Great. Thanks, everybody. I'm Derek Wood, Senior Analyst. The Rimini Street team here. Of Rimini Street, what kind of, really what the kind of value proposition is that you're serving today, and then we'll go in from there.
You got it. Rimini Street was founded 20 years ago now. It was founded by our founder that initiated the maintenance business for a division or a platform within Oracle, and saw the value proposition that there's a third-party market and created the third-party market for vendor replacement services. That's the core of Rimini Street. Been doing it very well, have by far and away the largest market share for vendor replacement support in the world. Our core offerings for support are the large ERP systems, but we have since, from a value proposition because we've been asked by our clients, to expand, and we've expanded into managed services, also custom offerings, supporting any platform down to the code level vendor replacement, as well as professional services and some other proprietary security solutions and connectivity solutions that we wrap around that.
What are the common reasons a customer would choose to move off of what was traditionally supported to a service like Rimini Street?
The obvious would be the radically improved economics. Our maintenance cost is half of what the vendor would charge. That is not the real value. That is the obvious hard, immediate cost savings. Over time, and we have saved in this several billions of dollars, but that is not the real value. We also support the custom code. Vendor will not support custom code. Whether we wrote it or not, we will take care of your custom code. You will not get that from the vendor. Over time, by the elimination for, and I know this because in previous lives, I have ran both SAP platforms and the Oracle full suite ecosystem, and I went through forced upgrades, and I got precisely nothing for it but disruption and a large bill and higher cost on the other side. It is 90% cost savings.
Now, of course, I would love to get to the, and we will get to it, with our new partnerships, is the ability to reallocate those dollars for innovation, especially in today's world and the very, very intriguing next-generation technologies that one has access to but not through the vendors.
Mm-hmm. Okay. So let's, we'll go into that in a little bit, but I do wanna talk about kinda what you're seeing in the macro today, current spending conditions, how you feel your ability to navigate through the uncertainties, and kinda what you saw in Q1 and what you're seeing in your pipeline.
We have said, even in normal times, we do well. Our value proposition, as we just discussed, is compelling for many. We have thousands of clients. However, in periods of uncertainty, in periods of inflationary periods, when folks have pressure from a P&L standpoint, it goes without saying that there is renewed interest, and instead of our outreach, we do have a tick up in the inbound inquiries, as we have immediate cost savings. We have immediate ability to free up capital to invest in other priorities. And in summary, given the uncertainty, I think we're all tired of saying that. Uncertainty would probably most overuse.
The new norm.
It's right. Right. The new norm. Fair. That's better. I do like that. That folks are looking at the priorities, and we're certainly identifying a gotta have versus a nice to have. There's nothing higher on the list on a nice to have than a forced upgrade that is very expensive and questionable, if ever, ROI. It's an interesting time for us, let's say that.
Yeah. I was gonna follow up. I'll get there in a second too. But how do you feel, Rimini? Like, like, if you get inbound calls because people are, you know, looking at TCO more, looking at how to get more value out of systems, what, how do you build market awareness and brand awareness so that you do get that phone call 'cause everyone knows about Rimini? Like, where have you been on your journey over the last, you know, five-plus years on, on getting more market and brand awareness?
It has been a very expensive proposition. We still, unfortunately, have to break down doors, and it's something that we do through our traditional two decades of a direct selling model. We've been fundamentally a direct selling model. However, and really appreciate the question, inbounds are happening in a different way these days. We're getting inbounds, almost to the point that we cannot develop new partnerships to develop an indirect channel. We have some noted partnerships that we did disclose publicly, and I assure you, that it is interesting for us how folks want to and need to partner with us for that value proposition of continuing those key assets that folks own through their perpetual licenses in-house. We're shifting the ability to reach and build that brand awareness by developing this indirect channel with some very preeminent players in the enterprise software space.
Mm-hmm. So, if I wanna talk about the core on SAP and Oracle, both of these vendors have end-of-lives, and the one that's, you know, more topical right now is SAP ECC that ends of life in 2027. I guess as an investor, I mean, how should investors be thinking about, like, what kind of opportu—I mean, as we get closer to that date, which is now only a couple of years away, like, you know, how do you take advantage of that opportunity of these, like, roadmap deadlines?
Certainly. Certainly. It stands without question, based on that set of facts there, that our conversations around SAP have never been greater at this point. In so far as we are finding that we're landing and having to remind folks that 2027 is right around the corner, and if you don't have a strategy to deal with this, you should do so. Here's a path that we can lay out for you that is not only through support, and we can optimize, and then innovate with our partnerships, that there is a different path, which is a better path, not only with economics to take advantage of these next-generation technologies. So very busy.
Mm-hmm.
Obviously, it's a vendor-driven event. I do wanna note, there is, the Oracle side of the house have said, "No, we will have, ongoing support virtually in perpetuity." There is a little trick there, and we have to educate the marketplace is that, at least you're two gens old. You're fundamentally needing to upgrade, nonetheless. There is disruption there. We believe it or not have to have, provide this insight to clients along those lines saying that it's just a different marketing, which is working in certain instances, but we're here to educate the market and let folks know that there is there are options.
Mm-hmm.
The optionality is something that one should seriously consider 'cause there are certainly other paths than being forced by the vendor to go along their roadmap.
Yeah. And, I mean, it would seem like there could be a boon of opportunity for you guys on SAP, but they also have extended support to 2030, and, like, so it's not this.
Tricks of the trade still exist.
Really hard deadline.
Yeah. The tricks of the trade still exist, but, forcing a conversation, we really enjoy that because, surprisingly, you know, to your earlier question, right, of the brand awareness and the value proposition that we have, is folks just do not really understand the true options that they do have and what we bring from a value perspective, not only with your existing assets, but a different path one can go.
Yeah. Okay. And on the PeopleSoft business, you've decided to wind that down. You've quantified the revenue. I think it's 7%.
Correct.
Just any kinda more color on, on I mean, you were maybe considering not winding that down. Why did you kinda ultimately go that way? And kinda what, you know, when will the drag tail off in the model?
As you noted appropriately, right, the right business decision for a whole host of factors was to wind down this particular platform. Then there was a period we reassessed, and that's after we had our conversations with our clients, and they reminded us of our value proposition. It was something that we stood back, made another assessment overall, and we've been working with all these folks because we're going to do this in a graceful manner and make sure we work together to provide them with another option. Again, we bring options to the marketplace. That's what we do.
We made the determination that overall, the greatest value we can bring to the entire client set, both existing and new clients, is to focus on these larger platforms and opportunities that are not only greater problems but also opportunities that we can bring to the market. That is where we had the determination. Now, from a timeline and a tail off, we do believe it is going to occur almost an 80/20 rule, so to speak, right? Almost applies to everything, is that, you know, we have defined plans with a very large component of these clients, as we said publicly in our last call, but it is going to be that last, let's say, 20% or so that is going to take almost the full two to three-year period to really get those folks to an alternate place.
Two to three-year period from the time you started this or from today?
Our target is from the time we started.
Yeah. Okay. Okay. Segue to the new initiatives, and there's a lot of them. You know, ServiceNow, Workday, VMware, T-Systems. Where do you wanna start? I mean, I think ServiceNow seems to be maybe having the most strategic involvement with that, you know, joint involvement with them. I think other ones as well. Like, let's kinda tackle these opportunities. So walk us through what you're doing with ServiceNow.
Absolutely. I think that's an appropriate place to start. We are really excited. The initial reception has been with our conversations collectively. We had a targeted audience. We had initial conversations with ourselves and ServiceNow, and the vast majority nodding their head saying, "This is interesting. I want to learn more. This is very intriguing of an alternative path to access the next-generation technology with the ultimate prize of your savings moving to Rimini Street will pay for the new platform." What are we talking about? ServiceNow, and it's a wonderful partnership insofar as we have no interest in selling new technology. That's what ServiceNow does. They do it as well, if not better than anybody else.
They have a platform on top that will allow folks to modernize your entire asset base of the hundreds of applications that you have vendors knocking down your door to buy their next-generation latest and greatest. It is all siloed. It is all individual, and everybody is trying to sell you on their next-generation AI, but it is only on that siloed data. There is no enterprise-wide look. Enter ServiceNow. Putting the user layer on top with the Now platform, you interact, and this is where we come in. ServiceNow knows that we know ERP systems deeper, broader than anybody else. We are helping them to take the out-of-the-box Now platform to tie in to the ERP system and need us to tie it in. That is what we have done. We have a proven case, and we saw a press release happen in the Americas.
From there, to manage the Now platform, that is how one will access all of these assets underneath for which Rimini Street will solve the largest problem. The conversations when folks are looking at next-generation technologies that they would like to, now I'll use AI. It has to come up in this conversation. It comes up in every technology conversation these days. They're thinking, "How do I get there?" versus the vendor's upgrade that says, "Go through this and just have AI, AI on my captive siloed platform." We solve the problem. What do I do with the need to upgrade and fighting for these dollars?
Insert Rimini Street in our core offering, not only for the core ERP systems, the Rimini Custom, where we can support and optimize your existing assets and then free up those dollars so you're not going to your board for substantially more dollars to give the board what they're asking for. How do you use AI to have a competitive advantage? This is the quickest, most enterprise-wide, path towards modernization, real modernization.
There's, you can provide the core service of don't need to upgrade your ERP system, keep it where it is. The innovation is gonna happen, the modernization upstack at the ServiceNow layer. So that's, that draws in core services for you guys. Is there an AMS component too, or what other?
Absolutely.
How are you helping do the plug-ins more? Is that part of core? Is that part of a different test?
That's part of our, when we are introducing ourselves to our clients these days and prospects, it's what we provide is support, the optimization, and then the innovation. The innovation occurs through our partners. Yes, what we, at the user layer, the innovation with ServiceNow enterprise-wide, the assets in place, we support vendor replacement, no need to upgrade. We will optimize through our managed services, and we'll provide the managed services even on the Now platform and other SaaS platforms as well.
Mm-hmm.
Everything's your assets are stable. You save your economics. And what we do is we run this and we optimize this because we're a service-first company. We're not interested in selling new technology. That's what our partners bring.
Can you talk about the involvement from the ServiceNow side? I mean, is there any joint go-to-market happening? What are they bringing to the table at all? 'Cause this is a formal partnership.
It absolutely is. We are working together in marketing the solution to the clients, and the solution is an enterprise-wide modernization that one does not have to throw out or upgrade existing assets and platforms. It is, again, the quickest, the most economical path to your modernization. It is collective. ServiceNow, the component where ServiceNow, what we bring in and we are inserted, is the problem of, "Okay, I'm not gonna find it. I want to do this, but I am forced to upgrade on these existing platforms." No longer need to do so. Not only do you not need to upgrade, you can save, have better service, and then these dollars are available for the modernization. It's really compelling. They're excited on their side as well. ServiceNow is very large.
They have a lot of platforms and technology to sell, but they also have a very large direct sales force. Back to your earlier conversation of awareness, right? And obviously, the introductions that we can have through the ServiceNow relationship are obviously impressive.
Yeah. Yeah. Good. I mean, any thoughts on when, like, this could turn into revenue?
We have said on the last call, Seth did note that he was given the question when to expect meaningful revenue. We did say this is gonna take time to develop, to get out there, but we see it being next year.
Mm-hmm.
Is the earliest of being meaningful. From an intermediate-term perspective, you know, this whole indirect channel for us, and I'm gonna highlight what I said previously, others are noticing how we can assist. Even your large SIs, our phone is ringing because the market wants to go to enterprise-wide AI. I heard you even talking about the agentic AI on top of the generative AI. Why not have your investment in that technology and/or that layer, whether at the user layer or at the data layer? A couple ways to do it.
Mm-hmm.
There's a problem.
Mm-hmm.
Above all is, where do I find the dollars? What do I do with my existing platforms? How do I make those work? That's what Rimini Street solves.
Mm-hmm.
That's where in the medium to inter, longer term, we are really excited. I use the words not from a technology perspective 'cause we're not there, but we have partners. The market's coming to us and our solution and our value add even more so.
Yeah. Are you c, you're like the AI budget freer or, or creator?
Yes. The answer is yes. Please do.
Yeah. I mean, think of it, Derek. You've covered the company for a long time, and the argument was always, "Okay, business is great. There's so much TAM, but it's a melting ice cube." This is different. We've been invited to have a seat at the table to get companies on next-gen technology. And it's also, as you know, the disruption to replatform.
Mm-hmm.
From licensed product to the SaaS cloud-type product. I mean, there's a risk. It's very costly. It takes a lot of time. ServiceNow wrote their press release. They're the ones who announced the partnership, and they're saying, "Hey, we can get you there in a matter of six months versus years.
Wow. Wow.
Think of it. When you get some of this stuff working, and we're building the connectors and COM APIs for, like, ECC6, you bring in other ECC6 guys. It's like, "Hey, we got it built." This could go pretty quickly if.
Wow.
If we get it, we get it right with a few key clients.
Why are you why are SIs calling you now?
Very interesting, right? 'Cause their highest margin offering is to help with these replatforming of these large systems. Very large revenue ticket.
Yeah.
They're calling us because the clients want to know, "How do I put in enterprise AI, not just the vendor's AI?
Mm-hmm.
The SI is thinking, "Well, hold on. What do I do with these legacy pro platforms? 'Cause there's not enough P&L space to do all of this." They're calling the group that has the solution to the problem, Rimini Street. We will stabilize all these assets. I was at a CIO conference on a CFO-CIO partnership initiative a few weeks ago and speaking with fellow CIOs. One thing collectively is becoming real CIOs are realizing is that the crown jewel in the upgrade path from the vendor is to get their AI, but it's only on their platform.
Mm-hmm.
The data within that platform. I told folks in the room, and they all agreed, "If you just go through, I have an HCM, I have a PLM, I have an ERP platform, and I have the AI that's captive there, you're gonna have different models trained in different ways on different information. That's gonna give you your hallucinations, and you're gonna have a very large build to do that.
Mm-hmm.
Think of AI. I implore the room. Think of it enterprise-wide to begin with. Please do so. Moreover, if you ever consider going to a SaaS platform, do not give up your perpetual licenses. There were a handful of CIOs I spoke with that are talking about, "I didn't give up my perpetual licenses. I'm putting them back on-prem. You saw our partnership, like, with the T-Systems. You even have a managed service provider. Put them in there. The hardware's great. You can put it back in. You can control your assets. You can control your data. You can put it in one space. You can keep a captive model across your enterprise, and you can invest in the innovation that way. If you have your data, you control your data, all of your information for your enterprise, you will maximize AI in that fashion.
If you do the captive vendor, I wish you luck.
If you're a-and ServiceNow is the layer of the enterprise AI that's gonna be that your innovation.
You log into ERP, log out, log into HCM, log out.
Yeah.
ServiceNow will take you on top. You'll always have modernization. You will speak to the systems below to transact. It will get housed in one area. You take there, and they're ahead on the agentic AI versus the gen AI with the Now platform on top overall, and you have one interface.
Right. The pivots come to where it-it's all about the data.
Yeah.
To be able to access it, pack it.
Yeah.
Instead of going through four systems, everyone's been to a doctor, hospital, you filled all these forms, you see the people behind. They're going to four systems. Employees that used to be you'd have to do payroll. You'd have to do their regular HCM thing, profit sharing, and on and on. This stuff can be automated to just one input.
Yeah.
and also.
Yeah.
You know, Michael, you're closer to it, but there's a hyperscaler angle to this as well.
Yeah. Oh.
Where they wanna run workloads, and they believe in this idea that it's about the data and the advanced, machine learning automation. AI should be done at that top layer.
Yeah.
They're thinking.
It's like big data lakes.
Instead of the user layer, take your information to the data layer, expand here with an open-source database. They will host that, and they'll put the AI on top and have all your information there. They're looking at it from the data layer. Ultimately, they're gonna continue to climb up the stack. I think you'll see them get there as well.
You guys help retain on-prem systems, so you don't.
We help retain licenses.
Yeah.
Right?
Oh, yeah. Yeah.
Platforms. We are involved, and we've helped folks take it and put it to a managed service provider.
BYOL.
You got it. BYOL.
Yeah.
Absolutely. Which is, that's gold.
Yeah.
That is absolute gold. That is what I was saying previously. If you're going to give SaaS a try, don't give up your perpetual licenses.
Mm-hmm.
Why would you give up that asset? Don't give up that asset. We can keep it running for decades.
Any questions out there? No? Please.
I have a question on the ServiceNow relationship. The terms are very interesting and exciting. Can you maybe double click on, you know, do you have, like, some exclusivity with ServiceNow in terms of the ServiceNow selling this platform? The other aspect is, who's actually selling? Is it, like, ServiceNow, like, [audio distortion] customers? You're telling them, like, "Hey, you don't need to upgrade. You can bring ServiceNow, and you're good to go," whatever.
Part one, there is not exclusivity in place on either side, and it's really not needed. We don't see a need for it. Neither side saw a real need for this, right? We're not going to do what ServiceNow does. They're not gonna do what we do, right? It works really well. It's so complementary, and it's just not needed. Now, secondly, ServiceNow doesn't need to go sell Rimini Street. ServiceNow needs somebody to buy and understand this vision and value, which is quite compelling.
The path to get you there more economically to work better on a shorter timeframe is, "And here's our partner, Rimini Street, and that's how we put this whole package together and get you there economically and quicker." And that's where it's, and what's training ServiceNow to sell what we do, is we put us in front of them, and we'll take care of that component.
That was a good question. Also, on the, I mean, are you trying to sell the, is this an opportunity within the existing base, or is this more about, like, a new customer grab?
Absolutely within the existing base.
Oh, yeah.
Right? You know, from a cross-sale standpoint. And that's where we went to clients that we identified with our best relationship, the list, as I referenced previously, that have both ServiceNow, you know, typically the IS, you know, ITSM platform, right, as well as Rimini Street, supporting one or the other platform, right? We support so many platforms and have a conversation. This is where we were seeing a lot of head nods saying, "This path makes so much sense. I wanna learn more.
If you've already won the core, with existing customers, though, what are you cross-sell? What are you cross-selling? The connectors and.
What we, our revenue stream will be to connect, 'cause there's, you know, you have, you know, the shrink wrap, you know, the Now platform on top. It's not gonna speak to a-and every instance of an ERP installation is customized, right?
Mm-hmm.
Nobody really keeps it off the shelf, right? We have our professional services engagement-based revenue stream to tie it in, which we've already proven out, and we had a press release on that, right? We have it functioning already. Part two is the Now platform for the managed services, right? They're sitting on top of the ERP. We'll manage that for the client. The third component, so here's our support, optimize, innovate. The innovation is the Now platform. We put it in professional services revenue. Managed services, ARR revenue for the Now platform on top. Then what it's on top of to stabilize. Here's the real what's so interesting for us over the medium to longer term is if somebody sees this vision appropriately to put the Now platform on top and invest in innovation there, our retention rate for supporting.
Mm-hmm.
The engine underneath is going to get better because this can stay in place, and there's no need to hand your checkbook, your P&L statement over to the large vendors.
Mm-hmm.
The SIs.
Interesting.
'Cause we can keep it running for 10 years- 20 years. That's what we do. And these assets, especially if somebody's on a latest enhancement pack with the latest platform with your own licenses, sunk cost, physical life for another 20 years, fully depreciated life.
Mm-hmm.
This is pure gold. The economics are so compelling.
Great. I think we know where the enthusiasm is right now, and there's a lot of pivot. I mean, we're at time, but, like, how do we think about investing in this opportunity and, like, in the broader envelope of your margin structure and, like, how you can kinda push forward quicker?
I think we have the capital allocated. I think within our existing business model, it's there to continue our certain segment with our direct selling, as we discussed earlier, but developing this indirect channel collectively, which go-to-market is going to be a more efficient and economical approach. I don't see margin compromise from a gross margin perspective. We'll manage our mix, with this of our support, optimize the innovation layer through our partners. And it's, you know, we're developing this. We're working hard at this, and we see this market opportunity, and, you know, we think it's a really exciting next three to five years for us.
Great.