to exceed 50%.

Speaker 4: Large de-electribution was also healthy, closing five deals with annual fees over $1 million, an increase from the fourth quarter year over year.

Speaker 4: As I detail the previous earnings calls since June of 2022, I have reallocated and dedicated a majority of my time to improving global marketing and sales execution, ensuring our service offerings and delivering innovative new marketing campaigns to a wider target buyer profile.

Speaker 4: in order to build bigger pipelines globally. We continued implementation of our successful cross-sales strategies to guide and focus our hunter sellers on new client acquisitions to assure we have balance between new client sales and cross-sales as our go-to-market strategy matured for growth in both opportunities.

Speaker 4: We continue to make changes that improve global marketing of our broader service offerings. Ramps up a stronger global demand generation engine to accelerate pipeline growth and equipped our board the 300 global revenue team members with a greater set of lead and opportunities to need these development and closing skills.

Speaker 4: To reach even more clients and prospects, our senior executives, including myself, continue to have a travel to participate in a growing number of successful in-person, ravine street and third party events and executive sales meetings with hundreds of current and prospective clients.

Speaker 4: and collaborated with regional Remini Street Management teams to set and hone the strategy for accelerated sales growth of our full portfolio of solutions.

Speaker 4: Orphal litigation update.

Speaker 4: For Meany Street and Oracle have been in litigation for more than 12 years. While the U.S. courts have confirmed long ago that third party software support is legal, we presently have two active proceedings with Oracle, the injunction compliance dispute and Remany 2 proceedings. The U.S. courts have been in court for more than 12 years.

Speaker 4: Both of which relate to the manner which Remini Street provides support services for certain Oracle product lines. Remini Street is not prohibited from providing support services for any Oracle products.

Speaker 4: With respect to the injunction compliance dispute, Remini Street filed an appeal in 2022 to the ninth Circuit of the United States Court of Appeals relating to certain rulings of the U.S. District Court. Oral arguments on the appeal were held in San Francisco on February 6, 2023, and the matter remains pending before the Court of Appeals.

Speaker 4: We believe we could ever ruling on the appeal in the second or third quarter of 2023, but the ruling could come earlier or later.

Speaker 4: With respect to Rameenee 2, the case Rameenee Street filed against Oracle in 2014 and Oracle filed counterclaims.

Speaker 4: On October 21, 2022, just days before the jury trial was set to begin, oracle with through certain of its counterclaims and all of its claims against Remini Street and against Meet Personally as CEO for monetary relief of any kind under any legal theory in this litigation.

Speaker 4: Remaining claims and articles remaining counterclaims seeking only equitable relief were tried before the court as a bench judge only trial that began November 29, 2022 and ended December 15, 2022.

Speaker 4: The party submitted their proposed findings of fact and conclusions of law to the District Court on February 23rd, 2023, and the matter remains pending before the District Court.

Speaker 4: We believe we could have a court verdict in the second or third quarter of 2023, but the verdict could come earlier or later.

Speaker 4: Please see our disclosures in the latest 10k filing for additional information and disclosures regarding litigation with Oracle.

Speaker 4: Please see our disclosures in the latest 10K filing for additional information and disclosures regarding litigation with Oracle.

Speaker 4: Over the past two years, we have placed the company in a materially stronger strategic position by achieving dream key goals. Strengthening the balance sheet to a series of key capital market transactions, delivering major wins at our retracted litigation with the Oracle.

Speaker 4: and successfully designing, developing, and launching an entire portfolio of new IT support product and service solutions.

Speaker 4: We remain confident that we are continuing to take the right actions and making the right investments to reaccelerate growth, increase profitability, and enhance shareholder value.

Speaker 4: Now over to you Michael.

Speaker 6: Thank you, sir, and thank you for joining us, everyone.

Speaker 6: Q4 and fiscal 2022 results. We were pleased with our improved Q4 performance and quarterly sequential billing growth in gross margin as well as maintaining a strong revenue retention rate on subscription revenue.

Speaker 6: Revenue for the fourth quarter and the full year 2022 was a record $108.6 million and 409.7 million respectively, a year-over-year increase of 9.4% for both periods.

Speaker 6: Clients within the United States represented 51.3% and 52.6% of total revenue for the fourth quarter in full year 2022 respectively. While international clients contributed 48.7% and 47.4% of total revenue for the fourth quarter.

Speaker 6: in full year 2022, respectively.

Speaker 6: Analyze Recreate Revenue was 420 million for the fourth quarter, a year-over-year increase of 6.9%.

Speaker 6: Revenue retention rate for service subscriptions, which makes up 98% of our revenue was 92%. With more than 80% of subscription revenue, non-cancelable for at least 12 models. We note that for the full year 2022, our total revenue measures on a constant currency basis.

Speaker 6: was negatively impacted by 1.5% due to FX movements.

Speaker 6: Billings for the fourth quarter will 160.4 million compared to 155.99 for the prior year fourth quarter and increase of 2.9% year over year and a substantial improvement from the prior quarter's decline of 32.5%.

Speaker 6: As evidence by the rebound in Billings during the fourth quarter, we were pleased with our strong client renewal and expanding sales to existing in new clients as Seth noted. For the full year 2022, Billings declined 2% year over year to 409.3 million. Deas Sills is improved in the fourth quarter to 72 days a quarter end.

Speaker 6: compared to 83 days for the prior year in 2021.

Speaker 6: This is a marked improvement from what we experienced during the first three quarters of 2022, where DSOs were lengthening.

Speaker 6: We believe the improvement underscores our strong client commitments to our offerings and thus experienced earlier than normal collections during our largest building quarter of the year.

Speaker 6: Gross margin was 64.5% of revenue for the fourth quarter and 62.8% for full year 2022. Compared to 65.1% of revenue for the prior year fourth quarter and 63.6% for prior year 2021. We do note the gross margin improved 300 basis points.

Speaker 6: quarter over quarter. And it was in line with her guidance reflecting her conscious decision in Q3 to wrap resources and talent that would allow for leveraging the fourth quarter.

Speaker 6: On a non-GAAP basis, which excludes stock-based compensation expense, gross margin was 64.9% of revenue for the fourth quarter and 63.3% for full year 2022. The third quarter is 65.5% of revenue for the fourth quarter.

Speaker 6: for the prior year fourth quarter in 63.9% for prior year 2021. The full year gross margin decline is result of higher cost of labor which has been successfully offset in part by our efforts to methodically expand efficiencies and leverage through technology.

Speaker 6: 62.6% of revenue on a non-GAF basis.

Speaker 6: Operating expenses.

Speaker 6: like other organizations globally. We are experiencing cost pressures due in large part to increase labor costs and inflation in all labor categories.

Speaker 6: To address this during the first quarter of 2023, we implemented a restructuring with a reduction in forced offset the increased costs, allowing us to maintain profitability and freeing up funds to target skill sets needed to drive growth. These initiatives, excluding the one-time charges,

Speaker 6: will result in approximately $15 million of annualized savings. Sales and marketing expenses as a percentage of revenue was 36.1% of revenue for the fourth quarter and 34.9% for full year 2022.

Speaker 6: compared to 32.7% of revenue for the prior year fourth quarter and 34.3% for prior year 2021. On a non-gap basis, which excludes stock-based compensation expense, sales of marketing expenses as a percentage of revenue.

was 35.4% of revenue for the fourth quarter and 34.1% for full year 2022 compared to 32% of revenue for the prior year fourth quarter and 33.5% for prior year 2021.

We remain focused on making the appropriate investments needed to capitalize on our growth opportunities and thus see full-year 2023 sales of marketing expenses to be in the range of 34.5% to 35.5% on a gap basis and 33.5.

to 34.5% on a non-GAAP basis. General and administrative expenses as a percentage of revenue, excluding outside litigation costs, was 16.7% of revenue for the fourth quarter and 18.4% for full year 2022 compared to welds compared to 2019.

15.6% of revenue for the prior year fourth quarter and 17.1% for prior year 2021. On a non-depth basis, which excludes stock-based compensation expense.

DNA was 15.6% of revenue for the fourth quarter and 17% for full year 2022 compared to 14% of revenue for the prior year fourth quarter and 15.7% for prior year 2021.

Outside of the one-time expenses that occurred in the period, the GNA line continues to be higher than our peers due in material part to the cost for in-house legal and compliance teams and other costs necessary made by our ongoing Oracle litigation and our conscious decision throughout 2022.

to continue making investment in the systems process and talent infrastructure needed to support our long-term growth objectives. Nonetheless.

Given that the majority of this investment is behind us and our aforementioned restructuring efforts, we see full year 2023 GNA expenses declining as a percentage of revenue, and thus to be in the range of 17 to 18 percent on a gap basis in 15.4.

to 16.4% on a non-GAAP basis. Net outside litigation expense was $12.8 million for the fourth quarter and was $25.3 million for the full year 2022.

This year's fourth quarter and four year 2022 had elevated costs, due primarily to oracle mitigation costs from the Remini-2 case bench trial completed during December 2022. We had expected the trial to occur during fiscal year 2023, so we were required to move these costs.

into 2022. Accordingly,

for full year 2023. We expect outside litigation expense to moderate to the $10 million level.

Furnings for the fourth quarter in the full year 2022 were impacted by the elevated litigation expense and during the fourth quarter we also incurred lease impairment charges of $3 million and reorganization charges of $2.5 million.

for the fourth quarter, the net loss attributable to shareholders was...

5.3 million or negative six cents per diluted share and for the full year 2022 was a loss of 2.5 million or 3 cents negative per diluted share.

On a non-GAF basis, net income for the fourth quarter was $15.3 million or positive $0.17 per diluted share. And for the full year 2022 was $39.2 million or positive $0.44 per diluted share.

Adjusted even though was 18.3 million for the fourth quarter or 17% of revenue, and for the full year 2022 was 52.3 million or 13% of revenue, compared to 19.3 million for the prior year fourth quarter.

and $55.8 million for the full year 2021. Our non-GAAP operating margin, which excludes outside litigation spend and stock-based compensation, remained in the double digits at 14% of revenue for the fourth quarter and 12% for the full year 2022.

Malachi. We ended the fiscal year with a cash balance of $109 million plus investments of $20 million, consisting of short-term treasuries and agency securities bringing readily available cash to $129 million, compared to $120 million for the prior fiscal year end.

In addition to the FX headwinds noted that is in fact at our cash flow, we have also experienced lower advance payments for clients, both to do an existing at the overall inflationary environment, leading to a broad-based shift towards clients retaining cash for their own short-term investment opportunities and the preservation.

the non-Castleboat future revenue was approximately 578 million as of December 31, 2022 from compared to 593 million for the prior year 4th quarter. Capital Marcus transactions.

During fiscal year 2022, we repurchased $4.7 million of our outstanding common stock with an average price of $5.56 per share, and we reduced the principal balance on our term loan from $88 million to $78 million through amortization payments of $4.5 million.

to a fixed rate on $41 of the loan and we are further offsetting debt service cost by investing excess cash at favorable short term fixed income rates. In addition, we amended our credit facility in February 2023 to convert the loan reference interest rate from liable to just over...

and amended the definition of consolidated EBITDA to provide an addback of certain costs and legal fees. These actually reflect the strong support of our credit partners. Lastly, I would also like to note that on October 10, 2022,

All $14.7 million of the $11.50 exercise price warrants expired.

Business Outlook. We are currently providing first quarter 2023 Revenue Guidance to be in the range of 101 to 103 million, full year 2023 Revenue Guidance to be in the range of 420 to 430 million, and full year 2023 adjusted EBITDA Guidance to be in the range of 52.

And if you have a question, please press Scar 1 on your phone now.

And our first question today will come from Jeff Van Rie with Craig Hellum.

Great, thanks for taking my questions, guys. Congrats. It's a very good number's top line in elsewhere. Maybe you just start on the obvious. The buildings turn around pretty dramatically. It sounds like you're maybe getting a little more confident that consumers have come out of the deer and headlights mode and are now purchasing your solution again.

Contrast that with the guide because you've got a fairly conservative Q1 number that's down, meaningfully sequentially, and for the year still implies not a lot of follow-through. So talk about whether or not there were some things in Q4 that you see as one time, maybe the health of the pipe and how that reflects in your 23 outlook.

Sure, thanks Jeff. You know, I mean, clearly we expected your first question to be about the guidance.

You know, look, I think we're going to continue to play a conservative guidance position. As you know, one of the bigger challenges for us as being a five-year public company has been that we haven't been able to yet have a reliable beaten-raised cadence. It's something that's very, very infocus for us.

I think you saw that we started to turn around the numbers that we had, even through the third quarter and then more into the fourth quarter. We weren't able to affect those buildings in the third quarter, which as you know is why it made changes to management structures and retook the helm on sales.

marketing in the third quarter. But I think again just consider a conservative guidance. Obviously we're very confident in the business. That's why you saw us finally adding adjusted EBITDA into our guidance and we're going to continue to stay conservative.

I wouldn't read anything more into it than that. We sure hope to put everyone into a beaten race mode. And we wanted to make sure that folks don't get out ahead of the business. We did see good. Pick up in the fourth quarter, as you mentioned. We suspected that customers would finish that re-budgeting, re-planning cycles.

about the year and what's happening. Hopefully we're in a position to again affect that beaten raised compound.

You've been working really hard, I know, to get sales and marketing and everything associated kind of where you want it. Again, to that Billings Improvement Discoordra, how do you think about, I know you don't give quarterly guidance, I'll just broadly speaking, do you think you can continue to accelerate that Billings growth, you got back into positive territory much quicker than I thought you would given what you were doing in sales? I mean...

Can we get to high single digit, low double digit and stay there for the rest of the year? Or, you know, I guess the embedded question is also just a little color commentary on how far you are with the sales realignment, how much more has yet to go? I feel very, very good where we are in sales globally.

I think we still have work to do in the Americas. As you know, that's been our focus. It was our focus for the last couple years. There are definitely some great transactions happening in the Americas. I also think that look at the tenure of our sellers is increased. A lot of them have now achieved their...

12 months and some of them even they're 18 months and we know that's an important full-crum point for performance and we're seeing it. They're getting better at doing deals and they're doing broader deals across the product lines and I think you saw all of that take place in Q4.

So, from a projection standpoint, we have no reason to believe that we're not going to do anything but get better. The structural issues that I stepped into affect and make changes on, we've done. I feel really good about where we are.

I think that we've held it around just shy of 80 sales reps, as we said we were going to do, while we continued to focus on performance on a rep-by-rep basis. And our close rates were strong. Our close rates on the...

proposals as I mentioned north of fifty percent again very strong so i think we're seeing all that all the factors we would want for accelerating growth and creating an accelerating growth environment including those pipeline growth so i think all those factors and if we see the it the economics hold

I'm actually in Singapore today. I've been down in Asia for over a month meeting literally hundreds of customers and prospects. And I can tell you that the feeling that we have the right mix of products, services, and solutions today with our wider breath.

I feel very, very confident that we're going to be in that growth trajectory. So let's keep the guidance conservative. And so, again, we don't get out ahead of ourselves. But, again, beat and raise is the cadence we want.

Yeah I totally agree. Maybe a quick one for you Michael. On the gross margin side on the non-GAAP you're guiding 61.6 to 2.6 so call it 62 at the mid roughly. You put up higher than that obviously in 22. Two questions, what are the puts and takes there, why the decline and then also the longer term model previously issued.

was for mid-60s gross margin. What are the drivers for lower gross margin and is that mid-60s still the valid target for the target model? Thanks, Jeff. I certainly would like to reiterate comfort with our long-term model. What we are seeing with regard to our mix, we have seen a lot of the press on the introductions. There was a heavy inve...

that gives us any concern with our ability to meet our long-term and intermediate-term targets.

Great, okay, I'll leave it there. Thanks for taking my questions, guys. And Jeff, to add on that, you look at the gross margin. I mean, we've kept it above 60%. While we built out an entire suite of products on our own capital. And, you know, of course, you're going to take some hits in the gross margin, but if you look at it.

We've kept it within one to two percentage points of revenue for that investment. So we've managed it, I think, very, very well to get everything done that we're doing. And when you talked about the puts and takes on the margin, one of the...

that we're giving up a little bit is we've got new products, our AMS product line. We have hundreds of employees and you're going to have a much lower initial gross margin on that until we hit scale. We believe that once we had a billion dollars in revenue, we will achieve the scale across all those product lines.

And that's why that mid-60s gross margin target is absolutely still the model. Our next question today will come from Brian Kinslinger with Alliance Global Parkers.

Great, thanks so much. My first question, it's some follow-ups to the questions already asked.

So let's start with the quarter of revenue. Sequential growth was the strongest, well let me say it this way, since 2017 you've only had one quarter of the sequential growth of $7 million and that was in, I believe, the fourth quarter of 2019 when you won your largest customers. So let's start with the first quarter.

So can you first help us understand what drove the sequential revenue growth? Is it one large customer? Is it lots of new customers?

Is it some customers were turned off and got turned back on trying to understand or is there a non-recurring piece that's unusual this quarter?

Sure, Mariah. I think you have a few things that came to effect. One, we had a really good, very strong renewals here.

The fourth quarter was strong and I think for a lot of the same reasons as the sales were frozen, remember we talked about two sides of the coin. If people aren't doing anything, part of what they're not doing is even switching off of our service to a next generation or any kind of evolution there.

And so you saw a lot of customers who had plans to make changes to their systems and they didn't. They extended their contracts instead, so it gave you a very strong renewals. And at the same time we had a lot of those held up deals freed up. We also saw them free up earlier in the quarter, which gave us a revenue pickup versus plan.

because we did get that done earlier, we got more days of earned revenue. So I think that plus, as you know, our fourth quarter tends to have a certain amount of revenue holdback that's released because of the way the contracting cycles work.

As you know, we're doing bigger contracts, more global contracts, which gives them more attributes that can hold back revenue or delay revenue rack. And we've traditionally, as you've seen over the last few years, had a bit of a pickup in the revenue due to those holdbacks in the fourth quarter. So I think a combination of those items I came together to give us the end.

sequential increase. And just to be clear you're talking about a strong renewals trying to reconcile how that helps grow revenue further. Is there price increases? Are there price declines? Or were you assuming more churn?

I think we were assuming a little more churn than we saw. Again, for those reasons, customers extending their driving more value out of their system. So our basic thesis not only held but improved even over the last few quarters. Whenever we have volatility in the markets.

Remaining street remains a strong player because of our ability to optimize spend. And we help customers spend their money better. And we now have more services to meet those needs in different areas. So the combination of that again I think is why you hear the level of optimism.

Not only is we were talking about through the fourth quarter, but as we see in the results and why, again, while we're playing a conservative number in our guidance, you're hearing a lot of confidence that we believe we fix the issues internally.

and people are adopting our products. They're adopting a wider set of them. And we're seeing that at the pipeline level. We're seeing it at the closing level. And we have sales reps who could do a better job of getting out and closing business. So I think you add all those factors together. They started in the third quarter. You saw the negative billings growth in the third quarter because that was already set in the mold. When you have a six to nine...

I think Q4 was just representative of the turnaround work that we're doing and the fact that we're seeing those economics change with customers moving forward.

Brian and Michael here would like to add particularly Q3 to Q4. Year to date I noted in the prepared remarks FX was a negative 1.5 for the full year.

quarter year to date I'm sorry Q3 it was over 2% around 2.1% so we had a little bit of an FX benefit you can pencil that out so to a lesser degree than set the note but that was also an element to rationalize

Thank you. But then to follow up on the One Q Guide, a $79 million decline would be the largest sequential decline in the company's history also. And I heard you, your answer is about guidance, but I'm trying to understand the rationale of you talking about your business being so strong.

but they're not providing a number that really helps investors to understand the strength of your business. So, $7 to $9 million, is that actually in the realm of possibilities? And what would have to happen for you to decline revenue 7 to 9% outside of FX? Or is FX already hurting you badly?

Well, I think Brian again, you know, the answer that we've talked about, which is the conservative nature, I think that's the right answer. You know, in terms of would we have that kind of actual decline versus the reality, I think we'll know in the coming weeks. As you know, we're very back end loaded on our sales.

We're very back and loaded in figuring out RevRack when it's said and done at the end of the quarter. So I think there's some variability there and we're just taking the conservative track and hopefully we will have an upside surprise on that.

Okay, last question I've got is, is you think about your revenue guidance for the full year, which again might be conservative? What are the assumptions from a high level of international versus North American revenue trends, are you going to see an acceleration one or the other from what you saw last year, trying to understand where you're seeing more pockets of strength than others?

Well, it gives you any sense. I'm in Asia for five months of this year, so I think that's the plan. There is, I think the strongest and fastest growing region has been the Asia-Pacific sector. A lot of green field opportunities out here.

as we break into new countries. I've been in, I think, what, five, six countries just in the last few weeks. And I think we're watching, again, improve performance across Europe and the Middle East, and I think across the U.S. and as we're starting to get more focused even on Canada.

So right now, I think again, you're sort of 50-50 split between the US and the rest of the world. I would expect to probably stay in that realm for a while because as we lift revenue globally, that split, I expect to stay fairly similar to that range.

Thank you. Great. Thanks, Brian . Our next question today will come from Derek Wood with Cowan & Company. Thank you.

A great thanks guys to Andrew Oxford Derrick.

Congrats on the quarter. It's after time like the Salesforce is in a better place and productivity is improving and you're more 10 year reps. Maybe just some more color on, you mentioned what other work there is to do there in the Americas and what could improve performance there. I think Americas represents a little bit different challenge. Every...

It's very successful for us all over the world. It's hard to get that done in the US. It's hard to get a group of folks together. We're still in this post-pandemic world. We're still seeing in the US more reluctance to attend in-person events than we've seen adopt and grow back around the world.

Our sellers are doing really well in North America and across the USA and Canada. And as I mentioned, we have some very high-quality transactions being done. We're seeing growing pipelines, and that's true on a global basis. But we're still playing around a little bit with the marketing mix.

to get people more engaged in the U.S. And I know we're not the only ones having this problem. It's been a problem before the pandemic in the United States. It is still a problem and it's a little more of a problem for everyone to get engagement with prospects in a post-pandemic world. So that's where we're focused. I think we've got some...

We just have to, again, tweak some of the things we're doing in marketing. But the messaging is resonating very, very well. We just got to get more people into these events and be able to engage more of them.

Yeah, that's great. And then Seth, your announcement today about Remini Watch was interesting, the new observability suite. Maybe just talk about how that builds on and is different from what you've provided before to clients and we're clients asking for this and when do we think this can start?

start to contribute to revenue? I it's already contributing to revenue. We we've been doing these products for several years. We just didn't announce them publicly. Recently you've seen us announce our security suite. Remini Protect. You've seen us announce our interoperability suite. Remini Connect.

Now you're watching Remini Watch, which is our observability platform. There's also the Remini Consult, our whole professional service business, where we've got growing and accelerating revenue as well. This is part of a seven pronged approach of products now.

And that is, these are just a few of the new ones. We're bringing them to market publicly, but we've actually been out selling these products for quite a while. This is what we've been investing in for the last few years is to build out these amazing suites of products and services. And the reason that we're doing it is because the customers are asking us for them. They want this broader offering from Remini Street.

because we're the trusted vendor. They like doing business with us. They like the kind of engineering talent we bring to the table. And they want us to do more. And they want us to become a bigger strategic partner with wider capabilities. And what we've been delivering are full suite now of products.

And solutions is exactly what the market has asked us to do. And that's why I said we're very early in the sales of all these products and services. But I think you're starting to see the traction and that was showing in the fourth quarter. Every single one of the product lines that we've released has growth.

and they continue adoption. So this, again, underlines our confidence that we've made the right strategic decisions in investing in this broader set of services and products and that customers think they're the right ones for them.

Great. And last one for you, Michael. It sounds, building off the prior questions, it's, I think we understand that you want to guide conservatively. Is it, it sounds like you've taken a more conservative approach to guidance first, maybe in prior.

prior quarters or versus last year, is that a fair way to characterize it or how should we think about that?

That is certainly a fair way to characterize it. I would highlight sets remarks. The moment that we built in the fourth quarter, we still have our strongest period of the current quarter that we need to close, but we really do feel good where we are. In comparison, I believe that's a fair statement.

All right. Thanks, guys. Thank you. This concludes today's question and answer session. I'd like to turn the call back to Mr. Raven for closing remarks.

Sure, thank you very much and I want to thank everyone for joining us for the fourth quarter and full year 2022 call. I also want to thank our Remini Street colleagues for the efforts in the fourth quarter in the full year 2022. Again our first year coming out of the pandemic and I think our team did a fantastic job.

of executing, building many, many new products and services, getting them out there to market. And I think it was a really important building year for us. I also want to say that we're looking forward to having you in our next earning call. And we'll do that again pretty soon on the first quarter of 2023. Until then, again, wishing you all continued good health and