Rimini Street, Inc.

Good day, and thank you for standing by. Welcome to Rimini Street fourth quarter 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this time, simply press star one on your telephone keypad. To withdraw your question, please press star two. Please be advised, but today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dean Paul, Vice President, Treasurer, and Investor Relations. Please go ahead.

Thank you, Operator. I'd like to welcome everyone to Rimini Street's fourth quarter and fiscal year 2023 earnings conference call. On the call with me today is Seth Raven, our CEO and President, and Michael Parika, our CFO. Today we issued our earnings press release for the fourth quarter and fiscal year ended December 31st, 2023, a copy of which can be found on our website under investor relations. A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables following the financial statements in the 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. 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 10-K filed today. for discussion of risks that may affect our future results or stock prices. Now, 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. Since its founding 19 years ago, Rumini Street has grown and evolved into a different kind of full IT services company focused on the needs and goals of our clients. Other IT service companies are focused on getting their clients to spend as much as possible on projects that maximize sales of their software services and hardware vendor partners and meet their own financial objectives. Instead, RiminiStreet works as a trusted partner to its clients and has no partnerships with other IT vendors that compromise or influence its independence and advice counsel, and recommendations provided to clients. We only have technology partnerships that we use to provide our clients value, leverage, and access to what we believe are strong solution opportunities. Rimini Street is focused on developing a Rimini SmartPath roadmap, an ROI-driven analysis of options and strategic recommendations to clients on the best allocation of limited IT budget, people and time resources to help them achieve their strategic financial and operational goals. When other IT firms say no, Romini works to say yes, we will get you there. We help our clients achieve better business outcomes such as accelerated growth, lowered operating costs, increased investment in innovation, and improved competitive advantage. We believe we have already delivered over $8 billion of savings and reinvestment opportunity to our clients. Not only is Hermione Street a global leader in its deep technical capabilities to run, manage, support, protect, connect, monitor, customize, configure, and optimize mission-critical enterprise application, database, and technology software, But Rumini is also growing technical and business capabilities to assist clients with innovation projects that include cloud, open source products, automation, workflow, data, analytics, AI, reporting, application modernization, license management, migrations, integrations, security, and global IT governance. To date, we've served over 5,500 Fortune 500, Fortune Global 100, mid-market and public sector organizations in nearly 150 countries and have global operations with over 2,100 employees across 21 countries. We have an average engineer response time of less than two minutes, 24 by 7 by 365, and earn an average client satisfaction score on our support delivery and onboarding services of 4.9 out of five, where five is excellent. Q4 and fiscal year 2023 results. For the fourth quarter and full year 2023, we continued focusing on improving sales execution across our expanded portfolio of solutions and being able to deliver the full portfolio of solutions globally. As our current and prospective clients learn more about the unique offerings and value of our expanded solutions portfolio, they are responding positively and buying across the full portfolio. Accordingly, to meet the increased demand, we have substantially increased our seller count and sales capacity coming into 2024. Throughout 2023, we saw our end-to-end ERP outsourcing solution, ReminiOne, solutions for SAP products, and Salesforce AMS solution continue to gain sales traction globally. To enhance and accelerate lead, opportunity, and pipeline development, and help close more large and strategic transactions for ReminiStreets, Our senior executives, including myself, continued our extensive in-person remaining street client and prospect meetings and attendance of third-party events and executive sales meetings in the United States and globally with many current and prospective clients. To deliver our full solutions portfolio globally, we continue to grow our workforce and expand our capabilities backed by innovation and technology that provides additional leverage for increased capacity, profitability, and revenue growth. Demand environment and competitive advantage. We continue to see strong demand for a proven, reliable, trusted partner for mission-critical transaction system services that can allow organizations to consolidate their preferred IT service providers for streamlined vendor management, increased aggregated purchasing power, and better business outcomes. Organizations today need to figure out how to deliver both revenue growth and increased profitability. And now, as an end-to-end provider of mission-critical IT support, products, and services, Rumini Street has the broader portfolio of solutions needed to be recognized as a key IT service partner that can help enable our clients to lower operating costs and achieve their goals from developing IT strategy and building roadmaps through plan execution. Expanded software product support, introducing Rimini Custom. This week, Rimini Street officially launched its Rimini Custom solution. This program allows organizations to request custom support solutions for a broader set of enterprise software that they are using beyond Rimini Street's current supported product list. Whether the client goal is to consolidate IT landscape support or manage services under a single trusted partner, extend the operating life of a software product or release, or just obtain better and more responsive support, we believe Rimini Custom is an exciting new solution. the Rimini Custom Service is now available to clients and new prospects. Rimini Street will work to say yes and present a proposal for any Rimini Custom client request that meets license, supportability, and resourcing analysis. With our new Rimini Custom offering, we believe that we are even better positioned to meet the current and evolving IT service needs of private and public sector organization in the years ahead. Oracle Litigation Update. Rimini Street and Oracle have been in litigation for more than 14 years, including cases known as Rimini 1 and Rimini 2. In 2010, Oracle filed the Rimini 1 case against Rimini Street in U.S. District Court. As a result of the Rimini 1 case, with trial completed in 2015 and subsequent appeals The U.S. court has affirmed that third-party software support is legal. The U.S. courts issued a permanent injunction known as the Romini 1 injunction in joining certain activities related to the manner in which Romini provides support on certain Oracle product lines. The Romini 1 injunction does not prohibit Romini from providing support to any Oracle product line. There are no current litigation activities related to Romini 1. Subsequent to the Romini 1 trial, Oracle filed and prevailed on certain claims in a contempt proceeding related to the Romini 1 injunction. Romini Street was fined and paid U.S. $530,000 and settled and paid Oracle's attorney's fees and costs for U.S. $9.7 million. In 2014, Romini filed the Romini 2 case against Oracle in the U.S. District Court. Trial occurred in 2022. While Oracle prevailed on liability for its DMCA and Lanamak claims with no damages award, Oracle abandoned its $1.4 billion of damages claim and all non-equitable claims of prejudice on the eve of a jury trial and lost its copyright claims for a majority of product lines at issue in the case, EBS, JDE, and Siebel. On the remaining product lines, PeopleSoft and Database, Oracle prevailed on the migration process, the use of certain rewrite files, and the use of certain automated tools. But Remini prevailed on central cross-cutting legal theories that were core to Oracle's broad infringement claims spanning all Oracle product lines, such as confirming Remini may write down and reuse its own know-how and that Oracle's licenses permit a third party like Romini to perform updates or fixes to the same extent as the licensee. Today, there are currently three Romini 2 post-trial litigation matters. One, appeal of the Romini 2 findings and the Romini 2 injunction before the Court of Appeals, known as the Merits Appeal. Two, a motion to further stay the Romini 2 injunction pending Romini's Merits Appeal also before the Court of Appeals. And three, litigation over Oracle's requested recovery of their attorney's fees and costs related to Romini 2 before the U.S. District Court. In July 2023, concurrent with the District Court's trial rulings for Romini 2, the District Court issued a permanent injunction known as the Romini 2 injunction, which, among other things, further enjoins Romini's activities related solely to the manner in which Romini provides support on certain Oracle product lines, which Romini Street has sought to reverse. As of this date, an administrative stay of the Romini 2 injunction is in place, and the Court of Appeals has not yet issued a decision on our motion to stay the Romini 2 injunction through the appeals process. With respect to the Romini 2 merits appeal, the Court of Appeals will hear the appeal on an expedited basis. which will include the appeal of the Romini 2 injunction. Romini's opening brief for the Romini 2 merits appeal is due March 4th, 2024, and Oracle's answering brief is due April 3rd, 2024. Romini's optional reply brief is due within 21 days after service of Oracle's answering brief. The Court of Appeals has currently set the date of June 5th, 2024 to hear oral arguments. On November 6, 2023, Oracle filed a motion for attorneys' fees and taxable costs with the U.S. District Court, requesting attorneys' fees and taxable costs totaling approximately U.S. $70.6 million related to the Romini 2 litigation. On February 20, 2024, Romini filed its opposition to Oracle's November 6, 2023, motion for attorney's fees and taxable costs in the Romini 2 litigation. In the opposition, Romini argues that the district court should deny Oracle's motion in its entirety. Romini further argues that should the district court award any attorney's fees to Oracle, such fees should not exceed U.S. $14.47 million. Oracle's reply to Romini's opposition is due by March 15, 2024, after which the matter will be taken under consideration for determination by the district court. Romini reserves all rights, including appellate rights, with respect to the Romini 2 litigation, including any award of attorney's fees and taxable costs to Oracle. For additional information and disclosures regarding the company's litigation with Oracle, please see our disclosures in the company's annual report on Form 10-K filed today, February 28, 2024, with the U.S. Securities and Exchange Commission. Please also note that at this time, we are still unable to provide material additional information beyond the disclosures and statements in our press releases, filings with the SEC, and court filings. nor provide guidance with respect to future financial results, nor are we able to provide additional commentary related to the pending Oracle litigation and potential impacts of the Romini 2 injunction because the matters are still before various courts and the outcomes cannot be predicted. Summary. We remain confident that we are continuing to take the right actions and making the right investments to accelerate growth increase profitability, enhance shareholder value, and bring our litigation with Oracle to a successful conclusion. However, if remaining street does not ultimately prevail in the litigation matters described above and in our SEC filings, it could have a material adverse impact on our business and financial results.