Rimini Street, Inc. (RMNI) Misses Q2 EPS by 36c; Offers FY18 Revenue Outlook Below Consensus

August 9, 2018 4:15 PM EDT
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Price: $6.52 +0.31%

EPS Growth %: +100.0%

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Rimini Street, Inc. (NASDAQ: RMNI) reported Q2 EPS of ($0.43), $0.36 worse than the analyst estimate of ($0.07). Revenue for the quarter came in at $62.6 million versus the consensus estimate of $60.64 million.

  • Revenue was $62.6 million for the second quarter of 2018, an increase of 20% compared to $52.0 million for the second quarter of 2017, and included approximately $1.2 million of non-subscription revenue recognized in the quarter.
  • Annualized Subscription Revenue was approximately $246 million for the second quarter of 2018, an increase of 18% compared to $208 million in the second quarter of 2017.
  • Active Clients as of June 30, 2018 were 1,622, an increase of 21% compared to 1,335 as of June 30, 2017.
  • Revenue Retention Rate was 93.2% for the trailing 12-months ended June 30, 2018 compared to 93.8% for the comparable period ended June 30, 2017.
  • Gross Margin was 58.4% for the second quarter of 2018 compared to 62.5% for the second quarter of 2017, reflecting investments to support new product and service offering launches, costs for the Company’s biannual global service delivery training event held in May 2018, and costs related to a new 10-year employee service award benefit.
  • Operating Loss was $6.0 million for the second quarter of 2018 compared to Operating Income of $7.5 million for the second quarter of 2017. The change was the result of increased litigation costs and planned increased spending on sales and marketing.
  • Non-GAAP Operating Income was $4.2 million for the second quarter of 2018 compared to Non-GAAP Operating Income of $8.1 million for the second quarter of 2017.
  • Net Loss for the second quarter of 2018 was $25.4 million, or a loss of $0.43 per basic share, compared to a Net Loss of $25.9 million, or a loss of $1.05 per basic share for the second quarter of 2017.
  • Non-GAAP Net Loss for the second quarter of 2018 was $7.8 million compared to a Non-GAAP Net Loss of $16.9 million for the second quarter of 2017.
  • Operating Cash Flow for the second quarter of 2018 was $8.5 million, compared to Operating Cash Flow of $28.5 million for the second quarter of 2017, which included an insurance settlement of $19.3 million.
  • Adjusted EBITDA for the second quarter of 2018 was $3.8 million compared to $8.9 million for the second quarter of 2017.
  • Reduced the Company’s credit facility obligation by $21.0 million with proceeds refunded and received from Oracle for certain court awards that had been previously paid by the Company, and that were subsequently overturned in Rimini Street’s favor on appeal.
  • Entered into a $140 million equity financing agreement on June 18, 2018, which subsequently closed on July 19, 2018, and resulted in repayment of all remaining outstanding obligations under the credit facility totaling $132.8 million, consisting of principal, make-whole applicable premium, interest and fees. Following repayment, the credit facility was terminated.

“We believe the recently completed refinancing of our credit facility with a $140 million private placement equity transaction removes the constraints to our revenue growth by eliminating covenants on sales and marketing spend,” stated Seth A. Ravin, Rimini Street co-founder and CEO. “Completion of the refinancing allows us to aggressively invest in global sales, marketing and service delivery capacity and capabilities in order to drive future revenue. Based on our 13 year track record of sales performance, we expect these investments to lead to growth and improved operating leverage in 2019 and beyond.”

“Revenue for the second quarter of 2018 came in above our guidance range and was driven by growth across all geographies,” stated Tom Sabol, Rimini Street CFO. “We also made significant progress in our goal to reduce our cost of capital with the refinancing of our credit facility by providing us an expected reduction in debt-related costs of approximately $95 million over the next three years. In addition, the refinancing extended the expected maturity until July 2023, when the convertible preferred equity may be redeemed by the holders in full, unless it has been previously converted into common stock.”

GUIDANCE:

Rimini Street, Inc. sees FY2018 revenue of $240-250 million, versus the consensus of $257.62 million.

For earnings history and earnings-related data on Rimini Street, Inc. (RMNI) click here.



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