Rimini Street, Inc.

Hello and welcome to the Rimini Street Earnings Call. My name is Michelle and I will be the operator for today's conference. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and during the question and answer session if you have a question please press star then 1 on your touch tone phone. I will now turn the call over to Mr. Dean Pohl, Vice President of Investor Relations. Sir, you may begin.

Thank you, operator. I'd like to welcome everyone to Rimini Street's first quarter 2021 earnings conference call. On the call with me today is Seth Raven, our CEO, and Michael Parica, our CFO. Today we issued our first quarter ended March 31st, 2021 earnings press release, which can be found on our website. A reconciliation of GAAP to non-GAAP financial measures has been provided in 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 table including the gap to non-gap 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 filings including our form 10Q for the first quarter of 2021 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 first quarter, we remain on track to achieve our strategic growth plan of $1 billion in annual revenue by 2026. We achieved record revenue of $87.9 million, up 12.6% year-over-year, a record active client count of 2,550, up 22.8% year-over-year, ended the quarter with strong billings growth of 24.2%, and delivered a gross margin greater than 61%. We also continued making investments, including key executive hires, to take advantage of growing global demand for Rimini Street's expanded breadth of support solutions, including our support, application management, security, interoperability, monitoring, and professional services. From the company's inception in 2005 to date, we have signed over 4,000 clients, including 168 Fortune 500 and Fortune Global 100 companies, and have saved our clients more than $5 billion. During the first quarter, our global service delivery team closed more than 10,000 support cases and delivered nearly 32,000 tax, legal, and regulatory updates across 36 countries and achieved an average client satisfaction rating of 4.9 out of 5.0 on the company's support delivery, where 5.0 is excellent. Our global employee count as of March 31st, 2021 was 1,501, a year-over-year increase of 15%. Pandemic impact. The pandemic continues to create opportunities as well as challenges, and we believe our strong balance sheet will provide us continued flexibility to help prospects and clients through the continuing pandemic impacts in 2021. The full extent to which the pandemic will continue to affect our business in 2021 and beyond will depend on numerous evolving factors that we cannot reliably predict. Sales and outlook. For 2021, we continue to see growing interest, pipelines and sales in our core support service business and our new application management services as well as our innovative security, Interoperability, monitoring and professional services with a growing number of clients successfully deploying and using these new services. Support services where we provide technical support required updates such as tax, legal and regulatory updates to a team who runs the system for the client day to day. Application management services where we run the system for the clients day to day. To highlight how clients are leveraging Rimini Street services globally to achieve strategic goals across different industries, I would like to share a few case studies from the first quarter. First, leading global tire company, Hankook Tire, headquartered in Korea, has switched to Rimini Street support for its SAP applications and reduced its annual maintenance fee by 50% with Rimini Street support. With the efficiencies gained from switching, the company plans to focus its resources on developing innovative technology capabilities, including artificial intelligence and digital sensors. The company is a primary supplier to one of our other global auto manufacturing clients, Hyundai Kia, where together they are lowering supply chain costs. Sayo Ryo, Chief Digital and Information Officer, stated that, Keeping our business performing efficiently and at its highest level is very important to us. The company is on the fast track to digital transformation with the pursuit of innovation and technological excellence at our core. After learning about Rimini Street's global availability and expert engineering support, we decided to switch our mission-critical ERP application support to Rimini Street to gain efficiencies and free up resources to focus on maximizing manufacturing operations. Next, London's Kent County Council switched support for its Oracle eBusiness Suite application and Oracle database software to Rimini Street. Like other public sector entities, Kent County Council is under significant budgetary pressure. With over 20,000 users, Their IT infrastructure makes up a sizable part of its expenditure. Having conducted a rigorous evaluation of its options to either spend significant funds implementing new business applications or drive further savings, the team selected to drive more value out of their existing Oracle products with a move to Rimini Street. Vincent Godfrey, Strategic Commissioner, Kent County Council, stated that, It was not the right decision to divert critical resources or disrupt our stable mission-critical software with an upgrade, especially when dealing with the COVID-19 pandemic. Turning to Rimini Street has bought us the luxury of time and saved us significant resources that we can apply to support essential services while knowing we have expert support enabling us to properly plan our transformation strategy to meet the needs of our organization. Lastly, Ampol Limited, Australia's leading transport fuels provider, switched to Rimini Street support for its SAP applications and SAP HANA database software. As a result, the company reduced its annual support fees and is also deferring an expensive and disruptive migration to SAP's new S4 HANA product. For the past 20 years, Ample has relied on its robust SAP platform as a key enabler of its business and operations. Ample decided to partner with Rimini Street to maintain and drive more value out of its current SAP platforms, while also managing complexity across its supply chain. Elisa Cooper, IT Director, stated that, we needed to look at ways to be more efficient and effective with our costs and technology in the current economic environment. The transition to Rimini Street has enabled us to reallocate investment in accelerating business value and innovate around the edges of our SAP platform. Third-party ERP software support landscape. 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 the third-party software support market, expecting that the market will exceed $1 billion in 2023. Rimini Street is the only company at global scale that 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 value and savings for clients. As discussed during our Investor Day 2021 in February, we believe our global penetration rate is still only about 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 market. In addition, we've increased our strategic focus and resources pursuing and closing more cross-sell opportunities within our client base and internally estimate that these opportunities currently exceed $1 billion in annual revenue. We look to achieve these growth objectives by leveraging a robust go-to-market strategy, a sales overlay model, and an integrated incentive framework that drives consistent goals throughout the organization. Oracle litigation update. The dispute between the parties has been the subject of two different lawsuits in the United States District Court for the District of Nevada. Third-party support is legal. and is not an issue in the litigation. Instead, the litigation involves disputes over the manner in which Rumini Street provides third-party support for licensees of certain Oracle products. In fact, the United States federal courts have found that third-party support and customizations of enterprise software is permitted. Oracle licensees have a choice of support vendors and Rumini provides, quote, third-party support for Oracle's enterprise software in lawful competition with Oracle's direct maintenance services. With respect to Oracle versus Rimini Street that was filed by Oracle in 2010, the case went to trial in 2015 and ran its course of all appeals by 2020. With respect to Rimini Street versus Oracle, the case we filed against Oracle in 2014, the cases in pretrial preparation and trial is not currently expected to occur until the first half of 2022, but could occur earlier. The parties are also engaged in a dispute over a permanent injunction that has been in place since 2018. On March 31st, 2021, the United States District Court for Nevada issued an order resolving many outstanding disputes between the parties. the court affirmed that there has been no finding of infringement by the court of the company's Enterprise Software Support Process 2.0 or Automation Framework AFW tools. Finding that, as Rimini Street requested when it filed the litigation in 2014, those issues will be heard and decided by a jury. Additionally, the court ruled in the company's favor on the ability of Rimini Street's engineers to learn and gain experience from their work, Oracle has claimed that Rimini Street engineers infringe Oracle's copyrights and violate court orders by merely applying their learning and using know-how gains supporting one client to support other clients running the same licensed software. Building on the court's previous denial of these Oracle claims, the court further noted in its most recent order that, quote, It is common sense that Rimini's engineers would get better and faster at conducting a task with more experience, end quote. The court also clarified and affirmed other important provisions of its previous and most recent orders in Rimini Street's favor, while denying Oracle claims, stating that accepting some of Oracle's claims would result in, quote, absurd result, end quote. The court also denied Oracle's motion for sanctions, noting that it did not find any inappropriate conduct by Rimini Street and therefore found no basis for any sanctions. The court did, however, find that Rimini Street has violated the injunction in certain narrow instances and circumstances, including with respect to two deliverables relating to two specific clients in 2014 and 2015. However, The cited activities for these two specific deliverables occurred before the injunction was in place and therefore cannot be a violation of the injunction. We have filed a motion with the court to correct the errors. The court has scheduled an evidentiary hearing in September 2021. Please see our first quarter 10Q filing for additional litigation disclosures and information. Summary. We believe the company executed well in the first quarter and we are on plan to achieve $1 billion in annual revenue and approximately 20% operating margin run rate by 2026. To achieve our short, mid, and long-term goals, we are 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.