Rimini Street, Inc.

Welcome to the Rimini Street Earnings Call. My name is Karen. I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please star the one on your touch-tone phone. I will now turn the call over to Dean Pohl. Dean, you may begin.

Thank you, operator. I'd like to welcome everyone to Rimini Street's fourth quarter and fiscal year 2020 earnings conference call. On the call with me today is Seth Raven, our CEO, and Michael Prika, our CFO. Today we issued our fourth quarter and fiscal year ended December 31st, 2020 earnings press release, which can be found on our website. A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables following the financial statements in this press release. An explanation of these measures and why we believe they are meaningful is also included in the press release under the heading about non-GAAP financial measures and certain key metrics. A copy of the press release and financial tables, including the GAAP to non-GAAP reconciliation, and other supplemental financial information can be viewed and downloaded from the investor relations section of our website. As a reminder, today's discussion will include forward-looking statements that reflect our current outlook. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. We encourage you to review our most recent SEC filing including our Form 10-K for fiscal year 2020, which was filed earlier today, for discussion of risks that may affect our future results or stock price. Before taking questions, we'll begin with prepared remarks. With that, I'd like to turn the call over to Seth.

Thank you, Dean, and thank you, everyone, for joining us today. For the fourth quarter and full year 2020, We continued to execute well against our strategic growth plan to achieve $1 billion in annual revenue by 2026 and exceeded quarterly and full-year guidance. We accelerated year-over-year revenue growth for the fourth quarter from 11.7% to 15.4% and for the full year 2020 from 10.9% to 16.3%, respectively. Achieved record quarterly and full-year results for revenue new sales invoicing, calculated billings, backlog, and total gross profit, and maintained a revenue retention rate of over 90%. Throughout the year, we continued making investments, including key executive leadership additions to take advantage of growing global demand for Rimini Street's support solutions, including our new application management, security, interoperability, and professional services. We ended the year with 2,487 active clients, a year-over-year net increase of 20.6%. Sales activity remains at historically high levels, and from the company's inception in 2005 to date, we have signed nearly 4,000 clients, including 165 Fortune 500 and Global 100 companies, and have saved our clients more than $5 billion. During the full year, our global service delivery team closed more than 33,000 support cases and delivered nearly 89,000 tax, legal, and regulatory updates across 58 countries, including more than 6,000 emergency updates related specifically to the global pandemic. Our year-end 2020 global employee count was 1,425, a year-over-year increase of 12%. Pandemic impact. Throughout the year, we experienced both the opportunities and challenges of the pandemic. We believe the pandemic added meaningful additional pipeline for both 2020 and 2021, and we believe some new client sales were attributable to the pandemic. However, we also had some existing Rimini Street clients file bankruptcy or terminate their agreements due to financial distress resulting from the pandemic. and other clients received special discounts and extended payment terms for us to help them navigate the challenging times. For full year 2020, we believe the sales opportunities created by the pandemic outweighed the challenges, with client renewal sales more negatively impacted by the sudden financial shock and disruption of the pandemic in the first half of the year. We believe our strong balance sheet and cash position provided us with the business flexibility and agility to help prospects and clients with special needs and protected us against downside risk in 2020. We believe our strong balance sheet and cash position will provide us continued flexibility and agility to help prospects and clients through the continuing pandemic impacts in 2021. The full extent to which the pandemic will continue to impact our business in 2021 and beyond will depend on numerous evolving factors that we cannot reliably predict. Sales and Outlook. During the fourth quarter, we completed 213 geographically diverse new support, application management, and strategic service sales transactions. Support services is where we provide technical support and required updates such as tax, legal, and regulatory updates to a team who runs the system for a client day-to-day. Application management services, also known as AMS, is where we run the system for the client day-to-day. To highlight how clients are leveraging Rimini Street services globally to achieve strategic goals across different industries, I'd like to share with you a few case studies from the fourth quarter. First, we were awarded three Brazilian public sector contracts to support Oracle and SAP software for the legislative, executive, and judiciary branches of the Brazilian government. Prior to Rumini Street's launch in the Brazilian public sector market, No public bids for support of Oracle or SAP systems occurred because the only support option available was from the software vendors and their partners. Today, Rumini Street is on the official list of approved support providers offering an alternative solution that provides a more competitive value proposition and a premium enterprise support experience. The same need was reflected in the whole of government volume sourcing agreement with the Australian government. designed to make the procurement process faster, easier, and more cost effective for Australian government agencies to access Rimini Street services. Rimini Street is already serving many Australian government agencies. Next, Metropolitan Water Reclamation District of Greater Chicago, serving more than 10 million customers, switched to Rimini Street support for its SAP applications. The client is now receiving Rimini Street's ultra-responsive premium level support that is available to them on their current release for a minimum of 15 years from the time they switch to Rimini Street, allowing them to receive full support for their current release and avoid a costly and unnecessary migration to SAP's newest product line. The client is able to realize significant savings and invest that savings back into IT modernization initiatives across the organization. Lastly, Pulse Electronics, a leading components manufacturer for the automotive and telecommunications industries, has switched to RiminiStreet support for its SAP software. With the savings achieved by switching to RiminiStreet, Pulse was able to invest its cost savings in business intelligence capabilities including artificial intelligence technologies to enable growth and competitive advantage during a year when new spending may not have otherwise been possible. With more than 70% of its products designed in collaboration with customers, Pulse uses its SAP system for several critical functions, including finance, operations, supply chain, and warehouse management. As its business operations are required to run 24-7, Any interruption would mean a major loss of revenue. In order to sustain its leadership in a highly competitive market, the company must adapt quickly to changing market dynamics. Pulse's IT director, Alex Wong, stated that, quote, macro disruption due to the global pandemic may have slowed our progress, but investing in innovation is still very much in reach thanks to switching to Ramini Street. For 2021 we're continuing to see growing interest pipelines and sales and our core support service business and our new application management services. We are also seeing growing interest pipelines and sales for our innovative security interoperability and professional services, with a growing number of clients successfully deploying and using these new services. We believe our full year 2020 sales results and 2021 pipeline demonstrate that Rimini Street is well-positioned to compete. Gartner notes Rimini Street is the leading provider of third-party support for Oracle and SAP products by annual revenue and client count, and its published data implies that Rimini Street has captured over 86% of the global market. Gartner is currently predicting a 200% increase in a third-party software support market, expecting that the market will exceed $1 billion in 2023. Rimini Street is the only vendor at global scale who offers a proven turnkey, single-vendor solution for running and supporting ERP software, with an ultra-responsive service that supports customizations, security, interoperability, and performance challenges, and creates savings and value for clients. As discussed during our Investor Day 2021, we believe our global penetration rate is only approximately 3.5% for support services and less than 1% for application management services, providing us significant greenfield opportunities within the $170 billion addressable ERP support and AMS markets. In addition, We have increased our commitment to cross-sell opportunities within our current client base and internally estimate that cross-sell opportunities currently exceed $1 billion in annual revenue. We look to achieve these growth objectives by leveraging robust go-to-market strategy, a sales overlay resource model, and an integrated incentive framework that drives consistent goals throughout the organization. Oracle litigation update. With respect to Oracle versus Rimini Street that was filed by Oracle in 2010, went to trial in 2015, and which ran its course of all appeals by 2020, the parties are engaged in the dispute over a permanent injunction that's been in place since 2018. The dispute has been submitted to the court and there is no known timeline for any court response. With respect to Rimini Street versus Oracle, the case we filed against Oracle in 2014, the case is in pretrial preparation, and trial is not currently expected to occur until the first half of 2022, but could occur earlier. To summarize, the courts have found that third-party support and customization of enterprise software is permitted, and Oracle licensees have a choice of support providers. Rumini Street, as deemed by the United States Court of Appeals, is a lawful competitor. Please see our annual 10-K filing made earlier today for additional litigation disclosures and information. Summary. We believe the company executed well in the fourth quarter and full year 2020. and we are on plan to achieve $1 billion in annual revenue and approximately 20% operating profit run rate by 2026. To achieve our short, mid, and long-term goals, we're focused on sales execution, including increased cross-selling and retention, disciplined expense and cash management, and bringing our litigation with Oracle to a successful conclusion. Now over to you, Michael.