Quarterly revenue of $99.3 million, up 13.0% year over year
Fiscal year revenue of $374.4 million, up 14.6% year over year
Fiscal year gross margin 63.6% compared to prior year of 61.4%
Fiscal year operating cash flow of $66.9 million, up 59.0% year over year
2,849 Active Clients at December 31, 2021, up 14.6% year over year
LAS VEGAS, March 2, 2022 – Rimini Street, Inc. (Nasdaq: RMNI), a global provider of enterprise software products and services, the leading third-party support provider for Oracle and SAP software products and a Salesforce partner, today announced results for the fourth quarter and fiscal year ended December 31, 2021.
“For the fourth quarter and full year 2021, we achieved a unique combination of record revenue exceeding our guidance, margin expansion, strong revenue retention and cash flow generation,” stated Seth A. Ravin, Rimini Street co-founder, CEO and chairman of the board. “We continue to see a strong opportunity for Rimini Street’s expanding portfolio of enterprise software support solutions and continue building and maturing our go to market capability to launch, sell and deliver our full solutions portfolio to new and existing clients globally.”
“We produced another consecutive quarter of net income, further strengthened the balance sheet with record cash of $119.6 million at year end 2021 and today announced a common stock repurchase plan of up to $15 million,” stated Michael L. Perica, Rimini Street chief financial officer. “Additionally, for the full year, we achieved record net income, Adjusted EBITDA, operating cash flow and cash generation. We are also issuing guidance today for the first quarter and full year 2022 revenue and affirming our continued commitment to the long-term goals of increasing operating cash flow and growing earnings per share.”
Fourth Quarter 2021 Financial Highlights
- Revenue was $99.3 million for the 2021 fourth quarter, an increase of 13.0% compared to $87.8 million for the same period last year.
- Annual Recurring Revenue was $393 million for the 2021 fourth quarter, an increase of 12.6% compared to $349 million for the same period last year.
- Active Clients as of December 31, 2021 were 2,849, an increase of 14.6% compared to 2,487 Active Clients as of December 31, 2020.
- Revenue Retention Rate was 92% for both the trailing 12 months ended December 31, 2021 and for the comparable period ended December 31, 2020.
- Gross margin was 65.1% for the 2021 fourth quarter compared to 61.8% for the same period last year.
- Operating income was $12.7 million for the 2021 fourth quarter compared to $4.5 million for the same period last year.
- Non-GAAP Operating Income was $19.4 million for the 2021 fourth quarter compared to $11.9 million for the same period last year.
- Net income was $70.1 million for the 2021 fourth quarter compared to net income of $2.5 million for the same period last year.
- Non-GAAP Net Income was $77.8 million for the 2021 fourth quarter compared to $11.1 million for the same period last year.
- Adjusted EBITDA for the 2021 fourth quarter was $19.3 million compared to $12.9 million for the same period last year.
- Basic and diluted earnings per share attributable to common stockholders was $0.81 and $0.77, respectively for the 2021 fourth quarter compared to a basic and diluted net loss per share of $(0.06) for the same period last year.
- Employee count as of December 31, 2021 was 1,666, a year-over-year increase of 16.9%.
Full Year 2021 Financial Highlights
- Revenue was $374.4 million for 2021, an increase of 14.6% compared to $326.8 million for 2020.
- Gross margin was 63.6% for 2021 compared to 61.4% for 2020.
- Operating income was $26.8 million for 2021 compared to $17.9 million for 2020.
- Non-GAAP Operating Income was $55.0 million for 2021 compared to $41.1 million for 2020.
- Net income was $75.2 million for 2021 compared to net income of $11.6 million for 2020.
- Basic and diluted net earnings per share attributable to common stockholders was $0.54 per share and $0.51 per share, respectively for 2021 compared to a basic and diluted net loss per share of $(0.21) per share for 2020.
- Non-GAAP Net Income was $107.6 million for 2021 compared to $36.2 million for 2020.
- Adjusted EBITDA was $55.8 million for 2021 compared to $42.6 million for 2020.
Reconciliations of the non-GAAP financial measures provided in this press release to their most directly comparable GAAP financial measures are provided in the financial tables included at the end of this press release. An explanation of these measures, why we believe they are meaningful and how they are calculated is also included under the heading “About Non-GAAP Financial Measures and Certain Key Metrics.”
Fourth Quarter 2021 Company Highlights
- Announced that the U.S. Patent Office granted the Company a new patent for Rimini Street Artificial Intelligence Support Applications, which reduced case resolution times by an average of 23% and helps the Company deliver an industry-leading client experience. For the fourth quarter, the Company achieved an average client satisfaction rating on the Company’s support delivery of 4.9 out of 5.0 and achieved an average 4.9 out of 5.0 for the Company’s client onboarding services (where 5.0 is “excellent”).
- Announced representative new clients who switched to, or existing clients who expanded their agreements with, Rimini Street, including:
- CHG Healthcare, the largest private healthcare staffing firm in the U.S.;
- DPaschoal Group, Brazil’s leading automotive parts and service retail chain;
- Korean Air, South Korea’s largest air carrier and a leading global airline;
- Philippine Airlines, the flagship carrier airline of the Philippines;
- Open Universities Australia, the leading online higher education marketplace in Australia;
- Mitsubishi Corporate Life Sciences, a leading food ingredients manufacturer in Japan; and
- ENEX, a leading furniture manufacturer in South Korea.
- Closed more than 9,700 support cases and delivered nearly 31,000 tax, legal and regulatory updates for 32 countries.
- Announced the appointment of Eric Helmer as chief technology officer (CTO), the establishment of the Office of the Chief Technology Officer (OCTO), Kevin Mease as chief product officer (CPO), Bill Carslay as GVP & GM, Global Professional Services, Frank Reneke as GVP & GM, Oracle Services, Jennifer Perry as GVP & GM, SAP Services, Emmanuel Richard to SVP & Theatre GM, North America and Gala Lyne to GVP & Regional GM, North America – East.
- Honored with Frost & Sullivan Best Practices Award for “Third-Party Enterprise Software Support Services Company of the Year.”
- Awarded the 2021 People’s Choice Stevie® Awards for Favorite Computer Services Company
- Rimini Street UK recognized in the top 10 for the 2021 UK’s Best Workplaces™, ranking favorably for the Company’s corporate social responsibility, job security and employee engagement program.
- Presented at numerous CIO and IT and procurement leader events worldwide.
- Supported charities around the world through the self-funded Rimini Street Foundation, providing financial contributions, volunteer hours and in-kind donations to further the Company’s mission of equal opportunity for all.
Business Outlook
The Company is providing first quarter 2022 revenue guidance to be in the range of $95.0 million to $96.0 million and full year 2022 revenue guidance to be in the range of $400.0 million to $410.0 million.
Webcast and Conference Call Information
Rimini Street will host a conference call and webcast to discuss the fourth quarter and full year 2021 results and select first quarter 2022 performance to-date commentary at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time on March 2, 2022. A live webcast of the event will be available on Rimini Street’s Investor Relations site at https://investors.riministreet.com. Dial-in participants can access the conference call by dialing (800) 708-4540 in the U.S. and Canada and enter the code 50279188. A replay of the webcast will be available for at least 90 days following the event.
Company’s Use of Non-GAAP Financial Measures
This press release contains certain “non-GAAP financial measures.” Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements and is not intended to represent a measure of performance in accordance with disclosures required by U.S. generally accepted accounting principles, or GAAP. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures determined in accordance with GAAP. A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release. Presented under the heading “About Non-GAAP Financial Measures and Certain Key Metrics” is a description and explanation of our non-GAAP financial measures.
RIMINI STREET, INC.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
ASSETS | December 31, 2021 | December 31, 2020 | |
Current assets: | |||
Cash and cash equivalents | $119,571 | $87,575 | |
Restricted cash | 419 | 334 | |
Accounts receivable, net of allowance of $576 and $723, respectively | 135,447 | 117,937 | |
Deferred contract costs, current | 14,985 | 13,918 | |
Prepaid expenses and other | 16,340 | 13,456 | |
Total current assets | 286,762 | 233,220 | |
Long-term assets: | |||
Property and equipment, net of accumulated depreciation and amortization of $13,278 and $10,985, respectively | 4,435 | 4,820 | |
Operating lease right-of-use assets | 12,722 | 17,521 | |
Deferred contract costs, noncurrent | 21,524 | 21,027 | |
Deposits and other | 1,786 | 1,476 | |
Deferred income taxes, net | 64,033 | 1,871 | |
Total assets | $391,262 | $279,935 | |
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | |||
Current liabilities: | |||
Current maturities of long-term debt | $3,664 | $ — | |
Accounts payable | 5,708 | 3,241 | |
Accrued compensation, benefits and commissions | 36,558 | 38,026 | |
Other accrued liabilities | 26,124 | 21,154 | |
Operating lease liabilities, current | 4,227 | 3,940 | |
Deferred revenue, current | 253,221 | 228,967 | |
Total current liabilities | 329,502 | 295,328 | |
Long-term liabilities: | |||
Long-term debt, net of current maturities | 79,655 | — | |
Deferred revenue, noncurrent | 47,047 | 27,966 | |
Operating lease liabilities, noncurrent | 12,511 | 15,993 | |
Accrued PIK dividends payable | — | 1,193 | |
Liability for redeemable warrants | — | 2,122 | |
Other long-term liabilities | 2,933 | 2,539 | |
Total liabilities | 471,648 | 345,141 | |
Redeemable Series A Preferred Stock: | |||
Authorized 180 shares; issued and outstanding no shares and 155 shares, respectively. Liquidation preference of $–, net of discount of $– and $154,911, net of discount of $17,057, respectively | — | 137,854 | |
Stockholders’ deficit: | |||
Preferred Stock, $0.0001 par value per share. Authorized 99,820 shares (excluding
180 shares of Series A Preferred Stock); no other series has been designated |
— | — | |
Common Stock, $0.0001 par value. Authorized 1,000,000 shares; issued and outstanding 87,107 and 74,406 shares, respectively | 9 | 8 | |
Additional paid-in capital | 149,234 | 98,258 | |
Accumulated other comprehensive loss | (2,724) | (318) | |
Accumulated deficit | (225,789) | (301,008) | |
Treasury stock | (1,116) | — | |
Total stockholders’ deficit | (80,386) | (203,060) | |
Total liabilities, redeemable preferred stock and stockholders’ deficit | $391,262 | $279,935 |
Unaudited Condensed Consolidated Statements of Operations
RIMINI STREET, INC.
(In thousands, except per share amounts)
Three Months Ended | Year Ended | ||||||
December 31, | December 31, | ||||||
2021 | 2020 | 2021 | 2020 | ||||
Revenue | $99,279 | $87,828 | $374,430 | $326,780 | |||
Cost of revenue | 34,657 | 33,584 | 136,464 | 126,211 | |||
Gross profit | 64,622 | 54,244 | 237,966 | 200,569 | |||
Operating expenses: | |||||||
Sales and marketing | 32,429 | 30,298 | 128,496 | 114,741 | |||
General and administrative | 15,444 | 14,063 | 64,172 | 52,222 | |||
Impairment charges related to operating lease right-of-use assets | 1,256 | 1,167 | 1,649 | 1,167 | |||
Litigation costs and related recoveries: | |||||||
Litigation settlement expense | 7,530 | — | 7,530 | — | |||
Professional fees and other costs of litigation | 2,327 | 4,246 | 16,457 | 13,493 | |||
Insurance costs and recoveries, net | (7,111) | — | (7,111) | 1,062 | |||
Litigation costs and related recoveries, net | 2,746 | 4,246 | 16,876 | 14,555 | |||
Total operating expenses | 51,875 | 49,774 | 211,193 | 182,685 | |||
Operating income | 12,747 | 4,470 | 26,773 | 17,884 | |||
Non-operating income and (expenses): | |||||||
Interest expense | (812) | (42) | (1,550) | (77) | |||
Loss from change in fair value of redeemable warrants | (1,160) | (1,152) | (4,183) | (1,394) | |||
Other income (expenses), net | (720) | 473 | (1,605) | (258) | |||
Income before income taxes | 10,055 | 3,749 | 19,435 | 16,155 | |||
Income taxes | 60,002 | (1,242) | 55,784 | (4,569) | |||
Net income | $70,057 | $2,507 | $75,219 | $11,586 | |||
Net income (loss) attributable to common stockholders | $70,057 | $(4,238) | $45,197 | $(15,223) | |||
Net income (loss) per share attributable to common stockholders: | |||||||
Basic | $0.81 | $(0.06) | $0.54 | $(0.21) | |||
Diluted | $0.77 | $(0.06) | $0.51 | $(0.21) | |||
Weighted average number of shares of Common Stock outstanding: | |||||||
Basic | 86,898 | 76,325 | 84,318 | 71,231 | |||
Diluted | 90,780 | 76,325 | 88,970 | 71,231 |
RIMINI STREET, INC.
GAAP to Non-GAAP Reconciliations
(In thousands)
Three Months Ended | Year Ended | ||||||
December 31, | December 31, | ||||||
2021 | 2020 | 2021 | 2020 | ||||
Non-GAAP operating income reconciliation: | |||||||
Operating income | $12,747 | $4,470 | $26,773 | $17,884 | |||
Non-GAAP adjustments: | |||||||
Litigation costs and related recoveries, net | 2,746 | 4,246 | 16,876 | 14,555 | |||
Stock-based compensation expense | 2,606 | 2,036 | 9,710 | 7,461 | |||
Impairment charges related to operating lease right-of-use assets | 1,256 | 1,167 | 1,649 | 1,167 | |||
Non-GAAP operating income | $19,355 | $11,919 | $55,008 | $41,067 | |||
Non-GAAP net income reconciliation: | |||||||
Net income | $70,057 | $2,507 | $75,219 | $11,586 | |||
Non-GAAP adjustments: | |||||||
Litigation costs and related recoveries, net | 2,746 | 4,246 | 16,876 | 14,555 | |||
Loss on change in fair value of redeemable warrants | 1,160 | 1,152 | 4,183 | 1,394 | |||
Stock-based compensation expense | 2,606 | 2,036 | 9,710 | 7,461 | |||
Impairment charges related to operating lease right-of-use assets | 1,256 | 1,167 | 1,649 | 1,167 | |||
Non-GAAP net income | $77,825 | $11,108 | $107,637 | $36,163 | |||
Non-GAAP Adjusted EBITDA reconciliation: | |||||||
Net income | $70,057 | $2,507 | $75,219 | $11,586 | |||
Non-GAAP adjustments: | |||||||
Interest expense | 812 | 42 | 1,550 | 77 | |||
Income taxes | (60,002) | 1,242 | (55,784) | 4,569 | |||
Depreciation and amortization expense | 632 | 493 | 2,404 | 1,813 | |||
EBITDA | 11,499 | 4,284 | 23,389 | 18,045 | |||
Non-GAAP adjustments: | |||||||
Litigation costs and related recoveries, net | 2,746 | 4,246 | 16,876 | 14,555 | |||
Loss on change in fair value of redeemable warrants | 1,160 | 1,152 | 4,183 | 1,394 | |||
Stock-based compensation expense | 2,606 | 2,036 | 9,710 | 7,461 | |||
Impairment charges related to operating lease right-of-use assets | 1,256 | 1,167 | 1,649 | 1,167 | |||
Adjusted EBITDA | $19,267 | $12,885 | $55,807 | $42,622 | |||
Calculated Billings: | |||||||
Revenue | $99,279 | $87,828 | $374,430 | $326,780 | |||
Deferred revenue, current and noncurrent, end of the period | 300,268 | 256,933 | 300,268 | 256,933 | |||
Deferred revenue, current and noncurrent, beginning of the period | 243,682 | 204,297 | 256,933 | 235,498 | |||
Change in deferred revenue | 56,586 | 52,636 | 43,335 | 21,435 | |||
Calculated billings | $155,865 | $140,464 | $417,765 | $348,215 |
About Non-GAAP Financial Measures and Certain Key Metrics
To provide investors and others with additional information regarding Rimini Street’s results, we have disclosed the following non-GAAP financial measures and certain key metrics. We have described below Active Clients, Annualized Recurring Revenue and Revenue Retention Rate, each of which is a key operational metric for our business. In addition, we have disclosed the following non-GAAP financial measures: non-GAAP operating income, non-GAAP net income, EBITDA, adjusted EBITDA and Billings. Rimini Street has provided in the tables above a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. Due to a valuation allowance for our deferred tax assets, there were no tax effects associated with any of our non-GAAP adjustments. These non-GAAP financial measures are also described below.
The primary purpose of using non-GAAP measures is to provide supplemental information that management believes may prove useful to investors and to enable investors to evaluate our results in the same way management does. We also present the non-GAAP financial measures because we believe they assist investors in comparing our performance across reporting periods on a consistent basis, as well as comparing our results against the results of other companies, by excluding items that we do not believe are indicative of our core operating performance. Specifically, management uses these non-GAAP measures as measures of operating performance; to prepare our annual operating budget; to allocate resources to enhance the financial performance of our business; to evaluate the effectiveness of our business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of our results with those of other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and in communications with our board of directors concerning our financial performance. Investors should be aware however, that not all companies define these non-GAAP measures consistently.
Billings represents the change in deferred revenue for the current period plus revenue for the current period.
Active Client is a distinct entity that purchases our services to support a specific product, including a company, an educational or government institution, or a business unit of a company. For example, we count as two separate active clients when support for two different products is being provided to the same entity. We believe that our ability to expand our active clients is an indicator of the growth of our business, the success of our sales and marketing activities, and the value that our services bring to our clients.
Annualized Recurring Revenue is the amount of subscription revenue recognized during a fiscal quarter and multiplied by four. This gives us an indication of the revenue that can be earned in the following 12-month period from our existing client base assuming no cancellations or price changes occur during that period. Subscription revenue excludes any non-recurring revenue, which has been insignificant to date.
Revenue Retention Rate is the actual subscription revenue (dollar-based) recognized over a 12-month period from customers that were clients on the day prior to the start of such 12-month period, divided by our Annual Recurring Revenue as of the day prior to the start of the 12-month period.
Non-GAAP Operating Income is operating income adjusted to exclude: litigation costs and related recoveries, net, stock-based compensation expense and impairment charge related to operating right-of-use assets. The exclusions are discussed in further detail below.
Non-GAAP Net Income is net income adjusted to exclude: litigation costs and related recoveries, net, loss on change in fair value of redeemable warrants, stock-based compensation expense and impairment charge related to operating right-of-use assets. These exclusions are discussed in further detail below.
Specifically, management is excluding the following items from its non-GAAP financial measures, as applicable, for the periods presented:
Litigation Costs and Related Recoveries, Net: Litigation costs and the associated insurance and appeal recoveries relate to outside costs of litigation activities. These costs and recoveries reflect the ongoing litigation we are involved with, and do not relate to the day-to-day operations or our core business of serving our clients.
Loss on Change in Fair Value of Redeemable Warrants: We have excluded the gains and losses on redeemable warrants related to the change in fair value of these instruments given the financial nature of this fair value requirement. We are not able to manage these amounts as part of our business operations nor are the costs core to serving our clients, and therefore we have excluded them.
Stock-Based Compensation Expense: Our compensation strategy includes the use of stock-based compensation to attract and retain employees. This strategy is principally aimed at aligning the employee interests with those of our stockholders and to achieve long-term employee retention, rather than to motivate or reward operational performance for any particular period. As a result, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.
Impairment Charges Related to Operating Lease Right-of-Use Assets: This relates to an impairment charge related to our leased assets for a portion of one of our locations as we no longer use the space.
EBITDA is net income adjusted to exclude: interest expense, income tax expense, and depreciation and amortization expense.
Adjusted EBITDA is EBITDA adjusted to exclude: litigation costs and related recoveries, net, gain (loss) on change in fair value of redeemable warrants, stock-based compensation expense and impairment charge related to operating right-of-use assets, as discussed above.