All right. I think we're live. I'm Andrew Sherman, software analyst at TD Cowen, covering Rimini Street. I'm here with Michael Perica, CFO, and Dean Pohl, Investor Relations. Thank you guys for being here.
I'm also treasurer, by the way.
Treasurer, sorry. Didn't mean to leave out a title.
Andrew, tough start.
Yeah.
Tough start. Short-changing it.
Maybe just for those that don't know, even though you have been around for a long time, but just give us a background on what you do, what market you serve, and all that.
You got it. Thank you, Andrew, and great to see everyone here. Rimini Street was founded 21 years ago with the fundamental premise to those users of enterprise software, to give them optionality and give them control of their IT roadmap, and that was through offering a premier, with radically better economic support offering to your core licenses, effectively replacing the vendor, not replacing the internal IT staff. That was the foundation of Rimini Street. We call it our L4, Level 4, on the ITIL stack support. That's deep down in the code, replacing the vendor and doing it with the client's needs as a priority. Frankly, we redefined in the industry and created the third-party software support industry 21 years ago.
Yeah. How do you guys think about the market size and how you fit into that? I think you've talked about $10 billion of savings for your customers over -
Yeah.
- over your life.
Yes.
That's a massive number.
Yes, it is.
Relative to your revenue.
Right.
The ERP market is huge, obviously, but what is your piece within that you can go after?
Fantastic to frame it at a high level. The overall maintenance that we've seen from third-party research opportunity and/or revenue collectively, not just ERP, overall licensed software globally is $80 billion. The ERP component, we estimate $18 billion-$20 billion. Again, this is retail pricing. We're the half-off model, right? To just use simplistic numbers. We go after, not generally available, but we have a Rimini Custom offering that can attack that other $60 billion of maintenance revenue for other platforms. That's becoming even more attractive and more in our discussions with our clients, existing clients, and even our prospects insofar as they're looking at putting agentic AI. I don't know if anybody's talking about AI at all in this conference or any conversation these days. It's not just Because we are thought of as the ERP expert.
Well, agentic AI and/or our customer support offering is across the entire enterprise. We're having aha moments with our clients to have discussions how they can utilize existing platforms, take those economic savings, and apply it, and use agentic AI across all.
Right. Let's dive deeper into that because that's the new exciting driver for you. I think you have 26 pilot customers.
Yes.
Maybe it's more now, but we'd love to hear the benefit they're seeing out of this, what they're doing. What are they doing with the savings? How does this all exactly work, and how do you think it's going to play out the next couple of years?
As we've said, that our fundamental strategy, through our direct selling efforts and our innovation offerings led by agentic AI, the Rimini Agentic UX, through our partnership with ServiceNow, through other partnerships, is to fundamentally let folks know and give them the optionality and the control that they have an option outside of vendor upgrades. Effectively leapfrog the SaaS layer. Effectively give the control of the roadmap and give the optionality to the client and allow the IT teams. We hear this from global CTOs that say, "We're engaging with Rimini Street because we want to stabilize what we have, our existing footprint, and I want to convert my global IT team to building versus buying, as we have bought and upgraded from the incumbent software vendor for three decades." Specifically, it's more showing these tools to our clients. Most everybody's in an evaluation mode, right?
Showing them they have the optionality, but ultimately, that leads to us pulling through our core revenue stream, which is the higher margin, right, and leading to better retention. This is not only new prospects with this. It is bringing this in to our existing clients and showing them the various options that we have. More specifically to the question, is this going to be the number one driver of revenue growth and become material over the near term? We've said no. However, is it going to pull through our core offering, and has that led to the improvement as we've seen with regard to our RPO and building the momentum the last three quarters? Yes.
That's great. How does the ServiceNow partnership align with that, and how are you integrated with them. You have a lot of probably some customers in common, but they have a much bigger customer base that maybe this helps you get into that too. Just describe that partnership.
You got it. As you appropriately note, ServiceNow has the relationships at the highest level with the largest entities around the world. As one can appreciate, their conversations at these C-suite levels with these existing clients and/or prospects, including governments, occur with agentic AI. Right? This is where we are inserted. Well, finding the budget dollars for this, I have a forced upgrade here, a forced upgrade there. I have to do a migration, and this is where Rimini Street's inserted to say, "Hold on a second. Here's the solution there." That's the structure of a rather uncommon, I don't want to say unique, partnership. Right? It's not a partnership where we have the ability to put their agents in with our trials, pilots. They're growing as we speak.
It's in really interesting positioning, again, to allow an IT team to convert to building versus buying. In ServiceNow, there's such alignment with the approach. As we highlighted earlier to your question of we are the ERP experts, but you have this $80 billion TAM of all these, where we have Rimini Custom to support. In ServiceNow, we have the vision where we can support all of that with our offerings, whether it's generally available or customized. ServiceNow say, "Put the Now Platform on top and use the agentic AI." There's alignment there, and that's what is really driving some great conversations to have an alternate IT roadmap.
Yeah.
That's a very long sales cycle.
If I could just jump in.
Yeah
Echo some of that. What's really shifted is, in the past, it was felt innovation could only come within an upgrade of your ERP. That's been flipped on its head. With all these next gen AI platforms sitting on top, it has made Rimini very much more relevant in the market.
Yeah. That's great. Let's just get to the Q1 recap. You had a very nice quarter.
Thank you.
Revenue ex PeopleSoft up 6%, RPO ex PeopleSoft 18%, that accelerated. What surprised you in the quarter? How sustainable is some of this? I have some follow-ups to that.
Sure. It's a continued building of momentum the start of Q3 of last year. Right? You've seen, and you're very well aware of the momentum we've been building from last Q3, Q4, Q1. I don't know if I want to say it surprised us, but there's an eerie correlation between the settlement of that protracted litigation in July of last year, what we saw in Q3, what happened in Q4 and Q1, and certainly the agentic AI, right, roadmap. Again, I don't want to say it's surprising, but what we are seeing is when folks engage with us, they are engaging and sitting down and working with us to set up longer term arrangements. If there's something that's different that started last Q3 are these longer term commitments to Rimini Street. We don't have the legal overhang, certainly. That's a reasonable assumption of a component driver.
Alternate roadmap to leapfrog SaaS, that's certainly a driver. It's these two factors that are building our momentum. We're on a few quarters of a good run here.
Yeah.
Building a good run.
As we think about the RPO growth and how that's going to flow into revenue growth, I think your guidance implies second half revenue is up high single digits roughly. You're coming from a point much lower than that. How do we get the re-acceleration needed? What could drive kind of upside to that?
Tying that question back to our first quarter performance, as you saw with our RPO growth, our longer term commitments, as well as the billings performance, this is something we haven't experienced in the first quarter that sort of sets the foundation to make your year overall. We're in a drastically better position than we were the last two or three years. Moreover, with continued momentum in Q2, which we're working towards, right? We're a little bit over almost two-thirds of the way through in the quarter, is positioning us very well to have that ramp on the top and the bottom line in the second half of the year. Frankly, the second half of the year, and it's been quite some time. All of our effort's there to position our growth for 2027. It's a much better position that we're in here.
Yeah.
In working towards continuing that momentum to really lay down. We are talking as much now on building our 2027 growth as much as delivering on the second half in our performance for 2026. We haven't done that and been in that type of position for years.
Hmm. Wow. Yeah, definitely a much different start. How much of that do you attribute to the litigation being over versus just better sales execution performance? Maybe it seems to have unlocked greater demand for you in the market. Was that all in the past couple of quarters, or you think this could be more even than that?
A great question, Andrew. I really think there is more and there can be more. Difficult to attribute any specificity to the contribution, not having legal, but I do believe there's certainly a correlation with these longer-term arrangements. Folks are just more comfortable. They don't have resistance from their internal, external legal groups.
Right.
That was part of the diligence. It's a great position -
Right.
- for us to be in something that is a trend that we don't believe it's short-term. We believe and see no reason why it shouldn't be longer-term.
Right. Wow. The duration has gone up to an average of, what is it recently versus what was it before?
With our overall base of business to move the needle on that calculation, we're typically around two years, what we have on average for our commitments. Certainly, as we have larger deals over longer term, we can see that coming up. We obviously would like to see it longer, and we're working towards that.
Yeah.
We are working towards that.
That's great. Maybe for the audience, in the past, under the litigation, you had some customers who literally were not willing to commit maybe even more than a year and certainly not sign these huge -
Absolutely.
- seven-figure kind of deals.
That's right.
That's right.
That's right. It was certainly more challenging. The larger the deal, the more sophisticated, or I shouldn't say sophisticated, more thorough the diligence. Both internally, with credit review, with your legal review, and then even engaging. We had large clients that would engage outside counsel as well. It was positive that they would actually go through that, how much they wanted to come to the Rimini offering, the Rimini platform, that was a pretty significant piece of -
Yeah.
- diligence, as you can appreciate.
Right. Yeah. Great to have that behind you. In that same vein, internally and from the sales reps, they don't have to sell against that anymore. You guys, I think, have talked about, you as a management team don't have to spend your time dealing with that, so you can go chase actual real opportunities. Has that been a big change over the past couple of quarters?
It certainly has. It's very difficult to express what it's like, and the area you touch on correctly is our sales folks that are client-facing, not only in new prospects. With existing clients have reservation to commit even more to you with this overhang, if you will. It's hard to express how we enjoy just not talking about it as much anymore.
Yeah.
Particularly with our clients. It's something that we don't have to explain and provide responses on diligence. We obviously were able to do it in our sleep. It was something that we had to address a lot, but not having that, it's been wonderful. The distraction behind us and our ability to genuinely go after the market and in a different way, where it's truly an engage with clients to provide them the optionality and the control of their IT roadmap and future. It's been quite pleasant.
Yeah
I will say.
That's right.
Yeah, just to add, think of your salesperson, the SAP Oracle, okay, they're being sued and there's no path to innovation. What are you doing? That's all been erased. We have what many believe is a preferred path to innovation. The Ninth Circuit completely overturned the case.
Yeah.
It's completely different. It's kind of surprising we sold what we did against those kind of objections.
Right.
Now it's open, and I'm sure Michael will get into it a little bit, but we've upgraded our sales teams. We're more of an attractive company.
Mm-hmm.
All that flows together.
Yeah, talk more about that. Yeah.
To be clear, for full disclosure, of course, there is a settlement component and performance obligation for us, and you noted, Andrew, our revenue excluding PeopleSoft, where we have to have completely out, and we will definitively perform on this by July of 2028. That's where the component of, there is PeopleSoft revenue, but it's becoming less and less non-material, and it will be gone.
Yeah.
In line with the stated terms of the settlement by July of 2028.
Yeah. Okay. Yeah. Dean, speaking of the go-to-market, let's drill into that because maybe just frame, there's been several changes over the last, call it five years, but it seems like you're in a more stable position now. Your CRO has been there two years. You've improved a bunch of things under him. You're growing reps. Just talk about the evolution of your go-to-market org.
Number one, Steve. Anyone who's followed the company, we sort of had a new CRO every year to two years. Steve has come in and from day one said, "I'm going to install a commit culture. I'm going to bring in people who believe in this, and the people who stick around are going to do really well." Over two years, he's been able to craft his division, the way he's expecting it. On the commit culture, he expects people to be accountable on a weekly basis, that they move the needle on pipeline or towards deal execution. I think that's another big pillar. I understand the market isn't giving the company credit until we actually show it in the numbers, but we are starting to see it in the lead indicators. Innovation, no legal, and better sales execution.
Yeah. Great.
Just would like to build on that and echo the strong performance that we're seeing in these key leading metrics, driven by the combination of Steve changing not only the culture, the performance of our team, collaborating internally with our go-to-market strategy. Getting our foundation, despite our expanded and continuing to expanding offerings, but getting our go-to-market and our team recognizing that you start with the L4. That's how this expansion strategy and this value enhancement to the client can happen. Right? Then cultivating our indirect channel, where during our investor day, December of last year, where the indirect channel is leading with the tech, but ultimately it's pulling through because leapfrogging SaaS and getting to quicker, more economical innovation using your agentic AI means you have to stabilize existing.
Bringing all of this together is not only with Steve, but our strategy and our go-to-market that is frankly resonating with our clients. We haven't had a single conversation where a client or prospect has told us, "No, that's the wrong path." We haven't heard that. We haven't heard that.
Wow. Okay. The go-to-market, you're hiring a lot of reps, which you've done in prior years, but then there's attrition and change and that kind of thing. Do you have to hire X amount of reps to hit, meet, or beat your numbers, or is that kind of just incremental?
Where we are today, what we've communicated for guidance, do we need incremental reps? No. As we appropriately, you track this data very closely, very accurately, Andrew, that going to my prior comments with regard to building in the second half of the year, right, and positioning and work to allow for the growth in 2027 and beyond, that will be needed f or us to achieve those objectives. We are seeing, again, not only Steve's work, the go to market, our attractive messaging, that we're seeing folks ramp up quicker than we have previously with those, get the sales rep count, get quota carrying capacity, expecting the performance or should see the performance and not seeing that. We are feeling better and the data is showing that we're having improved performance, and we're going to build from there.
That's great. Remind me the rep numbers you've talked about. It's like mid-70s to, is it over 90 or?
Yes. We could. This goes to getting to triple digits from reps sometime even next year. This goes to, as we noted from Q1, how we pulled forward sales and marketing spend. Same throughout the year, as really on the campaign side, not as much on the rep side in the first quarter, but something that we're building, which is an expression of our confidence, how we're not only to meet our objectives for the current year and potentially exceeding those objectives, and then laying the foundation for next year. It's a combination of those factors. By seeing those counts improve, that's an expression of our confidence in our ability to deliver results.
Right. The retention of your high-performing reps sounds like it's been better. Is that still-
It has been better. There of course, we're not perfect by any means, by any stretch of the imagination, but we are improving. Our reps are having such business-relevant conversations with value proposition to clients, where so much of our conversation, going back earlier, right, when we're talking about the overall TAM of $80 billion. P&L is out there for maintenance software in the entire world is $80 billion. Rimini Street can free up $40 billion without having to ask for more budget to spend on innovation. If one wants to think about it and look at it at the high level.
Our reps are walking in, and we have a slide that is in our investor deck where you look at the spend to go to SaaS ERP, and you don't get innovation, and how many years it takes and what kind of dollars, versus less spend, quicker innovation for Rimini Street. If somebody signs up for SaaS, if you're getting told that you're going to go out of support and you haven't chosen or are aware of the Rimini Street option, you're going to spend a few years to get the latest SaaS. You're going to give up your perpetual licenses. You're going to pay a rental fee. You're going to pay 2-3x more operating costs on your P&L. Got to find budget dollars for that. Once you get there, if you make it on time. More folks don't make it on time.
You're going to talk about getting to innovation and AI. Our curve is much quicker to innovation, much lower dollars. We have our marketing team, our go-to-market team, and/or sales reps that are laying this out in front of clients. We're having more business-relevant conversations that happen to have radically better economics, and we're just in a better place. Right? The value proposition, and Dean and I say it all the time when we're interacting with investors, though we've been at this for 21 years, our value proposition has not been more attractive.
Right. That's great. You guys also raised quotas at the beginning of the year, and you give a lot of good granularity, and you talk about certain pipeline metrics and things like that, but raising quotas by a lot at the beginning of the year, I don't think you did in prior years.
No, we didn't.
That was a signal of confidence.
Yes.
Reps have to make sure they hit that -
Of course.
- to get paid. They must be willing to underwrite that. What is the attainment levels of that higher quota? What is the confidence in hitting that? Why did you raise them in the first place, that kind of thing?
I love that terminology. I'll use it internally, that they're willing to underwrite their quotas. I like that. A true finance individual. Certainly, the expectation with regard to our value proposition, with regard to the expanded toolkit of offerings, right, not only our core support, right, the managed services offering, and then our innovation offerings, in our partnerships that allow more innovation come into clients, it's a reasonable expectation. Of course, I don't think anybody will know a sales individual that would want to have a higher quota, right? This is something that the opportunity is out there. After, to your point, as you mentioned, right, not having that quota increased for several years or so, it's really not that large of an increase.
Yeah.
I don't think you'd expect an individual sitting in the office of CFO to say anything different here, right?
Yeah.
To your other question, right, is our attainment, as you can see, right, through the billings performance and the RPO performance, et cetera, we're seeing improved attainment there. Certainly more to go, right? There's more runway here.
Yeah.
It's trending in the right direction.
That's great. One of the other metrics from the quarter was the 11 new deals with $1 million+ TCV for $33 million total. A year ago, that was five for $5.6 million. That's a huge increase. I think you said a lot of that was big U.S. brands. I know you can't name them, but you do name a lot of the international brands, and you press release those, and those are all impressive on their own right. Maybe there might be more U.S. appreciation for what you doing because they are some household brands, it sounds like. What is the opportunity to, in the Fortune 500 or 1,000, to get a lot more of those? Are you seeing those in the pipeline now?
We certainly are engaged in the pipeline with the constitution of those type of clients. We highlighted the performance domestically, with regard to those larger deals. There's a large ERP vendor that's U.S.-based, and then there's a bias, I should say, from a revenue stream. There's an international vendor based out of Europe that has the international bias, right. Our revenue looks similar. By default, it stands to reason, larger deals, right, larger household names with a U.S.-centric technology where we've had our retention challenges and performance not where it needed to be the last couple of years. That's where we're seeing the indication to the pipeline. I don't get overly excited about pipeline. I prefer what comes through with the right economics, right, delivering contracts. That is a trend that is something we should continue. Can continue, and we'll build from there.
That's great. We have a minute left. The international business has been relatively stronger. Is that because of who you're competing against and some of the historical litigation on the domestic side and the end of life for those customers has been pushed out one or two times?
Right.
if they don't want to move by then, is that alone a lead generator for you?
It certainly is. Suffice it to say, our pipeline relative to international, that particular platform is rather significant. Again, it is something that we, with our go-to-market, to let them know not only options from an economic standpoint, options from a technological standpoint that gives so much flexibility. It's fun to have these conversations with clients, right? That's the strength internationally, but our domestic business should give our international business a run for their money.
Wow. That's a great way to end it. Thanks, everybody.
Thank you, Andrew.
Thanks, Michael.