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Rimini Street, Inc. (RMNI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue rose 1.0% YoY to $104.1M, with gross margin expanding to 60.4% (from 59.1% YoY); GAAP EPS turned positive to $0.32, aided by litigation settlement proceeds, while non-GAAP net was approximately breakeven at -$0.1M .
  • Mix was mixed: international revenue grew 6.4% YoY, but U.S. revenue fell 4.5% YoY; ARR declined 1.3% YoY to $394.1M despite retention improving to 90% (from 88%) .
  • Operating income surged to $41.2M vs a loss in the prior year, primarily due to recognizing ~$36.2M of litigation settlement income; adjusted EBITDA improved to $13.0M vs $8.8M YoY .
  • Guidance remains suspended, but management plans to reinitiate at an Analyst Day in Q4—key catalysts include the Oracle settlement removing a long-standing overhang and anticipated guidance reintroduction .

What Went Well and What Went Wrong

What Went Well

  • Gross margin sustained >60%; “we are pleased with this gross margin level in excess of 60%,” underscoring operational leverage while investing for growth .
  • Oracle litigation settlement recognized ~$36.2M in Q2, turning GAAP earnings positive; CFO detailed ~$36.2M litigation settlement income and ~$1.7M interest related to the recovery .
  • Execution and pipeline quality improved: >70 quota-carrying sellers, higher quota attainment, and close rates >30% of pipeline; momentum in VMware support and alliances (ServiceNow, Dayforce, Merlin Cyber) .

What Went Wrong

  • ARR declined 1.3% YoY to $394.1M and U.S. revenue fell 4.5% YoY, highlighting domestic demand softness despite international growth .
  • Operating cash flow deteriorated by $17.8M in Q2; balance sheet movements weighed on cash generation despite FX tailwinds .
  • Subscription revenue dipped and non-GAAP net swung to a slight loss in Q2, reflecting underlying profitability headwinds after normalizing for litigation items .

Financial Results

Core P&L and Profitability (sequential comparison)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$114.2 $104.2 $104.1
Gross Margin %63.7% 61.0% 60.4%
Operating Income ($USD Millions)$14.9 $9.4 $41.2
Net Income ($USD Millions)$6.7 $3.4 $30.3
Diluted EPS ($USD)$0.07 $0.04 $0.32
Adjusted EBITDA ($USD Millions)$20.0 $15.3 $13.0

YoY and Estimate Context (Q2 only)

MetricQ2 2024Q2 2025Consensus (S&P Global)
Revenue ($USD Millions)$103.1 $104.1 N/A*
Diluted EPS ($USD)$(0.01) $0.32 N/A*
Adjusted EBITDA ($USD Millions)$8.8 $13.0 N/A*
Gross Margin %59.1% 60.4% N/A*

Consensus estimates were unavailable from S&P Global at the time of analysis. Values retrieved from S&P Global.*

Segment and KPI Breakdown

MetricQ4 2024Q1 2025Q2 2025
U.S. Revenue ($USD Millions)$53.1 $50.1 $49.2
International Revenue ($USD Millions)$61.1 $54.1 $55.0
Subscription Revenue ($USD Millions)$109.1 $99.0 $98.5
Subscription Revenue (% of Total)95.5% 95.0% 94.6%
Annualized Recurring Revenue ($USD Millions)$414.8 $396.2 $394.1
Active Clients (Count)3,081 3,092 3,060
Revenue Retention Rate (%)88% 88% 90%
Calculated Billings ($USD Millions)$172.1 $79.4 $110.6
Adjusted Calculated Billings ($USD Millions)N/AN/A$107.9
PeopleSoft Revenue (% of Total)N/AN/A~6%
Backlog/RPO ($USD Millions)N/AN/A$589.8

Notes: Adjusted Calculated Billings excludes PeopleSoft; PeopleSoft % provided in the call.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company Guidance (overall)FY 2025Suspended due to ongoing Oracle litigation Plan to reinitiate guidance at Analyst Day in Q4 Reinstatement planned
PeopleSoft Service RevenueThrough June 30, 2028Wind-down announced in 2024 (no date specified in prior releases) Formal agreement to wind down all PeopleSoft service revenue by June 30, 2028 Timeline formalized
Capital Returns (Repurchase Authorization)OngoingBoard authorization $12.5M per year, $50M aggregate (in place) Authorization remains; management evaluating uses post-settlement Maintained

No quantitative ranges for revenue, margins, OpEx, OI&E, tax rate, or dividends were provided in Q2 2025. Management stated guidance will be reintroduced at the forthcoming Analyst Day .

Earnings Call Themes & Trends

TopicQ4 2024 (Prior-2)Q1 2025 (Prior-1)Q2 2025 (Current)Trend
AI/technology initiativesAnnounced ServiceNow partnership to unlock value in existing ERP; expanded Protect/Connect suites Launched Rimini Manage for Workday; T-Systems partnership; Protect for VMware/Nutanix Packaged services for ServiceNow; Dayforce partnership; University of Melbourne adopts Rimini Manage/Consult for Salesforce Broadening partner-led innovation portfolio
Partnerships/channelsBuilding alliances; VMware survey highlights demand Workday AMS; T-Systems NA; multiple awards enhancing brand Merlin Cyber public sector partnership; Dayforce community partner designation Expanding channel leverage
Tariffs/macroMacro headwinds noted; FX impacts Continued caution tied to litigation/guidance posture CEO: deglobalization/tariffs disrupting supply chains; positioning Rimini to help navigate complexity Macro remains volatile; solution positioning positive
Regulatory/legalLitigation overhang persisted; guidance suspended Guidance suspended pending court clarity Settlement agreement with Oracle (Rimini II) and recognition of recovery; plan to reinitiate guidance Legal overhang easing
Product performanceVMware support demand indicated in survey Introduced Protect for hypervisors; Manage enhancements Continued acceleration in VMware support; billings driven by new subscriptions and project services Strengthening uptake
Regional trendsInternational growth; U.S. softness in Q4 U.S. down, International up modestly International +6.4% YoY; U.S. -4.5% YoY International resilient; U.S. still soft
PeopleSoft wind-downAnnounced wind-down plans Ongoing wind-down; litigation context Formalized end-date by 6/30/2028; PeopleSoft revenue ~6% in Q2 (vs ~8% prior-year Q2) Execution progressing

Management Commentary

  • CEO: “We experienced growing sales momentum… continued acceleration in sales of our new support for VMware… we believe we will continue to see growing sales opportunities across the entire solution portfolio” .
  • CEO on strategy: “Rimini Smart Path… three service pillars: support, optimize, and innovate,” leveraging ServiceNow AI to modernize ERP without costly upgrades .
  • CEO on settlement impact: “This is a new chapter… substantial number of customers now enter… partnerships we were held off from before” .
  • CFO: “We are pleased with [gross margin] level in excess of 60%… underscoring our continued focus on driving operational leverage” .
  • CFO: Recognized ~$36.2M litigation settlement income and ~$1.7M interest; net income $30.3M or $0.32 diluted EPS; non-GAAP net loss ~$79k .

Q&A Highlights

  • Litigation removal as commercial catalyst: Management expects previously hesitant prospects and partners to re-engage; pipeline and retention should benefit over time, with initial impact potentially as early as Q3 .
  • Macro/tariffs: CEO flagged deglobalization and tariff uncertainty as broad disruptions; Rimini positions offerings to help clients adapt IT to new supply-chain realities .
  • Cost structure: Reorganization costs to continue selectively as the company reallocates savings toward growth skill sets; litigation spend expected to decline over time with wind-down .
  • Capital returns: Board authorization of $12.5M/year (aggregate $50M) remains; buybacks are more top-of-mind post-settlement, alongside inorganic opportunities .
  • Guidance: No near-term quantitative guidance; reinitiation planned at Analyst Day in Q4 .

Estimates Context

  • S&P Global Wall Street consensus for Q2 2025 revenue and EPS was unavailable at the time of analysis; therefore, formal beat/miss versus consensus cannot be determined. Values retrieved from S&P Global.*
  • Qualitatively, GAAP EPS positivity was primarily driven by litigation settlement income; non-GAAP profitability remained constrained, suggesting estimates may need to parse GAAP vs non-GAAP impacts in forward models .

Key Takeaways for Investors

  • The Oracle settlement materially reduces legal overhang and should improve prospect conversion, alliances, and retention over coming quarters—watch for pipeline and ARR inflection into 2H25 and 2026 .
  • Mix matters: International growth offset U.S. softness; monitor U.S. demand recovery and subscription revenue stabilization to support ARR trends .
  • Margin baseline >60% appears sustainable while investing in growth; sequential adjusted EBITDA softness suggests continued investment and mix effects—track progress versus Rule-of-40 ambitions (management referenced ~13% today) .
  • PeopleSoft wind-down is progressing (formal end by 6/30/2028) and will mask some growth optics; focus on ex-PeopleSoft adjusted billings and new logos to gauge underlying momentum .
  • Near-term catalysts: Analyst Day guidance reintroduction and further partner/channel announcements (ServiceNow, Dayforce, Merlin Cyber) that can drive pipeline leverage and revenue diversification .
  • Cash flow caution: Q2 operating cash flow declined $17.8M; monitor cash conversion and deferred revenue trajectory alongside RPO growth ($589.8M) .
  • Capital allocation: With ~$37.9M recovered and buyback authorization in place, potential repurchases and inorganic moves could support shareholder returns and strategic expansion .