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Rimini Street, Inc.
Rimini Street, Inc. (Nasdaq: RMNI) is a global provider of enterprise software products and services, and the leading third-party support provider for Oracle and SAP software products. The Company has redefined enterprise software support services since 2005 with an innovative, award-winning program that enables licensees of IBM, Microsoft, Oracle, Salesforce, SAP and other enterprise software vendors to save up to 90 percent on total maintenance costs. Clients can remain on their current software release without any required upgrades for a minimum of 15 years. Over 1,620 global Fortune 500, midmarket, public sector and other organizations from a broad range of industries currently rely on Rimini Street as their trusted, third-party support provider. To learn more, please visit http://www.riministreet.com/, follow @riministreet on Twitter and find Rimini Street on Facebook and LinkedIn. (IR-RMNI)
Salesforce, Service Cloud, Sales Cloud and others are trademarks of salesforce.com, inc.
(c) 2018 Rimini Street, Inc. All rights reserved. "Rimini Street" is a registered trademark of Rimini Street, Inc. in the United States and other countries, and Rimini Street, the Rimini Street logo, and combinations thereof, and other marks marked by TM are trademarks of Rimini Street, Inc. All other trademarks remain the property of their respective owners, and unless otherwise specified, Rimini Street claims no affiliation, endorsement, or association with any such trademark holder or other companies referenced herein.
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Rimini Street, Inc. |
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Unaudited Condensed Consolidated Balance Sheets |
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(In thousands, except per share amounts) |
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June 30, |
December 31, |
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ASSETS |
2018 |
2017 |
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Current assets: |
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Cash and cash equivalents |
$ |
24,853 |
$ |
21,950 |
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Restricted cash |
10,634 |
18,077 |
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Accounts receivable, net of allowance of $293 and $51, respectively |
63,416 |
63,525 |
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Prepaid expenses and other |
8,706 |
8,560 |
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Total current assets |
107,609 |
112,112 |
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Long-term assets: |
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Property and equipment, net of accumulated depreciation and amortization of $7,805 and $6,947, respectively |
3,899 |
4,255 |
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Deferred debt issuance costs, net |
2,834 |
3,520 |
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Deferred offering costs |
2,831 |
500 |
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Deposits and other |
1,387 |
1,065 |
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Deferred income taxes, net |
940 |
719 |
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Total assets |
$ |
119,500 |
$ |
122,171 |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current liabilities: |
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Current maturities of long-term debt |
$ |
3,677 |
$ |
15,500 |
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Accounts payable |
12,416 |
10,137 |
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Accrued compensation, benefits and commissions |
18,420 |
18,154 |
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Other accrued liabilities |
28,509 |
22,920 |
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Deferred insurance settlement |
- |
8,033 |
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Liability for embedded derivatives |
7,800 |
1,600 |
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Deferred revenue |
167,879 |
152,390 |
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Total current liabilities |
238,701 |
228,734 |
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Long-term liabilities: |
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Long-term debt, net of current maturities |
72,364 |
66,613 |
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Deferred revenue |
32,506 |
29,182 |
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Other long-term liabilities |
5,825 |
7,943 |
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Total liabilities |
349,396 |
332,472 |
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Stockholders' deficit: |
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Preferred stock, $0.0001 par value per share. Authorized 100,000 shares; no shares issued and outstanding |
- |
- |
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Common stock; $0.0001 par value. Authorized 1,000,000 shares; issued and outstanding 60,005 and 59,314 shares as of June 30, 2018 and December 31, 2017, respectively |
6 |
6 |
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Additional paid-in capital |
97,663 |
94,967 |
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Accumulated other comprehensive loss |
(1,219 |
) |
(867 |
) |
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Accumulated deficit |
(326,346 |
) |
(304,407 |
) |
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Total stockholders' deficit |
(229,896 |
) |
(210,301 |
) |
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Total liabilities and stockholders' deficit |
$ |
119,500 |
$ |
122,171 |
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Rimini Street, Inc. |
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Unaudited Condensed Consolidated Statements of Operations |
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(In thousands, except per share amounts) |
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Three Months Ended |
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June 30, |
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2018 |
2017 |
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Net revenue |
$ |
62,649 |
$ |
52,048 |
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Cost of revenue |
26,084 |
19,537 |
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Gross profit |
36,565 |
32,511 |
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Operating expenses: |
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Sales and marketing |
23,097 |
15,801 |
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General and administrative |
10,324 |
8,928 |
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Litigation costs and related recoveries: |
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Professional fees and other defense costs of litigation |
9,113 |
3,426 |
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Insurance recoveries, net |
- |
(3,125 |
) |
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Total operating expenses |
42,534 |
25,030 |
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Operating income (loss) |
(5,969 |
) |
7,481 |
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Non-operating expenses: |
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Interest expense |
(9,323 |
) |
(14,541 |
) |
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Other debt financing expenses |
(1,339 |
) |
(10,859 |
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Loss from change in fair value of redeemable warrants |
- |
(7,648 |
) |
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Loss from change in fair value of embedded derivatives |
(6,700 |
) |
(700 |
) |
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Other income (expense), net |
(1,568 |
) |
225 |
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Loss before income taxes |
(24,899 |
) |
(26,042 |
) |
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Income tax benefit (expense) |
(547 |
) |
183 |
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Net loss |
$ |
(25,446 |
) |
$ |
(25,859 |
) |
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Net loss per share: |
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Basic |
$ |
(0.43 |
) |
$ |
(1.05 |
) |
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Diluted |
$ |
(0.43 |
) |
$ |
(1.05 |
) |
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Weighted average number of shares of Common Stock outstanding: (1) |
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Basic |
59,800 |
24,561 |
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Diluted |
59,800 |
24,561 |
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(1) |
For the three months ended June 30, 2017, the weighted average number of shares have been restated to give effect to the reverse recapitalization consummated on October 10, 2017. |
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Rimini Street, Inc. |
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GAAP to Non-GAAP Reconciliations |
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(In Thousands) |
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Three Months Ended |
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June 30, |
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2018 |
2017 |
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Non-GAAP operating income reconciliation: |
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Operating income (loss) |
$ |
(5,969 |
) |
$ |
7,481 |
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Non-GAAP adjustments: |
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Litigation costs, net of related recoveries |
9,113 |
301 |
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Stock-based compensation expense |
1,098 |
353 |
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Non-GAAP operating income |
$ |
4,242 |
$ |
8,135 |
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Non-GAAP net loss reconciliation: |
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Net loss |
$ |
(25,446 |
) |
$ |
(25,859 |
) |
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Non-GAAP adjustments: |
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Litigation costs, net of related recoveries |
9,113 |
301 |
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Write-off of deferred debt financing costs |
704 |
- |
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Stock-based compensation expense |
1,098 |
353 |
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Loss from change in fair value of embedded derivatives |
6,700 |
700 |
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Loss from change in fair value of redeemable warrants |
- |
7,648 |
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Non-GAAP net loss |
$ |
(7,831 |
) |
$ |
(16,857 |
) |
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Non-GAAP Adjusted EBITDA reconciliation: |
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Net loss |
$ |
(25,446 |
) |
$ |
(25,859 |
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Non-GAAP adjustments: |
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Interest expense |
9,323 |
14,541 |
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Income tax expense |
547 |
(183 |
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Depreciation and amortization expense |
466 |
496 |
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EBITDA |
(15,110 |
) |
(11,005 |
) |
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Non-GAAP adjustments: |
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Litigation costs, net of related recoveries |
9,113 |
301 |
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Stock-based compensation expense |
1,098 |
353 |
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Loss from change in fair value of embedded derivatives |
6,700 |
700 |
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Loss from change in fair value of redeemable warrants |
- |
7,648 |
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Write-off of deferred debt financing costs |
704 |
- |
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Other debt financing expenses |
1,339 |
10,859 |
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Adjusted EBITDA |
$ |
3,844 |
$ |
8,856 |
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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 Subscription 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 loss, EBITDA, and Adjusted EBITDA. Rimini Street has provided in the tables above a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. Due to a valuation allowance for our deferred tax assets, there were no tax effects associated with any of our non-GAAP adjustments. These non-GAAP financial measures are also described below.
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.
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 Subscription Revenue is the amount of subscription revenue recognized during a 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 had been insignificant until the fiscal second quarter of 2018.
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 Annualized Subscription Revenue as of the day prior to the start of the 12-month period.
Non-GAAP Operating Income is operating income (loss) adjusted to exclude: litigation costs, net of related appeal awards and insurance recoveries, and stock-based compensation expense. These exclusions are discussed in further detail below.
Non-GAAP Net Loss is net loss adjusted to exclude: litigation costs, net of related appeal awards and insurance recoveries, post judgment interest on litigation appeal awards, stock-based compensation expense, and gains or losses on changes in fair value of embedded derivatives and redeemable warrants. These exclusions are discussed in further detail below.
We exclude the following items from our non-GAAP financial measures, as applicable, for the periods presented:
Litigation Costs and related recoveries: Litigation costs, the associated insurance recoveries, adjustments to the deferred settlement liability, litigation appeal awards and post judgment interest relate to outside costs and recoveries for our litigation activities. These costs and related 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.
Write-off of Deferred Debt Financing Costs: Costs related to potential debt financing transactions are capitalized until we determine if the transaction will result in a new debt agreement. When we determine that these efforts are unsuccessful, the costs are written-off and classified as other non-operating expenses. Since these amounts are associated with our debt financing structure, we exclude them since they do not relate to our day-to-day operations or our core business of serving our clients.
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.
Loss (Gain) on Changes in Fair Value of Embedded Derivatives and Redeemable Warrants: Our former credit facility, which was terminated on July 19, 2018, included features that were determined to be embedded derivatives requiring bifurcation and accounting as separate financial instruments. Until October 2017, we also had redeemable warrants that were required to be carried at fair market value with changes in fair value resulting in gains and losses in our statement of operations. We have excluded the gains and losses related to the changes in fair value of embedded derivatives and redeemable warrants given the nature of the fair value requirements. We are not able to manage these amounts as part of our business operations nor are the costs core to servicing our clients and have excluded them.
Other Debt Financing Expenses: Other debt financing expenses include non-cash write-offs and amortization of debt discounts and issuance costs under our former credit facility, and collateral monitoring and other fees payable in cash related to the credit facility. Since these amounts related to our debt financing structure, we exclude them since they do not relate to the day-to-day operations or our core business of serving our clients.
EBITDA is net loss adjusted to exclude: interest expense, income tax expense, and depreciation and amortization expense.
Adjusted EBITDA is EBITDA adjusted to exclude: litigation costs, net of related appeal and insurance recoveries, post judgment interest on litigation appeal awards, stock-based compensation expense, gains or losses on changes in the fair value of embedded derivatives and redeemable warrants, write-off of deferred debt financing costs, and other debt financing expenses, as discussed above.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180809005664/en/
Contacts
Rimini Street, Inc.
Investor Relations Contact
Dean Pohl
+1 203-347-4446
dpohl@riministreet.com
or
Media Relations Contact
Michelle McGlocklin,
+1 925-523-8414
mmcglocklin@riministreet.com