10-Q: Rimini Street Reports Q1 2025 Results: Revenue Declines Slightly Amid Ongoing Litigation

Sentiment:

Quarterly Report 1 May 2025 4:01 PM

Rimini Street's Q1 2025 revenue decreased by 2% year-over-year, while the company navigates ongoing litigation with Oracle and manages global economic uncertainties.

Worse than expectedRevenue decreased by 2% year-over-year, indicating a slowdown in growth.Annualized recurring revenue declined, suggesting challenges in maintaining existing client contracts.Revenue retention rate decreased slightly, indicating some client attrition.

Summary

Rimini Street's Q1 2025 revenue was $104.2 million, a 2% decrease compared to $106.7 million in Q1 2024.
Net income for Q1 2025 was $3.4 million, compared to $1.3 million in Q1 2024.
The company's gross profit margin increased to 61.0% in Q1 2025 from 59.8% in Q1 2024.
Operating expenses decreased by 10.4% year-over-year, primarily due to lower sales and marketing expenses.
The company is continuing to wind down services for Oracle PeopleSoft products, which accounted for 7% of revenue in Q1 2025.
Rimini Street is involved in ongoing litigation with Oracle, which could have a material adverse impact on its business.
The company had $123.8 million in cash, cash equivalents, and restricted cash as of March 31, 2025.
Annualized recurring revenue was $396 million as of March 31, 2025, compared to $416 million as of March 31, 2024.
The revenue retention rate was 88% for the 12 months ended March 31, 2025, compared to 89% for the 12 months ended March 31, 2024.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While net income increased and operating expenses decreased, revenue declined and the company faces ongoing litigation and economic uncertainties. The outlook is cautiously optimistic.

Positives

Net income increased significantly year-over-year.
Gross profit margin improved, indicating better cost management.
Operating expenses decreased, contributing to higher profitability.
The company maintains a strong cash position.

Negatives

Revenue decreased by 2% year-over-year.
Annualized recurring revenue declined.
Revenue retention rate decreased slightly.
The company is continuing to wind down services for Oracle PeopleSoft products.

Risks

Ongoing litigation with Oracle could have a material adverse impact on the company's business and financial results.
Global economic uncertainties, including inflation and geopolitical conflicts, could affect client demand and the company's results of operations.
The market for independent software support services is relatively undeveloped and may not grow.
The company faces significant competition from enterprise software vendors and other independent providers.
The company has a history of losses and may not achieve revenue growth or profitability in the future.
The company's level of indebtedness may limit its operational and financing flexibility.
Cybersecurity threats continue to increase in frequency and sophistication.

Future Outlook

The company expects to continue investing in the development and improvement of new and existing products and services to address client needs, while navigating global economic uncertainties and the ongoing litigation with Oracle.

Management Comments

We also expect to continue investing in the development and improvement of new and existing products and services to address client needs.
Further, although our operations are influenced by general economic conditions, we do not believe the impacts of the economic disruptions described above had a significant net impact on our revenue or results of operations during the three months ended March 31, 2025.

Industry Context

Rimini Street operates in the enterprise software support market, competing with traditional software vendors like Oracle and SAP, as well as other independent support providers. The company's performance is influenced by the adoption of third-party support services and the overall economic conditions affecting IT spending.

Comparison to Industry Standards

The document does not provide enough information to make a detailed comparison to industry standards.
Without specific benchmarks for revenue growth, retention rates, and profitability within the third-party enterprise software support market, it's difficult to assess Rimini Street's performance relative to its peers.
Comparable companies such as Spinnaker Support (now part of Nitel) and Origina offer similar services, but their financial results are not always publicly available for direct comparison.
Industry reports from firms like Gartner and Forrester provide broader market trends and benchmarks, but not company-specific performance data.

Legal Proceedings

Rimini Street is involved in ongoing litigation with Oracle, including matters on remand from the Ninth Circuit and appeals related to attorneys' fees and costs.
The company is subject to a Modified Rimini II Injunction, which prohibits certain statements and requires compliance with copyright management information.

Related Party Transactions

An affiliate of Adams Street Partners, a member of the company's Board of Directors, owned approximately 25.8% of the company's issued and outstanding shares of Common Stock as of March 31, 2025.

Stakeholder Impact

Shareholders: The ongoing litigation and economic uncertainties could impact the stock price.
Clients: The company is committed to providing reliable support services, but the litigation could affect service delivery for certain products.
Employees: The company is managing costs and optimizing its structure, which could involve workforce reductions.
Creditors: The company is managing its debt obligations and complying with financial covenants.

Next Steps

The parties must jointly file proposed discovery, briefing and hearing schedules with the District Court no later than May 5, 2025.
Oracle has 90 days from the date the Ninth Circuit denied its petition for rehearing to file a petition for writ of certiorari in the United States Supreme Court.
Oracle's answering brief is due on May 12, 2025.

Key Dates

Date	Description
2005	Rimini Street, Inc. was formed in the State of Nevada.
2010	Rimini Street and Seth Ravin have been involved in litigation with Oracle since 2010.
October 2014	Rimini Street filed a separate lawsuit against Oracle, now captioned Oracle Intl Corp. v. Rimini Street, Inc.
August 2018	Rimini Street has been subject to a permanent injunction (the Rimini I Injunction) prohibiting it from using certain support processes.
July 2020	Oracle filed contempt proceedings alleging that Rimini Street was in violation of the Rimini I Injunction.
October 2022	Oracle withdrew all of its monetary damages claims against Rimini Street and Seth Ravin in Rimini II.
July 2023	The District Court issued its findings of fact and conclusions of law in Rimini II, accompanied by a permanent injunction against Rimini Street (the Original Rimini II Injunction).
July 2023	Rimini Street filed a notice of appeal in the District Court, commencing an appeal of the District Court's July 2023 Rimini II judgment and Injunction with the Ninth Circuit.
November 2023	Oracle filed a motion with the District Court requesting attorneys fees and costs of approximately $70.6 million relating to the Rimini II litigation.
December 2023	All matters relating to the Rimini I Injunction contempt proceedings have been resolved.
December 16, 2024	The Ninth Circuit issued its decision on Rimini Street's appeal.
September 23, 2024	The District Court issued its order on Oracle's motion for attorneys fees and costs, awarding Oracle $58.2 million in attorneys fees and $0.3 million in costs.
September 2024	Rimini Street filed a notice of appeal in the District Court, commencing an appeal of the District Court's award of attorneys fees and costs to Oracle.
October 2024	Rimini Street borrowed $15.0 million under the revolving line of credit.
January 29, 2025	Oracle filed a petition for panel rehearing and rehearing en banc in the Ninth Circuit.
February 25, 2025	The Ninth Circuit denied Oracle's petition for panel rehearing and rehearing en banc.
February 26, 2025	Pursuant to the evergreen provisions of the 2013 Plan, the Board of Directors authorized an increase of approximately 3.6 million shares available for grant under the 2013 Plan.
March 4, 2025	The Company's Board of Directors approved the Company's 2025 Long-Term Incentive Plan (the 2025 LTI Plan), consisting of awards of performance units (PSUs), restricted stock units (RSUs) and stock options to purchase shares of the Company's Common Stock under the terms of the Company's 2013 Plan, as amended, effective March 4, 2025.
March 5, 2025	The Ninth Circuit issued its mandate, returning jurisdiction over the Rimini II litigation, including the Original Rimini II Injunction, to the District Court.
March 5, 2025	Oracle filed a motion for an indicative ruling in the District Court regarding the award of attorneys fees and costs.
March 11, 2025	Rimini Street filed its opening brief with the Ninth Circuit.
March 31, 2025	End of the quarterly period.
April 1, 2025	The parties filed the joint status report on April 1, 2025, and a hearing on the joint status report was conducted on April 21, 2025, during which the District Court ordered the parties to meet and confer and file by May 5, 2025, a proposed schedule for limited discovery regarding the Company's Section 117(a) Defense and the parties briefing regarding liability, affirmative defenses, and injunctive relief.
April 21, 2025	After being briefed by both the Company and Oracle on this matter, on April 21, 2025, the District Court denied Oracle's motion and, shortly thereafter, the Company notified the Ninth Circuit of the District Court's ruling.
April 24, 2025	The District Court entered its order on mandate, identifying the items to be considered by the District Court on remand, as follows: (i) the merits of Oracle's copyright infringement claim regarding the Company's support practices for Oracle PeopleSoft products using the test for derivative works specifically identified by the Ninth Circuit in its December 2024 decision, (ii) the disposition of the Company's resurrected affirmative defense against claims of copyright infringement under Section 117(a) of the Copyright Act (which provides, in part, that it is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided [ . . . ] that such a new copy or adaptation is created as an essential step in the utilization of the computer program) and (iii) the scope and content of any injunctive relief to be awarded to Oracle should it prevail on its copyright infringement claims.
May 1, 2025	Date of the report.
May 5, 2025	The parties must jointly file proposed discovery, briefing and hearing schedules with the District Court no later than May 5, 2025.
May 12, 2025	Oracle's answering brief is due on May 12, 2025.

Keywords

Rimini Street, Oracle, SAP, litigation, revenue, financial results, software support, independent support, PeopleSoft, recurring revenue, retention rate, gross margin, Q1 2025

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