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.

Now, over to you, Michael.

Thank you, Seth. and thank you for joining us, everyone. Q4 and fiscal 2023 results. Revenue for the fourth quarter in the full year 2023 was $112.1 million and $431.5 million, respectively, a year-over-year increase of 3.2% and 5.3%, respectively. Clients within the United States represented 51%, while international clients represented 49% of total revenue for both the fourth quarter and full year 2023. Annualized recurring revenue was $432.3 million for the fourth quarter, a year-over-year increase of 2.9%. Revenue retention rate for service subscriptions, which makes up 96.4% of our revenue, was 90%, with more than 79% of subscription revenue non-cancellable for at least 12 months. We note that for the full year 2023, our total revenue measures on a constant currency basis was negatively impacted by 0.6% due to FX movements. The decline in our revenue retention rate for the year ended December 31st, 2023 was due to attrition during the fourth quarter, as certain clients did not renew specific subscriptions, however, in some cases maintained or added subscriptions for other products. Our net billings during the fourth quarter of 2023 was flat to the comparable period of 2022 because record fourth quarter new client invoicing was able to offset fourth quarter retention losses. Billings for the fourth quarter were $160.7 million, 160.4 million for the prior year fourth quarter. For the full year 2023, billings increased 2.3% to 418.5 million. Gross margin was 61% of revenue for the fourth quarter and 62.3% for full year 2023. Compared to 64.5% of revenue for the prior year fourth quarter, and 62.8% for prior year 2022. On a non-GAAP basis, which excludes stock-based compensation expense, gross margin was 61.5% of revenue for the fourth quarter and 62.8% for full year 2023, compared to 64.9% of revenue for the prior year fourth quarter and 63.3% for prior year 2022. Gross margin declined during the back half of 2023 as a result of continued investment in and expansion of our global engineering team needed to serve new client engagements in advance of related ratable contract revenue recognition. As noted in previous earning calls, we are expecting continued gross margin pressure as we scale to meet new client engagements. Simultaneously, We are also working to improve gross margin by driving efficiencies and leveraging the benefits of growing global scale.

Operating expenses.

While inflationary pressures and high costs are still persistent for skilled labor across all theaters, we continue to attract and retain key talent. Moreover, our margin performance, in light of the pressures highlighted previously, underscores the advantage of our global footprint with centers of excellence in geographies where both the talent and value remain attractive compared to higher-priced talent markets. Sales and marketing expenses as a percentage of revenue was 31.2% of revenue for the fourth quarter and 33% for full year 2023, compared to 36.1% of revenue for the prior year fourth quarter and 34.9% for prior year 2022. On a non-GAAP basis, which excludes stock-based compensation expense, sales and marketing expenses as a percentage of revenue was 30.5% of revenue for the fourth quarter and 32.3% for full year 2023 compared to 35.4% of revenue for the prior year fourth quarter and 34.1% for prior year 2022. General and administrative expenses as a percentage of revenue excluding outside litigation costs was 15.7% of revenue for the fourth quarter and 16.9% for full year 2023 compared to 16.7% of revenue for the prior year fourth quarter and 18.4% for prior year 2022. On a non-GAAP basis, which excludes stock-based compensation expense and litigation costs, GNA was 13.8% of revenue for the fourth quarter and 15.1% for full year 2023, compared to 15.6% of revenue for the prior year fourth quarter and 17% for prior year 2022. We are seeing a good year-over-year improvement in GNA spend due to some restructuring measures and the initial substantial investments that were required to develop and launch our expanded portfolio of solutions are largely completed. However, G&A expenses as a percentage of revenue are expected to remain elevated compared to our peers due in large part to the ongoing calls for in-house legal and compliance teams and other costs made necessary by our ongoing Oracle litigation and compliance activities. Net outside litigation expense, which includes the Oracle settlement previously referenced, was $4.3 million for the fourth quarter and was $9.8 million for the full year 2023, compared to $12.8 million for the prior year fourth quarter and $25.3 million for prior year 2022. This year's fourth quarter included an accounting charge of $2.7 million related to the $9.7 million Oracle cash settlement that Seth discussed earlier related to the Rimini 1 injunction contempt matter. Litigation expenses will vary quarter to quarter and year to year depending on current litigation activity. Our non-GAAP operating margin which excludes outside litigation spend, the stock-based compensation was 17.2% of revenue for the fourth quarter and 15.3% for full year 2023. Net income attributable to shareholders for the fourth quarter was 9.4 million or 10 cents per diluted share. And for the full year 2023 was 26.1 million or 29 cents per diluted share. On a non-GAAP basis, Net income for the fourth quarter was $17.1 million or $0.19 per diluted share and for the full year 2023 was $48.4 million or $0.54 per diluted share. Adjusted EBITDA defined in our press release was $21.3 million for the fourth quarter or 19% of revenue and for full year 2023 was $71.9 million or 16.7% of revenue.

Balance sheet.

We ended the fiscal year with a cash balance of $115.4 million plus investments of $9.8 million consisting of short-term treasuries and U.S. government agency securities, bringing readily available cash to $125.2 million compared to $129.1 million for the prior fiscal year end. During 2023, we reduced the principal balance on our term loan from 78.3 million to 72.6 million, resulting in a year-end net cash position of 52.6 million. On a cash flow basis, for the fourth quarter, operating cash flow declined 1.1 million, and for the full year 2023, we generated 12.5 million, compared to a decline of $1.9 million for the prior year fourth quarter and a positive $34.9 million for full year 2022. The year-over-year variance is due primarily to large non-recurring payments made during the first quarter to our outside litigation counsel relating to the fourth quarter 2022 Remini 2 trial with Oracle and overhead restructuring charges And during the fourth quarter, as noted, we paid $9.7 million to settle the contempt matter. In addition, throughout 2023, we experienced lower client multi-year prepayments and related collections compared to the prior year 2022 as clients retained cash in the higher rate environment for their own short-term investment opportunities and the preservation of cash. Lastly, FX headwinds, as noted, also impacted cash flow. Deferred revenue as of December 31st, 2023 was approximately $287 million compared to $300 million from the prior year fourth quarter. Backlog, which includes the sum of billed deferred revenue and non-campable future revenue, was approximately $607 million as of December 31st, 2023 compared to $578 million for the prior year fourth quarter. Business outlook. company is continuing to suspend guidance as to future financial results until there is more clarity around impacts from current litigation activity before the U.S. federal courts in the company's ongoing litigation with 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 on February 28, 2024 with the U.S. Securities and Exchange Commission. This concludes our prepared remarks.

Operator will now take questions.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press the star followed by the one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone,

Please lift the handset before pressing any keys. First question is from Brian Kingslinger from Alliant Global Partners. Please ask your question.

Hey, guys. Thanks for taking my question. The first one, I'm going to start on the expense side. You suspended revenue guidance for the obvious reason. So how do you plan on managing operating expenses over the next year is revenue. While revenue is growing at a very modest cliff, do you expect to hold off making investments that's going to add OpEx with some investments that were just completed? Do you plan to cut costs? Do you think holding the line where you are right now before there's more clarity is the option? I'd just like to get some more understanding on what you can control.

Sure, Brian. Great to have the call. Of course, I think you could tell from the size of the sales force where I had mentioned We've continued to expand the sales force. We're continuing to invest and lean in because of the size of the opportunity that we see. I think you're watching us relay that we are not looking to reduce costs. We are not in a hunker down position. We had modest growth across 2024 while we were busy spending and building out our global infrastructure to support all these different product lines that we've launched, including launching, as I mentioned in my prepared remarks today, the Rimini Consult, which is a very large program on a global basis to take on and support, provide managed service for a huge number of additional product lines, including IBM and others. So I think you're definitely not seeing us take a reduction of cost. I think the reductions we've made have all been about streamlining operations where we're taking out some middle management. We're giving wider scopes of responsibility to vice presidents and above to get better leverage. But that's all about making sure that we're able to support and drive higher revenues and a more accelerated growth into 24 and beyond. Great.

And then on the international business side, the year-over-year growth rates decelerated for the third consecutive quarter to about 4.5% just in the fourth quarter. What's driving the deceleration? Is there anything in the bookings trends that suggest a reacceleration in the first half of 24?

Well, again, without getting into the guidance side of things, just focused on the business, We had some issues. We had some issues down in the ANZ, the Australia, New Zealand area. We had some issues in the EMEA area, which we, of course, have taken significant steps. We have a brand new GM running the EMEA region, which I'm very, very happy to announce. We brought him over from Adobe, a very strong player. And in the ANZ market, we have a new leadership there as well. where we've turned things around, I believe. So those two contributed to some of the challenges. We also have some evolution going on in Japan where we have a very strong client base, our largest in all of Asia pack. As we now roll out our additional services there and we've reconfigured the Salesforce to be able to handle that. I think as you guys well understand, every time you reconfigure a Salesforce, you have a little bit of lag and disruption into the operation. We're very aware of that, but these are the kinds of changes necessary to be able to support the growth, the accelerated growth that we want in the future across all the product line portfolio.

Great. Last question, I'll get back in the queue. It might be related and might be some of the same answer, but You spoke to the 90% retention versus what's traditionally been three or four points higher. Were the lost customers in these regions, and was there a similar rationale for the handful or so, how many customers left, or were they all different cases?

Yeah, I think, of course, as you can imagine, when we have higher retention losses than normal, If you look on a normalized basis, it happens and it's happened over the years where you kind of go up and down. I can tell you that we had a few larger cancellations. Two of them were in the Australian market, which were pretty significant. But at the same time, those are existing clients. They are huge clients who rotated out on a couple products, that they were running. But their natural rotations and some of those things, we just have to go back. One of them, I think, was a loss we shouldn't have had. And so we've gone back to look at it. The other one wasn't anything we could do about it. It was just a business rotation. And then I saw one big one in the North American region, which came as a surprise again as part of an M&A. The biggest risk we always have is M&As because they change out management teams. And we have to go in and resell our position when those management teams change. And so it is almost like a new sale because they don't know who we are, what are we doing in there? And that is a process that always creates risk for us. So in the world of business churn, M&As always present the biggest risk to the business in terms of ongoing contracts. But they often present new opportunities for us as well, where a management team may have been more stubborn or maybe not fully bought into the full portfolio, then we get a change of management and we get to come in and expand our footprint. But it does generally cause some level of churn when we have management change.

Great.

I have a few more, but I'll get back in the queue and let others ask. Sure. Thanks, Brian.

Thank you. Your next question is from Daniel Hipschman from Craig Hallam.

Please ask your question.

Hey guys, thanks for taking my question. This is Daniel on for Jeff Van Re. Just on the employee count, I saw that was up 9% sequentially, about 10% year-over-year, but still getting the non-GAAP OpEx down, you know, sequentially and year-over-year. Just curious how you managed that. Was that, you know, in the geographies you were hiring? Was the hiring really late in the quarter? And then just maybe double-clicking on what areas you're hiring for. I know for sales, but just anything else on the roadmap, et cetera.

Sure. Happy to answer that. I think you've got a few different things. One, I'm not a big fan of the employee count numbers. I know a lot of people look at that and say, well, if that percentage is higher than your actual growth, that looks like a problem. But it doesn't take into account the cost of the personnel. A lot of those hires are in lower cost geographies. We have two big delivery centers between India and Brazil, which presents significantly different annual comp rates than you would have, for example, of course, in the United States or across in Europe. So from that point of view, yes, we have lower costs coming into it. That's one component that allows us to have the higher number of people by account number. The second one is you're correct. We often do a lot of hiring on service delivery on the back end of the year. We are a back end loaded business. And as you know, because we've been a bootstrap business with literally, what, 27.5 million of invested capital to drive over $400 million a year business, we have to use our own cash. What that means is we're very good at hiring just in time. We don't hire generally in advance of contracts. That allows us to minimize the burn cost of personnel not being utilized. And we wait for the contract to sign, and then we aggressively hire to fill that. And so that's very much with the fourth quarter. As we grow our business in the fourth quarter, you're going to see a lot more hiring in the fourth quarter. So, of course, you haven't seen the radical costs on that yet. So that is a combination that drives that.

And then on the billings and back, well, those both came in pretty nicely. Just any more color on that in terms of the biggest drivers of that in terms of what's coming down the pipeline, any particular verticals, applications, services, you know, what platform is seeing strength there? Thanks.

Well, I think we're seeing, again, good strength across all platforms. I think, again, as I mentioned in the prepared remarks, specifically strong in the SAP world. where you've got thousands and thousands of companies being pressured by SAP to move their systems between 2025 and 2027 with threats of de-support no longer being supported, which of course is untenable for a major organization. And so that's created, again, an upward swing in demand because Romani Street offers the only really proven global solution for large enterprises to make that move and continue to use the product for years to come. The other area we saw a lot of growth in is the Salesforce managed service. Again, Salesforce is a big, complex platform, requires additional work and support just like any other enterprise platform, and Rumini Street's well-positioned to provide those services to clients, even to other big service providers like NTT, who utilize us to manage their Salesforce platform.

And then maybe last for me, just on the, you already spoke some to the cost structure expectations for 24, but specifically on legal, professional, just any thoughts on how we should be expecting that, you know, a similar year in 24 relative to 23. And then the 9.7 million, was that already paid out? And where would I be seeing that on the financials?

Yeah, I'll let Michael answer where to see the $9.7 million on the financials. But that was a settlement of legal fees between Oracle and us. We settled that rather than continue it on in the court. And that was already reserved to a significant amount. I believe that was already reserved somewhere in the $6 million, and Michael can answer that. So there was an additional amount. But we had already looked at that, and that's where we came to a conclusion. But that ended the end of the contempt component of the trial side. So at this point in time, as we always say, when we don't have a trial year, which 2024, there is no trial, we do have the appeals that are pending that I mentioned in my prepared remarks. Those will continue through the process to the district court as well as the appellate court. But that generally, generally does not add up to the kind of cost that you see when we have a full-blown trial. So I think when you look at the cost, we mentioned about how in Q1 24, we had paid out a significant amount of legal bills relating to the Oracle trial in late 2022. So I think, you know, take that back and you can notice that we probably would expect more moderate fees coming into 24. from what we've seen in that fee structure.

And Michael here, just to, as Seth noted, in Q4 2023, of the 4.3 million of legal related expenses, 2.7 million was associated with the settlement. The total settlement, as Seth noted, was 9.7 million, and that cash was also dispersed in Q4 of last year. We previously in excess of 18 months ago, reserves $6.9 million of the total $9.7 million. So that's the timing, if that helps.

Okay. Yeah, that's great. Thanks for the details.

And that's it for me. Thanks, guys. Thank you. Thanks.

Thank you. Once again, should you have a question, please press star 1. Your next question is from Derek Wood from TD Cowen. Please ask your question.

Oh, did we lose someone?

Try to open up his line again. Just one second, please.

Okay, there he is. How's that? Sorry.

Go ahead, Derek Wood.

There you go.

Great. Yeah, thanks. Sorry, this is Cole on for Derek. The total customer count was down quarter over quarter. I mean, you guys mentioned that the NRR decel or downtick rather was mostly from pressure where customers were ending kind of subscription on certain products but staying on others. So kind of help me bridge, you know, Is some of the NRR pressure from customers just totally going off their mini platform as seen in the total customer count number? Or is it kind of, you know, these are smaller customers churning off and the larger ones that are hitting NRR are still customers at the end of the day?

I think you've got a mix. You've got some customers rolling off. And I think what we saw really through 24, some of this is related to the pandemic. We had customers who were in the process of moving off who had extended the life of their products for a few more years. So I think 24 was a bit of an interesting year. Some customers who had extended finally moving forward those projects that had been delayed during the pandemic. And I think that was a little bit more of the roll-off that you saw in this was some delayed roll-off that might have been in prior years. So I think that that is a catch-up component. And I didn't see anything during the year that was otherwise alarming or in any way saw a trend. We didn't see that. You have, for example, PeopleSoft, JD Edwards, and Siebel Clients. Those three platforms have been sunsetted. There is no future product for those folks. They have to change to another product. When they move off these platforms, they will completely move to something new. And so you are seeing some sunset of some of those people moving. That's natural in a sunset on a product line. And then again, you see others who are coming on board. So I don't think there's any real trend here that differs year over year. I just think you have some ups and downs. And if you look at some of the bigger losses that happened, as I mentioned earlier, related to management changes of M&A where they decided to go a different direction. You have some of them where they had some internal issues that they needed to address in terms of dropping this product line, adding another. We had one large client who dropped a large component but also added in the same week a large component. So this is part of what you get when you service a customer On a wider portfolio, there will be ups and downs in terms of what they sign up for, what they drop. They're living, breathing, moving organizations, and there's nothing frozen about what we do. And sometimes those will be bigger pieces, sometimes they'll be smaller, but we didn't see any trend in terms of what we saw in the fourth quarter versus the rest of the year. Now, in terms of total clients, part of what you're watching is we launched so many new products that we had our sellers over-rotated into cross-selling existing clients rather than bringing on new logos. Not an uncommon problem when you expand out a portfolio and it's popular with your existing client base and it's easier money. So we are putting incentives in place in 24 to incent sellers to take the tougher road of going out and bringing in new logos. and we're working on a multiple set of programs to drive and rotate back to more new logo acquisition. You saw the number there was a small increase in total new logos. That's exactly what you're watching. It's all the cross-sell activity. It's over-rotated, and we need to balance it better in 24.

Great. Super helpful. And then just one more for me. In terms of the sales force and reps, with Ramini Custom coming online here, How are you getting reps up to speed so that they can sell into the existing customer base and go out and sell new customers on the new portfolio here?

It has already been trained for the sales team. They've already received training for it. We just had our sales ready SKO kickoff just literally weeks ago in early January and where they did learn about custom. They've learned about all the different product lines. It was a fantastic week of learning and training for the global organization. Over 400 people from the global revenue organization, from all the countries around the world were together, led by our sales and revenue enablement organization. So I'm very confident in our ability to go out and position these products Rumini Custom is unlike anything else we've ever launched. It's basically opening the door and saying, Rumini Street is the best provider of enterprise software support in the world. And we believe we are also the best provider of the managed service for those products. And because we have our secret sauce of systems, processes, the technology, the people that we're able to use, we believe we can provide service to a wide variety of products that we've never offered service for. And that is, again, an amazing offering of opening the door and saying, bring us your enterprise product. If you want to get it supported, you want to get it managed, you want us to extend the life, you want to get better service on it, we believe we can do that better than anyone else on just about every enterprise product out there.

Helpful. I'll see you on the floor. Thank you. Thank you.

Thank you. There are no further questions at this time.

I will now hand the call back to Seth Rabin for the closing remarks.

Great. Thank you so much, everyone, again, for joining us on the fourth quarter, 23 earnings call and full year earnings call. I want to thank all of our Ramini Street colleagues once again for their great efforts over the past quarter and the year. It was a magnificent year of change and growth for the company and repositioning ourselves as a much larger enterprise player. I look forward to having all of you join us on the next earning call. We'll discuss the first quarter 2024 results, and as you know, that's coming up pretty quickly, and select second quarter 2024 performance today commentary as well. Until then, wishing you and yours a continued good health, Our thoughts and continued charitable support for those in need and in war around the world. Just always remembering we generally have it so much better and so many others suffering and in harm's way. So with that thought, thank you very much and have a good day.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining.

You may all disconnect.