RMNI - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Rimini Street's Second Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call may be recorded.

I would now like to introduce your host for today's conference, Mr. Dean Pohl, Director of Investor Relations. Sir, you may begin.

Dean Pohl

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

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

the including Relations viewed Investor of other and non-GAAP copy supplemental press GAAP and Events. the from section A release of and tables, reconciliation be downloaded the our financial financial website can information, Investor to under

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

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

Seth Ravin

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

continued During the and sales sales invest to second year-to-date quarter, we XX% in improved and sales expanded bookings XX% capacity year-over-year, productivity effectiveness.

growing in software Europe, demand. new address and for our in also such Southeast enterprise and Management products SAP and Asia Latin continued Eastern invest to operations We Services Application services America to expanded as

for of $XXX with million, prior we XX% year's quarter. the XXXX, Gross million a margin was from annualized June second subscription For year-over-year the quarter ended of XX.X% generated up revenue XX.X%, second of quarter for the year-over-year. up revenue $XX X.X% increase XX,

least XX substantially revenue Revenue more months with revenue at our basis. rolling of non-cancelable than remained subscription XX% retention a which for current of subscriptions, above for rate all is mix, XX% on

%. We a active with XX clients ended of increase quarter representing the X,XXX year-over-year net

over Global totaled count XXX a approximately The active Fortune Fortune employee count of year-over-year quarter X%. increase XXX, Our and X,XXX client companies. included XXX end

second the more tax, of support regulatory legal is satisfaction an out support average delivery, X,XXX record Company's Delivery X,XXX updates our excellent. a closed team rating delivered of For than X.X and quarter, the and cases, X.X Service maintained Global where rated as client on X.X

the President Nancy also We Gold Vice Stevie of that won Year. Onboarding of Lyskawa Street's proudly announced Client Award a Rimini Senior Executive Female Global for

remain of drive clients. spend our and the of increase consistent, initiatives to grow lifetime investment of growth, which each accelerated share Investments are initiatives, our IT primary revenue wallet value the and client

we up-sell To service of and a geographic new product further initiatives service SAP. new to offering invest productivity, in second existing continued An offerings, in these and and capacity our targeting Service, for programs new AMS the Application sales Management capabilities and operations clients. global quarter, is example

be we been separate press SAP clients their website. a South that that in management has found integrates global SAP Now, for to the in value in its services. services our support announced solution services lower Rimini integrated the run Rimini leveraging North And annual Rimini replaces software and on of delivering and enterprise software support, SAP expensive America. can systems, Street's that successfully and for availability addition to support today release vendor AMS support Street could application Street clients and with turnkey the

a long-term We IT increase revenues see application share secure this XXXX for X% services management wallet and analysts, grow opportunity the in service $XX than clients at between to more billion global market $XX significant of was and additional currently leading and the as billion to According spend. growing contracts, annually.

remains SAP stable fierce. vendor's Competition. continuing Competition and releases and immature software with from to vendors newest upgrade their to Both competitors, are to migrate engaged efforts releases. current licensees in software our the force primary Oracle

Oracle tens of the ECC in their product of ending using around software world must S/XHANA is fully full X by remain newest thousands support that popular has and to declared for most current licensees XXXX to releases product, their and some by release order migrate XXXX SAP supported.

range Street's market the in surveys and licensees Oracle XX%of of licensees plans a Oracle of conducted stated understand of that current, better to SAP about To oracle at and SAP the plan licensees respondents to they and to beyond quarter least of running across opportunity, offerings we are sentiment and second SAP and broad XX% SAP or industries. to move unsure planning mature or XXXX. and their customized continue not they stated migrating Oracle systems Rimini software-as-a-service

retirement the even create demand forced for Support Application believe and popular stable should and We Management Oracle SAP stronger releases the years of sales by ahead. in Street's and and Rimini environment an Services, opportunity

the Hyundai where database was quarter. at such provider second Oracle several support win client's Motors Oracle the Street also the global competitive during globally vast in Kia We One against became strategic for had portfolio. Korea, Rimini wins

actively Beom offer value of to Rimini forward their savings offering competitiveness allowing innovation its with Cloud and As along by customers. push greater Head Kia's demonstrated Tae, robust benefits, Hyundai Mr. database cost responsive Street Lee noted, and Hyundai Kia Infrastructure support team to

developments. and Oracle litigation status

litigation to and referred in pre-trial Street matters previous And Oracle Rimini that litigation different Rimini is against That to ongoing have against Rimini-X. Oracle's Rimini-X. XXXX. stage XXXX. Street's time, and in appeal with second As the in a discussed filed in referred for as litigation That Oracle. earning filed stage in as the two calls, we is is

other the U.S previously paid was from Oracle by US Supreme and Street Rimini-X, received of the interest XXXX. Rimini second respect Street in Court. to during Appeals Oracle quarter, Rimini costs by in $XX.X million-plus March to return This ordered ordered the million as Court $XX.X to and With addition of to was

by the against a Rimini vacating second million as currently US as oral of appeal, XXXX. Street Rimini on the $XX.X order expect an through XX, by to additional Court is on Court injunction refund XXXX. the August and seeking XX, US were of from Court's District Circuit presented issued Xth first Street currently an The well quarter the Oracle we an XXXX of decision Appeals July arguments

the Court's be could However, later. or decision earlier

concluded expected we has With discovery District rulings motions. and await respect the until trial date occur Rimini-X, on set and has trial currently been Court's to or summary XXXX is judgment not No later. to

productivity, continued in new show our focus capacity returns believe global investment and quarter in we is products on beginning results. Summary, expansion second sales and services our and and to

to in XXXX. of revenue expect by growth more become followed to accelerated continue in billings in investment visible second growth half returns We XXXX, the

over now CFO. will call Tom our to the I Sabol, turn

Thomas Sabol

Thank you, Seth.

noted, approximately increase Seth was year-over-year. $XX revenue million, annualized million, with revenue As of a from year-over-year X.X%, XX% up subscription $XXX the quarter second of

growth For aggregate XXXX, were of revenue year-over-year clients second total for international and XX%, the of the the within United clients States quarter while international. US X.X% representing revenue, XX% XX% constituted total rates of for

XX% for subscription and X% respectively. year-over-year While international US up and revenue the was

QX, from non-subscription the the that the of up quarter. consulting XXXX included Gross for international was quarter, $X.X second impacts Note revenue revenue XX.X% approximately in margin XX.X% prior-year comparison. second current million, year-over-year which

and ramp-up Management to Services by continue by believe our earlier the of we with services global newer the rollout SAP, Application of introduction products that Seth. margin this costs the of will gross While be for our will as associated expand, established our mentioned from Salesforce offset such

XXXX. for Therefore, to of our full-year, we XX% second our which a around was marketing continue the be for quarter, is the overall revenue from expect Sales guidance. from to percentage for gross and margin XX.X% unchanged XX.X% of up the quarter as prior second expenses

in expenses end in quarter to the of Sales and the hiring first see QX XX% XXXX, and the anticipated are still with marketing be up the marketing the expect expenses XX% XXXX. the second impact to of XX% for sales to as range revenue currently full-year be expected at fully more rep marketing of sales spend. quarter higher of of we of We to revenue in and along

a costs, second for General which litigation was outside unchanged revenue, percentage excludes expenses as and year-over-year. XX.X% of the quarter, administrative

XX% increased the in of new as along and full-year increased associated IT XX% from guidance accounting company personnel costs growth the system expenses range part for G&A of revenue public slightly expect revenue of implementation standards, up with to previous a the in with due for leasing percentage and and expansion. to be costs to We XXXX, geographic

on by litigation for quarter, the the Net activity a dispute a second $X.X in outside for decrease of litigation million. was legal a $XXX,XXX, which vendor expense an additional resolution and $XXX,XXX with reduced costs

legal by reflecting $XXX,XXX, accrual of remaining impact and related the Rimini-X. our work to also for appeal, expenses We reduced insurance

on based expense and activities. is the approximately recoveries. Gross of outside that can million are It $X.X should noted spend be was the noted linear XXXX not before each for fluctuate quarter quarter litigation litigation above second litigation

per We of to litigation $X expect quarter second during range changes. XXXX half the significant to expenses the million the of million absent in be any $X

loss was quarter million of income compared compared $X million $XX.X million Net non-GAAP $X.X income net ago. income operating a the the of of $X.X income an operating to million from quarter, million million a operating a $X.X to was operating quarter ago. year GAAP ago. $X.X Non-GAAP a from from loss year was compared for year for for to the

on and former million facility also the The in million credit valuation to XX, related XXXX. litigation in terminated expense included that quarter and in second $X.X of $XX.X compared July our quarter cost $XXX,XXX XXXX, related prior-year included was second to debt adjustments

Non-GAAP Series-A of This XX, $XXX with issued second value second and $X.X issuance to net of total the on loss quarter. income for the was $X.X for on adding million a Series-A the preferred the original net $X.X million $XXX of June issuance million quarter XXXX. compared July an X, March additional XXXX, prior-year non-GAAP shares a million million. million XX, of $X.X on stock to preferred completes face XXXX We

second per July Series-A common $X.XX common Series-A $X.X a while the $X.XX transaction, loss loss net million approximately stockholders the XXXX. of of X, $X.X share of holders Series-A basic was preferred X,XXX on of attributable dividends Reflecting stock. the to the part shares of the ago. to were to issued also a in shares kind dividends for million, were diluted with quarter Cash which for and a stock on dividends issuance the compared of year As recent earnings from payment share quarter, XXX,XXX settled the were we per

cash quarter $XX.X of total compared the million quarter, Deferred ago. million half $X.X We to our prior-year second was $XX.X at million, $XXX the $XX totaled and EBITDA XXXX. the million for the flow $XXX for first quarter million from second ended million approximately XX% revenue from second balance with year the sheet. a quarter-end up $X.X was Cash of quarter. Adjusted million on operations from for from

$XX to million. range to be expect we full-year the at in we respect the revenue range with million of guidance are $XX million. million guidance, raising currently And to of revenue high Now, end $XXX maintaining revenue $XXX XXXX XXXX from the while million the low-end $XXX quarter to of the third

operator, we'll And now with take questions. that

Operator

Our first Derrick with question comes and from Company. Cowen Wood

Your open. line is now

Derrick Wood

a Seth few guess, I you. for

drawing You of what's press can countries? highlighted sense a release, Poland, some in you could to investments give to Singapore, international think into terms Mexico, us investments rough these of these in as when incremental your business? number you start you pay-off And

Seth Ravin

in think - Derrick. I good Well, afternoon,

long the I growth, into that other Southeast pull Middle Poland, think not of in the into being America, to international a pulled into lot being East. investments from we're watching And think making I to of Asia, take we're pulled being pay-off. - being Latin the parts time pulled a pulled

as incremental as - doing The very investments folks sales just support. few off operations, with well are starting an office, a some usually the

up deals. generally first opens pretty that X, So person new have X those quickly a and cluster we turn into we area a

As seen announcements. of you've some that the

Derrick Wood

on And as side certainly up international, heard the a on that I we've some other been from choppiness follow question guess companies. note there's -

there. a would anything decent do you think regarding out benefit then hearing there guys business that guys? slowdown, economic was some clients And from You macroeconomic Are you actually mean, amount choppiness? if actually, I you of do

Seth Ravin

contract uncertain an during difficult, was we well of you good their because consider example, it that challenging does in they business a And us are or really moving is who I always think their meeting give Taiwan ours I'll times. with complex, I well times, does that just ourselves a expanding with operations. Well, client during

operation And development because help issues. from savings from am there Taiwan. the - manufacturing issues, Rimini back sorry, of I back the Street cost their operations built tariff China they're in using to reestablish They're

of we a of with there So seeing some global are clients. challenges of is real the world how playing the example our out

of services is on really Street growth, that to to Rimini to for savings Focus invest, is current on them advantage investment a help client with are the during provide a way But they us, creates focus one uncertain to all first turbulent things because able about even that the going cost. we're they competitive innovation times. innovations reduce better the and how to where anytime funds upside the are those for and and that

Derrick Wood

It your guess, the is sounds mid-XXs by I the ability the, XX it's like the about rep level. and year count how target the end was plan well? that to the - around tracking feeling are trending hit of you or to time productivity How

Seth Ravin

net Yes, on for of actually the X we quarter. we are heads we're increase - had a track,

out the more program. bit Sales about As a on the focus we and productivity individual We've and in the expanded less Effectiveness of little on the last Enablement of talked we lot a call, our growth heads reps.

folks basis, in us of of get so sellers managers, XX and more better selling management new and only - help army we learn business sales our to sorts not but the also have they to small a a also to become hired out productive. up directors, effectively, more have global all on or We've DMs,

my the stronger. saw data think look being, mentioned in quarter numbers increased beginnings, I that investment that starting the other in beginnings And to pay-off I of and the remarks, second you bookings leads points being prepared I think when you the include our pipelines several at as

sales online so that heads at of end-to-end, team coming the from you way to at new as all All you when selling becomes field the expect those better rep level things from are management. sales a would that have many

seeing start to the So, of I in. we're turn results that think do all investment

Derrick Wood

And gross Tom, could relative Could up expectations. the laid of I on some upside out just bit why has you some margins, you little keep a What guess you've pretty pressure down there reasons strong some more? drill putting be but surprise? some to medium-term generated upside

Thomas Sabol

Yes.

talk we we So delivery and to we our efficiencies group. further upside. have and ultimately we just the XX% continue footprint know from of in core could ultimately the And that growth further businesses, to believe efficiencies continue move to our level-three revenue global how continue about hit

as noted the quarters, remarks, right some at XX% of and believe will for costs here, is SAP have out SAP rolling - gross kind profit the my couple But where of Salesforce in the the least number we again, still next for for ASM we full-year margin.

Derrick Wood

should you've on - at in And in your Is new had the then I numbers typically and last generation, lower first the numbers question second look how numbers customer second when the half half. - we higher a half? about the pattern of shape a this in customer I just the into part going the year? generation guess And feeling new of back you second expect are

Seth Ravin

closed it's have customers the more mix think in of we that is ASP, mix, been upside plus noted I generated. Derrick, dollar ASPs we deal the expect and the deals. Yes, the do the to number our that several million see - offset would of The to with is we have larger the others changing you terms we Hyundai of in quarter,

what $XXX,XXX We the smaller $XXX,XXX call larger some year deals, deals. which pipeline. have we have Those are sort a come are the big and sweet into to of the spot number boosters a ASP those year will of offset more of

going sure to changing at be that against we looking totals to So measure because of the be need best that's I'm not numbers. that about careful the mix.

the may business. not larger clients of a of terms number in for in we be those much the see clients, of deal So size might of increase huge but quality

Operator

with And Partners. Kinstlinger comes Global Alliance question our next from Brian

open. Your line now is

Brian Kinstlinger

When margin year. say you Tom, the for XX% just clarification. gross one

XX% saying not per You're quarter.

margin then sub half more right? XX%. a year, % year the next something build XX second that, actually be You're correctly, for And last building in on the as Is answer that volumes. of up you'll on the you if like heard throughout looking I

Thomas Sabol

That's correct. correct. is That

Brian Kinstlinger

you is like geographies? a are it what And what countries? of new the from in to then X-year different think I'd Is X- targets about terms for international and understand these How meaningful maybe period? on a follow market these guess question. do I revenue some reasonable up

Thomas Sabol

I terms meaningful million type term of new think of a $XXX in geographies from some against number. a of these financial annual

countries grow about a number these they'll and some talking add of a you're think that in year dollars few to from will I then billion there.

your progression that's seen and for very the about references we've on-board, those the your I to takes next similar that few really it growth. with to clients we've think other many seeded countries opened, become XX because months get first

it X does a point when year. first X new we So really in XX the new to set take we total a - about years to clients opened where of the to X target geography to get

to toward in numbers few and the a a you we've focus look work an to Those first that years. get in are of double footprint more on we we've a then that of We you the trying until seeded have annual other geographies seen growth that accelerated opened. kinds the basis and model can

Brian Kinstlinger

ahead. question sorry, is last My go -

Thomas Sabol

was in that just these going revenue. are I to the add Brian, reminder then ratable

So, - to recognize months X months it XX the to bring us to as revenue. on customer takes Seth and all another a takes it it take to XX can said, X then

the over So, as of builds indicated. couple again, it first up Seth years,

Brian Kinstlinger

had to relates Application as question it was, Management Services. other The I

whereas of Oracle, ROI you How Management the is. you vendor to the whoever price Services? what's speaking First, business then or to that your are toward was easy Application SAP are customers? prospective pricing maintenance And XX%

Seth Ravin

Sure.

space, of for worked it watching we this application And and clients. support where adjacency an the an of been for companies long know, as a with of expansion been we've the billion management at the part the business we've time You Services, long time. this offering Management We've Application a been. think we're $XX looking to that

lot us the which service saying of get value, the been most the type, expertise, terrible business inexperienced client, work with in put so to very of complaining application years a average about other with lower because people provider be these loss satisfaction. get groups, they an with about frustration. because on there is have complaining get SIs pick There's is focused And experience that contract were can they this that a a within of because they they our position one clients coming consulting what up ones have they leader and management of their the the the to to haven't that us resources versus the Our what of client ratings trusted there's skilled XX of organization. and

fixes. this is because another opportunity expertise to see the We replacement level we're and of And which all our group in of this and really today We're talent the support people move take the that highest as our interesting. the create We're existing the is of chain, knowledgeable trusted our at most ones side. space, downstream. vendor

We an these the diagnostics, And And do we well. development. regulatory to do the moving run as now we systems downstream that and and client do the day-to-day. create and the a area applies we updates over team research we a tax where them normally they hand we're that going updates, to legal into for are

for increases And we're revenue so than often by contracts are received to the increases or equal very bigger a been another business. into And customer it's these taking well just over increases clients. client. this this our stickiness, It vendor already the our It getting pull clients And from has support been footprint wallet share. at the side. our by

year double them replacement to So doing that compared the cases vendor coming money see just support. of the many triple could us amount from every customer, in invoicing you or

robust So really of for us together all opportunity footprint. of more take come create a to these that over to

a given about we and we Now, investments aiming our year we we which have gross the that - for is blended this as profile plan talked want our about continue to and margin to have rate, seeing we're margin plan make. have we've XX% the

support we've system. before, still it we talked of margins a efficiencies the predicted XX% about But replacement we work both where service and when we're we in vendor the a get blended and see term, because exactly the going running that's long

provide the next the blended drive continue capability model, vendor else out of will nobody few ad we systems. our because both services to these mature, to unique years of running Over that for efficiencies in can as of that cost replacement the a the look in model

think profile. change there's So no that blended to I to our margin of consider all together overall comes -

Operator

[Operator comes question Foster Drew Instructions] from Our Citigroup. next with

now is line open. Your

Drew Foster

Seth, just just an could traction inhibitors Salesforce offering? And kind remind larger the being of also you give of some what us then contributor are holding a the from on back you that of today? update can

Seth Ravin

XX right? over that included We've first our that AMS AMS, Salesforce some already It's is - releases. is that clients process the we've on we've announcements This on our press AMS offering. you've made started out the second a The Again, months. our AMS last rolled a and servicing couple SAP bigger offering seen Salesforce. has

walk, were businesses run We Salesforce. we business business. little these How model had said, in jog, and always model, been has which the with AMS vendor infrastructure, to first then cooperative different of our overall a vendor. We it do always the us - a a for the bit replacement into one is learn work really a

our - interest year. grow. a you pipelines I know, From $XXX what perspective, type financial business take it'll we million We're would in of think that a the doing longer while to customer closing and from perspective, again, business are lot consider we of meaningful a a revenue So, a - product, before continuing it's the in and a of got structural. lot

it anything So think I don't holding there's back.

we move us product look I about methodical. I continuing more to think forward announcements just can additional be down as to But you road the maturity. the down the information very and traction this think providing again, is

Drew Foster

think number did some little that come larger responses, down you're through. customers your XXX the prior bit notice quarter. talked generally of how a I prior you Fortune seeing one about I have ticked And had deals then you in of And today from just

put some that color attrition you if or saw pieces So this reconcile you around those two we're wondered the quarter? just could

Seth Ravin

of as between cycle with deals the of and there's that the some within size right? in they and XXX, it, and pipeline. went size course, difference of spread whether out clients were - Well, Some well deal a size of the Fortune clients, But Fortune those the does not necessarily correlate of Sure. Global Fortune the the XXX the as XXX. to in

within what's think obviously, I points most are are. And that the that's of we're type of important, sales to is move revenue working a number $XXX,XXX lot for we're closing, the through? pipe, million most that think numbers. to I develop as the bread $XXX,XXX which two from sweet the bringing dollar well how done, spot whether seeing year And number we meaningful and and getting that of deals in mid a reps butter pipeline that really do the the and table add that in perspective, and spread as Number one, the those plus deals

in back closing, moving So this pipe the and see moving of I talking growth as in been seen the you'll where pipe, your because we've of think more is half coming the we've year through that about. bookings the

Drew Foster

or competitive prepared you about from from then retention one And anything for still being you're but In seeing SAP standpoint? strategy either talked tactical me. different competitive, your last the a that remarks, very environment Oracle

Seth Ravin

is that I Nothing No. new. would say

or predicted watching excited as their both products. would I new are companies. time based think and as for vendors They forward I have moving that these customers with they anywhere it not much mandatory getting challenging into have think the a near The moving continued on hoped more lines, by future pulling certain product - you're it's push customers these plug support. a dates, retirement up the on on more and ratcheting

for that volition. they're and proposition the very the They advantage. is value of adopt everyone products. the two things competitive most adopt They're me with very, going to most they're Really would of not looking customers. this expensive because new running And One, the not to investment do push them is the value jumping how these these products because their to important trying at. not own help customers new hazy of see to

on drop today's will And competitive answer to growth? that two, a world. it with to can't to how that help, one is it's fiercely calculation those those a projects how then if project bottom-line questions going justify of two either in the shows really hard And

focus reduce things And drive that's IT systems the that's this and to think Street's where advantage Not and vendors has costs, improve Street fine. savings. software staff the And not only where and the come software are to having will them of Rimini real growth focus use been crux in but and the show problem of competitive the growth replacing is that that time monetary vendors. Rimini are to and on And transaction support savings, challenges. able how core I just working that and real for their

Operator

Seth Ravin like I'm to back questions to closing remarks. And for you. Thank now turn would any the call not showing any over further at this I time.

Seth Ravin

push of everybody. for everybody, we the Thanks, half joining next forward the second look I year. call in as on for you, us the we busy business and know. earnings the this Thank providing of additional Great. And color bookings during to bigger week season, to continue

Operator

thank day. concludes disconnect. you program all may today’s participating a conference. wonderful today's you This and have gentlemen, and in Ladies for Everyone,

Rimini Street (RMNI) 10 Aug 192019 Q2 Earnings call transcript