News Release Details
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Rimini Street Announces Fiscal First Quarter 2018 Financial Results (Photo: Business Wire)
“Rimini Street executed well in the first quarter of 2018, in revenue, service delivery and global operations,” stated Seth A. Ravin,
“Revenue in the first quarter of fiscal year 2018 came in within our guidance range, and was driven by balanced growth across all geographies. The litigation refund of
Launch of New Product and Service Solutions
On
Additionally, today,
Press releases that contain additional information about the new product and service solutions are posted on the Company’s website.
First Quarter 2018 Financial Highlights
- Net Revenue was
$59.8 million for the quarter, an increase of 22% compared to$49.1 million for the same period last year. - Annualized Subscription Revenue was
$239 million for the quarter, an increase of 22% compared to$196 million for the same period last year. - Active Clients as of
March 31, 2018 were 1,581, an increase of 23% compared to 1,285 as ofMarch 31, 2017 . - Revenue Retention Rate was 92.9% for the trailing 12-months ended
March 31, 2018 , compared to 93.6% for the comparable period endingMarch 31, 2017 . - Gross Profit Percentage was 60.6% for the quarter compared to 62.6% for the same period last year, reflecting increased infrastructure investment and tax, legal and regulatory deliverables for certain countries.
- Operating Income was
$25.2 million for the quarter compared to$2.8 million for the same period last year and includes$21.3 million from theOracle litigation refund. Non-GAAP Operating Income was$6.1 million for the quarter compared to$7.1 million for the same period last year. - Net income was
$3.5 million or diluted earnings per share of$0.05 based on 68.2 million weighted average fully diluted shares outstanding compared to a net loss of$14.5 million , or a diluted loss per share of$0.59 based on 24.4 million weighted average fully diluted shares outstanding for the same period last year. Non-GAAP net loss for the quarter was$16.3 million compared to$4.5 million for the same period last year. - Cash flow from operations for the quarter was
$18.7 million compared with$6.6 million in the same period last year. - Adjusted EBITDA for the quarter was
$6.7 million compared to$7.7 million for the same period last year. - During
March 2018 ,Oracle was ordered by theU.S. Court of Appeals to refund approximately$50 million paid byRimini Street toOracle for overturned and vacated awards related to litigation. OnMarch 30, 2018 ,Rimini Street received$21.5 million fromOracle . In addition, onMay 2, 2018 , as agreed upon betweenRimini Street andOracle ,Oracle placed an additional$28.5 million in a court-controlled escrow account to be distributed following the outcome of a remand decision on attorney’s fees. We currently expect theU.S. Federal District Court to rule on this matter sometime in 2018.
Reconciliations of the non-GAAP financial measures provided in this press release to their most directly comparable GAAP financial measures are provided in the financial tables included at the end of this press release. An explanation of these measures and how they are calculated is also included under the heading “About Non-GAAP Financial Measures and Certain Key Metrics.”
First Quarter 2018 Company Highlights
- Expanded the
Rimini Street senior management team with the appointment ofGregory Symon as senior vice president, Worldwide Field Operations. Mr. Symon is a 30-year veteran of enterprise technology and software sales with proven success in sales team leadership, business development and sales strategy, including senior sales leadership roles atIntel ,Red Hat and Sitecore. - Appointed Hyungwook “Kevin” Kim as country manager,
South Korea . Mr. Kim brings over 20 years of sales and sales leadership experience toRimini Street . Most recently he served as senior sales director for Oracle Korea, and previously served in sales at SAP Korea. - Saved clients over
$3 billion in total maintenance costs to date since its inception. - Closed more than 7,000 support cases across 49 countries, and once again achieved an average client satisfaction rating on the Company’s support delivery of 4.8 out of 5.0 (where 5.0 is “excellent”).
- Recognized by the Stevie Awards for Sales & Customer Service with five awards including Customer Service Department of the Year and Customer Service Leader of the Year.
- Presented at 11 CIO and IT and procurement leader events worldwide, including events in
Brazil ,Japan ,Netherlands ,South Korea , theUK and the U.S.
Second Quarter 2018 Revenue Guidance
The Company is currently providing second quarter 2018 revenue guidance to be in the range of approximately
Full Year 2018 Revenue Guidance
The Company is reaffirming full year 2018 revenue guidance to be in the range of approximately
Webcast and Conference Call Information
Company’s Use of Non-GAAP Financial Measures
This press release contains certain “non-GAAP financial measures.” Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements, and is not intended to represent a measure of operating performance in accordance with disclosures required by generally accepted accounting principles, or GAAP. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures determined in accordance with GAAP. A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release. Presented under the heading “About Non-GAAP Financial Measures and Certain Key Metrics” is a description and explanation of our non-GAAP financial measures.
About
Forward-Looking Statements
Certain statements included in this communication are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “may,” “should,” “would,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “seem,” “seek,” “continue,” “future,” “will,” “expect,” “outlook” or other similar words, phrases or expressions. These forward-looking statements include, but are not limited to, statements regarding our second quarter and annual 2018 revenue guidance, industry, future events, future opportunities and growth initiatives, hiring plans, estimates of Rimini Street’s total addressable market, and projections of customer savings. These statements are based on various assumptions and on the current expectations of management and are not predictions of actual performance, nor are these statements of historical facts. These statements are subject to a number of risks and uncertainties regarding Rimini Street’s business, and actual results may differ materially. These risks and uncertainties include, but are not limited to, changes in the business environment in which
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© 2018
| Rimini Street, Inc. | ||||||||
| Unaudited Condensed Consolidated Balance Sheets | ||||||||
| (In thousands, except per share amounts) | ||||||||
|
March 31, |
December 31, | |||||||
| ASSETS |
2018 |
2017 |
||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 22,116 | $ | 21,950 | ||||
| Restricted cash | 32,374 | 18,077 | ||||||
| Accounts receivable, net of allowance of $81 and $51, respectively | 71,024 | 63,525 | ||||||
| Prepaid expenses and other | 8,264 | 8,560 | ||||||
| Total current assets | 133,778 | 112,112 | ||||||
| Long-term assets: | ||||||||
|
Property and equipment, net of accumulated depreciation and amortization of $7,426 and $6,947, respectively |
4,130 | 4,255 | ||||||
| Deferred debt issuance costs, net | 3,177 | 3,520 | ||||||
| Deposits and other | 3,347 | 1,565 | ||||||
| Deferred income taxes, net | 729 | 719 | ||||||
|
Total assets |
$ | 145,161 | $ | 122,171 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Current maturities of long-term debt | $ | 36,448 | $ | 15,500 | ||||
| Accounts payable | 7,788 | 10,137 | ||||||
| Accrued compensation, benefits and commissions | 17,462 | 18,154 | ||||||
| Other accrued liabilities | 28,242 | 22,920 | ||||||
| Deferred insurance settlement | - | 8,033 | ||||||
| Liability for embedded derivatives | 1,100 | 1,600 | ||||||
| Deferred revenue | 160,028 | 152,390 | ||||||
|
Total current liabilities |
251,068 | 228,734 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, net of current maturities | 56,391 | 66,613 | ||||||
| Deferred revenue | 35,582 | 29,182 | ||||||
| Other long-term liabilities | 7,931 | 7,943 | ||||||
|
Total liabilities |
350,972 | 332,472 | ||||||
| Stockholders’ deficit: | ||||||||
|
Preferred stock, $0.0001 par value per share. Authorized 100,000 shares; no shares issued and outstanding |
- | - | ||||||
|
Common stock; $0.0001 par value. Authorized 1,000,000 shares; issued and outstanding 59,440 and 59,314 shares as of March 31, 2018 and December 31, 2017, respectively |
6 | 6 | ||||||
| Additional paid-in capital | 95,987 | 94,967 | ||||||
| Accumulated other comprehensive loss | (904 | ) | (867 | ) | ||||
| Accumulated deficit | (300,900 | ) | (304,407 | ) | ||||
|
Total stockholders' deficit |
(205,811 | ) | (210,301 | ) | ||||
|
Total liabilities and stockholders' deficit |
$ | 145,161 | $ | 122,171 | ||||
| Rimini Street, Inc. | ||||||||
| Unaudited Condensed Consolidated Statements of Operations | ||||||||
| (In thousands, except per share amounts) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
|
2018 |
2017 |
|||||||
| Net revenue | $ | 59,805 | $ | 49,070 | ||||
| Cost of revenue | 23,541 | 18,356 | ||||||
| Gross profit | 36,264 | 30,714 | ||||||
| Operating expenses: | ||||||||
| Sales and marketing | 20,207 | 14,696 | ||||||
| General and administrative | 10,805 | 9,276 | ||||||
| Litigation costs and related recoveries: | ||||||||
| Professional fees and other defense costs of litigation | 8,899 | 4,971 | ||||||
| Litigation appeal refund | (21,285 | ) | - | |||||
| Insurance recoveries, net | (7,583 | ) | (1,026 | ) | ||||
| Total operating expenses | 11,043 | 27,917 | ||||||
| Operating income | 25,221 | 2,797 | ||||||
| Non-operating expenses: | ||||||||
| Interest expense | (13,409 | ) | (9,936 | ) | ||||
| Other debt financing expenses | (8,617 | ) | (1,282 | ) | ||||
| Loss from change in fair value of redeemable warrants | - | (602 | ) | |||||
| Gain (loss) from change in fair value of embedded derivatives | 500 | (5,100 | ) | |||||
| Other income, net | 328 | 89 | ||||||
| Income (loss) before income taxes | 4,023 | (14,034 | ) | |||||
| Income tax expense | (516 | ) | (441 | ) | ||||
| Net income (loss) | $ | 3,507 | $ | (14,475 | ) | |||
| Net income (loss) per share: | ||||||||
| Basic | $ | 0.06 | $ | (0.59 | ) | |||
| Diluted | $ | 0.05 | $ | (0.59 | ) | |||
| Weighted average number of shares of Common Stock outstanding: (1) | ||||||||
| Basic | 59,393 | 24,353 | ||||||
| Diluted | 68,154 | 24,353 | ||||||
| ______________ | ||||||||
|
(1) |
For the three months ended March 31, 2017, the weighted average number of shares have been restated to give effect to the reverse recapitalization consummated on October 10, 2017. | |
| Rimini Street, Inc. | ||||||||
| GAAP to Non-GAAP Reconciliations | ||||||||
| (In Thousands) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
|
2018 |
2017 |
|||||||
| Non-GAAP operating income (loss) reconciliation: | ||||||||
| Operating income | $ | 25,221 | $ | 2,797 | ||||
| Non-GAAP adjustments: | ||||||||
| Litigation costs, net of related appeal and insurance recoveries | (19,969 | ) | 3,945 | |||||
| Stock-based compensation expense | 867 | 361 | ||||||
| Non-GAAP operating income | $ | 6,119 | $ | 7,103 | ||||
| Non-GAAP net loss reconciliation: | ||||||||
| Net income (loss) | $ | 3,507 | $ | (14,475 | ) | |||
| Non-GAAP adjustments: | ||||||||
| Litigation costs, net of related appeal and insurance recoveries | (19,969 | ) | 3,945 | |||||
| Post-judgment interest on litigation appeal award | (199 | ) | - | |||||
| Stock-based compensation expense | 867 | 361 | ||||||
| Loss (gain) from change in fair value of embedded derivatives | (500 | ) | 5,100 | |||||
| Loss from change in fair value of redeemable warrants | - | 602 | ||||||
| Non-GAAP net loss | $ | (16,294 | ) | $ | (4,467 | ) | ||
| Non-GAAP Adjusted EBITDA reconciliation: | ||||||||
| Net income (loss) | $ | 3,507 | $ | (14,475 | ) | |||
| Non-GAAP adjustments: | ||||||||
| Interest expense | 13,409 | 9,936 | ||||||
| Income tax expense | 516 | 441 | ||||||
| Depreciation and amortization expense | 484 | 476 | ||||||
| EBITDA | 17,916 | (3,622 | ) | |||||
| Non-GAAP adjustments: | ||||||||
| Litigation costs, net of related appeal and insurance recoveries | (19,969 | ) | 3,945 | |||||
| Post-judgment interest on litigation appeal award | (199 | ) | - | |||||
| Stock-based compensation expense | 867 | 361 | ||||||
| Loss (gain) from change in fair value of embedded derivatives | (500 | ) | 5,100 | |||||
| Loss from change in fair value of redeemable warrants | - | 602 | ||||||
| Other debt financing expenses | 8,617 | 1,282 | ||||||
| Adjusted EBITDA | $ | 6,732 | $ | 7,668 | ||||
About Non-GAAP Financial Measures and Certain Key Metrics
To provide investors and others with additional information regarding Rimini Street’s results, we have disclosed the following non-GAAP financial measures and certain key metrics. We have described below Active Clients, Annualized Subscription Revenue and Revenue Retention Rate, each of which is a key operational metric for our business. In addition, we have disclosed the following non-GAAP financial measures: non-GAAP operating income, non-GAAP net loss, EBITDA, and adjusted EBITDA.
The primary purpose of using non-GAAP measures is to provide supplemental information that management believes may prove useful to investors and to enable investors to evaluate our results in the same way management does. We also present the non-GAAP financial measures because we believe they assist investors in comparing our performance across reporting periods on a consistent basis, as well as comparing our results against the results of other companies, by excluding items that we do not believe are indicative of our core operating performance. Specifically, management uses these non-GAAP measures as measures of operating performance; to prepare our annual operating budget; to allocate resources to enhance the financial performance of our business; to evaluate the effectiveness of our business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of our results with those of other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and in communications with our board of directors concerning our financial performance. Investors should be aware however, that not all companies define these non-GAAP measures consistently.
Active Client is a distinct entity that purchases our services to support a specific product, including a company, an educational or government institution, or a business unit of a company. For example, we count as two separate active clients when support for two different products is being provided to the same entity. We believe that our ability to expand our active clients is an indicator of the growth of our business, the success of our sales and marketing activities, and the value that our services bring to our clients.
Annualized Subscription Revenue is the amount of subscription revenue recognized during a quarter and multiplied by four. This gives us an indication of the revenue that can be earned in the following 12-month period from our existing client base assuming no cancellations or price changes occur during that period. Subscription revenue excludes any non-recurring revenue, which has been insignificant to date.
Revenue Retention Rate is the actual subscription revenue (dollar-based) recognized over a 12-month period from customers that were clients on the day prior to the start of such 12-month period, divided by our Annualized Subscription Revenue as of the day prior to the start of the 12-month period.
Non-GAAP Operating Income is operating income adjusted to exclude: litigation costs, net of related appeal awards and insurance recoveries, and stock-based compensation expense. These exclusions are discussed in further detail below.
Non-GAAP Net Income (Loss) is net income (loss) adjusted to exclude: litigation costs, net of related appeal awards and insurance recoveries, post judgment interest on litigation appeal awards, stock-based compensation expense, and gains or losses on changes in fair value of embedded derivatives and redeemable warrants These exclusions are discussed in further detail below.
We exclude the following items from our non-GAAP financial measures, as applicable, for the periods presented:
Litigation Costs and related recoveries: Litigation costs, the associated insurance recoveries, adjustments to the deferred settlement liability, litigation appeal awards and post judgment interest relate to outside costs and recoveries for our litigation activities. These costs and related recoveries reflect the ongoing litigation we are involved with, and do not relate to the day-to-day operations or our core business of serving our clients.
Stock-Based Compensation Expense: Our compensation strategy includes the use of stock-based compensation to attract and retain employees. This strategy is principally aimed at aligning the employee interests with those of our stockholders and to achieve long-term employee retention, rather than to motivate or reward operational performance for any particular period. As a result, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.
Loss (Gain) on Changes in Fair Value of Embedded Derivatives and Redeemable Warrants: Our credit facility includes features that were determined to be embedded derivatives requiring bifurcation and accounting as separate financial instruments. Until
Other Debt Financing Expenses: Other debt financing expenses include non-cash write-offs and amortization of debt discounts and issuance costs under our credit facility, and collateral monitoring and other fees payable in cash related to the credit facility. Since these amounts related to our debt financing structure, we exclude them since they do not relate to the day-to-day operations or our core business of serving our clients.
EBITDA is net income (loss) adjusted to exclude: interest expense, income tax expense, and depreciation and amortization expense.
Adjusted EBITDA is EBITDA adjusted to exclude: litigation costs, net of related appeal and insurance recoveries, post judgment interest on litigation appeal awards, stock-based compensation expense, gains or losses on changes in the fair value of embedded derivatives and redeemable warrants, and other debt financing expenses, as discussed above.
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Source:
Rimini Street, Inc.
Investor Relations Contact
Dean Pohl, +1 203-347-4446
dpohl@riministreet.com
or
Media Relations Contact
Michelle McGlocklin, +1 925-523-8414
mmcglocklin@riministreet.com
