RMNI - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Rimini Street First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Dean Pohl, Director of Investor Relations. begin. may you Sir,

Dean Pohl

I'd XXXX welcome Earnings operator. Street's to First Quarter Conference like you, everyone to Rimini Thank Call.

An tables release. issued our On measures heading, is the can press been the Financial tables, of our of the the these information in Today, be to Sabol, A explanation release our Measures. press Investor release, be measures has GAAP Seth under today financial and statements quarter the we website supplemental CFO. GAAP this reconciliation release Ravin, our can of found from provided in Investor earnings of non-GAAP viewed call included Relations also is CEO; following and other downloaded Events. which reconciliation with press financial copy our first me to under section financial the website. Non-GAAP financial the the XXXX press and on including Tom A and in non-GAAP

of today Form that to discussion statements cause actual reminder, recent are from which you and most may first our results SEC that a XXXX, These affect for may filed quarter filings that for uncertainties We price. subject to encourage to include differ was statements today. outlook. a current today's statements results materially forward-looking As our our risks reflect will discussion made the risks forward-looking including review XX-Q of stock or

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

Seth Ravin

everyone Thank you, us and for today. joining you, thank Dean,

that our and new service meaningful our selling total delivery launching addressable progress and During expanding increase the market. services sales global made other first Salesforce.com support and improving quarter, model we capacity,

plus we April. the decision. they and Court in against which paid interest prevailed the million, other to ordered US March, unanimous Supreme return to costs Street, in $XX.X in Rimini Additionally, Oracle was for Oracle

to is subscription a with increase the For revenue of of the March all mix million, generated annualized for remained with XX, on XX margin revenue XX.X% million, of We quarter. expanded first of non-cancelable year-over-year. revenue up subscriptions, subscription for above a up of year's quarter we XX% of with the $XX.X substantially our least at ended from revenue, for XX% year-over-year increase than rolling X,XXX Gross months ended year-over-year rate a XX%, which quarter first quarter more the net retention prior clients, active basis. XX%. Revenue XX%, $XXX XX%, representing XXXX, during current

XXX client over active Global Our XXX Fortune included count and companies. XXX, Fortune

clients delivery an X.X, of number rating of excellent. legal as quarter, the updates client nearly employees, the team service on record support X,XXX regulatory rated and global where a company's year-over-year than financial, growth. the cases X.X Investments closed maximize average of software switching support, of advantage XX%. can initiatives. daily time licensees and for Rimini significantly and by on Street investments, savings products and labor XX extending life enable competitive guaranteed approximately to innovation, Rimini enterprise costs existing the more is For delivery, a first ended span operating minimum operating X.X quarter of and After satisfaction tax, to ROI our years. support delivered with their reduced and fuel maintained We reinvest X,XXX, services Street and XX,XXX to out increase

expanded possible of of successful to XX migrate include we representative was to addition and existing newest global Accordingly, the example client. and they where leveraging could and Our making and sales plan investments leverage SAP staff, train that services with were scope new to from quality holding optimize next at to to sales additional been as ramp or services our processes they further immature value that remains our of and step. Bee, support of units increase the SAP expanding upgrade global any to client to quality our an unify primary to its enable growing early expanded we better the vendors investing meaningful its a sales client Street support and effectiveness, count Street stated and opportunity can excited release. become are client, value. in operations Competition. client quarter, products XXXX, for Rimini an in EBSCO wallet to level vendors larger spend initiatives first of company Bryan SAP Vice enablement share speed portfolio Competition lifetime a and EBSCO Rimini for business Rimini current, expanded receiving Both software their Rimini for since sales strategy. system, win Oracle global each successfully Street better their EBSCO services competitors, for sales and the acceleration, increased in individually. reported high more training releases our systems we Rimini heard When as elected the revenue for of total system the growth made Systems revenue their IT efforts and capacity services. to from they our a primary they budget. breadth that believe EBSCO software for today, that fierce. services, only and to either Street continued year-end logical Salesforce. support of and client IT has a include is of wallet looking massive for engaged will Global Rimini could Street Street we stable times productivity. XXXX. were share Salesforce shortened and a investment service have XX a force productivity provide Sales each expand Enterprise offer and lifetime noted changes Salesforce already support Industries, new of cost, a licensees also the to IT We've the by support in increased leveraging continue an leadership than By provide with shared not In President, engagement its of to IT even quota will services, increase systems integral to we increase reps, new longer long-term premium support the for were their mission-critical their services system, He leadership,

by migrate declared For of example, S/X tens licensees releases a popular demand of SAP most SAP, Oracle their the support their years to licensee product thousands using has expensive sales ECC take believe the popular for stable reimplementation the that newest by X, to and product project HANA world creates Rimini and developments. Street alternatives. and this very current could status forced and opportunity XXXX, retirement even around of stronger litigation service Oracle complete. environment We an must

and of vacating will Appeals XX, August Ninth $XX.X As an XX, Rimini appeal Court interest in Oracle we recently US well Appeals two in US in hear the July is paid XXXX, of against Circuit the District injunction the Street us stage to The that notified Oracle we Oracle was ongoing other is an Oracle oral April. was noted US and previously plus a in Rimini Appeals prevailed against and US causes the $XX.X Street And With Street I also refund sales, of by order X, Oracle XXXX, for is referred for referred on Rimini materially Rimini of Discovery damages in Circuit behavior discussed Street the of second Rimini and paid million appeal to client is Court to that With our seeking to stage in other to from have illegal has Summary. And impacted motions. issued Oracle that occur since in US in second with to XXXX. X. currently respect as Rimini second earlier, to by Trial million, Ninth calls, from earnings has Circuit of concluded as quarter an expected as Street not additional ordered Court from Rimini believe later. Oracle the or Oracle. return in seeking we on XXXX matters costs. million, Rimini X. was Oracle's currently Oracle. as and addition Court's X, Rimini ordered until summary, pre-trial against in through of Court District Rimini Court a Rimini This is on and the is judgement to Street. as XXXX. it different ruling Ninth filed new return Street Street's and seeking that await litigation action, litigation the appeal damages arguments Rimini XXXX. to Supreme filed for the litigation XXXX. time Rimini previous against March has addition is was Street respect $XX.X that to to

on and services, executing plan our products focused capacity and and global service our to sales infrastructure and new expand productivity. are delivery and capabilities. increase sell We Launch

We in the on followed to the of turn accelerated by revenue these I the investments growth will to continue in appear call to growth XXXX, billings first Tom now return expect second CFO. half in over Sabol, XXXX. our

Thomas Sabol

Seth. you, Thank

US XX% other and million, with a and aggregate Seth first Gross and infrastructure first increase leveraging increase States, clients revenue against the prior represented XX% first of growth constituted the million. Clients the revenue X% remaining base for The up annualized quarter revenue was efficiency $XX.X As the year-over-year XX% quarter. the rates improvements. approximately due international the made revenue a margin within year's internationally. XX.X% XX%, of quarter, and $XXX year-over-year first noted, the for XX% from primarily in quarter total subscription to for United the revenue of existing higher of was was up for

in margin service for ramp-up planned and pressure some services. new the from expect and products We costs and introduction increases from gross capacity

higher and to Sales for quarter, as for Sales to for XX.X% in revenue with a accelerated marketing XX.X% the in XXXX, expenses the of XXXX. was previous around expect hiring expenses spend. slightly all and General slight quarter, We quarter marketing XXXX. for for of now of first excludes expenses a be as margins QX up expected are guidance. along as the expenses sales continue of anticipated from XX.X% the first up to was reduction XXXX, which percentage to XX% XXXX. of all of first from of costs XX.X% be percentage and revenue We rep sales marketing of marketing first in we revenue for outside QX range from administrative to quarter revenue, to gross currently up be of litigation XX% a of XX% expect and XX% the

and reimbursement. recoveries impact by of offset revenue XXXX was quarter offset litigation received, March million Supreme be net a for to noted linear $XX.X We of $X.X litigation in to April for outside to XXXX, XXXX. million costs insurance XXXX. the litigation benefit for It a the net This that we all Oracle benefit our all $XX.X insurance XX% to and G&A QX litigation should the net on of non-taxable XX% of purposes previously GAAP that of is each Court Litigation recoveries net litigation of was subsequently for by had overturned from we $XX X, the the consisted estimated of million. The the be to of first Other a X, proceeds on $X return as can continue first activities. million spend Oracle, costs, $X.X million outside for on reimbursement paid for a percentage XXXX, quarter. not quarter range XXXX, expect was in million based Oracle $X.X current $X.X of was accrued of of expense of compared the million expense fluctuate previous for million and which carrier of US by

on prior of of $X.X to income first was first any $XX.X for We current due million face the compared quarter Net quarter. Series any to reduced non-GAAP $XX significant July XXXX, $XX before We income for an be in $X.X for of million to $X.X to operating million the first for for the the $X.X shares of a range XXXX, XXXX. Oracle million prior was to XX, $XX.X expect on for income year litigation issuance preferred the to issued continue effect year of A million value year litigation for the quarter to original March million $XXX of changes. for $X.X first absent first from to million income $XX.X XXXX, first million stock adding million expected Non-GAAP quarter. the quarter. income the loss GAAP the a million million compared from quarter the net compared to expense, year additional was of compared X, recoveries activity net ago. income prior net to operating was $XX.X Non-GAAP million compared operating quarter

A $XXX shares As million was for from $XX.X Deferred to quarter Series on holders to the approximately from quarter the common XX, million of issued second the were on cash up and shares the ended to share with earnings X% the million $X.XX of dividends XXX,XXX million also quarter of the which of quarter the A share off of will ago. payment we stock. $X.X quarter million of year million, April first the A share, quarter, for paid EBITDA with end, our a $X.XX revenue $X.X from balance kind transaction, ago. be a issuance stock XXXX. quarter compared preferred $X.X total approximately dividends, at million quarter to debt March Adjusted at of per We Cash from the net were operations for Series sheet, part per basic was attributable while XXXX. at $X.X $X.X X, was cash XXXX. were our on a settled from diluted in stockholders flow the year dividends approximately million million, end in Reflecting X,XXX the outstanding $X.X common which was $XXX and Series compared first

And in operator, be of to we'll in year range full range million we $XX.X quarter XXXX of be to revenue respect $XX.X our $XXX guidance to XXXX to now million, with We million. and expect questions. revenue the take with million currently second Now $XXX maintain revenue guidance. that the to

Operator

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

line Your is open.

Derrick Wood

QX. good Congratulations a afternoon. on Good Great.

Seth Ravin

Thank you.

Derrick Wood

call you'd time the highlight? in new sales quarters. would Seth, or first helped you What had in I productivity generation nice increase had around you that's customers, anything customer you year-over-year anything a few sales that acceleration drive strength, that a new think in cycles, out

Seth Ravin

in two able I as the to building we sales people execution, prior is where hire, up. team think wanted getting I And back look getting after calls, years in we think again, Derrick, this ramped up all We of period, a to during done, did being the to about talked we you about better and in not did on you May. heads few sales of saw April the hires of in which time the just we're our short the getting that number much hiring side. will now the expected QX target, complete out

watching So to increasing successfully and I maturing think the of capability. close the you're and rate team close more just their deals their ability

Derrick Wood

end by What been and XXX traction the still think and of it environment. last getting you're we should Okay. the of better getting to couple a to tough you And the you've seem like boarding think as XX reps, does with and hiring, it's mentioned, quarters, better doing about do mentioned you're you on year?

Seth Ravin

got very, better the and well for and working into time very profile, the we've and one, period number the through recruiting currently has think engine been continuing. April I QX a

the it's doubt, it. there, So across think, reps out But to successful being people more hiring technology. of a I no number still again, are on tough globally I environment much trying we're think that hire given

expand XX enablement end hold decided team. Instead, of instead, to hires, somewhere up our hires probably the year. to and moving and about that we May. going planned number around of the by ended hire to mid-XX about do effectiveness As we're far when sales probably of back going is, XX this we're terms forward, to talked we're to XX hold to as to XX looking in XXX doing had the for we what about We've

to a we getting going that of we're on out little XX. we're have, to going performance So the going and bit. balance We're digest sales better focus reps to that

the XXXX effectiveness. and take instead XXXX it XXXX. additional for can of quarter see, that we'll our hiatus as the and little quarter again on So of And XX push first a of to you focus we'll change didn't guidance XX, heads last

Derrick Wood

Got it, okay.

hoping what they you leadership, of bring they having? what that and impact the are are terms new already In sales

Seth Ravin

We I level director is at how coming building sales along. to maturing. think eight They to some six of business reps close belt, a their are they're are the new quite they're got overseeing them. added their now. deals, book navigate the how the deals leadership They've They're who to few time. learning folks under learning

do again, business, Tim very progress getting America. North them months, seeing the We're we're well, those of well I seeing around hands will a his the learning think well. most new America, doing few only So of think I Head DeLisle, North here very and doing and

new officially I a business. learning He's Head year, this the think week. of Our been Europe, EMEA, here just

heads So that's marketing. learning him. been for of a new curve A lot big of

the I and comfortable I you watching think the So think overall, learning more to business just getting team being mature, execute. able and

Derrick Wood

you gross that? Tom, nice had on margins driver was strength the Okay. in QX. What in

Thomas Sabol

two One, consultants we use expand think we're So full we're still hiring people improving of time always is focused a efficiencies, is on we're more of as doing as Group using We and we're margins, that's been less. things starting -- have number trying the on to consultants. things. to the rely -- using we less our one we're

But and it's we're reducing that clearly outside getting we're want So time show, we're I the starting getting, we use to efficiencies. that full to starting don't more and better consultants of say number on to using, don't them. rely we're folks

However, that we'll Salesforce.com I in the services. still some mentioned ramp we will be we the as range, and believe, XX% on mention as comments, I other

the also geographies, be into. we'll that talking going of some So we will on and roughly in new we're have some there, year cost later

hiring still focused time XX%. consulting helping full on less people efficiencies. will the side, be which we and But drive is on we around utilizing think we think are more better us So

Derrick Wood

downtick due that And change the right? the year bit and do that's Okay. pace slight that have presume -- is marketing expectation of of marketing, to the maybe sales and little I by I for a more the offset in around hiring

Seth Ravin

lead-gen I that XXXX such it's with mean quarter that with certain there's every of Yes, sales a of a staff XX, to respect contingent goes and moving associated people first as out and it, the direct build reps. heads whole XX of group folks

where that's you're yes, So seeing it.

Thomas Sabol

slight a just it's reduction. But

Seth Ravin

Yes.

X%. So

Derrick Wood

Right.

Seth Ravin

correct. That's range. guidance the Of

Derrick Wood

guys. right. all Thanks it Okay, me. from That's

Seth Ravin

Thanks, Derrick.

Operator

Thank you.

Our next Baldry Capital. ROTH question comes from Richard with

Your open. line is

Richard Baldry

notable, growing so X% international drivers talk the in the you you It's is XX% how US. the I different, that internationally Thanks. the in Can that versus Thanks. are think guess domestic market? about, what successes replicable

Seth Ravin

Sure, Rich.

up Just adds you just your things, when -- remember, on see we yes, number. smaller growth, building the international you're calling. Listen, a calling

So percentage higher you're have a to going growth.

them, I -- and markets that's up a We're North marketing where a America, which decent between hanging fruit have of very growth come market. amount great mature for that facts opening a of bunch is difference you're stepping XX is the low maturity years demand areas that we're watching greenfield get. We've new the you're think new for of in and why, a into and in bunch there and of them. are opportunities for here taking been the we're lot us to seeing

execute on expansions. the So watching I think you're us that new just with

Richard Baldry

do there of at new in, Thanks. allocated When focuses, vertical any the they the geographically? we you're industry sort new Or where is that sort to of will hires look attempt putting be additions?

Seth Ravin

both. at think actually you're I looking

we'll you Zealand, staff and we're we these just regions amounts Europe Eastern take of to expand opportunity, But out additional our some as Russia recently New in expansion where into advantage we us for expand to seeing Poland, as we some build announced out of us make announce and announcements, and demand it. good more seen saw You've again countries.

some We verticalization. also doing are

the Rimini You out retail big period vendors. have and time look or the changing very like have you required quick were areas and Street's big competition that where and very, kind challenges traditionally of margin, at systems things by higher markets normally is sector public in lower you

and America our So within our dedicated had in sector and deployed markets We've where sector. reps, we this so into it's year, fits that those on just very, segments. public reps model education, And other model. education public really very success. international very higher North good created been we've nicely focused sector public testing have

And again component. we have presence one that's see then where verticalization around very might some sector, the you So retail strong globally.

Richard Baldry

quarter. good on Congrats thanks. Great,

Seth Ravin

very you Thank much.

Operator

you. Thank

question comes next Alliance Brian from with Our Global. Kinstlinger

open. is line Your

Brian Kinstlinger

the so was a still a numbers got characterized, less EBITDA expected, sales was the while thanks goal mid what support than first XXs, these talk maybe year’s in obviously, to of higher be for giving the Can Great, EBITDA reinvesting XXXX Adjusted do people. you it Or you as the still you grow the all moving adding you leverage will as but line think I a much. about, sales little holding in and headcount you profitability quarter? sales, you -- of I parts, will more revenue? think some for profit parts in more than investing said saw as expect moving marketing, lot the be year, we in given see on this originally and is

Thomas Sabol

Yes. slightly EBITDA -- was in have the significantly side. quarter down and the first margin plans gross helped sales number. improvement we've year-over-year still marketing to invest during indicated, Clearly, the as in margin We Brian, improvement the the first clearly quarter

than we higher So originally thought. to we're going to we're not looking have that EBITDA right indicate now a what

some products, and But and going by I say, side a focus there's lower But maybe me it the well, business. get with quarter. profitability. lot margins improved But again, gross the to marketing in It was really first group. shouldn't really on as significant the indicated change Seth the new as Seth that that investment sales for of efficiencies a a out into training really but of we'll there spend. of sales group, of smaller on a an driven well from done as by the as and done be slightly So benefit would of the of group bit EBITDA, sales marketing the there indicated, wasn't little and was as a

Brian Kinstlinger

late, I the Great. stronger got, was you joined -- I of that some think margin the The -- heard I you reasons, gross definitely but than expected.

a originally that will you expect of think bit I it. little on pressure be it

Given we there some add first process, in need from see continue of weakness you the achieved some to sustainable? some additional you to to increased what as to of personnel is capabilities? a additional quarter bit had add the cost, the you've Or or services little

Thomas Sabol

Yes. full would the we're near guidance. expect to our Again, we year, for going that be XX%

there services that So will slight going of forward be well new we'll because as believe, we the some be going degradation, as geographies the new into.

Brian Kinstlinger

Great.

And But that sorry, in if maybe drove increased XQ question. new joined first if stronger sorry, faster I late, would again, I repeating customers so from regions existing upside what I'm revenue in -- they the or than thought rates, you upside it was quarter? originally, the or growing it a demand was close

Thomas Sabol

a really of renewal new it's business combination both So, rates. and

rates stayed renewal Our above XX%.

So of it's really a the combination two.

Brian Kinstlinger

your What mostly are And it is churn, that applications don't the M&A, renew? longer those renew don't of services. change they've there that remind that companies, is the -- is need and me of some that no feedback

Seth Ravin

Yes, Brian, Seth here.

I that don't really changed much. think So it's

going combine associated, has another of use to something company when when or leaves, always one because have top been you think to going entities. they're and system company the they've they I joined churn basis their they M&A the different do they're

of variety M&A. reasons a So there's around

and Street old had Rimini example return they XX-year who new together, left they Oracle, carry different Second companies then implement back it's why time customers merge Street support and just away going their slightly are with pick system XX software new great happening years years, another products, went it model the churn got from again. because because with have up. to Wendy's, new on company, always of new that And a that brought people system, back, RB's An We've the And a regular can these picked relicensed very the went on investment, change went for forward. plus on to -- system see they come of it. we've several than days. two great to and to are system, customer different system, they built basis back had pick that's we to fairly Rimini the who and a -- they our a came implemented all, who when Oracle, they're this new got happy, is go and our

Brian Kinstlinger

where have. did Okay. XXs I where give Great. of quarter, end you hold where I thought quarter the end Last a May or XX, sales did actually did you today? know are you'll salespeople, you ended the quarter, you'd you hear number up where mid line, is kind question by the I the last the of around you

Seth Ravin

Yes, we're about XX today.

fill to folks of expect we So remainder out end of the May. our sales by the

Brian Kinstlinger

Thank Great. much. so you

Seth Ravin

Thanks, Brian. Sure.

Operator

And over time. no you. further back showing I'm like Ravin Thank turn call to at this to for the Seth questions I closing remarks.

Seth Ravin

to us joining quarter everybody. again, Thanks, having our Have us very XXXX Great. day. Thank call. call. join you all again second quarterly good everyone look forward for of for our you We much. I want again to a thank for

Operator

wonderful have this Ladies participation, your a today's Thank and gentlemen, for day. and concludes you conference.

Rimini Street (RMNI) 12 May 192019 Q1 Earnings call transcript