Full fiscal year net revenue of $212.6 million, up 33% year over year
Full fiscal year gross profit of 61%, up from 58% in 2016
Full fiscal year operating income of $22.0 million, up 58% year over year
1,566 active clients at fiscal year-end, up 28% year over year
LAS VEGAS-Saturday, March 17th 2018 [ AETOS Wire ]
(BUSINESS WIRE) -- Rimini Street, Inc.
(Nasdaq:RMNI), a global provider of enterprise software products and
services, and the leading third-party support provider for Oracle and
SAP software products, today announced results for its fourth quarter
and full year ended December 31, 2017.
“The fourth
quarter was another record quarter for revenue and the 48th consecutive
quarter of revenue growth for Rimini Street,” stated Seth A. Ravin,
Rimini Street co-founder and CEO. “We continue to see a growing global
demand for our enterprise software support products and services, and
our current offerings cover an addressable market of more than $30
billion in annual IT services spend. With total annual global market
spend on software and maintenance services exceeding $160 billion, and
considering additional spend on IT services adjacencies, Rimini Street
sees a substantial opportunity for continued growth in the years ahead.
As the global leader for independent support and maintenance, we are
well-positioned to continue growth through additional sales and
marketing investments, as well as expansion into new countries, products
and services.”
“Revenue in
the fourth quarter and full fiscal year 2017 exceeded the high end of
our guidance range, driven by continued growing global demand for our
products and services and operational execution in sales and service
delivery,” stated Tom Sabol,
Rimini Street CFO. “In addition to our focus on revenue growth and
gross profit expansion, we are also focused on the goals of reducing
total debt, reducing our cost of capital and improving free cash flows
in a way that will allow us to invest more in growth and eventually
achieve GAAP profitability.”
Litigation Developments
On January 8,
2018, the U.S. Appeals Court ruled favorably for Rimini Street. The
Court of Appeals reversed certain awards made in Oracle’s favor during
and after the Oracle v. Rimini Street trial in 2015, and vacated others,
including all claims and judgments against Mr. Ravin and an injunction
that had already been stayed by the appellate court. Rimini Street will
seek reimbursement for up to $50.3 million of the judgment previously
paid to Oracle. Rimini Street currently believes Oracle may refund
approximately $21.0 million in the second quarter of 2018, and the
Company currently expects the resolution of the remaining amount
sometime in 2018. Amounts refunded back to Rimini Street from Oracle
will be used to pay down outstanding debt under its credit facility.
After all appeals have been exhausted and after netting out all remand
and appeal costs, a portion of the proceeds received will need to be
refunded to the insurance company that paid a portion of the litigation
costs.
With respect
to the litigation Rimini Street has filed against Oracle (Rimini Street
v. Oracle), the Court has allowed us to proceed with our amended
complaint against Oracle asking for declaratory judgment of
non-infringement of copyright and to proceed with our claims against
Oracle of intentional interference with contractual relationships and
violation of California and Nevada unfair business practices statutes.
The case is not currently expected to go to trial until at least 2020.
Fourth Quarter 2017 Financial Highlights
- Net Revenue was $57.9 million for the quarter, an increase of 24% compared to $46.7 million for the same period last year.
- Annualized Subscription Revenue was $231.6 million for the quarter, an increase of 24% compared to $186.9 million for the same period last year.
- Active Clients as of December 31, 2017 were 1,566, an increase of 28% compared to 1,226 Active Clients on December 31, 2016.
- Gross Profit Percentage was 57.0% for the quarter compared to 59.4% for the same period last year.
- Operating Income was $4.3 million for the quarter compared to $37.9 million for the same period last year. Operating Income includes $5.2 million and $47.4 million of insurance reimbursement recoveries related to litigation for the fourth quarter 2017 and 2016, respectively. Non-GAAP Operating Income was $5.6 million for the quarter compared to a Non-GAAP operating loss of $3.3 million for the same period last year.
- Net Loss attributable to common stockholders was $3.9 million or a diluted net loss per share of $0.07 based on 55.0 million weighted average shares outstanding compared to net income attributable to common stockholders of $14.1 million or diluted earnings per share of $0.31 based on 45.3 million weighted average shares outstanding for the same period last year. Non-GAAP net loss attributable to common stockholders for the quarter was $8.5 million compared to $15.4 million for the same period last year.
- Adjusted EBITDA for the quarter was a positive $6.0 million compared to a negative $3.9 million for the same period last year.
Full Year 2017 Financial Highlights
- Net Revenue was $212.6 million for the full year 2017, an increase of 33% compared to $160.2 million for the full year 2016.
- Revenue Retention Rate was 93% for the trailing 12-months ended December 31, 2017.
- Gross Profit Percentage increased to 61.0% for full year 2017 compared to 58.1% for full year 2016.
- Operating Income was $22.0 million for full year 2017 compared to $13.9 million for full year 2016; Non-GAAP Operating Income was $29.8 million for full year 2017 compared to a loss of $12.0 million for full year 2016.
- Net Loss attributable to common stockholders was $53.3 million or a diluted net loss per share of $1.65 based on 32.2 million weighted average shares outstanding for full year 2017 compared to a net loss attributable to common stockholders of $22.9 million or a diluted net loss per share of $0.95 based on 24.3 million weighted average shares outstanding for full year 2016. Non-GAAP Net Loss attributable to common stockholders was $32.9 million compared to $35.1 million for full year 2016.
- Adjusted EBITDA was a positive $32.1 million for full year 2017 compared to a negative $12.0 million for full year 2016.
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 and how they are calculated is also
included under the heading “About Non-GAAP Financial Measures and
Certain Key Metrics.”
Fourth Quarter 2017 Company Highlights
- Completed the merger with GP Investments Acquisition Corp., and began trading as a public company on Nasdaq under the symbol “RMNI” on October 11, 2017.
- Honored with seven Golden Bridge Awards for 2017, including IT Company of the Year, in addition to multiple award wins for delivering excellence in customer service.
- Recognized by the One Planet Best in Business and Professional Excellence Awards with three awards, including Company of the Year and Most Innovative Service of the Year.
- Presented at 16 CIO and IT and procurement leader events worldwide, including Gartner’s IT Symposium in Orlando, Florida, Brazil, Japan, Australia and Spain, and the IDC CIO Summit in Malaysia.
Full Year 2017 Achievements and Highlights
- Invested in growth and expansion worldwide including the opening of the Company’s new, expanded Latin American headquarters in São Paulo, Brazil, and the launch of the Company’s French subsidiary, Rimini Street SAS, and opening of its new Paris office.
- Expanded its technology platform coverage, offering support for six new database products including IBM DB2, Microsoft SQL Server, and SAP’s Sybase family of database products.
- Launched Rimini Street Advanced Database Security, a next-generation security solution that identifies and intercepts attempted exploits of database vulnerabilities before they reach their target.
- Closed a record number of support cases – more than 25,000 support cases across 61 countries – and achieved an average client satisfaction rating on the Company’s support delivery of 4.8 out of 5.0 (where 5.0 is rated as “excellent”).
- Delivered more than 20,000 tax, legal and regulatory updates to clients worldwide through an innovative combination of patent-pending tax, legal and regulatory technology, a proven methodology and ISO 9001-certified development processes.
- Recognized as a “Top Workplace” by the Bay Area News Group for the fourth time.
- Made the San Francisco Business Times’ “Top Software Companies in the Greater Bay Area” list for the second consecutive year.
- Partnered with 55 charities around the world through the Rimini Street Foundation, providing financial contributions, in-kind donations and numerous employee volunteer hours.
First Quarter 2018 Revenue Guidance
The Company
is currently providing first quarter 2018 revenue guidance to be in the
range of approximately $59.0 million to $60.0 million.
Full Year 2018 Revenue Guidance
The Company
is currently providing full year 2018 revenue guidance to be in the
range of approximately $250 million to $270 million.
Webcast and Conference Call Information
Rimini Street
will host a conference call and webcast to discuss the fourth quarter
and full year 2017 results at 5:00 p.m. Eastern / 2:00 p.m. Pacific time
on March 15, 2018. A live webcast of the event will be available on
Rimini Street’s Investor Relations site at https://investors.riministreet.com/events-and-presentations/upcoming-and-past-events. Dial in participants can access the conference call by dialing (855) 213-3942 in the U.S. and Canada and enter the code 4385768. 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 generally accepted accounting principles, or
GAAP. Non-GAAP financial measures should be considered in addition to,
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.
About Rimini Street, Inc.
Rimini Street
is a global provider of enterprise software products and services, and
the leading third-party support provider for Oracle and SAP software
products, based on both the number of active clients supported and
recognition by industry analyst firms. The Company has redefined
enterprise software support services since 2005 with an innovative,
award-winning program that enables licensees of IBM, Microsoft, Oracle,
SAP and other enterprise software vendors to save up to 90 percent on
total support costs. Clients can remain on their current software
release without any required upgrades for a minimum of 15 years. Over
1,560 global Fortune 500, midmarket, public sector and other
organizations from a broad range of industries currently rely on Rimini
Street as their trusted, third-party support provider. To learn more,
please visit http://www.riministreet.com, follow @riministreet on Twitter and find Rimini Street on Facebook and LinkedIn. (IR-RMNI)
Forward-Looking Statements
Certain
statements included in this communication are not historical facts but
are forward-looking statements for purposes of the safe harbor
provisions under The Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally are accompanied by words such as
“may,” “should,” “would,” “plan,” “intend,” “anticipate,” “believe,”
“estimate,” “predict,” “potential,” “seem,” “seek,” “continue,”
“future,” “will,” “expect,” “outlook” or other similar words, phrases or
expressions. These forward-looking statements include, but are not
limited to, statements regarding our first quarter and annual 2018
revenue guidance, industry, future events, future opportunities and
growth initiatives, estimates of Rimini Street’s total addressable
market, and projections of customer savings. These statements are based
on various assumptions and on the current expectations of management and
are not predictions of actual performance, nor are these statements of
historical facts. These statements are subject to a number of risks and
uncertainties regarding Rimini Street’s business, and actual results may
differ materially. These risks and uncertainties include, but are not
limited to, changes in the business environment in which Rimini Street
operates, including inflation and interest rates, and general financial,
economic, regulatory and political conditions affecting the industry in
which Rimini Street operates; adverse litigation developments or
government inquiry; the final amount and timing of any refunds from
Oracle related to our litigation; our ability to refinance existing debt
on favorable terms; changes in taxes, laws and regulations; competitive
product and pricing activity; difficulties of managing growth
profitably; the loss of one or more members of Rimini Street’s
management team; uncertainty as to the long-term value of RMNI common
stock; and those discussed in Rimini Street’s Annual Report on Form 10-K
filed on March 15, 2018 under the heading “Risk Factors,” as updated
from time to time by Rimini Street’s Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and other filings by Rimini Street with the
Securities and Exchange Commission. There may be additional risks that
Rimini Street presently knows or that Rimini Street currently believes
are immaterial that could also cause actual results to differ from those
contained in the forward-looking statements. In addition,
forward-looking statements provide Rimini Street’s expectations, plans
or forecasts of future events and views as of the date of this
communication. Rimini Street anticipates that subsequent events and
developments will cause Rimini Street’s assessments to change. However,
while Rimini Street may elect to update these forward-looking statements
at some point in the future, Rimini Street specifically disclaims any
obligation to do so. These forward-looking statements should not be
relied upon as representing Rimini Street’s assessments as of any date
subsequent to the date of this communication.
© 2018 Rimini
Street, Inc. All rights reserved. “Rimini Street” is a registered
trademark of Rimini Street, Inc. in the United States and other
countries, and Rimini Street, the Rimini Street logo, and combinations
thereof, and other marks marked by TM are trademarks of Rimini Street,
Inc. All other trademarks remain the property of their respective
owners, and unless otherwise specified, Rimini Street claims no
affiliation, endorsement, or association with any such trademark holder
or other companies referenced herein.
|
RIMINI STREET, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (In thousands, except per share amounts) (Unaudited) ASSETS |
|||||||||
|
|
|
December 31,
|
|
December 31,
|
|||||
|
2017
|
2016
|
||||||||
|
Current assets:
|
|||||||||
|
Cash and cash equivalents
|
$
|
21,950
|
$
|
9,385
|
|||||
|
Restricted cash
|
18,077
|
18,852
|
|||||||
|
Accounts receivable, net of allowance of $51 and $36, respectively
|
63,525
|
55,324
|
|||||||
|
Prepaid expenses and other
|
|
8,560
|
|
|
5,748
|
|
|||
|
Total current assets
|
112,112
|
89,309
|
|||||||
|
|
|||||||||
|
Long-term assets:
|
|||||||||
|
Property and equipment, net
|
4,255
|
4,559
|
|||||||
|
Deferred debt issuance costs, net
|
3,520
|
3,950
|
|||||||
|
Deposits and other
|
1,565
|
965
|
|||||||
|
Deferred income taxes, net
|
|
719
|
|
|
595
|
|
|||
|
Total assets
|
$
|
122,171
|
|
$
|
99,378
|
|
|||
|
|
|||||||||
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|||||||||
|
Current liabilities:
|
|||||||||
|
Current maturities of long-term debt
|
$
|
15,500
|
$
|
24,750
|
|||||
|
Accounts payable
|
10,137
|
8,839
|
|||||||
|
Accrued compensation, benefits and commissions
|
18,154
|
18,304
|
|||||||
|
Other accrued liabilities
|
22,920
|
18,346
|
|||||||
|
Deferred insurance settlement
|
8,033
|
-
|
|||||||
|
Liability for embedded derivatives
|
1,600
|
5,400
|
|||||||
|
Deferred revenue
|
|
152,390
|
|
|
137,293
|
|
|||
|
Total current liabilities
|
228,734
|
212,932
|
|||||||
|
|
|||||||||
|
Long-term liabilities:
|
|||||||||
|
Long-term debt, net of current maturities
|
66,613
|
63,314
|
|||||||
|
Deferred revenue
|
29,182
|
27,538
|
|||||||
|
Liability for redeemable warrants
|
-
|
7,269
|
|||||||
|
Other long-term liabilities
|
|
7,943
|
|
|
1,835
|
|
|||
|
Total liabilities
|
|
332,472
|
|
|
312,888
|
|
|||
|
|
|||||||||
|
Stockholders’ deficit (1):
|
|||||||||
|
Preferred stock, $0.0001 par value per share. Authorized 100,000 shares; no shares issued and outstanding
|
-
|
-
|
|||||||
|
RSI
convertible preferred stock, $0.001 par value per share. Authorized,
issued and outstanding 100,486 shares in 2016; aggregate liquidation
preference of $20,551 in 2016
|
-
|
19,542
|
|||||||
|
Common
stock; $0.0001 par value. Authorized 1,000,000 shares; issued and
outstanding 59,314 and 24,282 shares as of December 31, 2017 and 2016,
respectively
|
6
|
2
|
|||||||
|
Additional paid-in capital
|
94,967
|
19,102
|
|||||||
|
Accumulated other comprehensive loss
|
(867
|
)
|
(1,046
|
)
|
|||||
|
Accumulated deficit
|
|
(304,407
|
)
|
|
(251,110
|
)
|
|||
|
Total stockholders’ deficit
|
|
(210,301
|
)
|
|
(213,510
|
)
|
|||
|
Total liabilities and stockholders’ deficit
|
$
|
122,171
|
|
$
|
99,378
|
|
|||
|
_______________________________________
|
|||||||||
|
(1)
Where applicable, stockholders’ deficit has been retroactively restated
to reflect the exchange ratio per the merger, as well as for the
related reverse recapitalization, and the conversion of the preferred
stock to common stock.
|
|||||||||
|
RIMINI STREET, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) |
||||||||||||||||||
|
Three Months Ended
|
Year Ended
|
|||||||||||||||||
|
December 31,
|
December 31,
|
|||||||||||||||||
|
2017
|
2016
|
2017
|
2016
|
|||||||||||||||
|
Net revenue
|
$
|
57,904
|
$
|
46,737
|
$
|
212,633
|
$
|
160,175
|
||||||||||
|
Cost of revenue
|
|
24,896
|
|
|
18,971
|
|
|
82,898
|
|
|
67,045
|
|
||||||
|
Gross profit
|
|
33,008
|
|
|
27,766
|
|
|
129,735
|
|
|
93,130
|
|
||||||
|
Operating expenses:
|
||||||||||||||||||
|
Sales and marketing
|
19,074
|
19,363
|
66,759
|
72,936
|
||||||||||||||
|
General and administrative
|
9,360
|
12,130
|
36,144
|
36,212
|
||||||||||||||
|
Litigation costs and related insurance recoveries:
|
||||||||||||||||||
|
Litigation settlement and pre-judgment interest
|
-
|
214
|
-
|
2,920
|
||||||||||||||
|
Professional fees and other defense costs of litigation
|
5,447
|
5,514
|
17,171
|
21,379
|
||||||||||||||
|
Insurance recoveries
|
|
(5,198
|
)
|
|
(47,380
|
)
|
|
(12,311
|
)
|
|
(54,248
|
)
|
||||||
|
Total operating expenses
|
|
28,683
|
|
|
(10,159
|
)
|
|
107,763
|
|
|
79,199
|
|
||||||
|
Operating income
|
4,325
|
37,925
|
21,972
|
13,931
|
||||||||||||||
|
Non-operating expenses:
|
||||||||||||||||||
|
Interest expense
|
(9,728
|
)
|
(8,336
|
)
|
(43,357
|
)
|
(13,356
|
)
|
||||||||||
|
Other debt financing expenses
|
(3,657
|
)
|
(2,093
|
)
|
(18,361
|
)
|
(6,372
|
)
|
||||||||||
|
Gain (loss) on change in fair value of embedded derivatives and redeemable warrants, net
|
5,915
|
(1,677
|
)
|
(12,552
|
)
|
(3,822
|
)
|
|||||||||||
|
Other income (expense), net
|
|
(102
|
)
|
|
(1,122
|
)
|
|
320
|
|
|
(1,786
|
)
|
||||||
|
Income (loss) before income taxes
|
(3,247
|
)
|
24,697
|
(51,978
|
)
|
(11,405
|
)
|
|||||||||||
|
Income tax expense
|
|
(676
|
)
|
|
(637
|
)
|
|
(1,319
|
)
|
|
(1,532
|
)
|
||||||
|
Net income (loss)
|
(3,923
|
)
|
24,060
|
(53,297
|
)
|
(12,937
|
)
|
|||||||||||
|
Deemed dividend for beneficial conversion feature of RSI Preferred Stock
|
|
-
|
|
|
(10,000
|
)
|
|
-
|
|
|
(10,000
|
)
|
||||||
|
Net income (loss) attributable to common stockholders
|
$
|
(3,923
|
)
|
$
|
14,060
|
|
$
|
(53,297
|
)
|
$
|
(22,937
|
)
|
||||||
|
|
||||||||||||||||||
|
Net income (loss) per share attributable to common stockholders:
|
||||||||||||||||||
|
Basic
|
$
|
(0.07
|
)
|
$
|
0.58
|
|
$
|
(1.65
|
)
|
$
|
(0.95
|
)
|
||||||
|
Diluted
|
$
|
(0.07
|
)
|
$
|
0.31
|
|
$
|
(1.65
|
)
|
$
|
(0.95
|
)
|
||||||
|
|
||||||||||||||||||
|
Weighted average number of common shares outstanding (1):
|
||||||||||||||||||
|
Basic
|
|
55,021
|
|
|
24,273
|
|
|
32,229
|
|
|
24,262
|
|
||||||
|
Diluted
|
|
55,021
|
|
|
45,258
|
|
|
32,229
|
|
|
24,262
|
|
||||||
|
___________________________________
|
||||||||||||||||||
|
(1)
Shares have been retroactively restated to reflect the exchange ratio
per the merger, as well as for the related reverse recapitalization, and
the
conversion of the preferred stock to common stock.
|
||||||||||||||||||
|
RIMINI STREET, INC. AND SUBSIDIARIES
GAAP to Non-GAAP Reconciliations (In thousands, except per share amounts) (Unaudited) |
|||||||||||||||||
|
Three Months Ended
|
Year Ended
|
||||||||||||||||
|
December 31,
|
December 31,
|
||||||||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||||||||
|
Non-GAAP operating income (loss) reconciliation:
|
|||||||||||||||||
|
|
|||||||||||||||||
|
Operating income
|
$
|
4,325
|
$
|
37,925
|
$
|
21,972
|
$
|
13,931
|
|||||||||
|
Non-GAAP Adjustments:
|
|||||||||||||||||
|
Litigation costs, net of related insurance adjustments
|
249
|
(41,652
|
)
|
4,860
|
(29,949
|
)
|
|||||||||||
|
Stock-based compensation expense
|
1,047
|
468
|
2,963
|
2,297
|
|||||||||||||
|
Write-off of deferred financing costs
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,700
|
|
|||||
|
Non-GAAP operating income (loss)
|
$
|
5,621
|
|
$
|
(3,259
|
)
|
$
|
29,795
|
|
$
|
(12,021
|
)
|
|||||
|
|
|||||||||||||||||
|
Non-GAAP net loss attributable to common stockholders reconciliation:
|
|||||||||||||||||
|
|
|||||||||||||||||
|
Net income (loss) attributable to common stockholders
|
$
|
(3,923
|
)
|
$
|
14,060
|
$
|
(53,297
|
)
|
$
|
(22,937
|
)
|
||||||
|
Non-GAAP Adjustments:
|
|||||||||||||||||
|
Litigation costs, net of related insurance adjustments
|
249
|
(41,652
|
)
|
4,860
|
(29,949
|
)
|
|||||||||||
|
Stock-based compensation expense
|
1,047
|
468
|
2,963
|
2,297
|
|||||||||||||
|
Write-off of deferred financing costs
|
-
|
-
|
-
|
1,700
|
|||||||||||||
|
Gain (loss) on change in fair value of embedded derivatives and redeemable warrants, net
|
(5,915
|
)
|
1,677
|
12,552
|
3,822
|
||||||||||||
|
Deemed dividend for beneficial conversion feature of RSI Preferred Stock
|
|
-
|
|
|
10,000
|
|
|
-
|
|
|
10,000
|
|
|||||
|
Non-GAAP net loss attributable to common stockholders
|
$
|
(8,542
|
)
|
$
|
(15,447
|
)
|
$
|
(32,922
|
)
|
$
|
(35,067
|
)
|
|||||
|
|
|||||||||||||||||
|
Non-GAAP Adjusted EBITDA reconciliation:
|
|||||||||||||||||
|
|
|||||||||||||||||
|
Net income (loss)
|
$
|
(3,923
|
)
|
$
|
24,060
|
$
|
(53,297
|
)
|
$
|
(12,937
|
)
|
||||||
|
Non-GAAP Adjustments:
|
|||||||||||||||||
|
Interest expense
|
9,728
|
8,336
|
43,357
|
13,356
|
|||||||||||||
|
Income tax expense
|
676
|
637
|
1,319
|
1,532
|
|||||||||||||
|
Depreciation and amortization expense
|
|
496
|
|
|
487
|
|
|
1,973
|
|
|
1,783
|
|
|||||
|
EBITDA
|
6,977
|
33,520
|
(6,648
|
)
|
3,734
|
||||||||||||
|
Non-GAAP Adjustments:
|
|||||||||||||||||
|
Litigation costs, net of related insurance adjustments
|
249
|
(41,652
|
)
|
4,860
|
(29,949
|
)
|
|||||||||||
|
Stock-based compensation expense
|
1,047
|
468
|
2,963
|
2,297
|
|||||||||||||
|
Write-off of deferred financing costs
|
-
|
-
|
-
|
1,700
|
|||||||||||||
|
Gain (loss) on change in fair value of embedded derivatives and redeemable warrants, net
|
(5,915
|
)
|
1,677
|
12,552
|
3,822
|
||||||||||||
|
Other debt financing expenses
|
|
3,657
|
|
|
2,093
|
|
|
18,361
|
|
|
6,372
|
|
|||||
|
Adjusted EBITDA
|
$
|
6,015
|
|
$
|
(3,894
|
)
|
$
|
32,088
|
|
$
|
(12,024
|
)
|
|||||
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 Subscription 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 (loss), non-GAAP net loss, EBITDA, and adjusted EBITDA.
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.
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 Subscription Revenue
is the amount of subscription revenue recognized during a 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 Annualized Subscription
Revenue as of the day prior to the start of the 12-month period.
Non-GAAP Operating Income (Loss)
is operating income adjusted to exclude: litigation costs, net of
related insurance adjustments, stock-based compensation expense, and
write-off of deferred financing costs. The exclusions are discussed in
further detail below.
Non-GAAP Net Loss Attributable to Common Stockholders
is net income (loss) attributable to common stockholders adjusted to
exclude: litigation costs, net of related insurance adjustments,
stock-based compensation expense, write-off of deferred financing costs,
gain (loss) on change in fair value of embedded derivatives and
redeemable warrants, net and deemed dividend for beneficial conversion
feature of RSI Preferred Stock.
Specifically,
management is excluding the following items from its non-GAAP financial
measures, as applicable, for the periods presented:
Litigation Costs, Net of Related Insurance Adjustments:
Litigation costs and the associated insurance recoveries and
adjustments to the deferred settlement liability relate to outside costs
on the litigation activities. These costs 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.
Stock-Based Compensation Expense:
The Company’s 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.
Write-off of Deferred Financing Costs:
The write-off of deferred financing costs relates to certain costs that
were expensed in 2016 because we determined that the arrangements
related to these costs would not result in future financings when we
completed our credit facility in June 2016. As such, these write-offs
are not related to how we manage our business and operational decisions
on an ongoing basis.
Gain (Loss) on Change in Fair Value of Embedded Derivatives and Redeemable Warrants, Net:
Our credit facility includes features that were determined to be
embedded derivatives requiring bifurcation and accounting as separate
financial instruments. We have determined to exclude the gains and
losses on embedded derivatives and 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 servicing our
clients and have excluded them.
Deemed dividend for beneficial conversion feature of RSI Preferred Stock: Deemed
dividends reflecting the beneficial conversion feature are treated as
an increase in additional paid-in capital with a corresponding reduction
in additional paid-in capital. A beneficial conversion feature is a
non-detachable conversion feature that is “in the money” at the
commitment date, which requires recognition of a deemed dividend. We are
not able to manage these amounts as part of our business operations nor
are the costs core to servicing our clients and have excluded them.
EBITDA is net income (loss) adjusted to exclude: interest expense, income tax expense, and depreciation and amortization expense.
Adjusted EBITDA
is EBITDA adjusted to exclude: litigation costs, net of related
insurance adjustments, stock-based compensation expense, write-off of
deferred financing costs, gain (loss) on change in fair value of
embedded derivatives and redeemable warrants, net, and other debt
financing expenses, as discussed above.
Contacts
Rimini Street, Inc.
Investor Relations Contact
Dean Pohl, +1 203-347-4446
dpohl@riministreet.com
or
Media Relations Contact
Michelle McGlocklin, +1 925-523-8414
mmcglocklin@riministreet.com
