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Rimini Street, Inc. (RMNI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $114.2M (+1.9% YoY) with GAAP diluted EPS of $0.07; gross margin expanded to 63.7%, aided by a slightly over $5M one-time client event that brought forward revenue into the quarter .
  • Billings grew 7.1% YoY to $172.1M; Annualized Recurring Revenue (ARR) ended at $414.8M (-4.1% YoY). International strength (up 10.5% YoY) offset U.S. softness (down 6.5% YoY) .
  • Management suspended formal guidance pending Oracle litigation clarity but expects to return to providing guidance in 2025; CFO projects outside litigation expense near $10M for FY2025 .
  • Potential stock catalysts: clarity and potential recovery of the $58.5M paid to Oracle, guidance reinstatement, VMware support momentum and the ServiceNow partnership expanding ERP modernization and AI workflows .

What Went Well and What Went Wrong

What Went Well

  • Billings growth and international rebound: “billings…up 7.1% YoY,” led by LATAM, EMEA and APAC; U.S. bookings higher YoY .
  • VMware traction and differentiated security: dozens of customers across five continents; VMware support survey shows 79% would stick with perpetual software and 99% would consider continuing if support is available .
  • Margin execution and client satisfaction: gross margin improved to 63.7% (helped by the one-time revenue), with “support client case satisfaction…over 4.9 out of 5.0” reflecting operational discipline .

What Went Wrong

  • ARR and retention pressure: ARR fell to $414.8M (-4.1% YoY); revenue retention rate slipped to 88% from 90% in 2023 .
  • U.S. revenue softness and litigation burden: U.S. revenue fell 6.5% YoY; FY2024 recognized a $58.5M litigation settlement expense and paid $58.5M to Oracle in Q4, driving a full-year GAAP net loss .
  • Guidance suspended and ongoing reorganization: No formal financial guidance; cost optimization continues with restructuring charges ($1.1M in Q4) and expected additional reorg costs in 2025 .

Financial Results

Sequential Trend (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$103.1 $104.7 $114.2
GAAP Diluted EPS ($)$(0.01) $(0.47) $0.07
Non-GAAP Diluted EPS ($)N/AN/A$0.12
Gross Margin (%)59.1% 60.7% 63.7%
Adjusted EBITDA ($USD Millions)$8.8 $13.7 $20.0

YoY Comparison (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$112.1 $114.2
GAAP Diluted EPS ($)$0.10 $0.07
Non-GAAP Diluted EPS ($)$0.19 $0.12
Gross Margin (%)61.0% 63.7%
Operating Income ($USD Millions)$11.5 $14.9
Adjusted EBITDA ($USD Millions)$21.3 $20.0

Geographic Revenue Mix

MetricQ2 2024Q3 2024Q4 2024
U.S. Revenue ($USD Millions)$51.5 $51.6 $53.1
International Revenue ($USD Millions)$51.7 $53.1 $61.1

KPIs and Operating Metrics

MetricQ2 2024Q3 2024Q4 2024
Subscription Revenue ($USD Millions)$99.9 (96.8%) $100.4 (95.9%) $109.1 (95.5%)
Annualized Recurring Revenue ($USD Millions)$399.4 $401.5 $414.8
Active Clients (count)3,007 3,097 3,081
Revenue Retention Rate (%)88% 89% 88%
Calculated Billings ($USD Millions)$111.610 $65.193 $172.096
Deferred Revenue, end of period ($USD Millions)$262.793 $223.314 $281.197

Other Q4-only items (context): Backlog $587.9M; Deferred revenue $281.2M; cash + short-term investments $88.8M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Overall financial guidance (Revenue/EPS/etc.)FY2025Suspended (Q3’24) Suspended (Q4’24); plan to return in 2025 Maintained suspended; intent to resume
Outside litigation expenseFY2025N/A~$10M expected for non-trial year New disclosure
Reorganization (restructuring) costsFY2025Expect additional Q4’24 reorg costs Expect additional reorg costs during 2025 Extended timeline
PeopleSoft services outlookFY2025+Wind-down initiated (Q3’24) Reassessing exit given litigation rulings and demand Reconsidering strategy

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/Technology initiativesClient wins investing in AI; VMware services launched Mercury NZ reinvesting in AI/ML; continued VMware rollout ServiceNow partnership to enable ERP modernization + AI workflows Strengthening
VMware supportLaunch of Rimini Support/Protect/Consult for VMware Clients across four continents; early traction Dozens of customers; bundled hypervisor security; survey shows demand Accelerating
Litigation with OracleOngoing compliance costs referenced $58.5M settlement expense accrued; impact on results Ninth Circuit decision vacating much of trial rulings; seeking return of $58.5M; guidance to resume in 2025 Improving clarity
Cost optimizationReorg costs ($3.2M); optimization began Reorg costs ($1.4M); optimization ongoing Net annualized cost reductions $18M at Q4; $22M at mid-Q1’25 Progressing, balanced with growth investments
PeopleSoftDecision to wind down services Wind-down project underway; materiality ~8–9% historical Exit reassessed due to litigation outcomes and demand Reevaluating
Regional trendsIntl down slightly; U.S. down U.S. down 7.4% YoY; Intl up 2.7% U.S. down 6.5% YoY; Intl up 10.5% Intl strengthening
Federal/Gov’t exposureN/AN/ABuilding federal sales; Army uses security package; pursuing cost reductions in federal sector Emerging focus
Macro/TariffsN/AN/AManagement sees uncertainty (tariffs, globalization) favoring Rimini’s value proposition Supportive backdrop

Management Commentary

  • Strategy and growth: “We remain focused on…reaccelerate growth and improve profitability…[and] expect to return to providing guidance in 2025.”
  • Sales execution: “We…adopted the hunter-farmer sales model…reorganizing the Americas’ client base by industry…assigning industry-proven sellers.”
  • VMware outlook: “VMware will be a substantive part of our sales in 2025…security solution bundled…sold to dozens of companies…five continents.”
  • One-time revenue effect: “Fourth quarter revenue was positively impacted by slightly over $5M due to a onetime client event…[which] contributed to our strong gross margin.”
  • Litigation: “Ninth Circuit…issued a very positive decision…we are seeking the return of the amounts paid…[and] expect a decision…later this year.”

Q&A Highlights

  • Return to growth: CEO characterized the trajectory as “on the upper side of that U,” with improved bookings and pipeline despite litigation noise; international execution improved with leadership changes .
  • Cost savings vs investment: CFO clarified net annualized savings of $18M at Q4 and $22M at mid-Q1’25; management is pausing deeper cuts to invest in VMware, ServiceNow and AI capabilities .
  • Guidance reinstatement: Management expects to resume guidance in 2025 once remanded litigation items clarify; potential Supreme Court paths noted .
  • ServiceNow partnership: Significant pipeline with ~6,000 ServiceNow sellers aligned; expected accretive opportunities in 2025 as deployment capabilities mature .
  • Litigation cash recovery timing: Appellate brief due March 11; management sees a “very good chance” for a decision later this year regarding potential return of the $58.5M .

Estimates Context

  • S&P Global Wall Street consensus for Q4 2024 (Revenue, EPS, EBITDA) was unavailable due to a data access limit at the time of retrieval. As a result, estimate comparisons cannot be provided in this recap.
  • We will anchor to S&P Global consensus in future updates once data access is restored.

Key Takeaways for Investors

  • Q4 quality mixed: revenue/GAAP EPS positive with margin lift partly from a ~$5M one-time event; underlying billings strength and international momentum are constructive .
  • Near-term narrative: legal clarity and potential recovery of $58.5M are key catalysts; guidance reinstatement in 2025 would enhance visibility and reduce uncertainty premium .
  • Growth vectors: VMware support and differentiated security, plus ServiceNow alliance for ERP modernization/AI, should support pipeline and cross-sell into a large installed base .
  • Watch ARR and retention: ARR down 4.1% YoY and retention at 88% warrant monitoring as management balances reorg savings with growth investments .
  • U.S. softness vs international strength: continued geographic mix shift implies execution leverage outside the U.S.; track U.S. bookings improvement noted by management .
  • Expense trajectory: outside litigation expense guided to ~$10M in 2025, with further reorg costs; consider implications for operating leverage as growth reaccelerates .
  • PeopleSoft strategy pivot: reassessment of wind-down could stabilize revenue in that category; follow developments post-litigation remand .