RMNI — Rimini Street, Inc.

Rimini Street (RMNI) Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: $111.1 million, a 6.7% increase year-over-year; adjusted revenue (excluding PeopleSoft) grew 10%.
• Annualized Recurring Revenue (ARR): $401.1 million, up 8.1% year-over-year.
• Billings: $100.9 million, down 8.8% year-over-year; excluding PeopleSoft, the decline was 8%.
• Gross Margin: 60.9%, up from 60.4% year-over-year; non-GAAP gross margin at 61.3%.
• Net Income: $2.4 million ($0.03 per diluted share), down from $0.32 per diluted share in the prior year due to a one-time gain last year.
• Adjusted EBITDA: $10.5 million (9.5% of revenue), down from $14 million (13.4% of revenue) year-over-year.
• Cash Position: $123.4 million, with $48.4 million in outstanding debt after a $10 million prepayment.
• Deferred Revenue: $267.1 million, up from $262.9 million year-over-year.

2. Strategic Updates and Business Highlights

• Continued focus on evolving into an innovation company, emphasizing AI solutions to enhance client operations without the need for costly ERP upgrades.
• Launched Rimini Govern for AI, a governance solution for AI deployment, enhancing their service portfolio.
• Closed 14 new client transactions over $1 million in TCV during Q2, totaling $30 million, with 58 new logos added.
• Strengthened partnerships and alliances, which contributed to sales transactions and client acquisition.
• Notable client wins included VIVERI GROUP, One NZ, and Cochlear Limited, showcasing the demand for Rimini's support services.

3. Forward Guidance and Outlook

• Q3 2026 revenue expected to be in the range of $110 million to $112 million.
• Full-year 2026 guidance reiterated, projecting revenue growth of 4%-6% and adjusted EBITDA margins of 12.5%-15.5%.
• Management remains optimistic about achieving Rule of 20 results for fiscal 2026.

4. Challenges and Points of Concern

• Billings Decline: Notable year-over-year decline in billings raises concerns about revenue momentum, although H1 billings showed a 3.2% growth.
• Sales and Marketing Expenses: Increased to 38.5% of revenue, reflecting investments in new service offerings, which may pressure margins.
• Client Retention: Although there was a net gain in clients this quarter, historical trends showed losses in previous years, indicating ongoing challenges in client retention.
• Sales Rep Turnover: Higher turnover in the sales team may affect productivity and sales execution as the company adjusts to new skill requirements.

5. Notable Q&A Insights

• AI Impact on Cost Model: Management highlighted the potential for AI to improve sales efficiency and reduce operating costs, though quantification of long-term impacts remains uncertain.
• Sales Pipeline: Management noted a healthy pipeline with double-digit growth year-over-year, driven by new bookings and retention strategies.
• Partner Contributions: Partnerships are increasingly contributing to new bookings, with a focus on expanding the indirect sales ecosystem.
• Competitive Landscape: Recent European Commission decisions regarding SAP's practices could benefit Rimini by increasing competitive options for clients, enhancing demand for third-party support.

Overall, while Rimini Street demonstrated solid revenue growth and strategic advancements, challenges in billings, client retention, and sales execution remain areas to monitor moving forward.