RMNI - Earnings call transcript Q4 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Rimini Street Fourth Quarter and Full-Year 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this conference is being recorded. I would now like to hand the floor over to Dean Pohl, Director of Investor Relations. sir. ahead, go Please

Dean Pohl

I’d and welcome, call. full-year Karen. Street’s to fourth quarter XXXX like you, everyone, to Rimini Thank earnings conference

the measures measures found CFO. statements today and me XXXX earnings fourth call Ravin, which reconciliations of explanation full-year website. is the On CEO; can A release, in financial our be quarter in is, and the Tom our we heading measures. Today, press provided Seth included our press issued on non-GAAP our Sabol, of the GAAP also these has to the under tables been non-GAAP An this financial release. financial following with

may As factors our our statements most forward-looking encourage discussion forward-looking cause statements to review a differ outlook. made include of complete price. you these to These to risks results will may statements or current today’s other reminder, that are today. reflect that risks We actual recent materially discussion affect results from for that our subject and stock filings uncertainties and

Before prepared turn taking that, Seth. to With with remarks. begin call over to the like I’d we’ll questions,

Seth Ravin

for software both clients provider industry an Dean, and Thanks, results. model. by on XXXX firms. Today, subscription of everyone, thank support active primarily and Rimini products, annualized redefine award-winning and founded the to joining billion recognition to and software software the supported through and is leading products developing We by innovative, XXXX number Street disrupt full-year enterprise independent services, support SAP analyst Rimini in the financial Street and based Oracle delivering software fourth Street’s $XXX and review Rimini market and us enterprise you, quarter for support value-driven

XX% generated a of billion net demand we December market for offerings products services fourth see $XX revenue the than global software fourth and the full-year our to respectively. we quarter more the we our cover and million The full-year and million, an XX, revenue growth. quarter $X ended of marked and To $XX.X enterprise of more and the quarter our Our year-over-year world. XX.X% record increases clients from guidance in margin exceeded of saved spend, and fiscal XXXX clients, support current for billion. fiscal increase XXXX, around growing $XXX ended Gross continue $XXX.X XX.X% have date, annual than another of addressable In billion of range. with and in revenue Fourth XX%. We our high-end XXth XXXX X,XXX XXXX. expanded a consecutive to of quarter fiscal XX%, revenue quarter XXXX year-over-year active

and industries count active includes XXX geographies. Fortune a Our broad across and XX serve and range XXX client companies, of XX we Fortune Global clients

growth For achieved more our client countries, than X.X as company’s We the XX services, average ended we in excellent headwinds. with and the in for full-year, X, demand over of Despite delivery. seeing year-over-year. growing employees, regulatory market closed legal an across client in tax, the global support of support XX,XXX updates an delivered approximately XX,XXX some and faced increase X rating on X.X% XXX our XXXX, satisfaction where of we cases fiscal continued fiscal sales rated is XXXX

ability terms credit First, of the the for facility. by were invest in to limited we growth our existing

fiscal fiscal revenue governed marketing XX.X% were fiscal allowing marketing able of sales just an taken with sales a spending XXXX down to revenue marketing initiatives in our plan the in negotiate covenants, to spend to have we entering sales from in Accordingly, example, to were marketing, and able and and growth facility, October an increase XX% and XXXX, us additional thresholds, and invest XXXX, more measures capacity the on and loosened of to were XXXX. over For but between the spending in the believe spend services. growth opportunity credit invest XX% forward. demand to We covenant some sales in going to we which including better to In amendment we to allow for will revenue marketing and serve in of XXXX XX.X% fiscal growing us additional sales and XX% products the spend XXXX.

faced by we’ve of declining fourth believe competitor second, a that materially and progressed. Second, we impact some XXXX, impacted the third year client sales and with the was our new as behavior quarters illegal in fiscal

now some aggressively Oracle. behavior in addressing in our developments damages. litigation like appropriate the would and review We court are seeking I with to

and and And in Rimini different two Rimini in is judgments to appellate U.S. and to the and have certain Street’s for litigation the reversed made personally Appeals in the and already that’s vacated all referred X, The X. including appeal XXXX, Appeals as Court X. With in against by January Oracle an stage referred Rimini ruled and X, had us favorably as on awards litigation. appeal filed Oracle’s in litigation XXXX, Rimini with our against trial of injunction Court stated judgments pretrial the court. favor Rimini claims the during others, against XXXX, after to awards. respect that We and stage that Street filed me XXXX been Oracle in

go to exhausted the to to respect from be all debt we portion paid complaint pay the to costs. sometime a to seek credit all has for outstanding the in After insurance unfair of to judgment refunded X, We of portion at until, interference expect The the least, Street remand Oracle the $XX.X business approximately our our Nevada XXXX, Oracle allowed be believes, non-infringement second to and facility. to that paid remaining after not and with of down California, and to netting been case refund need relationships costs, litigation to Rimini us of proceed XXXX. against statute. have court in With under copyright trial practice Amounts proceed will out of quarter used of Oracle appeal appeals XXXX. amended against million intentional company up is and our claims contractual received of of and will will refunded resolution Oracle currently proceeds the Rimini back with a of expected the judgment with amount to of currently declaratory Oracle. $XX.X reimbursement may the million currently asking violation previously us

review to business some funding. Acquisition million and like fourth XX, closed After was accomplishments in the public I’d highlights GP merger and on we with NASDAQ trading our and XXXX. Now Investments went Corp. completed $XX significant full-year XXXX. We for and on equity October the began quarter

During Service for a Street IT for database launched Company Golden Awards Rimini Bridge solution. fiscal solid products Innovative by Business Professional received plan. operational and the our new XXXX, and support Year Best Excellence the achieved of the our many security some and results Year Year wards sales for including One In platform we offering to of coverage, summary, Awards. the headwinds through We in year, navigate of Database and six Planet Security, sales Company excellence, we expanded to in and strategic despite next-generation technology Most by continue having to XXXX, Advanced and execute

Sabol, new service adding at and scaling plan increasing operating I and call organization talent, we will leverage to capability. delivery by the XXXX, over into offerings growth CFO. our investments, and expanding senior sales products the additional executive now launching levels, marketing fuel all to improve service Tom turn and Moving

Thomas Sabol

Thanks, Seth.

and driven our for Seth full-year XXXX As our operational revenue the range, for guidance high-end execution continued demand services, growing quarter exceeded fourth earlier, products and the and of in delivery. the by and sales our noted global service

and annualized XX% year-over-year results, was million, an $XX.X quarter subscription year-over-year. net revenue $XXX.X of was increase fourth For XX% million, up revenue

than we of company. XX% continue may be revenue in services been our in growth. from clients Although quarter This faster profit Gross consulting our around year-over-year, the in from XX% total prior services was revenue today, revenue and the future. in deliver constituted has States the XX.X% and continued subscription-based the fourth outside United some XX% percentage grew down XXX% products of by area is investment and our year. overall an the a quarter, to limited the will for Revenue

onboard was we margin more and various typically several Seth regulatory in geographies. quarter tax we debt updates business were and the The due solutions than and marketing of Sales In decreases prior in XXXX costs net sales the as XXXX as delivery of XX.X% on we effort previously higher of the service fourth spend as the commented, invested for fourth back-half marketing quarter year. XXXX, increase in time to to across quarter major fourth costs one were of year. limited revenue, developing and fourth in our in from increase and expected, covenants. new Our quarter ability down XX.X% the the in

marketing to For increase full-year spend revenue. a as of expect and percentage XXXX, sales we on

outside expenses, XXXX, from to range marketing General on expect XX% litigation fiscal XX.X% year net administrative revenue XX% XXXX down of in We exclude of XXXX. costs and QX in revenues. sales and of were QX spend between and XX% which

our as percentage QX XXXX the G&A from included benefits While of decreased million overall financing-related scale. of costs. spend internal approximately revenue of debt $X a

expect our be to of to G&A we model. forward, continue source Going in a leverage

compared loss in the gain respectively. expenses linear to million $X.X operations, Litigation be insurance non-cash. our quarters, million with percentage to and $X.X service costs additional revaluation loss other expense fourth embedded company’s million credits. a million was fluctuate was quarter, prior common can We portion litigation income and next related of higher XXXXX. to amortization result accounting a million $XX.X compared the of and professional the GAAP which loss outside a spend of derivatives $X.X fourth stockholders fourth XXXX, $X.X a revenue. XXXX, of the QX related $X.X credit over to the based fourth $X year, and Interest $X.X operating $X.XX However, XXXX, on a of as income income infrastructure fully-diluted for quarter. $X.X that in million same had to service in court the included a million the warrant share activities. in a million associated non-cash in will the were compared reimbursement net a income a was quarter XXXX, XXXX. on $XX.X for of public is Non-GAAP of and million cash expense in net period significant XXXX, of quarter which our expense of of to $X.XX which basis, million. million, of insurance million QX loss by in as compared increase in interest basic of $X.X litigation the loss quarter in offset Net last and per the and and was few in period Non-GAAP G&A earnings $XX.X $X.X of company net of of offset million $X.X quarter fourth QX XXXX not compared will in fourth of costs, million operating year a the and was per the fully-diluted million same quarter, quarter facility. net includes $X.X $XX.X XXXX. reimbursement quarter million attributable was basic recoveries move and to Other $XX.X share income the both of should the in $X.X million and of million basis to respectively, to we on was It debt QX of the incur by for Cash $X.XX likely of of net costs noted non-cash fees debt-related

weighted basis. $X.X had Adjusted to QX and period. million, the of year common negative Street For million a quarter XXXX, prior fourth the million of $XX was for compared a a shares $X Rimini EBITDA fully-diluted basic in both average on positive outstanding

conference our on is to negative tend working in quarter income a due capital in on measure adjusted our we collect we provided in advance in of focus of EBITDA, to instead operating cash call, income services XXXX, which discussed operating be As because third model future. to believe better business of our we the

year the million, XX% clients rate. year. of the XX% For XXXX, the profit of overall outside grew States revenue year-over-year year-over-year. was Revenue up an increase XX% prior from growth of net United fiscal revenue full-year $XXX.X revenue and total XXXX, our by faster XX% from XX.X% than for Gross was during constituted in

and benefit such While basis, going gross continue scale XX.X% were our that down delivery on annual driven an of Sales be to by on we process expected XXXX. efficiencies to for fiscal more from net is economy service costs of revenue, operations XX.X% leverage and will growth expect in our measured fiscal forward. margins continued XXXX marketing

XX% percent from which a litigation marketing XXXX, of on excludes XXXX. were revenue XX.X% in XX% expect fiscal fiscal of increase administrative fiscal to For in expenses, and currently between as we net XXXX, revenues. spend down of and XX% sales costs outside to revenue and General

for of XXXX $XX.X G&A was million $XX.X fiscal of fiscal non-cash. by the insurance was full-year included compares from million fiscal expense embedded year. non-cash expense million $XX.X income This service million fiscal in a related While insurance for net decreased a the associated related loss in loss in $XX to $XX million, $XX.X interest income costs. reimbursement other XXXX. net a loss a a amortization million of of by million, million common approximately were $XX.X to $X.XX company’s in a stockholders gain basic again, as $XX.X to million. million our a fiscal $X.X $XX.X in and net compared net $XX.X loss in benefits included costs debt-related million XXXX. revenue compared in XXXX of a basic facility. the revaluation significant derivatives and had to offset of loss spend expenses which of in $X.XX credit $XX.X net to Non-GAAP fiscal scale, XXXX, was XXXX. of and million fiscal portion XXXX, million. XXXX Net million a fiscal XXXX, to financing Litigation and Cash expense fiscal a debt costs, on with XXXX, fiscal million of credit in net credits $XX.X overall both compared recoveries cash basis and prior the of fully-diluted of loss of fiscal percentage of fiscal was attributable loss $XX.X stockholders offset XXXX. million million of $X.X basis XXXX, $XX.X net was of $XX.X $XX in by in to to in was Interest expense $XX.X of fees common share in fiscal Non-GAAP of of XXXX, We compared fully-diluted Other loss net a XXXX, attributable litigation in XXXX. fiscal compared a in operating a income non-cash expense million debt offset on per and to was GAAP of operating million million million warrant $X.X $XX.X

fully-diluted fiscal on $XX approximately positive Adjusted weighted shares versus XXXX. a average million negative was fiscal both outstanding in a fiscal $XX Rimini XXXX, had For Street EBITDA common for fiscal of $XX.X to $XX XXXX million million and basic XXXX. basis in a million, compared

of $XXX the sheet moving operations sheet. Now compared year ended total compared the was with in cash XXXX cash $XX balance XXXX $XX.X quarter XXXX. on from million, million, an outflow million operating our XXXX. was flow for XXXX $XXX.X in Cash $XX.X flow. fiscal cash in and $XXX.X the QX to of fiscal million to Deferred We million of revenue in of balance to million QX of quarter and fourth

facility of XXXX, $XX.X $XXX.X our obligations million XXXX. total December to XX, reduced credit million During under debt our as by fiscal we

by previously total reduce upon the the Seth, refunded amounts debt credit facility. noted under will Oracle from our appeal, of receipts As further obligations we our the

to our Moving guidance.

quarter quarter For in million we first to the range revenue be of the $XX fiscal expect in of million XXXX. first $XX approximately of to XXXX, the

approximately of $XXX now $XXX And will expect guidance, range that, questions. For million. operator, we with million full-year to the in we revenue be XXXX to take

Operator

of Cowen [Operator Wood you. Company. Thank and question comes with first the from Our Instructions] line Derrick

Derrick Wood

really the guys. nice Looks Great. Thanks board.? beat like taking my across for numbers job, you questions and

Seth Ravin

Derrick. you, Thank

Derrick Wood

months filings. for settlements been on now. I I guess, you’ve some has There court high-level, mean, starting, been the Seth, several favorable from public a

hear heels developments? conversations customers seeing to curious change you’re with on acceptance and increased with to some these being any respect or Just market what the of of

Seth Ravin

any Derrick, particular think positive influence yet. as don’t had based negative really that I on now, these I’ve of that seen or developments we’ve

I its think, way working it’s through the market. still

yet. seen So developments any we haven’t

Derrick Wood

of be impact mention some a in disruptive through still it it navigate the did said, the to it you are make and you XXXX? but was to feeling QX, you’ve And disruptive you QX, maybe QX to in today some didn’t in you about degree. QX, How process there’s lesser had archiving it. Got that around changes as appear

Seth Ravin

Well, even. in pretty impact, in lighter my saw QX we that I lighter that, obviously, heavy think saying QX, per QX, in remarks and

what These the the seeing We to in these renewals, third are while the in know I pipeline disruption of fourth that still talked when think back were we comes you going call, you’re in not. on quarter already some that, quarter. be in to around. deals, QX think deals though disrupt the were were into even these of is didn’t and that was it’s some some deals when it in going pipeline a impact quarter And I we pipeline for process. that annual before had impact that the there yet see fourth were if did QX or take

think, the from we’re weeks quarter, away finishing. couple obviously, only of a we first come I as into

So continue I from other I can’t say that, improvement, comment think, really impacts we’ll year? the last on see to than to

Derrick Wood

Okay.

the new side, products? could, did then you any products with you see around And change is if product any On notable required mix? initiatives there update in

Seth Ravin

remains Oracle think quarter. We commenting that’s products to expensive fundamental of an of looking economies switch the a scale databases in looking leading the say technology to in the customers still many overall, very I coming But in Oracle terms two with on through database new very that offerings. a do the and find very, from pack once to points. make again the close. are lines product I Yes, much the saw specifically think the QX database not that product One, the mix fourth

will And it in commoditization continues database quarter we think, on based watching fast we’re alone. what look trend as think the fourth product. that of like, very well the I So I a saw

As launch and announced said that lines we’ve sales their SEC time before, Those SaaS potential in that force potentially we’ve XXXX we far do period. development. – as the product of expect announced are as filings, Workday. are lines the that, sales products our continuing launch that those the And launched we product would in

Derrick Wood

Great. growth around pure some marketing around year? color. I On sales in the see much Seth, color you for any that how to and guys capacity mean, parameters that gave you’d sales like Thanks spend. for

Seth Ravin

the from kind you grow XX%. you think, growth governed Well, trying which the at a startling XX% to a I been trajectory. think down And I and you’re traditional that when of our numbers, it’s get when arena, look XX%-plus in pretty to has

think, are the are of very cash very, investing flows manage in to Most those I covenants, challenging to growth. the because put things lenders had we And wanted. together. people to that

that combination the where less in pull XXXX. end toll the XXXX, of ended than we into with sales of its certainly reps did So took and coming we XXXX give

to up being growth things you’re challenging high with cost. at again, governed down So the some keep same that in time opportunities

I – of going significant and marketing XX% think, were covenants. you’re increase looking budget from a the you at sales think XX% larger negotiate a to a in able to percentage the about is this number, when pretty much substantial just into that we

program seen think, to in materialize we’ve very going very, additional growth in reception. sales do good additional hires, marketing where significant additional I markets, that spend, you’ve international you’re rep had So to and watch

world. markets around we’re I the opening think the in that new

Derrick Wood

comments And Tom, why? year? you or margins. but Any guidance see QX the not some us on QX could on then, through you you reason revenue, And trending how margins directional give versus maybe Okay. gave

Thomas Sabol

Yes.

would we what just did. So quarter line, indicated as which call, as could by the still expect Derrick, top what is year. kind in you we probably muted XXXX. it providing for my the to this gross mentioned, on third four there be guidance that on we’ve tell here upper more expansion of XX% comments, in we But from margin Though last be will we XX%s the we’ve be or years, where three had than moved we to

an our some in margins impact of and that with have trying get XXXX. margins, still we of and to expand on cloud around spend those think, the will things, arms I types here some expect to but we’re still of of associated what

direction these on in to areas some continued So have the we and of but Seth, about us to we would scale probably as calls. prior invest other be just talked in again, expect a improvement products that margins, lesser

Derrick Wood

a like Yes. QX an And on of COGS that big maybe kind – down call moderate out standpoint? QX seems COGS anything back seasonality in seasonality. And you’d or has pretty QX? from Does OpEx

Thomas Sabol

still does and moderate the were It Year onboarding clients. stuff even down we back some New into for but some, doing

mentioned, other there. we folks a being be associated in percentage we additional mentioned margin add the as will we much company don’t But a terms, the gross in side that with other spend As of up public see than G&A probably spend and otherwise, typically us some QX we on the basis. now on margin seasonality

Derrick Wood

Okay. All quarter. guys, Thanks the taking congrats on questions. for my right,

Seth Ravin

Thanks, Derrick.

Thomas Sabol

Derrick. Thanks,

Operator

Thank for you. And that session any I’d like to today. for concludes over to closing our comments. question-and-answer back floor Ravin Seth turn the

Seth Ravin

colleagues a And the in quarter you, for some Thank everybody. our all Great. just fourth world, first numbers we delivered the who weeks. forward to folks and everybody to do few great look having XXXX. growth impressive for together our conference and call the our with And I getting for quarter want thank our around

Have much, everybody. very thank you a good day. So

Operator

your disconnect. have may conclude a great program. the thank for day. in now participation you Ladies This and gentlemen, And today’s does conference. Everyone, you

Rimini Street (RMNI) 16 Mar 182017 Q4 Earnings call transcript