Q4 2024 Rimini Street Inc Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the remedy Street Q4, 'twenty 'twenty four earnings conference call.
At this time all lines are in a listen only mode.
Speaker Change: Following the presentation, we will conduct a question and answer session. If at any given time. During this call you require immediate assistance. Please press star zero for the operator. This call is being recorded today Thursday February 27, 2025, I would now like to turn the conference over to <unk>.
Speaker Change: Dean Pohl, Vice President Treasurer, and Investor Relations. Please go ahead.
Dean Pohl: Thank you operator, I'd like to welcome everyone to Rimini Street's fourth quarter and fiscal year 2024 earnings conference call.
Speaker Change: On the call with me today is separate than our CEO and president and Michael <unk> Our CFO.
Speaker Change: We issued our earnings press release for the fourth quarter and fiscal year ended December 31 2020 for.
Speaker Change: A copy of which can be found better website under investor Relations a reconciliation of GAAP to non-GAAP financial measures has been provided in the tables. Following the financial statements in the press release, an explanation of these measures and why we believe they are meaningful is also included in the press release under the heading about Mt.
Speaker Change: GAAP financial measures and certain key metrics.
Speaker Change: 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.
Speaker Change: We encourage you to review our most recent SEC filings, including our Form 10-K filed today for a discussion of risks that may affect our future results or stock price.
Scott: Before taking questions, we'll begin with prepared remarks with that I'd like to turn the call over to Scott.
Dean Pohl: Dean and thank you everyone for joining us today.
Dean Pohl: Today more than 2000, Rimini Street employees in 21 countries up client support and optimize their current enterprise software portfolio and transform their business to achieve significant operating cost savings improved profitability enhance competitive advantage and <unk>.
Dean Pohl: Salary growth.
Dean Pohl: Our clients have already realized billions of U S dollars in operational savings.
Dean Pohl: Clients leverage our unique Rubin Rimini smart class methodology to achieve better business outcomes, such as more comprehensive hyper responsive software support and the ability to fund flexible infrastructure.
Speaker Change: Hi, workflow automation and other innovation investments without the need for additional budget.
Speaker Change: We are the leading global third party support provider for Oracle S E T and.
Speaker Change: And Vmware software and.
Speaker Change: And we run manage support customize and figure and that protect monitor optimize and transform enterprise application database and technology software landscapes.
Speaker Change: The company has signed and successfully delivered on thousands of contracts with Fortune Global 100, Fortune 500 mid market public sector and government organizations with select Rimini Street as their trusted proven and mission critical enterprise software solutions provider.
Speaker Change: Fourth quarter results.
Speaker Change: We achieved positive momentum in billings, new clients and client renewals during the fourth quarter sale.
Speaker Change: Sales included the mix of our products services and solutions, including the continued sales acceleration of our new support for Vmware across a broad set of industries and geographies.
Speaker Change: We also achieved improved new logo acquisition sales, including major brands and delivered 22, new clients sales transactions in the quarter with T C V over $1 million.
Speaker Change: We believe our focus on offering the right solutions organizing around the right go to market strategy and maturing global sales and marketing execution was reflected in the seven 1% year over year improvement in quarterly billings.
Speaker Change: The billings improvement included solid results for both our contract renewals and extensions and project based professional services.
Speaker Change: The billings improvement was led by Latam, EMEA and Asia Pacific regions.
Speaker Change: With respect to global service delivery, we achieved a support client satisfaction average rating over 4.9 out of 5.0 or five points hero is excellent.
Speaker Change: We continued to see strong client satisfaction and a broad interest in purchasing additional products services and solutions from Rimini Street beyond our core industry, leading support offering.
Speaker Change: Growth drivers.
Speaker Change: In the fourth quarter, we continued to make investments and improvements to our business that we believe will provide additional growth drivers and positively impact future financial and operating results.
Speaker Change: For example.
Speaker Change: We have implemented a new go to market strategy in the Americas adopting the Hunter farmer sales model to assure growth in sales to both new logos and cross sales to existing clients.
Speaker Change: Structural farmer change involved replacing most of the existing Americas client success team with proven sellers in a particular industry, where you're organizing the Americas existing client base by industry and assigning the industry proven sellers to a portfolio of aligned clients.
The new farmer sellers carry full sales quotas, while also having client management responsibilities.
Speaker Change: We've also expanded the capabilities and streamlined our global sales support organization.
Speaker Change: We've hired regional C T OS and industry leaders across key industries, and if combined these resources with our solution architects and global proposal team into a one stop sales support organization the global solution Engineering key.
Speaker Change: These experts will help sellers better communicate Rimini street's messages improved C suite engagement.
Speaker Change: Five more thought leadership develop industry use cases lead client road mapping workshops and provide more comprehensive support for large complex deals.
Speaker Change: We have also expanded our services to more software products.
Speaker Change: People, we see a strong opportunity to grow our sales of our new support for Vmware.
Speaker Change: In a recent survey we published in December 2024, 79% of respondents stated they're perpetually licensed Vmware software meets their current business needs and 99% say they would consider continuing to utilize their current Vmware software if they could acquire support.
Speaker Change: We also recently announced our bundled advanced Hypervisor security for Vmware and other leading virtualization products with hypervisor such as new tactics.
Speaker Change: Providing a unique security solution that is already in use by the U S military.
Speaker Change: And last but not least we are expanding our sales reach with strategic alliances partnerships and channels.
Speaker Change: For example.
Speaker Change: Our exciting new partnership with service now offers.
Speaker Change: Oracle Infor and Microsoft ERP licensees and exclusive enterprise application modernization AI.
Speaker Change: Hi, workflow and automation solution that does not require any costly upgrades migrations are re platforming.
Speaker Change: Is that S. P E C C. Six our S. Four Hana cloud on premise migration as far hotter rise.
We believe this will help clients achieve significant savings derived immediate business transformation value at all and why.
Speaker Change: Oracle litigation update.
Speaker Change: Rimini Street, and Oracle have been in litigation for more than 15 years, including cases, known as Rimini, one and Rimini two.
Speaker Change: With respect to Rimini, one which was filed by Oracle against Rimini Street in 2010. The litigation has run its course and there are no current litigation activities related to Rimini one.
However, there is a remaining one permanent injunction that remains in effect.
Speaker Change: With respect to Rimini two on December 16, 2020 for the U S. Ninth Circuit Court of Appeals issued a very positive decision for Rimini Street vacating much of the U S District Court trial rulings.
Speaker Change: On January 29th 2025, Oracle filed a petition for rehearing by the Appeals court, arguing that the Appeals court erred in its Rimini two rulings.
Speaker Change: On February 25, 2025, the Appeals court denied oracle's petition.
With respect to the District Court's award to Oracle of $58 5 million and attorneys' fees and costs related to the Rimini two findings that we paid in the fourth quarter. The U S District Court issued the order prior to the Appeals Court's December 16th 2024 decision.
Speaker Change: We have filed a notice of appeal with the Appeals court and are seeking the return of the amounts paid.
Speaker Change: As of the date of this report the company's appeal remains pending.
Speaker Change: For additional information and disclosures regarding the company's litigation with Oracle. Please see our disclosures in the company's annual report on Form 10-K filed today February 27, 2025, with the U S Securities and Exchange Commission.
Please also note that at this time, we are still unable to provide material additional information beyond the disclosures and statements in our press releases filings with the SEC in court filings related to the pending Oracle litigation.
Summary.
Speaker Change: We remain focused on driving more leads building more pipeline and closing more business through detailed methodical sales discipline and execution.
We remain confident that we are continuing to take the right actions and making the right investments to reaccelerate growth and improve profitability enhance shareholder value and bring our litigation with Oracle to a successful conclusion.
Speaker Change: Further we expect to return to providing guidance in 2025.
Michael: Now over to you Michael.
Michael: Thank you Seth and thank you for joining us everyone.
Michael: Q4, and fiscal 2024 results.
Michael: Revenue for the fourth quarter and the full year 2024 was $114 2 million and $428 8 million a year over year increase of one 9% for the quarter and a decrease of 0.6% for the full year.
Michael: Client revenue for the fourth quarter and full year 2024 within the United States represented 47% and 49% while international clients represented 53% and 51% respectively.
Michael: Our fourth quarter revenue was positively impacted by slightly over $5 million due to a onetime client event that brought forward the remaining revenue into the quarter.
Michael: Annualized recurring revenue was $414 8 million for the fourth quarter the year over year decrease of four 1%.
Michael: Revenue retention rate for service subscriptions, which makes up 96% of our revenue was 88% with approximately 88% of subscription revenue noncancelable for at least 12 months. We note that for the full year 2024, FX movements negatively impacted our <unk>.
Michael: Revenues by one 3% compared to a negative impact of 0.6% for 2023.
Michael: Billings for the fourth quarter were $172 1 million up seven 1% year over year and full year 2020 for billings were $423 million an increase of one 1%.
Michael: In the fourth quarter billings, excluding people soft associated billings increased 12% on a year over year basis.
Michael: Gross margin was 63, 7% of revenue for the fourth quarter.
Michael: 69% for full year 2024.
Michael: Compared to 61% of revenue for the prior year fourth quarter and 62, 3% for prior year 2023.
Michael: On a non-GAAP basis, which excludes stock based compensation expense gross margin was 64% of revenue for the fourth quarter and 61, 3% for full year 2024, compared to 61, 5% of revenue for the prior year fourth quarter.
Michael: 62, 8% for prior year 2023.
Michael: We do note however that the aforementioned onetime revenue benefit did contribute to our strong gross margin during the quarter.
Michael: Nonetheless, excluding this onetime favorable event. We are pleased with this result of our continued focus on driving operational leverage through improved systems processes and global staffing models, while continuing to deliver best in class support for a wider array of support optimization.
Michael: Transformational offerings.
Michael: Despite our methodical focus on gross margin improvement opportunities through efficiency, we will continue to balance gross margin improvement against investment needs to take advantage of new revenue growth opportunities and initiatives such as our nascent services for Vmware in service now.
Michael: Operating expenses.
Michael: As noted in our previous earnings calls.
Michael: We initiated a cost optimization plan to reduce our net operating cost by $35 million on an annual basis measured from Q1 quarter end 2024 to Q1 quarter in 2025.
Michael: As of Q4, the net cost reduction on an annualized basis was $18 million.
Michael: The variance to the reported trends is associated with one time project related spend in the second half of the year.
Michael: At the midpoint of the current quarter Q1 of 2025, our net annualized cost reductions totaled $22 million.
Michael: While this plan was appropriate at the time. It was initiated we are evaluating this broader initiative in the current quarter to ensure we are properly investing in the growth opportunities SaaS outlined earlier.
Michael: Reorganization charges associated with the cost optimization plan for the fourth quarter was $1 1 million and for 2024 was $5 7 million.
Michael: We do expect to incur additional reorganization costs during 2025, as we continue to optimize our cost structure in areas where opportunities to streamline our operations exist.
Michael: Sales and marketing expenses as a percentage of revenue was 32, 8% of revenue for the fourth quarter and 34, 9% for the full year 2024, compared to 31, 2% of revenue for the prior year fourth quarter and 33% for prior year.
Michael: <unk> 2023.
Michael: On a non-GAAP basis, which excludes stock based compensation expense sales and marketing expenses as a percentage of revenue.
Michael: Was 32, 2% of revenue for the fourth quarter and 34 four for the full year 2024, compared to 35% of revenue for the prior year fourth quarter and 32, 3% for prior year 2023.
Michael: General and administrative expenses as a percentage of revenue.
Michael: Excluding outside litigation costs was 16, 3% of revenue for the fourth quarter and 17% for full year 2024, compared to 15, 7% of revenue for the prior year fourth quarter and 16, 9% for prior year 2020.
Michael: Three.
Michael: On a non-GAAP basis, which excludes stock based compensation expense and litigation costs.
Michael: G&A was 15, 1% of revenue for the fourth quarter and 15, 7% for full year 2024, compared to 13, 8% of revenue for the prior year fourth quarter and 15, 1% for prior year 2023.
Michael: Okay.
Michael: Outside litigation costs was 675000 for the fourth quarter and $6 1 million for the full year 2024, compared to $1 6 million for the prior year fourth quarter and $7 million for prior year 2023.
Michael: Litigation settlement expense was $58 5 million for full year 2024, compared to $2 7 million for prior year 2023.
Michael: As Seth addressed earlier, there was a litigation payment of $58 5 million in the fourth quarter that represented the court ordered reimbursement to Oracle for their attorneys fees and costs related to the Rimini two case this.
Michael: This expense however was accrued during the third fiscal quarter of 2024.
Michael: For full year 2025, we expect outside litigation expense to remain consistent with non trial periods, where full year spend approaches $10 million.
Michael: Net income attributable to shareholders for the fourth quarter was $6 7 million or <unk> <unk> per diluted share compared to the prior year fourth quarter net income of <unk> <unk> per diluted share.
Michael: Full year 2024, net loss was <unk> 40 per diluted share compared to net income of 2009 cents per diluted share for prior year 2023.
Michael: On a non-GAAP basis net income for the fourth quarter was $10 8 million or <unk> 12 per diluted share compared to the prior year fourth quarter of <unk> 19 per diluted share.
Michael: Full year 2024, non-GAAP net income was <unk> 48 per diluted share compared to net income of 54 per diluted share for prior year 2023.
Michael: Our non-GAAP operating margin, which excludes outside litigation spend and stock based compensation expense was 16, 7% of revenue for the fourth quarter and 11, 1% for full year 2024.
Michael: Compared to 17, 2% for the prior year fourth quarter and 15, 3% for prior year 2023.
Michael: Adjusted EBITDA defined in our press release was $20 million for the fourth quarter or 17, 5% of revenue compared to the prior year fourth quarter of $21 3 million or 19% of revenue.
Michael: Full year 2024, adjusted EBITDA was $53 1 million or 12, 4% of revenue compared to adjusted EBITDA of $71 9 million or 16, 7% of revenue for prior year 2023.
Michael: Balance sheet.
Michael: We ended the fourth quarter December 31 2024.
Michael: With the cash balance and short term investments of $88 8 million compared to $125 3 million of cash and short term investments for the prior year fourth quarter 2023 on a cash flow basis for full year 2020 for operating cash flow decreased $38 8 million.
Michael: Compared to the prior year 2023 increase of $12 5 million.
Michael: The results include litigation settlement expenses of $58 5 million and $2 7 million for full year, 2024, and 2023, respectively. Additionally.
Michael: Additionally, the effective foreign currency translation was unfavorable by $8 2 million and $2 2 million for full year, 2024, and 2023, respectively deferred revenues.
Michael: As of December 31, 2024 was $281 2 million compared to deferred revenue of $287 million for prior year 2023 <unk>.
Michael: Backlog, which includes the sum of billed deferred revenue and noncancelable future revenue was $587 9 million as of December 31, 2024, compared to $606 8 million for prior year 2023.
Speaker Change: People soft update.
Speaker Change: As noted in our previous earnings call, we announced the wind down of services for Oracle people soft products. We are now reassessing our exit from the field soft business in light of the recent litigation rulings and the continued demand in the market for our best in class offerings that extends beyond support.
Speaker Change: People soft revenue was $8 million and $32 9 million for the fourth quarter and full year, 2024, or 7% and seven 7% of total revenue respectfully, while prior year revenue was $8 5 million and $36 million in the fourth.
Speaker Change: Quarter, and full year, 2023, or seven 6% and eight 4% respectively.
Speaker Change: Business outlook.
Speaker Change: The company is continuing to suspend guidance as to future financial results until there's more clarity around impacts from current litigation activity before the U S federal courts, and the company's ongoing litigation with Oracle.
Speaker Change: For additional information and disclosures regarding the company's litigation with Oracle. Please see our disclosures in the company's annual report on Form 10-K filed on February 27th 2025, with the U S Securities and Exchange Commission.
Speaker Change: This concludes our prepared remarks, operator, we will now take questions.
Speaker Change: Thank you Les.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your Touchtone phone and you will hear a prompt that your hand has been raised should you wish to decline from the building process.
Speaker Change: The pound followed by the number two if you are using a speaker phone. Please lift the handset before pressing any key.
One moment. Please for your first question.
Speaker Change: Your first question comes from the line of Brian Gaines Linger from AGP. Please go ahead.
Speaker Change: Great. Thanks, so much thanks results for the fourth quarter.
Speaker Change: My question is if I exclude the $5 million nonrecurring benefit and I adjusted for currency.
Speaker Change: It was down.
Speaker Change: Small percent maybe 1%.
Speaker Change: Can you talk about the changes you've made in sales.
Speaker Change: The restructuring that's going on sales execution and the pipeline.
Speaker Change: And how you think about the return to revenue growth both in North America as well as international as we look forward is that something you think exclude.
Speaker Change: Excluding people soft whatever the decisions you make there you can produce in 2025.
Speaker Change: Sure, Brian and thanks, Thanks for joining us.
Speaker Change: The question of whether or not we've come up on the other side of the you and I think of course, that's everybody's question.
Speaker Change: We seen the bottom and are we on our way back up.
Speaker Change: Thank the metrics show that we are indeed on that you turn up I think we saw that in the third quarter with the underlying strength there.
Speaker Change: That continued to grow in the fourth quarter.
Speaker Change: Don't think it's going to be a straight up you I think like most things we will have our ups and downs along the way, but we will maintain the general direction of returning to growth and higher profitability and I think that the changes that we've made the sales the restructurings all of those.
Speaker Change: Remember, we're all about bringing a multi product bag too.
Speaker Change: To bear in terms of the sales environment into a solution sell from a single product and it's taken us several years to develop those products ploy our capability on a global basis, So, yes, I I actually am.
Speaker Change: Three.
Speaker Change: Very much feeling positive that we're on the upper side of that you.
Speaker Change: And one more quick question related to that and then I have one last question.
Speaker Change: If you think about the pipeline theres been a lot of noise.
Speaker Change: The litigation last 18, 24 months that could have impacted the pipeline can you kind of compare.
Speaker Change: Either quantitatively or qualitatively, where we are today versus maybe 18 to 24 months ago.
Speaker Change: I do think we had impact certainly in the pipeline.
Speaker Change: The remaining two ruling in July of 2023, I don't think we realize the impact until you get several quarters down the road, but I think we definitely felt that.
Speaker Change: And of course, feeling very very good about the.
Speaker Change: The appellate court's decision in December which of course was too late in the quarter to really measure any sense of impact at all given how late in the quarter. It was in December so I do hope that that that will provide.
Speaker Change: Some additional uplift.
Speaker Change: Two our continuing business growth as we again tempt to Reaccelerate sales.
Speaker Change: Great. Thank you one last question probably for Michael.
Speaker Change: Sure.
Speaker Change: On the cost savings you mentioned in the fourth quarter, you were on pace or IMAX, but whereas for a decline of 22 million in opex, but the fourth quarter. Excluding litigation you had opex of $56 million.
Speaker Change: Firstly, just 57 million in the baseline year baseline quarter of the first quarter, which is hardly down so maybe talk about what I'm missing in that naphtha.
Speaker Change: Sure, Brian just clarification, the $22 million of net annualized savings is that as of the midpoint of Q1 2025 as of the end of the year December 31, 24, we were net $18 million down the variance.
Speaker Change: To the reported figures that you are noting in scene is associated with and it's in the G&A line. One time project related nonrecurring spend and that's the variance to the reported figure, but net again Q4 18 million midpoint Q1, 'twenty five 'twenty two.
Speaker Change: Yeah.
Speaker Change: What was what were the nonrecurring.
Speaker Change: Maybe help us understand those nonrecurring charges and it sounds like a big number maybe help us with that number wise.
Speaker Change: Unfortunately, we can't comment any further other than saying it's nonrecurring.
Speaker Change: Okay and the size of that.
Speaker Change: If you annualize that figure relative the reported difference to the $18 million would get you there.
Okay.
Speaker Change: So much.
Brian: Thank you thanks, Brian.
Speaker Change: Thank you. Your next question comes from the line of Derrick Wood from TD Cowen. Please go ahead.
Brian: South of Michael missions, Jr. John Don on Suberic Wood.
Speaker Change: Good to see building strength in the quarter I was just curious if you could characterize some of the areas where that strength coming from whether it's <unk> or product wise.
Speaker Change: Sure and thanks for joining us that'd be the strength really I think again it comes more from the execution globally.
Speaker Change: We saw some strength return on the global stage outside of the U S that of course, you watch come down a little bit into prior quarters. So we did see strength returning due to some leadership changes due to some execution improvements.
Speaker Change: And I think that that was broad based across the international community.
Speaker Change: And even on the even on the U S side.
Speaker Change: <unk> bookings.
Were higher year over year on a quarterly basis. So that's hidden a little bit by the revenue downside from the earlier quarters in terms of the revenue flow through but the bookings themselves or sales bookings were up so I think again, just general overall strength in the fourth.
Speaker Change: Quarter.
Speaker Change: Awesome, that's good to hear.
Speaker Change: Then on the Army deal could you provide a little more context around that and then just zooming out maybe comment federal exposure and then any dynamics you expect to see from the new dose administration.
Speaker Change: Yes.
Speaker Change: And the discussion in the prepared remarks about the army deal there was a discussion about the security package being in use by the army and that's all we can say about that but the but in general we saw.
Speaker Change: See the the U S side.
Speaker Change: Does the cost reductions on the federal side.
Speaker Change: As being an.
Something that we want to pursue its something that we are actively pursuing we've bulked up our sales capabilities on the federal side of the house and in fact, the entire government sector for the U S. In the North American region, we continued to add additional personnel.
Speaker Change: Part of the investments that we said we were making.
Speaker Change: In the current environment, and we think that we have a lot to offer.
Speaker Change: With our particular approach and the way that we come at it with the Rimini Smart path, where we can come in and drop costs, rather quickly drive longer term return on the assets without any required upgrades and migrations and we think thats an extremely attractive government type of.
Speaker Change: <unk> and we're making sure to get ourselves positioned for that.
Speaker Change: Yeah.
Speaker Change: Awesome good to hear about those investments on the go to market side and just to double click on that is there any more fine tuning we should expect in this coming year or do you feel like you're in a good spot there.
Speaker Change: Well I think this is the year that we focus on Reacceleration, which again means execution. We have all of the building blocks now that we want the newer areas are these partnerships and alliances where we are extending our leverage beyond our own sales team.
Speaker Change: That is a critical next step.
Speaker Change: This is something that we werent able to do in prior years, because a lot of people weren't really interested in partnering with Rimini Street and now what we're seeing is that the.
Speaker Change: The company logos.
Speaker Change: Across the world that want to partner with us or reaching out to us for entering a new phase of our growth as we come into this half a billion dollars a year revenue and people recognizing that our customer base represent some of the biggest governments and.
Speaker Change: Private sector organizations out there and they want access to them. So that is driving a lot more engagement at the partner alliances level and we've built a new team. We've made those investments as well and that is it's still a fairly nascent area for us, but it will we believe add accrete.
Opportunities to to growth on the other side during 'twenty five and beyond.
Speaker Change: Thank you for the color I'll pass it on.
Speaker Change: Sure. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you. Your next question comes from the line of Jeff Van <unk> from Craig Hallum. Please go ahead.
Speaker Change: Hey, guys, yeah. Thanks for taking the questions and congrats on the progress and of course, it was just a pretty outstanding.
Speaker Change: Decision there are lot of good stuff to come from that a couple of questions. Just I wonder if that's an immediate offshoot of that.
You had commented that youre going to withhold guidance until summer.
Speaker Change: Something clarifies on the litigation front can you just expand on that what's going to be go time in terms of starting to give guidance again, what has to happen in the courts to do that.
Speaker Change: Well, that's one reason, Jeff I wanted to make sure I mentioned that we plan to return to guidance in 'twenty five because we knew that that was going to be a question of when.
Speaker Change: When we stopped providing guidance it was because we had.
Speaker Change: Significant questions around the courts orders what might become of injunctions, how it might impact existing product lines. There were a lot of pieces in there that we felt impacted our ability to give real solid management guidance. Both at the revenue line and at the core.
Speaker Change: Line, and we still feel that in our recent evaluation. Despite the big win in the courts. The appellate courts in December there are still many pieces that had been remanded theres still pieces that are not known.
Speaker Change: Back to the core even though Oracle lost its appeal there are still options for them in terms of going to the Supreme Court. There are still things that we are remanded back to judge <unk> Court and so we need to wait to hear from her and understand how things are going to progress but.
Speaker Change: We believe that the answers will come in.
Speaker Change: In the next quarter or two I truly believe were sort of beginning the end of this litigation.
Speaker Change: I think that the way the court narrowed the laws the way that the court made decisions.
Speaker Change: A way that this is being remanded back on certain points and others were already vacated so I think that this is sort of at the beginning of the final stage in my opinion.
Speaker Change: And so we're gonna have to let this play out a little bit longer, but I think it was relevant to say I do believe that in the coming quarters, we should have an opportunity to return to that guidance.
Speaker Change: Yeah.
Speaker Change: That's helpful. Thanks, and as it relates to 2025.
Speaker Change: Without getting precise on guidance are you at least comfortable it should be a growth year I mean, the buildings youre, suggesting that you commented on a lot of things going on in the pipeline.
Speaker Change: Thoughts on what it would take to be a growth year for 25.
Speaker Change: Yeah.
Well, you know without without guidance, but I think you could take my general direction as I believe we're on the upside of the U S.
Speaker Change: I believe we will continue on that side.
Speaker Change: Some of the unknowns around the impacts of litigation and how those could affect us and a few other things of course that are happening in the world, including the economics in the over the overall, our globalization challenges with that.
Speaker Change: Everything from tariffs on down Theres a lot in the mix. So I would say that yes, do I believe that we will continue down our path of.
Speaker Change: Moving towards accelerated growth and improved profitability I believe so.
Speaker Change: Okay.
Speaker Change: And then so on service now just catch us up I mean, obviously.
Speaker Change: The relationships you've talked about it a lot initially could be game changing for both of you actually in terms of.
Speaker Change: Gives them a lot of leverage versus people they'd like to displace them and gives them a huge potential distribution, but I know there was some technical developments you had to put in place and some go to market.
Speaker Change: Where are we now.
Yeah, it's a pretty complicated set of packages and offerings that we set out on but service now.
Speaker Change: You know the first quarter in and we're still getting our teams aligned on a global basis there.
Speaker Change: There is significant pipeline.
Speaker Change: It's been built up on both sides that they've got 6000 sellers, who have been told that Rimini Street is a very critical part of their plan going forward for growth outside of their traditional product areas of <unk> and into the area of ERP modernization we.
Speaker Change: Both believe bill Mcdermott and myself in significant opportunity.
Speaker Change: In this area and we're making the investments necessary, but it is fairly complicated.
Speaker Change: <unk>, new consulting offerings on our side involves deployment capabilities and working relationships with service now across the world and we're continuing to work. It every single week and put those in place and we expect it to bear fruit.
Speaker Change: With with accretive sales opportunities and driving into our bottom line in 2025. So we're still very optimistic very excited by this partnership and once we get this often running in the machine running and we expect it to do to.
Speaker Change: Bring real positive things got both sides.
Speaker Change: And while we're on that just maybe spend a minute also on Vmware I mean, obviously a lot of disruption as they push push through some fairly massive price increases.
Speaker Change: How has that progressed are you able to quantify at all what that's doing in terms of percent of revenue percent of pipeline any scope of how big Vmware is and is going to be for you as well.
Speaker Change: I think Vmware will be a substantive.
Speaker Change: Part of our sales in 2025 I have been extremely excited watching the early months as we built this thing out from the ground up launched it became number one in this space very early we.
Speaker Change: We built a security solution.
That is bundled with our offering we are the only people out there with this combination which gives us tremendous competitive advantage. We have sold it to dozens of companies and organizations are ready and that's just in the early stages of getting it out the door getting our sales teams to.
Speaker Change: Trained up we are covering customers in five different continents already.
Speaker Change: We're covering everything from banks and financial institutions.
Speaker Change: Cross just about every major industry already so I think thats a wonderful start to the early months of getting this out there and getting the word out.
Speaker Change: Like Gardner and other the analysts have been very bullish writing about us.
Speaker Change: Got a lot of very good publicity and press around it so I think that will contribute.
Speaker Change: Again.
Speaker Change: Substantially.
Speaker Change: Avoiding the materiality word because we all know that it has.
Speaker Change: An important component in terms of size and scope, but it really is something that we do believe will contribute this year.
Speaker Change: Okay helpful. Maybe one last quick one then on the $58 5 million.
Speaker Change: Any any I mean, obviously courts incredibly unpredictable, but any norms industry norms are ways to give kind of an over under on when you might have answers on getting some or all of that 58 million that you paid for oracle's legal census back.
Speaker Change: Well I think that it has to go through the appellate court process and generally that is something that's done within the calendar year.
Speaker Change: I would think that based on our calendar we've got our first.
Speaker Change: Briefings due to the appellate court on March 11th.
Speaker Change: I think there is a very good chance that we'll have a decision by the appellate court.
Speaker Change: Some time later this year.
Speaker Change: Great Okay, great. Congrats thanks, guys.
Speaker Change: Thank you.
Speaker Change: Thank you. Your next question comes from the line of Richard Baldry from Roth Capital. Please go ahead.
Speaker Change: Thanks.
Richard Baldry: See if you could dive a little bit more into the new logo strength.
Richard Baldry: Because obviously that will have a pretty big impact on the outlook for growth So is that <unk>.
Richard Baldry: Geographically.
Richard Baldry: All concentrated product or service line concentrated.
Speaker Change: Was it related to sort of the new our partnership offerings, how do we think about that strength and how.
Richard Baldry: Durable extensible it is.
Speaker Change: Well rich I think the answer came last year. When we started to see the results of all of our new products coming to market and the great News was that our sellers were enthusiastically moving and starting to sell them into our existing client base. The problem was.
Speaker Change: Werent spending enough time generating new logos and we saw that happened in the first half of year.
Speaker Change: And the course correction, we made was to take it first in the Americas to break apart into a heart a hunter farmer model, where we created the Hunter team that just focuses on the acquisition of new logos and we created a farmer's sales team, replacing the account.
Speaker Change: <unk> with a with an actual sales team dedicated to the existing clients and cross selling and growing our footprint in those clients and we've we've already started to see results from that we made other changes in terms of compensation plans to really drive new logo acquisition.
Speaker Change: Reward new logo acquisition, but more and more we had to split the teams up in order to maintain the growth of sales in both categories and I know this is not an uncommon problem for companies with larger portfolios of product.
Speaker Change: So that's the changes we made because we saw the opportunity for the new logo growth, but salespeople will tend to go to where it is easier and of course, it's generally easier to sell to an existing happy client more services, but you got to get those new logos as you said.
Speaker Change: Got it.
Speaker Change: Then when we think about the base business macro uncertainties seem to.
Speaker Change: Pretty persistent out there are.
Speaker Change: Are you seeing that impact sort of the duration our retention rates, how long average client staying with you those extending now.
Speaker Change: How do you view that that's likely to change over the year ahead.
Speaker Change: Well I think you know, we've always said Rimini street's not a contrarian business because a contrarian business means you do well in bad times, but you may not do well in good. We've always said, we do well in good times and we can do really well in bad times volatile times.
Speaker Change: Regardless of where anyone is on a on a political spectrum.
Speaker Change: The reality is the world is in quite an upheaval.
Speaker Change: Both in globalization and moving things around supply chains, and where factories are located taxation and tariffs I believe got so much going on right now that it is definitely to Rimini street's benefit from a sales perspective that we have.
Speaker Change: So much.
Speaker Change: Uncertainty uncertainty means people don't know what to do and in many cases, they're going to look for ways to hunker down on their existing spend on their existing investments, they're going to avoid doing new things that are finally costly or controversial or.
Speaker Change: They're just not sure what the right moves are to make and I think we play very well in this environment. We can be the right advisors at the right time, providing the right kind of services that allow companies to lower their current operating spend which is critical because everybody is under pressure for profit.
Speaker Change: And at the same time, they can take some of that savings invested in new technologies like enterprise AI, which we're offering now through the service now platform without having to do any of those major upgrades. So we really do have an offering that is dead on with.
Speaker Change: Most of the markets need around the world. So I see this as a significant opportunity for us in the years ahead.
Speaker Change: Last for me would be you know.
Speaker Change: I think you obviously would have some pretty good data to support a revisit of the concept of cutting costs. So there's a lot of ways to think about what might drive that.
Speaker Change: Could you maybe.
Speaker Change: Just broadly talk to us about what you are.
Speaker Change: Really seeing is that pipeline growth win rates, improving sales cycles speeding up our pool, our contract sizes grow on like what are some of the pieces that have given you a pause on the concept to continue cutting on the cost side.
Speaker Change: Well I think that you look at market demand is we think very strong we think our ability to execute against that has gotten better.
I think the fact that we see improved pipelines, we see our ability to forecast getting better all of these things maturing under our new go to market model and the changes we're making we've also changed out a lot of the sales force for.
Speaker Change: More can I put this more aggressive sellers.
Speaker Change: That we believe will go out and help deliver the business better than maybe some other groups before.
Speaker Change: We brought in a new <unk>.
Speaker Change: Who is doing a fantastic job, Steve Hershkowitz, who's driving a very aggressive sales program on a global basis very accountable program in terms of commits in delivery.
Speaker Change: I think if you look at you look at our execution, even on the finance side with Dsos running into 70 71 days consistent cash generation all of the execution of the business is moving along in the direction, we want it to go and because of that.
Speaker Change: We felt that continuing to make cuts at this particular time would not be to the benefit of shareholders and our ability to make the investments that are upon us now such as a service now such as the new partners and alliances that are coming to bear these things take investment.
Speaker Change: And we felt that it would be counterproductive to push further in there.
Speaker Change: A big way it doesn't mean, we're not making small changes here and there we're always going to optimize and that's why Michael indicated that we expect to continue to optimize and we will have restructuring charges likely through the rest of this year, but that is because we have to continue to not only drive for profitability and.
Speaker Change: <unk> streamlined operations, but we also have to take out certain older skill sets and cycled them to be able to replace them with new ones AI.
Speaker Change: There's a complete amount of hiring as people are doing in that area. We have a lot of other skill sets that go with that analytics data modeling et cetera that we have to bring in new service now skills and capabilities. So we have to clear the deck for that so I think that in general.
Speaker Change: You're watching us make the right decisions about not going too deep in this in trying to cut costs.
Speaker Change: Where it's counterproductive.
Speaker Change: Great Congrats on starting to make the turn.
Speaker Change: Thank you so much right.
Speaker Change: Thank you there are no further questions at this time I'll turn the call over to Seth Ravin for closing remarks.
Speaker Change: Thank you very much operator, and thank you everyone for joining us and once again, thanks to our dedicated staff around the world, whose passionately serving clients and that makes them successful and is helping to drive our accelerated growth and increased profitability in the road ahead and of course.
Speaker Change: As always our thoughts are with those in harm's way and who of course are challenged out there.
Speaker Change: We have a pretty good relative to many around the world and we never want to forget that thank you. So much everybody have a great day.
Speaker Change: Yes.