Rimini Street Announces Fiscal Fourth Quarter and Annual 2022 Financial and Operational Results
Rimini Street (Nasdaq: RMNI) reported its fourth quarter and full year 2022 results, with quarterly revenue of $108.6 million, up 9.4% year-over-year. Fiscal year revenue reached $409.7 million, also up 9.4%. However, billings for the fiscal year dipped 2.0% to $409.3 million, while the quarterly gross margin declined to 64.5% from 65.1% year-over-year. The company reported a net loss of $5.3 million for Q4, a stark contrast to a net income of $70.1 million in Q4 2021. They expect Q1 2023 revenue between $101 million and $103 million and guidance for full-year 2023 revenue of $420 million to $430 million.
- Quarterly revenue increased by 9.4% year-over-year to $108.6 million.
- Fiscal year revenue reached $409.7 million, up 9.4% year-over-year.
- Annualized Recurring Revenue grew 6.9% year-over-year to $420 million.
- Active Clients increased by 6.0% year-over-year to 3,020.
- Fiscal year billings decreased by 2.0% to $409.3 million.
- Fourth quarter gross margin declined to 64.5% from 65.1% year-over-year.
- Operating loss of $5.6 million in Q4 compared to an operating income of $12.7 million in Q4 2021.
- Net loss of $5.3 million in Q4 versus net income of $70.1 million in Q4 2021.
Financial Highlights Include:
Quarterly revenue of
Fiscal year revenue of
Quarterly Billings of
Fiscal year Billings of
Quarterly gross margin of
Fiscal year gross margin of
3,020 Active Clients at
“We believe the growing adoption of
“We were pleased with our improved Q4 performance in quarterly sequential billings growth and gross margin, as well as maintaining a strong Revenue Retention Rate on subscription revenue,” stated
Fourth Quarter 2022 Financial Highlights
-
Revenue was
for the 2022 fourth quarter, an increase of$108.6 million 9.4% compared to for the same period last year.$99.3 million -
Annualized Recurring Revenue was
for the 2022 fourth quarter, an increase of$420.0 million 6.9% compared to for the same period last year.$392.8 million -
Active Clients as of
December 31, 2022 were 3,020, an increase of6.0% compared to 2,849 Active Clients as ofDecember 31, 2021 . -
Revenue Retention Rate was
92% for both the trailing 12 months endedDecember 31, 2022 , and for the comparable period endedDecember 31, 2021 . -
Gross margin was
64.5% for the 2022 fourth quarter compared to65.1% for the same period last year. -
Operating loss was
for the 2022 fourth quarter compared to operating income of$5.6 million for the same period last year.$12.7 million -
Non-GAAP Operating Income was
for the 2022 fourth quarter compared to$15.0 million for the same period last year.$19.4 million -
Net loss was
for the 2022 fourth quarter compared to net income of$5.3 million for the same period last year.$70.1 million -
Non-GAAP Net Income was
for the 2022 fourth quarter compared to$15.3 million for the same period last year.$77.8 million -
Adjusted EBITDA for the 2022 fourth quarter was
compared to$18.3 million for the same period last year.$19.3 million -
Basic and diluted earnings per share attributable to common stockholders was a net loss per share of
and$0.06 , respectively, for the 2022 fourth quarter compared to a basic and diluted net income per share of$0.06 and$0.81 for the same period last year.$0.77 -
Employee count as of
December 31, 2022 was 1,921, a year-over-year increase of15.3% . -
On
February 22, 2023 we amended our Credit Facility to convert the loan reference interest rate from LIBOR to SOFR, and to amend the definition of Consolidated EBITDA to provide an addback of certain costs and legal fees relating to the Oracle litigation.
Full Year 2022 Financial Highlights
-
Revenue was
for 2022, an increase of$409.7 million 9.4% compared to for 2021.$374.4 million -
Gross margin was
62.8% for 2022 compared to63.6% for 2021. -
Operating income was
for 2022 compared to$8.1 million for 2021.$26.8 million -
Non-GAAP Operating Income was
for 2022 compared to$49.8 million for 2021.$55.0 million -
Net loss was
for 2022 compared to net income of$2.5 million for 2021.$75.2 million -
Basic and diluted net earnings per share attributable to common stockholders was a net loss per share of
and$0.03 , respectively, for 2022 compared to a basic and diluted net income per share of$0.03 and$0.54 , respectively for 2021.$0.51 -
Non-GAAP Net Income was
for 2022 compared to$39.2 million for 2021.$107.6 million -
Adjusted EBITDA was
for 2022 compared to$52.3 million for 2021.$55.8 million
Reconciliations of the non-GAAP financial measures provided in this press release to their most directly comparable GAAP financial measures are provided in the financial tables included at the end of this press release. An explanation of these measures, why we believe they are meaningful and how they are calculated is also included under the heading “About Non-GAAP Financial Measures and Certain Key Metrics.”
Fourth Quarter 2022 Company Highlights
-
Announced representative new clients who switched to, or existing clients who expanded their agreements with,
Rimini Street , including:- Kooksoondang – South Korea’s leading producer and exporter of traditional liquor, established in 1970
- Officeworks – Australia’s leading retailer of office products, supplies, furniture, technology, and education resources
-
Southern Cross Electrical Engineering –
Australia's leading electrical, instrumentation, communication and maintenance services company -
Taeyoung E&C –
South Korea's leading civil engineering firm, specializing in water and sewage management, public projects including highways, bridges, water drainage systems, and port facility construction
- Launched Rimini Connect™ Integration and Interoperability Suite – easy-to-deploy solutions to provide unique, innovative, and economical tools for connecting browsers, operating systems, and email used with Oracle, SAP, and other software.
- Closed 8,388 support cases and delivered 2,661 tax, legal and regulatory updates to clients across 48 countries, while achieving an average client satisfaction rating on the Company’s support delivery of 4.9 out of 5.0 (where 5.0 is rated excellent).
-
Named a supplier for
UK G-Cloud 13 Framework for all its Application, Database, Managed and Professional Services, helpingUK public sector organizations achieve immediate savings on annual support fees for Oracle and SAP products. -
Achieved
Great Place to Work© certifications inFrance ,Israel ,Japan andUnited Kingdom , building on past wins inAustralia ,India ,Korea ,New Zealand , andUnited States . -
Hosted a large volunteer event for 300 colleagues gathered in
Las Vegas to handmake fleece blankets for local foster children, and homeless youth.
Business Outlook
The Company is providing first quarter 2023 revenue guidance to be in the range of
Webcast and Conference Call Information
Company’s Use of Non-GAAP Financial Measures
This press release contains certain “non-GAAP financial measures.” Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements and is not intended to represent a measure of performance in accordance with disclosures required by
About
Forward-Looking Statements
Certain statements included in this communication are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “may,” “should,” “would,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “seem,” “seek,” “continue,” “future,” “will,” “expect,” “outlook” or other similar words, phrases or expressions. These forward-looking statements include, but are not limited to, statements regarding our expectations of future events, future opportunities, global expansion and other growth initiatives and our investments in such initiatives. These statements are based on various assumptions and on the current expectations of management and are not predictions of actual performance, nor are these statements of historical facts. These statements are subject to a number of risks and uncertainties regarding Rimini Street’s business, and actual results may differ materially. These risks and uncertainties include, but are not limited to, adverse developments in and costs associated with defending pending litigation or any new litigation; changes in the business environment in which
© 2023
|
||||||||
Unaudited Condensed Consolidated Balance Sheets |
||||||||
(In thousands, except per share amounts) |
||||||||
ASSETS |
|
|
||||||
Current assets: |
|
|
||||||
Cash and cash equivalents |
$ |
109,008 |
|
$ |
119,571 |
|
||
Restricted cash |
|
426 |
|
|
419 |
|
||
Accounts receivable, net of allowance of |
|
116,093 |
|
|
135,447 |
|
||
Deferred contract costs, current |
|
17,218 |
|
|
14,985 |
|
||
Short-term investments |
|
20,115 |
|
|
— |
|
||
Prepaid expenses and other |
|
18,846 |
|
|
16,340 |
|
||
Total current assets |
|
281,706 |
|
|
286,762 |
|
||
Long-term assets: |
|
|
||||||
Property and equipment, net of accumulated depreciation and amortization of |
|
6,113 |
|
|
4,435 |
|
||
Operating lease right-of-use assets |
|
7,142 |
|
|
12,722 |
|
||
Deferred contract costs, noncurrent |
|
23,508 |
|
|
21,524 |
|
||
Deposits and other |
|
7,057 |
|
|
1,786 |
|
||
Deferred income taxes, net |
|
65,515 |
|
|
64,033 |
|
||
Total assets |
$ |
391,041 |
|
$ |
391,262 |
|
||
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
||||||||
Current liabilities: |
|
|
||||||
Current maturities of long-term debt |
$ |
4,789 |
|
$ |
3,664 |
|
||
Accounts payable |
|
8,040 |
|
|
5,708 |
|
||
Accrued compensation, benefits and commissions |
|
37,459 |
|
|
36,558 |
|
||
Other accrued liabilities |
|
32,676 |
|
|
26,124 |
|
||
Operating lease liabilities, current |
|
4,223 |
|
|
4,227 |
|
||
Deferred revenue, current |
|
265,840 |
|
|
253,221 |
|
||
Total current liabilities |
|
353,027 |
|
|
329,502 |
|
||
Long-term liabilities: |
|
|
||||||
Long-term debt, net of current maturities |
|
70,003 |
|
|
79,655 |
|
||
Deferred revenue, noncurrent |
|
34,081 |
|
|
47,047 |
|
||
Operating lease liabilities, noncurrent |
|
9,094 |
|
|
12,511 |
|
||
Other long-term liabilities |
|
2,006 |
|
|
2,933 |
|
||
Total liabilities |
|
468,211 |
|
|
471,648 |
|
||
Stockholders' deficit: |
|
|
||||||
Preferred Stock, 180 shares of Series A Preferred Stock); no other series has been designated |
|
— |
|
|
— |
|
||
Common Stock, |
|
9 |
|
|
9 |
|
||
Additional paid-in capital |
|
156,401 |
|
|
149,234 |
|
||
Accumulated other comprehensive loss |
|
(4,195 |
) |
|
(2,724 |
) |
||
Accumulated deficit |
|
(228,269 |
) |
|
(225,789 |
) |
||
|
|
(1,116 |
) |
|
(1,116 |
) |
||
Total stockholders' deficit |
|
(77,170 |
) |
|
(80,386 |
) |
||
Total liabilities, redeemable preferred stock and stockholders' deficit |
$ |
391,041 |
|
$ |
391,262 |
|
|
||||||||||||||||
Unaudited Condensed Consolidated Statements of Operations |
||||||||||||||||
(In thousands, except per share amounts) |
||||||||||||||||
|
Three Months Ended |
Year Ended |
||||||||||||||
|
|
|
||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
||||||||||||
Revenue |
$ |
108,621 |
|
$ |
99,279 |
|
$ |
409,662 |
|
$ |
374,430 |
|
||||
Cost of revenue |
|
38,563 |
|
|
34,657 |
|
|
152,385 |
|
|
136,464 |
|
||||
Gross profit |
|
70,058 |
|
|
64,622 |
|
|
257,277 |
|
|
237,966 |
|
||||
Operating expenses: |
|
|
|
|
||||||||||||
Sales and marketing |
|
39,181 |
|
|
32,429 |
|
|
143,018 |
|
|
128,496 |
|
||||
General and administrative |
|
18,100 |
|
|
15,444 |
|
|
75,367 |
|
|
64,172 |
|
||||
Impairment charges related to operating lease right-of-use assets |
|
3,013 |
|
|
1,256 |
|
|
3,013 |
|
|
1,649 |
|
||||
Reorganization costs |
|
2,525 |
|
|
— |
|
|
2,525 |
|
|
— |
|
||||
Litigation costs and related recoveries: |
|
|
|
|
||||||||||||
Litigation settlement expense |
|
— |
|
|
7,530 |
|
|
— |
|
|
7,530 |
|
||||
Professional fees and other costs of litigation |
|
12,817 |
|
|
2,327 |
|
|
25,654 |
|
|
16,457 |
|
||||
Insurance costs and recoveries, net |
|
— |
|
|
(7,111 |
) |
|
(389 |
) |
|
(7,111 |
) |
||||
Litigation costs and related recoveries, net |
|
12,817 |
|
|
2,746 |
|
|
25,265 |
|
|
16,876 |
|
||||
Total operating expenses |
|
75,636 |
|
|
51,875 |
|
|
249,188 |
|
|
211,193 |
|
||||
Operating income (loss) |
|
(5,578 |
) |
|
12,747 |
|
|
8,089 |
|
|
26,773 |
|
||||
Non-operating income and (expenses): |
|
|
|
|
||||||||||||
Interest expense |
|
(1,296 |
) |
|
(812 |
) |
|
(4,271 |
) |
|
(1,550 |
) |
||||
Loss from change in fair value of redeemable warrants |
|
— |
|
|
(1,160 |
) |
|
— |
|
|
(4,183 |
) |
||||
Other income (expenses), net |
|
2,684 |
|
|
(720 |
) |
|
(13 |
) |
|
(1,605 |
) |
||||
Income (loss) before income taxes |
|
(4,190 |
) |
|
10,055 |
|
|
3,805 |
|
|
19,435 |
|
||||
Income taxes |
|
(1,082 |
) |
|
60,002 |
|
|
(6,285 |
) |
|
55,784 |
|
||||
Net income (loss) |
$ |
(5,272 |
) |
$ |
70,057 |
|
$ |
(2,480 |
) |
$ |
75,219 |
|
||||
|
|
|
|
|
||||||||||||
Net income (loss) attributable to common stockholders |
$ |
(5,272 |
) |
$ |
70,057 |
|
$ |
(2,480 |
) |
$ |
45,197 |
|
||||
|
|
|
|
|
||||||||||||
Net income (loss) per share attributable to common stockholders: |
|
|
|
|
||||||||||||
Basic |
$ |
(0.06 |
) |
$ |
0.81 |
|
$ |
(0.03 |
) |
$ |
0.54 |
|
||||
Diluted |
$ |
(0.06 |
) |
$ |
0.77 |
|
$ |
(0.03 |
) |
$ |
0.51 |
|
||||
Weighted average number of shares of Common Stock outstanding: |
|
|
|
|
||||||||||||
Basic |
|
88,355 |
|
|
86,898 |
|
|
87,672 |
|
|
84,318 |
|
||||
Diluted |
|
88,355 |
|
|
90,780 |
|
|
87,672 |
|
|
88,970 |
|
|
||||||||||||||||
GAAP to Non-GAAP Reconciliations |
||||||||||||||||
(In thousands) |
||||||||||||||||
|
Three Months Ended |
Year Ended |
||||||||||||||
|
|
|
||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
||||||||||||
Non-GAAP operating income reconciliation: |
|
|
|
|
||||||||||||
Operating income (loss) |
$ |
(5,578 |
) |
$ |
12,747 |
|
$ |
8,089 |
|
$ |
26,773 |
|
||||
Non-GAAP adjustments: |
|
|
|
|
||||||||||||
Litigation costs and related recoveries, net |
|
12,817 |
|
|
2,746 |
|
|
25,265 |
|
|
16,876 |
|
||||
Stock-based compensation expense |
|
2,242 |
|
|
2,606 |
|
|
10,895 |
|
|
9,710 |
|
||||
Impairment charges related to operating lease right-of-use assets |
|
3,013 |
|
|
1,256 |
|
|
3,013 |
|
|
1,649 |
|
||||
Reorganization costs |
|
2,525 |
|
|
— |
|
|
2,525 |
|
|
— |
|
||||
Non-GAAP operating income |
$ |
15,019 |
|
$ |
19,355 |
|
$ |
49,787 |
|
$ |
55,008 |
|
||||
Non-GAAP net income reconciliation: |
|
|
|
|
||||||||||||
Net income (loss) |
$ |
(5,272 |
) |
$ |
70,057 |
|
$ |
(2,480 |
) |
$ |
75,219 |
|
||||
Non-GAAP adjustments: |
|
|
|
|
||||||||||||
Litigation costs and related recoveries, net |
|
12,817 |
|
|
2,746 |
|
|
25,265 |
|
|
16,876 |
|
||||
Loss on change in fair value of redeemable warrants |
|
— |
|
|
1,160 |
|
|
— |
|
|
4,183 |
|
||||
Stock-based compensation expense |
|
2,242 |
|
|
2,606 |
|
|
10,895 |
|
|
9,710 |
|
||||
Impairment charges related to operating lease right-of-use assets |
|
3,013 |
|
|
1,256 |
|
|
3,013 |
|
|
1,649 |
|
||||
Reorganization costs |
|
2,525 |
|
|
— |
|
|
2,525 |
|
|
— |
|
||||
Non-GAAP net income |
$ |
15,325 |
|
$ |
77,825 |
|
$ |
39,218 |
|
$ |
107,637 |
|
||||
Non-GAAP Adjusted EBITDA reconciliation: |
|
|
|
|
||||||||||||
Net income (loss) |
$ |
(5,272 |
) |
$ |
70,057 |
|
$ |
(2,480 |
) |
$ |
75,219 |
|
||||
Non-GAAP adjustments: |
|
|
|
|
||||||||||||
Interest expense |
|
1,296 |
|
|
812 |
|
|
4,271 |
|
|
1,550 |
|
||||
Income taxes |
|
1,082 |
|
|
(60,002 |
) |
|
6,285 |
|
|
(55,784 |
) |
||||
Depreciation and amortization expense |
|
633 |
|
|
632 |
|
|
2,504 |
|
|
2,404 |
|
||||
EBITDA |
|
(2,261 |
) |
|
11,499 |
|
|
10,580 |
|
|
23,389 |
|
||||
Non-GAAP adjustments: |
|
|
|
|
||||||||||||
Litigation costs and related recoveries, net |
|
12,817 |
|
|
2,746 |
|
|
25,265 |
|
|
16,876 |
|
||||
Loss on change in fair value of redeemable warrants |
|
— |
|
|
1,160 |
|
|
— |
|
|
4,183 |
|
||||
Stock-based compensation expense |
|
2,242 |
|
|
2,606 |
|
|
10,895 |
|
|
9,710 |
|
||||
Impairment charges related to operating lease right-of-use assets |
|
3,013 |
|
|
1,256 |
|
|
3,013 |
|
|
1,649 |
|
||||
Reorganization costs |
|
2,525 |
|
|
— |
|
|
2,525 |
|
|
— |
|
||||
Adjusted EBITDA |
$ |
18,336 |
|
$ |
19,267 |
|
$ |
52,278 |
|
$ |
55,807 |
|
||||
Calculated Billings: |
|
|
|
|
||||||||||||
Revenue |
$ |
108,621 |
|
$ |
99,279 |
|
$ |
409,662 |
|
$ |
374,430 |
|
||||
Deferred revenue, current and noncurrent, end of the period |
|
299,921 |
|
|
300,268 |
|
|
299,921 |
|
|
300,268 |
|
||||
Deferred revenue, current and noncurrent, beginning of the period |
|
248,187 |
|
|
243,682 |
|
|
300,268 |
|
|
256,933 |
|
||||
Change in deferred revenue |
|
51,734 |
|
|
56,586 |
|
|
(347 |
) |
|
43,335 |
|
||||
Calculated billings |
$ |
160,355 |
|
$ |
155,865 |
|
$ |
409,315 |
|
$ |
417,765 |
|
About Non-GAAP Financial Measures and Certain Key Metrics
To provide investors and others with additional information regarding Rimini Street’s results, we have disclosed the following non-GAAP financial measures and certain key metrics. We have described below Active Clients, Annualized Recurring Revenue and Revenue Retention Rate, each of which is a key operational metric for our business. In addition, we have disclosed the following non-GAAP financial measures: non-GAAP operating income, non-GAAP net income, EBITDA, Adjusted EBITDA and Billings.
The primary purpose of using non-GAAP measures is to provide supplemental information that management believes may prove useful to investors and to enable investors to evaluate our results in the same way management does. We also present the non-GAAP financial measures because we believe they assist investors in comparing our performance across reporting periods on a consistent basis, as well as comparing our results against the results of other companies, by excluding items that we do not believe are indicative of our core operating performance. Specifically, management uses these non-GAAP measures as measures of operating performance; to prepare our annual operating budget; to allocate resources to enhance the financial performance of our business; to evaluate the effectiveness of our business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of our results with those of other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and in communications with our board of directors concerning our financial performance. Investors should be aware however, that not all companies define these non-GAAP measures consistently.
Billings represents the change in deferred revenue for the current period plus revenue for the current period.
Active Client is a distinct entity that purchases our services to support a specific product, including a company, an educational or government institution, or a business unit of a company. For example, we count as two separate active clients when support for two different products is being provided to the same entity. We believe that our ability to expand our active clients is an indicator of the growth of our business, the success of our sales and marketing activities, and the value that our services bring to our clients.
Annualized Recurring Revenue is the amount of subscription revenue recognized during a fiscal quarter and multiplied by four. This gives us an indication of the revenue that can be earned in the following 12-month period from our existing client base assuming no cancellations or price changes occur during that period. Subscription revenue excludes any non-recurring revenue, which has been insignificant to date.
Revenue Retention Rate is the actual subscription revenue (dollar-based) recognized over a 12-month period from customers that were clients on the day prior to the start of such 12-month period, divided by our Annual Recurring Revenue as of the day prior to the start of the 12-month period.
Non-GAAP Operating Income is operating income adjusted to exclude: litigation costs and related recoveries, net, stock-based compensation expense and impairment charge related to operating right-of-use assets. The exclusions are discussed in further detail below.
Non-GAAP Net Income is net income adjusted to exclude: litigation costs and related recoveries, net, loss on change in fair value of redeemable warrants, stock-based compensation expense and impairment charge related to operating right-of-use assets. These exclusions are discussed in further detail below.
Specifically, management is excluding the following items from its non-GAAP financial measures, as applicable, for the periods presented:
Litigation Costs and Related Recoveries, Net: Litigation costs and the associated insurance and appeal recoveries related to outside costs of litigation activities. These costs and recoveries reflect the ongoing litigation we are involved with, and do not relate to the day-to-day operations or our core business of serving our clients.
Loss on Change in Fair Value of Redeemable Warrants: We have excluded the losses on redeemable warrants related to the change in fair value of these instruments given the financial nature of this fair value requirement. We are not able to manage these amounts as part of our business operations nor are the costs core to serving our clients, and therefore we have excluded them.
Stock-Based Compensation Expense: Our compensation strategy includes the use of stock-based compensation to attract and retain employees. This strategy is principally aimed at aligning the employee interests with those of our stockholders and to achieve long-term employee retention, rather than to motivate or reward operational performance for any particular period. As a result, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.
Impairment Charges Related to Operating Lease Right-of-Use Assets: This relates to impairment charges on our leased assets for a portion of one of our locations as we no longer use the space and have revised our estimated loss.
Reorganization Costs: The costs consist primarily of severance costs associated with the Company's reorganization plan.
EBITDA is net income adjusted to exclude: interest expense, income tax expense, and depreciation and amortization expense.
Adjusted EBITDA is EBITDA adjusted to exclude: litigation costs and related recoveries, net, loss on change in fair value of redeemable warrants, stock-based compensation expense, impairment charges related to operating right-of-use assets and reorganization costs, each as discussed above.
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Investor Relations Contact
+1 925 523-7636
dpohl@riministreet.com
Media Relations Contact
+1 702 285-3532
pr@riministreet.com
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