Rimini Street, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Rimini Street Q1 2026 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Thursday, April 30, 2026. I'll now turn the call over to Dean Paul, Vice President, Treasurer, and Head of Investor Relations. Please go ahead.

Thank you, Operator. I'd like to welcome everyone to Rimini Street's Fiscal First Quarter 2026 Earnings Conference Call. On the call with me today is Seth Raven, our CEO and President, and Michael Parika, our CFO. Hello. Today we issued our earnings press release for the first quarter ending March 31, 2026, a copy of which can be found on our website under the investor relations section. 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 and our website under the heading about non-GAAP, financial measures, and certain key metrics. As a reminder, today's discussion will include forward-looking statements about our operations that reflect our current outlook. These forward-looking statements are subject to risks and uncertainties that may cause results to differ materially from statements made today. We encourage you to review our most recent SEC filings, including our form 10-Q filed today for discussion of risks that may affect our future results or stock price. Now, before taking questions, we will 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. First quarter results.

Our first quarter results reflect continued growth and accelerating momentum. A growing number of organizations are leveraging Remini support and our proven Remini SmartPath to execute their global ERP and operational transaction processes faster, better, and cheaper with more agility and speed to value, all within existing budgets. Remini Street can help just about any organization lower its total operating costs an improved competitive advantage, or improved return for government constituents using technology. We delivered strong growth in adjusted calculated billings and adjusted ARR, and expanded remaining performance obligations year over year, adjusted for the Oracle PeopleSoft support and services wind down, and which includes new logo and renewal subscription sales. We also continue to make additional strategic investments in our next generation Reminiagentic AI ERP solutions that can be quickly deployed over existing ERP software without the cost or risk of unnecessary upgrades, migrations, or replatforming. During the quarter, we closed 11 new client transactions with over $1 million in TCV and totaling $33 million. compared to five transactions totaling $5.6 million during the same period last year. We added 50 new logos that included household, global, and regional brand wins. The combined strength of the second half of 2025 and first quarter 2026 results give us continued confidence in delivering growth in fiscal 2026. positioning the company for increased growth and profitability. We are continuing our evolution beyond our position as the premier third-party enterprise software support provider to a leader in also helping clients modernize their existing business transaction systems in the AI era. We are now the software support and agentic AI ERP company. Today, More than 1,900 Armenian Street employees in 22 countries are helping organizations avoid unnecessary, costly, and risky ERP and other enterprise software upgrades, migrations, and replatformings that often deliver low ROI and offer little competitive advantage. Instead, organizations can invest in modernization of their existing systems, leveraging next-generation remediagentic AI ERP solutions that can be quickly and economically deployed over their current ERP and other enterprise software and deliver real competitive advantage. We believe we can help organizations achieve significant IT operating cost savings, improve profitability, enhance competitive advantage, and accelerate growth. Our clients have already realized over $10 billion in operational savings. Romini Street leads in the Gentic AI ERP. We are helping clients set a new vision, technical, and functional path forward from their current vendor ERP software release. APAP does not require any return to the vendor for a future upgrade or migration to their current ERP software release in order to achieve innovation and modernization. The client can innovate and modernize their existing ERP software and other enterprise software using agentic AI ERP solutions deployed easily, economically, right over the top of their existing software releases. The Rimini SmartPath is our proprietary proven three-step methodology that clients can use to self-fund and accelerate innovation, especially AI and automation, without undergoing costly, risky, or unnecessary ERP upgrades or rip and replace migrations by leveraging and modernizing existing IT environments, all without operational disruptions. Romania Gentic UX is our AI-driven experience and automation layer that is deployed right over existing client ERP software and turns their ERP software from a static system of record into an autonomous system of action, delivering innovation and modernization in weeks, not years, and at a fraction of the cost of a major upgrade, migration, or replatforming project.

client success stories.

Rimini Street is helping clients across many industries, geographies, and software protect and optimize their core ERP systems while funding innovation and modernization, including fixing broken processes, automating workflows and functions, and using AI to solve specific business challenges. without disruptive, costly, or risky ERP software upgrade, migrations, or replatforming. Here are a few examples of our mini street solutions for SAP, Oracle, and VMware software for enabling innovation, transforming, and improved competitive advantage for clients. Cubic Corporation, a US defense and transportation technology company, said that partnering with Ramini Street allowed them to gain full control of their SAP roadmap, avoid a costly S4 HANA upgrade, and reallocate savings and internal capacity for its automation, AI, and broader modernization initiatives. Flexitech, a French automotive products company, said that they chose Ramini's support to help reduce risk and operational disruption in its SAP environment. strengthening cybersecurity posture and accelerating compliance readiness, while enabling the reallocation of savings towards R&D and modernization programs. Cleanera, a South Korean paper and hygiene products company, said they were able to cut SAP and Oracle vendor maintenance costs by approximately 50% with Ramini Street, stabilizing their core ERP environment and freeing budget and talent to accelerate AI, analytics, cloud expansion, and IoT-driven operational improvements. Elmort, a Brazilian industrial company, said that unifying support across VMware and SAP with Ramini Street created the opportunity to increase operational stability and security while redirecting budget internal resources from maintenance to sustainability and growth initiatives.

Partners, alliances, and channels.

We continued strengthening and maturing our indirect sales ecosystem, including adding new partner managers for strategic technology, services, and channel relationships. During the quarter, we closed the creative sales transactions globally that we do not believe we would have otherwise closed without partners. These partnerships extend our reach, bring complementary expertise, and help clients execute modernization strategies that combine Ramini Street support with world-class platforms, cloud services, and AI tooling. The ecosystem is becoming a strategic multiplier for us, accelerating adoption, expanding influence, and enabling shared go-to-market opportunities. Summary. We are focused on accelerating growth, improving profitability, and delivering shareholder return. We plan to leverage RiminiStreet's proprietary unique and proven SmartPath methodology, service portfolio, and capabilities to help a growing list of clients take back control of their technology roadmap and spending and successfully navigate business and technical complexity in the age of AI.

Now, over to you, Michael. Thank you, Seth, and thank you for joining us, everyone.

Q1 results. Our first quarter results reflect solid execution and continued sign of momentum, highlighted by remaining performance obligations, RPO, and billings growth along with a return to top-line growth despite the headwinds from the wind-down of support and services for Oracle's PeopleSoft software. Our strong operating cash flow and cash position enabled us to comfortably make $10 million of additional voluntary principal prepayments that reduced our debt balance to $58.4 million and increased our net cash position to $73.8 million at the end of the quarter. Revenue for the first quarter was $105.5 million, a year-over-year increase of 1.2%. Excluding support services for PeopleSoft products, revenue increased by 5.2% year-over-year. FX movements impacted first quarter revenue negatively by 0.5%. Annualized recurring revenue was $400.8 million for the first quarter, a year-over-year increase of 1.2%. Our revenue retention rate for service subscriptions, which makes up 95% of our revenue, was 88%, with approximately 81% of subscription revenue non-cancellable for at least 12 months. Billings for the first quarter were $95.3 million. an increase of 19.9% year-over-year. When excluding billings associated with support services for PeopleSoft products, the year-over-year increase was 22.9%. Gross margin was 59.0% of revenue for the first quarter compared to 61.0% of revenue for the prior year first quarter. On a non-GAAP basis, which excludes stock-based compensation expense, gross margin was 59.5% of revenue for the first quarter compared to 61.5% of revenue for the prior year first quarter. Our gross margin in the period was negatively impacted by investments pulled forward in the year to take advantage of market opportunities and select non-subscription engagements that had large front-loaded startup costs. Nonetheless, as noted during our investor day presentations last December, Our use of innovation and other analytics deployed on top of our existing systems of record provides us with confidence in our ability to build from this current gross margin level and achieve the targets we outlined. Operating expenses. Reorganization charges associated with optimization costs for the first quarter were $407,000. Also, we have clubbed out our R&D expenditures of $571,000 in the quarter in a separate line item that reflects our ongoing and increasing research and development activity for our proprietary historical offerings as well as our burgeoning agentic AI ERP and UX solutions. Sales and marketing expense as a percentage of revenue was 36.6% for the first quarter compared to 32.9% of revenue for the prior year first quarter. On a non-GAAP basis, which excludes stock-based compensation expense, sales and marketing expense as a percentage of revenue was 35.8% for the first quarter, compared to 32% of revenue for the prior year first quarter. Our sales and marketing costs in the period was negatively impacted by investments pulled forward in the year to take advantage of market opportunities. General and administrative expenses as a percentage of revenue was 16.9% of revenue for the first quarter compared to 16.8% of revenue for the prior year first quarter. On a non-GAAP basis, which excludes stock-based compensation expense, G&A was 15.7% of revenue for the first quarter compared to 15.6% of revenue for the prior year first quarter. As we stated in our most recent earnings call, We do not expect litigation expenses to be material on a going forward basis and are now including any residual legal costs in the GNA line item in our income statement. Net income attributable to shareholders for the first quarter was $1.4 million, or $0.01 per diluted share, compared to the prior year first quarter of $0.04 per diluted share. On a non-GAAP basis, net income for the first quarter was $4 million, or 4 cents per diluted share, compared to the first quarter of the prior year of 10 cents per diluted share. Adjusted EBITDA, as defined in our earnings release, and now excludes unrealized FX translation adjustments, was 8.9 million for the first quarter, or 8.4% of revenue, compared to the prior year's first quarter of 15.7 million, or 15.1% of revenue. Balance sheet. We ended the first quarter of 2026 with a cash balance of 132.2 million compared to 122.6 million of cash for the prior year first quarter. On a cash flow basis, first quarter operating cash flow increased 24.5 million compared to the prior year's first quarter increase of 33.7 million. Deferred revenue as of March 31st, 2026 was $277.3 million compared to deferred revenue of $256.4 million for the prior year first quarter. Remaining performance obligations, RPO, which includes the sum of bill deferred revenue, contract assets, and non-cancelable future revenue, was $643.6 million as of March 31, 2026. compared to $553.1 million for the prior year first quarter, an increase of 16.4%. When excluding RPO relating to support services for PeopleSoft products, the year-end balance increased 18.2%, reflecting our building momentum with both new bookings growth and longer-duration commitments. PeopleSoft Support Wind-Down Update As we discussed during previous quarter's earnings conference calls, our July 2025 settlement agreement with Oracle provides, amongst other obligation in terms between the parties, that the company will complete its previously announced wind-down of its support and services for Oracle's PeopleSoft software no later than July 31, 2028. we have made progress in reducing both the number of PeopleSoft's software support clients and related revenues since announcing the wind down. Revenue from PeopleSoft's software support services was 3% of revenue for the first quarter compared to approximately 7% for the previous year first quarter and down from 8% of revenue when we began the wind down process during the second half of 2024. Business Outlook. The company is providing second quarter 2026 revenue guidance to be in the range of $106 million to $108 million and reiterating the full year 2026 guidance provided at our investor day in December 2025 of revenue growth in the 4% to 6% range and adjusted EBITDA margins in the 12.5% to 15.5% range combined to achieve rule of 20. For additional information, please see the disclosures in our Form 10-Q file today, April 30, 2026, with the U.S. Securities and Exchange Commission. This concludes our prepared remarks. Operator, we'll now take questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you're using a speakerphone, please lift the handset before pressing any keys. Our first question comes from the line of Brian Kinslinger from Alliance Global Partners. Please go ahead.

Great. Thanks so much for taking my question. You talked about stronger bookings trends that have started since the second half of 25. Can you provide any quantifiable context, maybe year-over-year comparisons, either booking totals you can provide or a book-to-bill? And then lastly, maybe from a qualitative standpoint, discuss domestic versus international.

Sure, Brian. Seth here. As we said, starting mid-last year, we started to see an uptick, and we've shown it, of course, in the billings and bookings numbers. The compares, I think, have already been in each of the releases, so the team will be happy to get you those at a later date. But I think we're seeing continued growing demands. We're seeing continued growing pipelines, and those are now converting, as you're seeing, into larger contracts. We're seeing longer-term contracts. Just look at the number of deals with the TCV over 1 million. Even in North America, where we had zero of those deals in Q1 of last year, 60% of those deals were in North America this year. So we're seeing all different indicators of continued growing demand in And our ability to execute continues to get better and better. So we're pleased with what we saw happening in Q1 and how it sets us up even for the full year.

And then to follow up on that, you mentioned in your prepared remarks and just now as well about the longer duration. I think traditionally you've had one-year contracts, correct me if I'm wrong, whereas the renewable for every year. What's happening now? What are you seeing in terms of duration? Or maybe dig a little deeper into what you're describing as longer duration.

Well, I think our average contract length before used to be something short of three years, about 2.5, 2.6 years for a new contract. And we're seeing longer-term contracts being signed, and I think the indication of that is we're watching customers think about a much longer term for this next phase of technology transition. And they're looking at their existing systems. They're looking at the amount of change that's coming their way or being pushed their way, realizing a lot of it isn't going to generate the kind of return on investment or the competitive advantage they need. And they're looking to us for longer-term solutions. And I think that's what you're seeing play out in the contracts.

Okay. My last question is, last quarter you highlighted 26 customers that were testing your agentic AI solutions. Maybe you can update us on that number. Share what feedback you're getting from them and timelines to production. And then lastly, how would you want to be measured over the next 18 months on your progress of that new solution? Is it improving organic growth rates? Are you going to discuss the revenue contribution? Just how should investors think about that?

Well, I think how they should think about it is exactly based on the guidance. It's about growth. The fact that we're returning to growth against the headwinds of the PeopleSoft wind down is certainly a nice indicator. And I think the fact that we would return to growth with a mid-single digit this year, as we said, a rule of 20 is what we're aiming for between a top line and a bottom line. We want to give ourselves a little range and flexibility between the top line and bottom line. And then look to us to get to that rule of 40 that we want to get to, which, of course, requires us to see a double-digit growth on the top line and and a double-digit return on the bottom. So I think those are very, very key. The other part is obviously we have investors who want to see shareholder return. We believe that we sit on surplus cash. We believe that that should be returned to shareholders in one way or another, whether that's through stock buybacks, whether that's through paying down debt. But increasing shareholder value is a key component. So I think those are the measures that we're looking at in terms of growing the business. Now, when it comes to the world of agentic AI and agentic AI ERP, there's two things you need to remember. There's one, there's the fact that we create a path and we create a vision that customers can follow that doesn't require any future return to the vendor. That's very, very key. That is a big change from prior years where customers often thought of us as more of a temporary detour for some number of years and then a return to the vendor to get their next level of innovation. That's no longer the case, and that's why you're watching us win bigger and bigger contracts because customers are liking what we put on the table as a path and a strategy that does not lead them back to the software vendor in a future year. And that is changing the game dramatically for us on the ground.

Great. Thanks so much. Thank you.

Your next question comes from the line of Jeff Van Rie from Craig Hallam. Your line is now open.

Great. Thanks. Thanks for taking the questions, guys. You know, some great underlying metrics here. Looks like some good momentum and good to see some ARR growth year over year. Seth, you were just touching on, you know, leverage, and I want to revisit that. Gross margins, this is on the lower end of anything I've seen in quite a while. And, Michael, I think you referenced there were some pull-forwards for some, I guess what I would characterize as something like unexpected business opportunities. I think you, you know, S&M is up from 34 to 37 year over year, but revenue is generally flat. And so, you know, given that, I'm just trying to understand around the, you know, number one, you know, what is this near-term opportunity you're seeing that you've got to invest in? right now, given that you're not raising the overall outlook? Maybe we could just start there and understand those.

Sure, Jeff. So first, yes, we made a decision to pull forward some expense from future quarters, but we, of course, reiterated guidance being on target with what we provided in the investor day in December. And the things we're seeing, for example, we're investing in our U.S. federal team, brand-new team, We see a lot of opportunity in the federal government space with our new GSA contract, our partners that we're putting in place. And so there's a lot going on in that part of the world. There's also a significant amount of work for us to do with PE firms. and we've got our first vice president of PE sales on board, because today we service accounts that have over 20 different major PE firms represented, and we're going to go in and try and work with these firms to work on their bigger portfolios in general. So that, again, is another expansion area for us to build on. And so those investments were being made. We also, of course, are investing in our agentic AI ERP solutions. And you saw the first time we have an R&D line item because we're making some investments at the product level. So those are also taking place. We also expanded our sales team. We're over 80 sellers now. And so we've moved our numbers back up from the mid-70s when we last had our last call for end of year to and so we're continuing to expand and invest in sales and marketing as well. So you saw temporarily the expenses went up as a percent of revenue, but we expect those will normalize throughout the year.

And so then just to follow on to that, given all of those incremental revenue opportunities and in light of the revenue outperformance in the quarter relative to the guides, you didn't flow it through, to the annual guide. So just help me understand what was in play there.

Well, I think we want to just take it very carefully. As you know, we didn't grow for a while there, and we're back and feeling very positive and very confident in our growth for the year, and hence the mid-single-digit growth. growth targets that we set out there. But we want to just get another quarter under the belt and think about that before we talk about any kind of raise in the guidance.

Okay. And then maybe just last, Seth, on customer retention. I know it's a focus and the agentic UX and some other things probably have some opportunities to help there. But How should we think about churn over the next several quarters? This retention number has been at 88 here for at least a few quarters. Just any big churn events coming up here, and how do you think about retention next several quarters?

Well, the 88%, remember, is a TTM rear view of the total number. We feel very good, and as I noted in the prepared remarks, we beat our internal numbers on the retention number. It's just going to take a while to show up in the TTM number. I think when you look at the RPO, some of those are even related to renewals. So we're seeing good, strong renewals out of the first quarter and feeling good about where we're looking to the year. Our goal is, of course, to see that TTM return to over a 90% number, and we feel that we should start to see it show up in the metrics starting in the next quarter or so.

Okay, great. I'll leave it there.

Thank you. Your next question comes from the line of Alex Furman from Lucid Capital Markets. Your line is now open.

Hey, guys. Thanks very much for taking my question, and congratulations on the return to growth here in Q1. Looks like here in the first quarter you added about 30 active clients relative to where you ended 2025. The last three years, give or take, Q1 has been about flat in terms of customer acquisition. Is this just more of the same, what we've been kind of talking about, increased demand for your AI solutions, or are we maybe starting to see more of a year-round sales and adoption process as your clients are starting to implement more AI?

Sure, and thanks. absolutely are seeing improvement in everything from the number of leads coming in to lead conversion to opportunity, opportunity to closes. So higher quality pipeline, higher quality execution, but the demand environment is absolutely growing as well. There is no doubt that the world of AI has changed the dynamics dramatically. from a technological standpoint, you're also watching, as Ramini Street had predicted many years ago, the breakup of these big ERP monolithic systems into smaller pieces we call composable ERP. Those pieces are breaking down further. And what this means is that businesses and government organizations are now able to buy pieces that a la carte, let's say, versus having to buy them all in one big package. And we're well positioned, maybe the best positioned, to help customers through all these technological transitions, including the thoughtful implementation of AI where it's appropriate. And because our number one objective is driving down the total cost of operations, and improving profitability or improving share return for government organizations, we think we are well positioned to help customers for the long term. And we're talking 5, 10, 15, 20 years through this next phase of transition. So I think all of that coming together is what we're watching and showing up in the numbers.

Okay, that's really helpful. Thanks for all of that, Culler. And then I see you have a new line item here, research and development. Sounds like that's going to be more of a focus for the company going forward. How much should we expect to see there, you know, going forward there this year and in the future?

Well, I think this line – oh, I'm sorry.

No, go ahead.

Go ahead. Oh, I was just going to say that, you know, we expect to continue to make investments in this space because we We've been a services company. We've always had products. But the opportunity for us to develop more in the product and the licensing arena for subscription licenses has increased. And so we're going to make those investments. But keep in mind, we're staying within our guidance limits. We're not talking about changing guidance even with the R&D line item. And I'm sorry, Michael, you wanted to add there?

Yeah, just want to augment the point that Seth made, Alex, at the end, that this was incorporated overall in our guidance. We do expect it to creep up throughout the year and can exit the year about 1% or so. That's how we're looking at it, to augment these key technological investments, both of what we have existing and these new offerings that we're talking about.

Okay, that's really helpful. Thank you guys very much. Thank you.

Your next question comes from the line of Brian Kinslinger from Alliance Global Partners. Please go ahead.

Yeah, great. Thanks. I just wanted to confirm that today the revenue from the agentic eye solution is quite modest, but that we'll begin to see that contribution pick up maybe in the second half of the year, in the next year. And then my second part of my question is, will there eventually be a a report or some kind of metric that helps investors frame how much revenue is coming from that new solution?

Sure, Brian. Of course, it's not what we call a material amount yet from the agentic AI ERP solutions themselves. But two ways to think about this. There is the actual revenue That's accretive. That comes from solutions and sales and licensing and subscriptions in the agentic bucket. That's a new set of products and services. There's a second more important one, which is already at work here, and that is the fact that we have created a vision and we have a path, and we have a solution going forward for customers that leads them away from having to do vendor upgrades and migrations in the future and allows them to drive their existing systems with modernization on that platform, that alone is what's driving, we believe, underneath a lot of the extra demand we're seeing. Because that is creating new demand that we did not have before, And it's bringing customers back to the table who have now come back to us to join Rumini Street, who before had turned us down. Proposals that they didn't move forward with, we're now able to show them a path forward with an agenda capability that says, okay, we'll go ahead and move forward at this time. So don't underestimate the very fact that we have this path and this vision and technology That alone is driving increased sales.

Okay. Thank you. Certainly.

There are no further questions at this time. I will now turn the call over to Seth Raven, CEO. Please continue.

Great. Well, thank you very much, and thanks, everyone, for joining us, and we will see you on the next earnings call. Have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.