Rimini Street (RMNI) Q2 2026 Earnings Call Summary

1Key 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.

2Strategic 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.

3Forward 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.

4Challenges 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.

5Notable 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.