Q1 2025 Rimini Street Inc Earnings Call
Speaker Change: [music].
Operator: Good afternoon, ladies and gentlemen, and welcome to the Rimini Street Q1 2025 Earnings Conference. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.
Good afternoon, ladies and gentlemen, and welcome to the Rimini Street Q.
Q1, 'twenty 25 earnings conference call.
At this time all lines are in a listen only mode.
Following the presentation, we will conduct a question and answer session.
If at any time during this call you require immediate assistance. Please press star zero for the operator.
Operator: This call is being recorded today, Thursday, May 1, 2025.
This call is being recorded today Thursday may one at 2025.
Dean Pohl: I would now like to turn the conference over to Dean Pohl, Vice President, Treasurer, Investor Relations. Please go ahead. Thank you, operator.
Dean Pohl: I'd now like to turn the conference over to Dean Pohl, Vice President Treasurer Investor Relations.
Speaker Change: Please go ahead.
Speaker Change: Thank you operator.
Dean Pohl: I'd like to welcome everyone to Rimini Street's fiscal first quarter 2025 earnings conference call.
Speaker Change: I'd like to welcome everyone to Rimini Street's fiscal first quarter 2025 earnings conference call.
Dean Pohl: On the call with me today, Seth Ravin, our CEO and president, and Michael Perica, our CFO.
Speaker Change: On the call with me today is got the Raven, our CEO and president.
Speaker Change: And Michael <unk>, our CFO.
Dean Pohl: Today, we issued our earnings press release for the first quarter ended March 31st, 2025, a copy of which can be found on our website under the investor relations section. Reconciliation of GAAP to Non-GAAP Financial Measures has been provided in the tables following the financial statements in the press An explanation of these measures and why we believe they are meaningful is also included in the press release and our website under the heading about non-GAAP financial measures and certain key methods. As a reminder, today's discussion will include forward-looking statements about our operations that reflect our current outlook.
Speaker Change: Today, we issued our earnings press release for the first quarter ended March 31st 2025, a copy of which can be found on our website under the Investor Relations section.
Speaker Change: A reconciliation of GAAP to non-GAAP financial measures.
Speaker Change: <unk> provided in the tables following the financial statements in the press release.
Speaker Change: An explanation of these measures and why we believe they are meaningful is also included in the press release.
Speaker Change: And our website under the heading about non-GAAP financial measures and certain key metrics.
Speaker Change: As a reminder, today's discussion will include forward looking statements about our operations that reflect our current outlook.
Dean Pohl: These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today.
Speaker Change: These forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today.
Dean Pohl: We encourage you to review our most recent SEC filings, including our Form 10-Q file today for a discussion of risks that may affect our future results or stock Now, before taking questions, we'll begin with prepared remarks.
Speaker Change: We encourage you to review our most recent SEC filings.
Speaker Change: Our Form 10-Q filed today for a discussion of risks that may affect our future results or stock price now.
Seth: Now before taking questions, we'll begin with prepared remarks with that I'd like to turn the call over to Seth.
Seth Ravin: With that, I'd like to turn the call over to Seth. Thank you, Dean, and thank you, everyone, for joining. Today, more than 2,000 Rimini Street employees in 21 countries help clients leverage our unique proven Rimini SmartPath methodology to achieve better business outcomes such as significant IT cost savings, more comprehensive hyper-responsive software support, and the ability to fund AI, workflow, automation, and other innovation investments without the need for any additional IT budget. We achieve this unique capability by helping our clients extend the useful life of their existing ERP and other enterprise software, avoid unnecessary upgrades, and then use the savings to fund innovation.
Seth: Thank you Dean and thank you everyone for joining us.
Speaker Change: Today more than 2000, Rimini Street employees in 21 countries.
Speaker Change: Clients leverage our unique proven to Rimini smart pass methodologies to achieve better business outcomes, such as significant cost savings more comprehensive hyper responsive software support and the ability to fund AI workflow automation and other innovation.
Speaker Change: Investments without the need for any additional I T budget.
Speaker Change: We achieved this unique capability by helping our clients extend the useful life of their existing ERP and other enterprise software avoid unnecessary upgrades and then use the savings to fund innovation.
Seth Ravin: We are the leading global third-party support provider for Oracle, SAP, and VMware software. And we run, manage, support, customize, configure, connect, protect, monitor, optimize, and transform enterprise application, database, and technology software landscapes. The company has signed and successfully delivered on thousands of contracts with Fortune Global 100, Fortune 500, bid market, public sector, and government organizations who selected Rimini Street as their trusted, proven, and mission-critical enterprise software solutions provider.
Speaker Change: We are the leading global third party support provider for Oracle safety, and Vmware software and we run manage supports customize can figure connect protect monitor optimize and transform enterprise application database.
Speaker Change: Some technology software landscapes.
Speaker Change: The company aside and successfully delivered on thousands of contracts with Fortune Global 100, Fortune 500 mid market public sector and government organizations, who selected to Rimini Street as their trusted proven and mission critical enterprise software solutions provider.
Seth Ravin: first quarter results. We maintained positive momentum in billings and cost controls during the first quarter. Sales included a mix of our products, services, and solutions, and a notable acceleration in sales of our new support subscriptions for VMware across a broad set of industries and geographies.
Speaker Change: First quarter results.
Speaker Change: We maintained positive momentum in billings and cost controls during the first quarter.
Sales included a mix of our products services and solutions and a notable acceleration in sales of our new support subscriptions for Vmware across a broad set of industries and geographies.
Seth Ravin: We also achieved improved new logo acquisition sales, including major brands, and delivered five new client sales transactions in the quarter with TCV over 1 million. Operating expenses and cost of revenue as a percent of revenue declined 5.8% year over year due to our continuing cost optimization plan. We believe our focus on offering the right solutions, organizing around the right go-to-market strategy, and maturing global sales and marketing execution is continuing to drive better sales execution. and was reflected in the 7.2% year-over-year improvement in quarterly billing. The building's growth was primarily driven by a mix of new subscriptions and project-based professional services and geographically led by the EMEA and Asia-Pacific region.
Speaker Change: We also achieved improved new logo acquisition sales, including major brands and delivered five new client sales transactions in the quarter with T C V over $1 million.
Speaker Change: Operating expenses and cost of revenue as a percent of revenue declined five 8% year over year due to our continuing cost optimization plan.
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 is continuing to drive better sales execution.
Speaker Change: And was reflected in the 7.2% year over year improvement in quarterly billings.
Speaker Change: The billings growth was primarily driven by a mix of new subscriptions and project based professional services and geographically by by the EMEA and Asia Pacific regions.
Seth Ravin: New Growth Drivers. In the first quarter, we continue to make investments that we believe enhance our short, medium, and long-term sales growth and profitability. One area of focus is the continued investment in the expansion of our global alliances, partnerships, and channels business to drive sales leverage beyond our own global sales force.
Speaker Change: New growth drivers.
Speaker Change: In the first quarter, we continued to make investments that we believe enhance our short medium and long term sales growth and profitability.
Speaker Change: One area of focus is the continued investment in the expansion of our global alliances partnerships and channels business.
Speaker Change: <unk> sales leverage beyond our own global sales force.
Seth Ravin: for example. We continue to execute our go-to-market rollout with ServiceNow in both sales and service delivery. Recently, ServiceNow rolled out the Rimini Street sales playbook to their approximately 6,000 global sellers, and we both are training our sales teams on the joint solution. in service delivery, our engineering teams collaborated on our first joint very successful project for a Brazilian pharmaceutical company. Demonstrating our combined capabilities. ServiceNow plans to premiere and showcase the client solution at ServiceNow's upcoming Knowledge 2025 event in Las Vegas, May 6-8, where 25,000 attendees are expected.
Speaker Change: For example.
Speaker Change: We continued to execute our go to market rollout with service now in both sales and service delivery.
Speaker Change: Recently serviced now rolled out the remaining street sales playbook to there are approximately 6000 global sellers and we both are training our sales teams on the joint solution.
Speaker Change: And service delivery, our engineering teams collaborated on our first joint very successful project for Brazilian pharmaceutical company, demonstrating our combined capabilities.
Speaker Change: Service now plans to Premier and showcase the client solutions at service valves upcoming knowledge 2025 events in Las Vegas May six through eight or 25000 attendees are expected.
Seth Ravin: We also announced three new partnerships. First, we announced a new partnership with innovative security company, Valley Cyber, whose proven hypervisor security product has been integrated into our support for VMware solutions. Second, we announced a new partnership with Workday, certifying Rimini Street as a new provider of application management services for the platform. Hundreds of Rimini Street clients use Workday, and Rimini Street is now offering to run the software for our clients, lowering operating costs, eliminating staffing challenges, and improving system operation.
Speaker Change: We also announced three new partnerships.
Speaker Change: Yeah.
Speaker Change: We announced a new partnership with innovative security Company Valley Ciber has proven a hypervisor security product has been integrated into our support for Vmware solution.
Speaker Change: Second we announced a new partnership with Workday certifying Rimini Street as a new provider of application management services for the platform.
Speaker Change: Hundreds of Rimini Street clients use workday and Rimini Street is now offering to run the software for our clients lowering operating costs, eliminating staffing challenges and improving system operation.
Speaker Change: Okay.
Seth Ravin: Azario Almeida, Group Vice President, Global Partner Sales, Workday, stated, Rimini Street's addition as a Workday AMS partner will provide our community with valuable new capabilities for optimizing their Workday environment. Their established expertise in delivering excellent service and helping clients maximize their IT investment will empower workday customers choosing to work with them to achieve greater efficiency and derive more value from their deployment.
Speaker Change: Hi, Jerry O Almeda group, Vice President Global partner sales Workday stated Rimini. Street's addition is a workday a M. S partner will provide our community with valuable new capabilities for optimizing their workday environments.
Speaker Change: They're established expertise in delivering excellent service in helping clients maximize their investment will empower workday customers choosing to work with them to achieve greater efficiency and derive more value from their deployments.
Speaker Change: Okay.
Seth Ravin: Third, we announced a new strategic partnership with T-Systems North America where we will deliver an integrated approach to enterprise IT support based on Rimini Street's RiminiOne integrated support and management service for SAP, Oracle, and VMware. With a combination of Rimini Street's enterprise software expertise and T-Systems North America's deep knowledge of hosting the cloud infrastructure managed services, organizations will have the opportunity to extend the lifespan of their current IT products and releases while seamlessly adopting modern cloud and automation technologies such as our ServiceNow solution.
Speaker Change: Third we announced a new strategic partnership with T systems, North America, where we will deliver an integrated approach to enterprise. It supports based on Rimini Street's Rimini, one integrated support and management services for S AP Oracle and Vmware.
Speaker Change: With a combination of Rimini Street's enterprise software expertise and T systems, North America's deep knowledge of hosting and cloud infrastructure managed services organizations will have the opportunity to extend the lifespan of their current products. It releases, while seamlessly adopting modern cloud.
Speaker Change: And automation technologies, such as our service now solution.
Seth Ravin: Cesar Martinez, CEO and Chairman of the Board for T-Systems North America, stated, Our partnership with Rimini Street marks a significant step in delivering end-to-end IT solutions that offer enterprises greater flexibility with alternative roadmaps, efficiency, and cost savings.
Cesar Martinez: Cesar Martinez CEO and chairman of the Board for T Systems, North America stated our partnership with Rimini Street marks a significant step in delivering end to end solutions that offer enterprises, greater flexibility with alternative roadmaps efficiency and <unk>.
Speaker Change: Cost savings.
Seth Ravin: or a litigation of Rimini Street and Oracle have been in litigation for more than 15 years, including cases known as Rimini 1 and Rimini 2. 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 Rimini 1 permanent injunction that remains in effect. With respect to Rimini 2, the trial was completed in 2022, and we appealed the district court's order and injunction. In December 2024, the U.S. Court of Appeals issued many favorable rulings for us and later returned the case to the District Court for further proceedings on the open remaining matters.
Speaker Change: Oracle litigation update.
Speaker Change: Rimini Street, and Oracle opinion 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.
Speaker Change: Litigation has run its course and there are no current litigation activities related to repeat you want.
Speaker Change: However, there is a rimini one permanent injunction that remains in effect.
Speaker Change: With respect to Rimini two the trial was completed in 2022, and we appealed the district Court's order an injunction.
Speaker Change: In December 2020 for the U S Court of Appeals issued many favorable rulings for US and later returned the case to the district court for further proceedings on the open remaining matters.
Seth Ravin: Oracle sought a rehearing of the appeal, which was denied in February 2025. In April 2025, the District Court issued a modified Rimini 2 injunction that removed provisions related to findings vacated and overturned by the Appeals Court, and left only the provisions that prohibit Rimini Street's use of four marketing statements no longer in use, and prohibit certain practices involving Oracle copyright notices that ceased long ago. Our only remaining active litigation matters with Oracle and the District Court include whether Rimini is liable for certain legacy PeopleSoft development processes and activities. and if so, whether an injunction should prohibit these processes.
Speaker Change: Oracle sort of rehearing of the appeal, which was denied in February 2025.
Speaker Change: In April 2025, the district Court issued a modified Rimini, two injunction that removed provisions related to findings vacated and overturned by the Appeals court and left only the provisions that prohibit Rimini Street's use are for marketing statements no longer in use.
Speaker Change: And prohibits certain practices involving oracle copyright notices that ceased long ago.
Speaker Change: Our only remaining active litigation matters with Oracle in the district Court include whether romine is liable for certain legacy people soft development processes and activities and if so whether an injunction should prohibit these processes.
Seth Ravin: Oracle lost its claims with respect to its other product lines at issue at the Rimini 2 litigation, and in no case is Oracle entitled to any financial damage. The District Court stated its intention to bring the remaining case items, now solely related to Oracle's PeopleSoft product, to final resolution within a year. Additionally, in the appeals court, we are continuing to seek the return of $58.7 million in Oracle's attorney's fees and costs plus interest that we paid under court order in the fourth quarter of 2024 before the favorable appeals court opinion.
Speaker Change: Org lost its claims so this back to its other product lines that issue with the Rimini, two litigation and in no cases, oracle entitled to any financial damages. The District Court stated its intention to bring the remaining case items now solely related to oracles peoplesoft product to final.
Speaker Change: Solution within a year.
Speaker Change: Additionally, in the Appeals court, we are continuing to seek the return of $58 $7 million in oracle's attorneys' fees and costs plus interest that we paid under court order in the fourth quarter of 2024 before the favorable Appeals court opinion.
Seth Ravin: For additional information and disclosures regarding the company's litigation with Oracle, please see our disclosures on Form 10-Q, filed today, May 1, 2025, with the U.S. Securities and Exchange Commission. Please also note that, at this time, we are unable to provide material additional information beyond the disclosures and statements in our press releases, filings with the SEC, and court filings related to current Oracle litigation activity.
Speaker Change: For additional information and disclosures regarding the company's litigation with Oracle. Please see our disclosures on Form 10-Q filed today May <unk> 2025, with the U S Securities and Exchange Commission.
Speaker Change: Please also note that at this time, we are unable to provide material additional information beyond the disclosures and statements in our press releases filings with the SEC and court filings related to current Oracle litigation activity.
Speaker Change: Summary.
Seth Ravin: We remain focused on driving more leads, building more pipeline, and closing more business through detailed, methodical sales discipline and execution. We believe the shifts and uncertainties of de-globalization trends and global trade policy are causing organizations to reassess their IT plans and spending and believe our business will ultimately benefit. We remain confident that we're continuing to take the right actions and making the right investments in a cost-effective manner to reaccelerate growth and improve profitability, enhance shareholder value, and bring our litigation with Oracle to a successful conclusion.
Speaker Change: We remain focused on driving more leads building more pipeline and closing more business through detailed methodical sales discipline and execution.
Speaker Change: We believe this shifts and uncertainties of the globalization trends and global trade policy or causing organizations to reassess their plans and spending and believe our business will ultimately benefit.
Speaker Change: We remain confident that we are continuing to take the right actions and making the right investments in a cost effective manner to reaccelerate growth and improve profitability enhance shareholder value and bring our litigation with Oracle to a successful conclusion.
Michael Perica: Now, over to you, Michael. Thank you, Seth, and thank you for joining us, everyone. Q1 2025 results. Revenue for the first quarter was $104.2 million, a year-over-year decrease of 2.4%. Clients within the United States represented 48%, while international clients represented 52% of total revenue for the quarter. annualized recurring revenue was $396.2 million for the first quarter, a year over year decrease of 4.7%. Revenue retention rate for service subscriptions, which makes up 95% of our revenue, was 88%. with approximately 77% of subscription revenue, non-cancelable for at least 12 months. We note that, for the quarter, FX movements negatively impacted our total revenue by 1% during the quarter, compared to a negative impact of 0.8% for the prior year first quarter.
Speaker Change: Now over to you Michael.
Michael: Thank you Seth and thank you for joining us everyone.
Speaker Change: Q1 2025 results.
Revenue for the first quarter was $104 2 million a year over year decrease of two 4%.
Speaker Change: Clients within the United States represented 48%, while international clients represented 52% of total revenue for the quarter.
Speaker Change: Annualized recurring revenue was $396 2 million for the first quarter of year over year decrease of four 7%.
Speaker Change: Revenue retention rate for service subscriptions, which makes up 95% of our revenue was 88% with approximately 77% of subscription revenue noncancelable for at least 12 months we.
Speaker Change: We note that for the quarter FX movements negatively impacted our total revenue by 1% during the quarter compared to a negative impact of 0.8% for the prior year first quarter.
Speaker Change: Billings as defined in our press release for the first quarter were $79 4 million up seven 2% year over year billings, excluding the people soft associated billings increased 11, 3% on a year over year basis.
Michael Perica: Billings, as defined in our press release. For the first quarter were 79.4 million, up 7.2% year over year. Billings excluding the PeopleSoft Associated Billings increased 11.3% on a year over year basis. Gross margin for the first quarter was 61% of revenue, compared to 59.8% of revenue for the prior year first quarter. On a non-GAAP basis, which excludes stock-based compensation expense, litigation expense, and reorganization costs, gross margin was 61.5% of revenue for the first quarter, compared to 60.3% of revenue for the prior year first quarter. We are pleased with this gross margin level in spite of lower revenue, underscoring 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, and transformational offerings.
Speaker Change: Gross margin for the first quarter was 61% of revenue compared to 59, 8% of revenue for the prior year first quarter.
Speaker Change: On a non-GAAP basis, which excludes stock based compensation expense litigation expense and reorganization costs gross margin was 61, 5% of revenue for the first quarter compared to 63% of revenue for the prior year first quarter.
Speaker Change: We are pleased with this gross margin level in spite of lower revenue underscoring our continued focus on driving operational leverage to improve systems processes and global staffing models, while continuing to deliver best in class support for a wider array of support optimization and transformational offerings.
Michael Perica: 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 believe we have established a strong operating baseline across our full suite of offerings.
Speaker Change: Despite our methodical focus on gross margin improvement opportunities through efficiency.
Speaker Change: We will continue to balance gross margin improvement against investment needs to take advantage of new revenue growth opportunities and believe we have established a strong operating baseline across our full suite of products. Thanks.
Michael Perica: operating expense. Reorganization charges associated with our continuous cost optimization plan for the first quarter was $462,000. At the end of Q1, our net annualized cost reduction efforts totaled $24.3 million, reflecting our intentional slowing of aggressive reductions as we assess the ramp of our growth opportunities and the macro environment.
Speaker Change: Operating.
Speaker Change: Expenses.
Speaker Change: Reorganization charges associated with our continuous cost optimization plan for the first quarter was 462000.
Speaker Change: At the end of Q1.
Speaker Change: Our net annualized cost reduction efforts totaled $24 3 million, reflecting our intentional slowing up aggressive reductions as we assess the ramp of our growth opportunities and the macro environment.
Michael Perica: 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. Sales and marketing expenses as a percentage of revenue was 32.9% of revenue for the first quarter, compared to 36.7% of revenue for the prior year first quarter. on a non-GAAP basis, which excludes stock-based compensation expense, sales and marketing expenses as a percentage of revenue was 32% of revenue for the first quarter, compared to 36.3% of revenue for the prior year first quarter. General and administrative expenses as a percentage of revenue, excluding outside litigation costs, was 16.8% of revenue for the first quarter, compared to 17.2% of revenue for the prior year first quarter.
Speaker Change: 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.
Speaker Change: Sales and marketing expenses as a percentage of revenue was 32, 9% of revenue for the first quarter compared to 36, 7% of revenue for the prior year first quarter.
Speaker Change: On a non-GAAP basis, which excludes stock based compensation expense sales and marketing expenses as a percentage of revenue was 32% of revenue for the first quarter compared to 36, 3% of revenue for the prior year first quarter.
Speaker Change: General and administrative expenses as a percentage of revenue excluding outside litigation costs was 16, 8% of revenue for the first quarter compared to 17, 2% of revenue for the prior year first quarter.
Michael Perica: on a non-GAAP basis, which excludes stock-based compensation expense and litigation costs. GNA was 15.6% of revenue for the first quarter compared to 15.7% of revenue for the prior year first quarter. Professional fees and other costs of litigation was $1.9 million for the first quarter, compared to $2.9 million for the prior year first quarter.
Speaker Change: On a non-GAAP basis, which excludes stock based compensation expense and litigation costs.
Speaker Change: G&A was 15, 6% of revenue for the first quarter compared to 15, 7% of revenue for the prior year first quarter.
Speaker Change: Professional fees and other costs of litigation was $1 9 million for the first quarter compared to $2 9 million for the prior year first quarter.
Michael Perica: The net income attributable to shareholders for the first quarter was $3.4 million, or $0.04 per diluted share, compared to the prior year first quarter net income of $0.01 per diluted share. On a non-GAAP basis, net income for the first quarter was $8.4 million, or $0.09 per diluted share, compared to the prior year first quarter of $0.08 per diluted share. Our non-GAAP operating income, which excludes outside litigation spend, stock-based compensation, and reorganization expense was $14.5 million, or 13.9% of revenue for the first quarter, compared to 8.3% for the prior year first quarter. adjusted EBITDA defined in our press release.
Speaker Change: The net income attributable to shareholders for the first quarter was $3 4 million or <unk> <unk> per diluted share compared to the prior year first quarter net income of one cent per diluted share.
Speaker Change: On a non-GAAP basis net income for the first quarter was $8 4 million or.
Speaker Change: <unk> <unk> per diluted share.
Speaker Change: <unk> to the prior year first quarter of <unk> <unk> per diluted share.
Speaker Change: Our non-GAAP operating income, which excludes outside litigation spend stock based compensation and reorganization expense was $14 5 million or 13, 9% of revenue for the first quarter compared to eight 3% for the prior year first quarter.
Speaker Change: Adjusted EBITDA defined in our press release.
Michael Perica: was $15.3 million for the first quarter, or 14.7% of revenue, compared to the prior year first quarter of 10% of revenue.
Speaker Change: It was $15 3 million for the first quarter or 14, 7% of revenue compared to the prior year first quarter up 10% of revenue.
Michael Perica: balance sheet. We ended the first quarter, March 31st, 2025, with a cash balance and short-term investments of $122.6 million compared to $129 million for the prior year of first quarter.
Speaker Change: Balance sheet.
Speaker Change: We ended the first quarter March 31, 2025, with the cash balance and short term investments of $122 6 million.
Speaker Change: There are two $129 million for the prior year first quarter.
Michael Perica: on a cash flow basis. For the first quarter, operating cash flow increased $33.7 million compared to the prior year first quarter increase of $11.1 million. Additionally, the effective foreign currency impact was favorable by $2.8 million for the quarter compared to unfavorable foreign currency impact of $4.4 million for the prior year first quarter. Deferred Revenue as of March 31, 2025 was $256.4 million compared to deferred revenue of $254.3 million for prior year first quarter.
Speaker Change: On a cash flow basis.
Speaker Change: For the first quarter.
Speaker Change: Cash flow increased $33 7 million compared to the prior year first quarter increase of $11 1 million. Additionally.
Speaker Change: Additionally, the effective foreign currency impact was favorable by $2 8 million for the quarter.
Speaker Change: <unk> two unfavorable foreign currency impact of $4 4 million for the prior year first quarter.
Speaker Change: Deferred revenue as of March 31, 2025.
Speaker Change: Was $256 4 million.
Speaker Change: Compared to deferred revenue of $254 3 million for prior year first quarter.
Michael Perica: backlog. Also referred to as Remaining Performance Obligation, RPO, which includes the sum of bill deferred revenue and non-cancellable future revenue, was $553.1 million as of March 31st, 2025, compared to $556.9 million for prior year first quarter.
Speaker Change: Backlog.
Speaker Change: Also referred to as remaining performance obligation <unk>, which includes the sum of billed deferred revenue and noncancelable future revenue was.
Speaker Change: It was $553 1 million as of March 31, 2025, compared to $556 9 million for prior year first quarter.
Speaker Change: People soft update.
Michael Perica: PeopleSoft, though. in 2024. We announced our intent to wind down our services for Oracle's PeopleSoft product. In our last earnings call, we indicated that we were reevaluating the wind down decision. We completed that reevaluation and decided it was still the right decision to continue the wind down plan. We have made progress in reducing both the number of PeopleSoft clients and related revenue since announcing the widened PeopleSoft revenue was approximately 7.0 million or 7% of revenue for the three months ended March 31, 2025, compared to approximately 8.2 million or 8% of revenue for the prior year first quarter.
Speaker Change: In 2024.
Speaker Change: We announced our intent to wind down our services for oracles Peoplesoft product.
Speaker Change: In our last earnings call, we indicated that we were reevaluating the wind down decision.
Speaker Change: We completed that reevaluation and decided it was still the right decision to continue the wind down plan.
Speaker Change: We have made progress in reducing both the number of people soft clients and related revenue since announcing the wind down.
Speaker Change: People soft revenue was approximately 7.0 million or 7% of revenue for the three months ended March 31, 2025, compared to approximately $8 2 million or 8% of revenue for the prior year first quarter.
Michael Perica: Business Outlook. The company is continuing to suspend guidance until there is more clarity around impacts from current litigation activity before the U.S. federal courts in the company's ongoing litigation with Oracle. For additional information and disclosures regarding the company's litigation with Oracle, please see our disclosure in the company's Form 10-Q filed on May 1st, 2025 with the U.S. Securities and Exchange Commission.
Speaker Change: Business outlook.
Speaker Change: The company is continuing to suspend guidance 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.
For additional information and disclosures regarding the company's litigation with Oracle.
Speaker Change: Please see our disclosure in the company's Form 10-Q filed on May <unk> 2025, with the U S Securities and Exchange Commission.
Dean Pohl: This concludes our prepared remarks.
Speaker Change: This concludes our prepared remarks, operator, we'll now take questions.
Operator: Operator will now take questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have any question, please press the star followed by the one on your touchtone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any. One moment, please, for your first question.
Speaker Change: Okay.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have any question. Please press the star followed by the one on your Touchtone phone you will hear a problem that you had has been raised should you wish to decline from the polling process. Please press the star.
Speaker Change: Followed by that too.
Speaker Change: If you are using a speaker phone please lift the handset before pressing any keys.
Speaker Change: One moment. Please for your first question.
Speaker Change: Yeah.
Brian Kinstlinger: Your first question comes from the line of Brian Kinstlinger from Alliance Global Partners. Please go ahead. Great. Thanks so much. Good results.
Speaker Change: Your first question comes from the line of Brian Gaines Linger from Alliance Global Partners. Please go ahead.
Speaker Change: Great. Thanks, so much good results.
Seth Ravin: I wanted to start with the three partnerships you discussed, and while I'm sure they all have great potential, maybe you could help describe which of the three have the largest long-term potential in your view, and then alternatively, which ones do you expect will have the earliest impact meaningfully to your business? And in terms of service now, since it's the biggest help investors understand what a reasonable target for a timeframe of becoming meaningful is maybe two or 3% or at I think you're going to see meaningful in 2026. The rollout is extensive on a global basis.
Speaker Change: I wanted to start with the three partnerships you discussed and while I'm sure. They all have great potential maybe you could help describe which of the three largest long term potential in your view and then alternatively, which ones do you expect we'll have the earliest.
Speaker Change: Impact meaningfully to your business.
Brian: Sure Brian.
Speaker Change: You're obviously.
Speaker Change: I think the biggest one in total opportunity.
Speaker Change: Is without doubt the service now partnership.
Speaker Change: I think this is one that we truly believe has substantial global legs.
Speaker Change: I'm working directly with Bill Mcdermott.
Speaker Change: We have a vision.
Speaker Change: Aligned vision of being able to take out the latest technology that people want they want workflow. They want automation. They want the ability to have a single pane of glass to see with enterprise AI across the entire enterprise.
Speaker Change: And we can bring all of that technology on top of their existing systems without major expensive and risky upgrades to ERP and other components, that's a huge market opportunity.
Speaker Change: The ones with T systems for example.
Speaker Change: Is a opportunity for first and foremost with the assay side, where they have a very large S. A P base across the entire T systems operation globally, and we have the ability to extend the life of those systems for people, who do not want to move and don't find that the value.
Speaker Change: And it moved to S. P rise, which also involves a re platforming and the same is true with other providers out there who are looking for help for their customers. We don't want to move so I think that's a whole category unto itself that represents huge opportunities in the coming years.
Speaker Change: With all of those especially with the SAP <unk> client and then the workday of course, that's a very large set of customers that are on the platform.
Speaker Change: We're working closely with workday Theres, a lot of our customers that want to implement workday as part of their next generation systems, and we see a huge opportunity to run those systems for long term revenue. So that's that's sort of the makeup of those three and of course the security.
Speaker Change: With valley Cyber and all those are very important because it gives us security nobody else has even though even vmware themselves doesn't have this security. So it gives us a huge market opportunity to go after their 330000 customers.
Speaker Change: And in terms of service now since it's the biggest.
Speaker Change: Help investors understand what a reasonable target for a timeframe are becoming meaningful as maybe two or 3% of revenue.
Speaker Change: I think youre going to see meaningful in 2026. The rollout is extensive on a global basis. As I noted 6000 sellers are being handed a sales tools and playbooks from service now, but they have a lot of things to learn.
Seth Ravin: As I noted, 6,000 sellers are being handed sales tools and playbooks from ServiceNow. But they have a lot of things to learn, and they are premiering with us at many different events. I'm actually here in Korea today. We did an event here. We had 120 people where our team and the ServiceNow team presented our vision of the future and how to integrate that with existing systems. So, yeah, I think you got meaningful execution from a revenue perspective in 2026, but ramping much more significantly in the back half of this year as we put all the pieces together globally.
Speaker Change: Yeah.
Speaker Change: And they are pre mirroring with us at many different events.
Speaker Change: Actually here in Korea today, we did an event here, we had 120 people.
Speaker Change: Where our team and the service now team presented our vision of the future and how to integrate that with existing systems. So yeah, I think you've got meaningful meaningful execution from a revenue perspective in 'twenty, six but ramping much more significantly than the <unk>.
Speaker Change: <unk> half of this year as we put all the pieces together globally.
Seth Ravin: Great.
Speaker Change: Great.
Brian Kinstlinger: Touching on the U.S. federal government, maybe I missed it, you talked about it. You got the press release. You talked about it on your conference call a couple, about a month and a half ago.
Speaker Change: Touching on the U S. Federal government, maybe I missed it you talked about it you've got the press release, you talked about it in your conference call couple of about a month and a half ago and.
Seth Ravin: First of all, can you size the maintenance from Oracle and SAP they generate from the federal government? And then second, given the pace Doze has cut costs, can you help us understand how you think about the sales cycle? And would you need meaningful clearances? Do you have clearances to handle that business or would you have to go through that process for your Well, it depends. As you said, it's a big amount of Oracle, SAP, VMware, and a thousand other products that are used by the U.S. federal government.
Speaker Change: First of all can you size it.
Speaker Change: Maintenance from Oracle and SAP, they generate from the federal government and then second given the pace goes.
Speaker Change: Jos has cut cost can you help us understand how you think about the sales cycle and would you need meaningful.
Speaker Change: <unk>.
Speaker Change: Clearances do hot clearing schools to handle that business or would you have to go through that process for your people.
Speaker Change: Well it depends as you said, it's a big it's a big amount of or call S. AP Vmware and a thousand other products that are used by the U S. Federal government now we service governments.
Seth Ravin: Now, we service governments within military, in various countries, so we do service customers with very high clearance for some of our teams. So we do have the ability to bring on teams and manage high security clearance operations, because we already do it. And the opportunities, of course, between, say, a Pentagon, a defense, versus the rest of the U.S. government are massive. I would measure the size of that opportunity in terms of billions of dollars on an annualized basis that are spent in software support and upgrades and migrations that are being forced on the government as well, just like private industry.
Speaker Change: Within the military.
Speaker Change: In various countries, we do service customers with very high clearance offer some of our teams. So we do have the ability to.
Speaker Change: Two to bring on teams and manage high security clearance operations, because we already do it.
Speaker Change: And the opportunities of course between say a Pentagon the defense versus the rest of the of the U S. Governments are massive I would measure the size of that opportunity in terms of billions.
Speaker Change: <unk> of dollars on an annualized basis that are spent in software support and upgrades and migrations that are being forced on the government as well just like private industry.
Seth Ravin: So for us, it's an exciting new move into the U.S. federal government. We haven't been there before. We did some work for the IRS in the past, but that's it, in the federal government. But now we have the opportunity to expand, like we're doing with governments around the world.
Speaker Change: For us, it's an exciting new move into the U S. Federal government, we haven't been there before we did some work for the ire rats in the past, but that's it in the federal government, but now we have the opportunity to expand like we're doing with governments around the world.
Speaker Change: Great. My last question is deferred revenue.
Brian Kinstlinger: My last question is deferred revenue is up for the first time in several years on a year-over-year basis, looking at the quarter. Does this give you confidence that excluding the impacts of PeopleSoft, you'll cross the year-over-year growth mark this year? Is it still uncertain?
Speaker Change: Is up for the first time in several years on a year over year basis looking at the quarter.
Speaker Change: Does this give you confidence there.
Speaker Change: Excluding the impacts of people shocked.
Speaker Change: Youll cross the year over year growth Mark. This year is it still uncertain and then have you changed your view of the exit of people soft in terms of timeline I think you've communicated its going to be gradual and over time is that still the case or has that changed at all.
Seth Ravin: And then have you changed your view of the exit of PeopleSoft in terms of timeline? I think you've communicated it's going to be gradual, and over time, is that still the case or is that changing? Well, I think we talked in prior calls, we said that, you know, a three year amortization of the wind down, we thought was a reasonable period, given the fact we have, I think we're down now to only 130 customers. So we've significantly reduced the number of customers over the time since we announced the wind down of PeopleSoft as a plan.
Speaker Change: Well I think we talked in prior calls we said that.
Speaker Change: A three year amortization of the wind down we thought was a reasonable period given the fact, we have I think we're down now to only 130 customers. So we've significantly reduced the number of customers over the time since we announced the wind down to people soft as a plan.
Seth Ravin: So we've continued down that track, and you know, it's going to be lumpy at different size customers, they come off a different contract period, so it's not going to be a straight line across an amortized three years, it will be lumpy, there will be bigger quarters than others. But overall, Brian, I would say that, of course, we have confidence that despite the headwinds of the reduction of PeopleSoft on the revenue line, the opportunities we have to grow the business are bigger than that. And yes, we do expect at some point in time to cross over and still have a positive and achieve a positive revenue growth, despite the headwinds of PeopleSoft continuing to wind down.
Speaker Change: So we continue down that track and you know, it's going to be lumpy at different sized customers. They come off a different contract period. So it's not going to be a straight line across an amortized three years, it will be lumpy, there will be bigger quarters and others.
Speaker Change: But overall, Brian I would say that of course, we have confidence that despite the headwinds of the reduction of people soft on the revenue line. The opportunities we have to grow the business are bigger than that and yes, we do expect that some.
Speaker Change: Point in time to crossover and still have a positive and achieve a positive revenue growth. Despite the headwinds of people soft continuing to wind down.
Brian Kinstlinger: I just make one comment that if there are huge chunks of people's soft revenue you know are coming off, while not giving guidance, hopefully you can give us a clue of if that's about to happen so investors and sell-side analysts alike can gauge that. Thank you. Sure. Thank you, bro. Thank you.
Speaker Change: Great I, just make one comment.
Speaker Change: There are huge chunks of People's soft revenue you know are coming up now.
Speaker Change: Not giving guidance hopefully you can give us a clue of if that's about to happen so investors and sell side analysts alike and can gauge that thank you.
Speaker Change: Sure. Thank you Brad.
Speaker Change: Okay.
Speaker Change: Okay.
Cole Erskine: Your next question comes from the line of Derek Wood from TD Cowen. Please go ahead. Great. Thanks, guys. This is Cole. I'm for Derek.
Speaker Change: Thank you. Your next question comes from the line of Derrick Wood from TD Cowen. Please go ahead.
Speaker Change: Great. Thanks, guys. This is coal on for Derek.
Seth Ravin: I just want to start with the continued cost saving measures into this year. Is that going to be coming out of go to market or other, you know, areas of headcount where you guys are going to look to, you know, get a little bit more efficient, some more color, that would be great. So, I will tell you that we've been, we've reduced over a hundred heads as you saw the count of employees. So, we've been very focused on streamlining internal operations, first of all, from IT on down. Our processes across the company, reducing administrative costs, just as we're doing for customers.
Speaker Change: Wanted to start with the continued cost saving measures into this year is that going to be coming out of go to market or other.
Speaker Change: You know areas of head count, where you guys are going to look to.
Speaker Change: Get a little bit more efficient some more color there would be great.
Speaker Change: Jericho.
Speaker Change: I will tell you that we've been we've reduced over 100 heads that you saw the count of employees. So we've been very focused on streamlining internal operations first of all.
Speaker Change: From I T on down our processes across the company, reducing administrative costs just as we're doing for customers. We brought on a new chief.
Seth Ravin: We brought on a new Chief Information Officer, Global, and he is very focused on driving technology into every part of the business. And we are reducing labor costs, and we are, in fact, installing ServiceNow in new areas that we're going to be leaders in, in the use of ServiceNow. But that is becoming a core platform for us across the company, just as we're advocating for our customers. So, that is in progress. You're going to see some shift of personnel. Some of those costs are related to right-sizing the teams and putting them in the right area.
Speaker Change: Chief Information Officer Global.
Speaker Change: And he is very focused on driving technology into every part of the business and we are reducing our labor costs and we are in fact installing service now.
Speaker Change: In new areas that we're going to be leaders in the use of service now, but that is becoming a core platform for us across the company just as we're advocating for our customers. So that is in progress, we youre going to see some shift of personnel.
Speaker Change: Some of those costs are related to right sizing the teams and putting them in the right area, we've grown Brazil to hundreds of employees that's on its way to a target of a thousand.
Seth Ravin: We've grown Brazil to hundreds of employees. That's on its way to a target of 1,000. India has grown. That's on its way to a target of 1,000.
Speaker Change: India has grown that's on its way to a target of 1000.
Seth Ravin: And we announced the launch of our Kuala Lumpur operation. We have a very large customer base in Malaysia and doing very well there. And we announced the opening of a center that we're going to hire 1,000 engineers. So, our core centers are growing. That changes the cost factors on a global basis. And, again, streamlined operations.
Speaker Change: And we announced the launch of our color lawn poor operation, we have a very large customer base in Malaysia, and doing very well, there and we announced.
Speaker Change: The opening of a center with that we're going to hire 1000 engineers. So our core centers are growing that changes the cost factors on a global basis, and and again streamlined operations.
Cole Erskine: Great, thanks. And then just one more.
Speaker Change: Great. Thanks, and then just one more Seth.
Seth Ravin: Seth, the comments on the macro. Do you have any... Proof of that that that you could share or is this just a broader look at it and you know on the flip side of that too, is there anything? going on, you know, between macro tariffs, etc, that you think, you know, might have a negative impact to growth here in the in the short term. That'd be helpful. Thanks. helpful. Thanks. Sure. Thank you.
Speaker Change: Yeah, the comments on the macro.
Speaker Change: Being a positive catalyst for the business.
Speaker Change: Do you have any.
Speaker Change: Proof points of that that the.
Speaker Change: You could share or is it.
Speaker Change: Just a broader look at that and you know on the flip side of that too is there anything <unk>.
Speaker Change: On you know between macro tariffs et cetera that you think might have a negative impact to.
Speaker Change: The growth here in the in the short term.
Speaker Change: Would be helpful. Thanks.
Speaker Change: Sure net positive and that's why I use the term net positive because.
Speaker Change: On the plus side whenever businesses and even governments don't know where to spend money I'll just spend money. We've seen this 2001 and the dot com meltdown 2007, and nine in the banking meltdown in 'twenty, one when we had the Covid meltdown.
Speaker Change: All different scenarios, but what happens with any of these organizations is big projects get cancelled people move back to cash because cash is king and they want to hold onto that cash they'd lower cost because again, we've got rising labor costs overall costs.
Speaker Change: Duction are higher but people are having a hard time, raising topline prices because again highly competitive fiercely competitive world and what's getting squeezed a profit and when profits get squeezed.
Speaker Change: Just get canceled budgets get reduced and we are the only people that can come in.
Speaker Change: Have a methodology with our smart path methodology, where we could reduce costs of labor and reduced cost of system maintenance by taking out the vendors maintenance, replacing it with the Rimini Street saving them up to 90% and total operating costs when they don't have to do upgrades in <unk>.
Speaker Change: Gration and then using that to fund all of this new innovation that's needed for growth. So that we can do both cost cutting and growth in our methodology and we do all of this within the budget not above the budget and that is an amazing opportunity for companies. So yes I do.
Speaker Change: That that the market and the dynamics and the macro are positive for US now as we warned previously even during the pandemic.
Speaker Change: You got to watch your renewables because companies are going to be under potential cost pressure. They are going to be under some cash pressure. That's the side of the business you watch we did very well in and holding our our renewals through 'twenty. One we saw that we did some great things, we helped customers who.
Speaker Change: We're in trouble.
Speaker Change: By extending payment terms are we gave them quarterly payments for example, the state of annual upfront because we have the cash capability to do that and in exchange, we ask for things like extended contract terms, which don't show up and so those are the things that are that are really good when we when we give something to get something.
Speaker Change: That becomes a positive for long term business as well.
Speaker Change: Helpful. Thanks.
Sure Tom.
Speaker Change: Thank you there are no further questions at this time I would now like to turn the conference back to Seth Ravin for.
Operator: There are no further questions at this time.
Seth Ravin: I would now like to turn the conference back to Seth Ravin for closing remarks. Thank you very much. I appreciate everybody joining us. Obviously, we're entering some interestingly complex macro world of deglobalization, and we're watching supply chain challenges. We're watching tariff wars. All of this will play out, we believe, in the months ahead. At Rimini Street, we believe we are well prepared to help companies navigate these changes.
Seth Ravin: Your closing remarks.
Seth Ravin: Thank you very much appreciate everybody joining us obviously, we're entering some interestingly complex macro world of de globalization and we're watching the supply chain challenges, we're watching tariff wars. All of this will play out we believe.
Speaker Change: <unk> in the months ahead.
Speaker Change: Rimini Street, we believe we are well prepared to help companies navigate these changes.
Seth Ravin: We look forward to sharing more information with you on our second quarter company call when we have this at the end of the second quarter results. Thank you very much and appreciate everybody joining us today. Thank you.
Speaker Change: And we look forward to sharing more information with you on our second quarter company call. When we have this at the end of the second quarter results. Thank you very much and appreciate everybody joining us today. Thank you.