Rimini Street, Inc. (RMNI)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 showed resilient profitability and cash generation despite modest revenue contraction; billings grew year over year, gross margin expanded, and non-GAAP profitability improved while guidance remains suspended pending Oracle litigation clarity .
• Mix was favorable outside the U.S. (international up, U.S. down), and subscription remained the vast majority of revenue; PeopleSoft wind-down continued, pressuring top-line but helping mix and cost allocation over time .
• Strategic momentum: management highlighted advancing partnerships (ServiceNow, Workday AMS, T‑Systems) and a robust VMware security offering with Vali Cyber—positioned as medium-term growth drivers .
• Litigation update: Appeals court rulings favorable; modified injunction narrowed; remaining matters limited to legacy PeopleSoft processes and no monetary damages; court aims to resolve within ~12 months—an important near-term catalyst for the stock narrative .
• With consensus estimates unavailable via S&P Global, investor focus shifts to the improving margin/billings trajectory, partnership pipeline, and litigation timeline as primary trading catalysts (see Estimates Context) .

What Went Well and What Went Wrong

• What Went Well

  • Billings growth with mix improvement: billings rose year over year, led by EMEA/APAC and a mix of new subscriptions and project-based services; ex‑PeopleSoft billings rose double-digits. “We believe…better sales execution…reflected in the 7.2% year‑over‑year improvement in quarterly billings.” .
  • Margin expansion and cost discipline: gross margin expanded vs. prior year; sales & marketing ratio decreased; non‑GAAP operating income and adjusted EBITDA improved. Management emphasized “operational leverage through improved systems, processes and global staffing models.” .
  • Strategic partnerships and product breadth: ServiceNow GTM rollout (6,000 sellers playbook), Workday AMS launch, and T‑Systems collaboration; VMware security enhanced via Vali Cyber—broadening addressable market and enabling cross‑sell .

• What Went Wrong

  • Revenue decline and U.S. softness: total revenue contracted year over year; U.S. revenue declined while international grew modestly, reflecting ongoing domestic headwinds .
  • PeopleSoft wind‑down still a top‑line headwind: revenue contribution fell year over year as the program continues; management reaffirmed the multi‑year, lumpy wind‑down trajectory .
  • FX and macro overlays: management cited FX as a drag on revenue this quarter and reiterated macro renewals watchfulness; guidance remains suspended pending litigation, limiting visibility .

Financial Results

Revenue, profitability, and billings vs prior year and prior quarter

Revenue mix and subscription profile

Key KPIs and balance sheet indicators

Non‑GAAP adjustments (Q1 2025): litigation costs and related recoveries ($1.925m), stock‑based comp ($2.702m), and reorganization costs ($0.462m), driving non‑GAAP operating income and adjusted EBITDA uplift . FX movements reduced total revenue by ~1% year over year in Q1 2025 .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We…maintained positive momentum in billings and cost controls…a notable acceleration in sales of our new support subscriptions for VMware…improved new logo acquisition…5 new client sales transactions…TCV over $1 million.”
• “ServiceNow rolled out the Rimini Street sales playbook to their approximately 6,000 global sellers…our engineering teams collaborated on our first joint very successful project.”
• “We…decided it was still the right decision to continue the [PeopleSoft] wind down plan…PeopleSoft revenue was approximately $7.0 million or 7% of revenue…vs approximately $8.2 million or 8%…prior year.”
• Litigation: “Appeals…issued many favorable rulings…District Court issued a modified…injunction…only provisions that prohibit…4 marketing statements…[and] certain practices…that ceased long ago…no case is Oracle entitled to any financial damages…intention to bring…to final resolution within a year.”
• Profitability and operations: “Gross margin was 61%…we are pleased with this…underscoring our continued focus on…systems, processes and global staffing models.”

Q&A Highlights

• Partnership ramp and revenue impact: Management sees the largest long‑term opportunity with ServiceNow; expects “meaningful” revenue contribution in 2026, with ramp in back half of 2025 as GTM scales .
• U.S. Federal opportunity: Management framed federal spending on enterprise software support/upgrades as “billions” annually, citing prior experience with high‑clearance work and intent to expand coverage .
• Crossing back to growth: Deferred revenue improvement supports confidence in returning to growth excluding PeopleSoft; PeopleSoft exit remains lumpy over an estimated ~3‑year horizon .
• Cost actions and footprint: Company is streamlining operations, shifting staffing to scalable hubs (Brazil, India, Kuala Lumpur), and deploying ServiceNow internally to drive efficiency .
• Macro/FX: Macro seen as a net positive for Rimini’s value proposition; FX reduced revenue ~1% year over year; management remains attentive to renewals in tighter environments .

Estimates Context

S&P Global consensus for Q1 2025 revenue and EPS was unavailable; therefore, we cannot quantify beats/misses vs. Street. Focus shifts to y/y and q/q comparisons and to non‑GAAP margin and billings trajectory for near‑term estimate revisions .
Note: Consensus values were requested from S&P Global but were unavailable for Q1 2025; values marked N/A* below. Values retrieved from S&P Global.

Where estimates may adjust: given margin execution (opex ratio reductions; non‑GAAP profitability strength) and billings growth, forward models may shift mix and profitability assumptions upward while maintaining cautious revenue trajectories until PeopleSoft headwinds and U.S. softness abate .

Key Takeaways for Investors

• Profitability quality: Expanding gross margin, lower S&M ratio, and higher non‑GAAP operating income and adjusted EBITDA indicate structural efficiency improvements that can sustain through mix shifts .
• Growth under the hood: Billings growth and EMEA/APAC strength offset U.S. softness; ex‑PeopleSoft billings growth was stronger, suggesting underlying demand health .
• Medium‑term catalysts: ServiceNow GTM scale‑up, Workday AMS entry, T‑Systems partnership, and VMware security differentiation expand TAM and cross‑sell vectors for 2025–2026 .
• Litigation de‑risking: Appeals outcome narrowed injunction scope, no damages, and a stated path to resolution within ~12 months—reducing an overhang and potentially unlocking guidance resumption .
• Capital and cash: Sequential cash improvement provides flexibility to support GTM and delivery investments while managing through PeopleSoft wind‑down .
• Watch‑items: U.S. demand softness, FX headwinds, and retention at 88% warrant monitoring; however, management highlights process discipline on renewals and pricing .
• Trading lens: With Street estimates unavailable, price action is likely to key off margin/billings momentum, partnership updates (notably ServiceNow milestones), and litigation milestones that could enable guidance reinstatement .

Management disclosed and reconciled non‑GAAP measures; add‑backs included litigation, SBC, and reorganization costs; investors should consider both GAAP and non‑GAAP views when assessing sustainable earnings power .