Quarterly revenue of $69.0 million, up 10.1% year over year
Quarterly gross margin of 62.4%, down from 64.5% year over year
2,032 active clients at September 30, 2019, up 17.3% year over year
LAS VEGAS-Sunday 10 November 2019 [ AETOS Wire ]
(BUSINESS WIRE) -- 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 third
quarter ended September 30, 2019.
“In
the third quarter, we continued to see improving performance from
investments made over the past eighteen months in global sales capacity,
productivity and infrastructure,” stated Seth A. Ravin,
Rimini Street co-founder, CEO and Chairman of the Board. “We also
continued expanding our global capabilities and new product and service
offerings, opening operations in Dubai to serve the Gulf region and
announcing the global availability of Application Management Services
for SAP. In addition, today we announced the global availability of
Application Management Services for Oracle Database and Applications.”
“Third
quarter revenue, sales and marketing and general and administrative
spend were all within our quarter guidance range, and gross margin for
the third quarter and year-to-date are both above our previously
provided guidance ranges,” stated Tom Sabol,
Rimini Street CFO. “We remain committed to the long-term goals of
top-line revenue growth, strong free cash flow and achieving sustained
GAAP profitability.”
Third Quarter 2019 Financial Highlights
- Revenue was $69.0 million for the 2019 third quarter, an increase of 10.1% compared to $62.6 million for the 2018 third quarter.
- Annualized Subscription Revenue was approximately $274 million for the 2019 third quarter, an increase of 10% compared to $250 million for the 2018 third quarter.
- Active Clients as of September 30, 2019 were 2,032, an increase of 17.3% compared to 1,732 Active Clients as of September 30, 2018.
- Revenue Retention Rate was 91.5% for the trailing 12 months ended September 30, 2019 compared to 92.0% for the comparable period ended September 30, 2018.
- Gross margin was 62.4% for the 2019 third quarter compared to 64.5% for the 2018 third quarter.
- Operating income was $2.5 million for both the 2019 and 2018 third quarters.
- Non-GAAP Operating Income was $7.5 million for the 2019 third quarter compared to $10.7 million for the 2018 third quarter.
- Net income was $1.7 million for the 2019 third quarter compared to a net loss of $48.4 million for the 2018 third quarter.
- Non-GAAP Net Income was $6.7 million for both the 2019 third quarter and the 2018 third quarter.
- Adjusted EBITDA for the 2019 third quarter was $7.6 million compared to $10.8 million for the 2018 third quarter.
- Basic and diluted earnings per share attributable to common stockholders was a net loss per share of $0.07 per share for the 2019 third quarter compared to a net loss per share of $0.85 per share for the 2018 third quarter.
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.”
Third Quarter 2019 Company Highlights
- Announced that global auto manufacturer, Hyundai-Kia Motors, selected Rimini Street for support and maintenance of its global database portfolio.
- Announced the global availability of the Company’s Application Management Services for SAP, offering clients a turnkey support solution to run their SAP systems which integrates both AMS and Support Services for SAP.
- Expanded investment in the Middle East, including the establishment of a new subsidiary and office in Dubai, and hiring local staff to support increasing demand in the Gulf region.
- Closed over 7,500 support cases, and scored an overall average of 4.8 in client satisfaction (where 5.0 is excellent).
- Delivered more than 15,000 tax, legal and regulatory updates to clients globally for PeopleSoft, JD Edwards, SAP and Oracle E-Business Suite products.
- Announced numerous award wins including:
- A gold Stevie ABA award and a silver Stevie IBA award to the Global SAP Support team for Customer Service Team of the Year;
- A gold Stevie ABA and a gold Stevie IBA award for Company of the Year | Computer Services;
- Four awards in total from the Customer Sales and Service Awards including gold awards for Milestone of the Year and Customer Service Outstanding Performance of the Year.
- Presented at 13 CIO, CFO and IT procurement leader events including CFO.org in New York, IDC’s CIO Empowerment conference in Puerto Vallarta, Mexico, Gartner’s ITAM Summit in Dallas, and the Japan Information Systems User Association in Tokyo.
2019 Revenue Guidance
The
Company is maintaining the midpoint of our full year guidance of $275
million, while narrowing the range to $274.5 million to $275.5 million
and guiding fourth quarter 2019 revenue to be in the range of $71.3
million to $72.3 million.
CFO Transition
Rimini
Street announced today that Thomas Sabol has resigned as CFO effective
November 15, 2019 to pursue another opportunity in the state in which he
resides. Stanley Mbugua, previously the Company’s Vice President and
Corporate Controller, was appointed Group Vice President and Chief
Accounting Officer effective November 5, 2019. The Company is actively
recruiting a new Chief Financial Officer. “I want to thank Tom for his
financial stewardship over the past three years, which included the
successful completion of several substantial refinancing transactions
and taking the company public in 2017. We wish him well in his new
role,” stated Mr. Ravin.
Webcast and Conference Call Information
Rimini
Street will host a conference call and webcast to discuss the third
quarter 2019 results at 5:00 p.m. Eastern / 2:00 p.m. Pacific time on
November 7, 2019. 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 8398042. 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.
About Rimini Street, Inc.
Rimini
Street, Inc. (Nasdaq: RMNI) is 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. The Company
offers premium, ultra-responsive and integrated application management
and support services that enable enterprise software licensees to save
significant costs, free up resources for innovation and achieve better
business outcomes. Over 2,000 global Fortune 500, midmarket, public
sector and other organizations from a broad range of industries rely on
Rimini Street as their trusted application enterprise software products
and services 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 expectations of future events,
future opportunities, global expansion and other growth initiatives and
our investments in such initiatives. 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 developments in pending
litigation (including our pending appeal of the permanent injunction) or
in the government inquiry or any new litigation; our need and ability
to raise additional equity or debt financing on favorable terms and our
ability to generate cash flows from operations to help fund increased
investment in our growth initiatives; the sufficiency of our cash and
cash equivalents to meet our liquidity requirements; the terms and
impact of our outstanding 13.00% Series A Preferred Stock; changes in
taxes, laws and regulations; competitive product and pricing activity;
difficulties of managing growth profitably; the customer adoption of our
recently introduced products and services, including our Application
Management Services (AMS), Rimini Street Advanced Database Security, and
services for Salesforce Sales Cloud and Service Cloud products, in
addition to other products and services we expect to introduce in the
near future; the loss of one or more members of Rimini Street’s
management team; uncertainty as to the long-term value of Rimini
Street’s equity securities; and those discussed under the heading “Risk
Factors” in Rimini Street’s Quarterly Report on Form 10-Q filed on
November 7, 2019, and as updated from time to time by Rimini Street’s
future Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and other filings by Rimini Street with the
Securities and Exchange Commission. 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,
except as required by law. 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.
©
2019 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.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
|
|||||||
ASSETS
|
September 30,
2019 |
|
December 31,
2018 |
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
41,725
|
|
|
$
|
24,771
|
|
Restricted cash
|
436
|
|
|
435
|
|
||
Accounts receivable, net of allowance of $477 and $489, respectively
|
61,829
|
|
|
80,599
|
|
||
Prepaid expenses and other
|
11,198
|
|
|
7,099
|
|
||
Total current assets
|
115,188
|
|
|
112,904
|
|
||
Long-term assets:
|
|
|
|
||||
Property and equipment, net of accumulated depreciation and amortization of $9,949 and $8,543, respectively
|
3,605
|
|
|
3,634
|
|
||
Deposits and other
|
1,632
|
|
|
1,438
|
|
||
Deferred income taxes, net
|
907
|
|
|
909
|
|
||
Total assets
|
$
|
121,332
|
|
|
$
|
118,885
|
|
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
|
|||||||
Current liabilities:
|
|
|
|
||||
Current maturities of long-term debt
|
$
|
—
|
|
|
$
|
2,372
|
|
Accounts payable
|
2,580
|
|
|
12,851
|
|
||
Accrued compensation, benefits and commissions
|
22,337
|
|
|
22,503
|
|
||
Other accrued liabilities
|
22,506
|
|
|
20,424
|
|
||
Deferred revenue
|
167,024
|
|
|
180,358
|
|
||
Total current liabilities
|
214,447
|
|
|
238,508
|
|
||
Long-term liabilities:
|
|
|
|
||||
Deferred revenue
|
33,489
|
|
|
28,898
|
|
||
Accrued PIK dividends payable
|
1,149
|
|
|
1,056
|
|
||
Other long-term liabilities
|
2,326
|
|
|
2,011
|
|
||
Total liabilities
|
251,411
|
|
|
270,473
|
|
||
Redeemable Series A Preferred Stock:
|
|
|
|
||||
Authorized
180 shares; issued and outstanding 154 shares and 141 as of September
30, 2019 and December 31, 2018, respectively. Liquidation preference of
$154,082, net of discount of $25,444 and $140,846, net of discount of
$26,848, as of September 30, 2019 and December 31, 2018, respectively
|
128,638
|
|
|
113,998
|
|
||
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 67,109 and 64,193 shares as of September 30, 2019 and
December 31, 2018, respectively
|
7
|
|
|
6
|
|
||
Additional paid-in capital
|
97,896
|
|
|
108,347
|
|
||
Accumulated other comprehensive loss
|
(1,898
|
)
|
|
(1,567
|
)
|
||
Accumulated deficit
|
(354,722
|
)
|
|
(372,372
|
)
|
||
Total stockholders' deficit
|
(258,717
|
)
|
|
(265,586
|
)
|
||
Total liabilities, redeemable preferred stock and stockholders' deficit
|
$
|
121,332
|
|
|
$
|
118,885
|
|
RIMINI STREET, INC.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
|
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
$
|
68,952
|
|
|
$
|
62,629
|
|
|
$
|
203,168
|
|
|
$
|
185,083
|
|
Cost of revenue
|
25,915
|
|
|
22,220
|
|
|
74,786
|
|
|
71,845
|
|
||||
Gross profit
|
43,037
|
|
|
40,409
|
|
|
128,382
|
|
|
113,238
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
26,716
|
|
|
22,312
|
|
|
76,437
|
|
|
65,616
|
|
||||
General and administrative
|
10,472
|
|
|
8,585
|
|
|
34,162
|
|
|
29,714
|
|
||||
Litigation costs and related recoveries:
|
|
|
|
|
|
|
|
||||||||
Professional fees and other costs of litigation
|
3,642
|
|
|
6,990
|
|
|
6,127
|
|
|
25,002
|
|
||||
Litigation appeal refunds
|
—
|
|
|
—
|
|
|
(12,775
|
)
|
|
(21,285
|
)
|
||||
Insurance costs and recoveries, net
|
(339
|
)
|
|
—
|
|
|
4,000
|
|
|
(7,583
|
)
|
||||
Litigation costs and related recoveries, net
|
3,303
|
|
|
6,990
|
|
|
(2,648
|
)
|
|
(3,866
|
)
|
||||
Total operating expenses
|
40,491
|
|
|
37,887
|
|
|
107,951
|
|
|
91,464
|
|
||||
Operating income
|
2,546
|
|
|
2,522
|
|
|
20,431
|
|
|
21,774
|
|
||||
Non-operating income and (expenses):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(27
|
)
|
|
(9,499
|
)
|
|
(375
|
)
|
|
(32,231
|
)
|
||||
Other debt financing expenses
|
—
|
|
|
(48,375
|
)
|
|
—
|
|
|
(58,331
|
)
|
||||
Gain from change in fair value of embedded derivatives
|
—
|
|
|
7,800
|
|
|
—
|
|
|
1,600
|
|
||||
Other expense, net
|
(329
|
)
|
|
(306
|
)
|
|
(629
|
)
|
|
(1,546
|
)
|
||||
Income (loss) before income taxes
|
2,190
|
|
|
(47,858
|
)
|
|
19,427
|
|
|
(68,734
|
)
|
||||
Income tax expense
|
(451
|
)
|
|
(510
|
)
|
|
(1,777
|
)
|
|
(1,573
|
)
|
||||
Net income (loss)
|
$
|
1,739
|
|
|
$
|
(48,368
|
)
|
|
$
|
17,650
|
|
|
$
|
(70,307
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to common stockholders
|
$
|
(4,780
|
)
|
|
$
|
(53,070
|
)
|
|
$
|
(1,219
|
)
|
|
$
|
(75,009
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
(0.07
|
)
|
|
$
|
(0.85
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(1.24
|
)
|
Weighted average number of shares of Common Stock outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
66,696
|
|
|
62,590
|
|
|
65,625
|
|
|
60,565
|
|
RIMINI STREET, INC.
GAAP to Non-GAAP Reconciliations
(In thousands)
|
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Non-GAAP operating income reconciliation:
|
|
|
|
|
|
|
|
||||||||
Operating income
|
$
|
2,546
|
|
|
$
|
2,522
|
|
|
$
|
20,431
|
|
|
$
|
21,774
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||
Litigation costs and related recoveries, net
|
3,303
|
|
|
6,990
|
|
|
(2,648
|
)
|
|
(3,866
|
)
|
||||
Stock-based compensation expense
|
1,621
|
|
|
1,178
|
|
|
3,829
|
|
|
3,143
|
|
||||
Non-GAAP operating income
|
$
|
7,470
|
|
|
$
|
10,690
|
|
|
$
|
21,612
|
|
|
$
|
21,051
|
|
Non-GAAP net income (loss) reconciliation:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
1,739
|
|
|
$
|
(48,368
|
)
|
|
$
|
17,650
|
|
|
$
|
(70,307
|
)
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||
Litigation costs and related recoveries, net
|
3,303
|
|
|
6,990
|
|
|
(2,648
|
)
|
|
(3,866
|
)
|
||||
Post-judgment interest in litigation awards
|
—
|
|
|
—
|
|
|
(212
|
)
|
|
(199
|
)
|
||||
Write-off of deferred debt financing costs
|
—
|
|
|
—
|
|
|
—
|
|
|
704
|
|
||||
Extinguishment charges upon payoff of Credit Facility:
|
|
|
|
|
|
|
|
||||||||
Write-off of debt discount and issuance costs
|
—
|
|
|
47,367
|
|
|
—
|
|
|
47,367
|
|
||||
Make-whole applicable premium
|
—
|
|
|
7,307
|
|
|
—
|
|
|
7,307
|
|
||||
Stock-based compensation expense
|
1,621
|
|
|
1,178
|
|
|
3,829
|
|
|
3,143
|
|
||||
Gain from change in fair value of embedded derivatives
|
—
|
|
|
(7,800
|
)
|
|
—
|
|
|
(1,600
|
)
|
||||
Non-GAAP net income (loss)
|
$
|
6,663
|
|
|
$
|
6,674
|
|
|
$
|
18,619
|
|
|
$
|
(17,451
|
)
|
Non-GAAP Adjusted EBITDA reconciliation:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
1,739
|
|
|
$
|
(48,368
|
)
|
|
$
|
17,650
|
|
|
$
|
(70,307
|
)
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
27
|
|
|
9,499
|
|
|
375
|
|
|
32,231
|
|
||||
Income tax expense
|
451
|
|
|
510
|
|
|
1,777
|
|
|
1,573
|
|
||||
Depreciation and amortization expense
|
496
|
|
|
449
|
|
|
1,462
|
|
|
1,399
|
|
||||
EBITDA
|
2,713
|
|
|
(37,910
|
)
|
|
21,264
|
|
|
(35,104
|
)
|
||||
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||
Litigation costs and related recoveries, net
|
3,303
|
|
|
6,990
|
|
|
(2,648
|
)
|
|
(3,866
|
)
|
||||
Post-judgment interest in litigation awards
|
—
|
|
|
—
|
|
|
(212
|
)
|
|
(199
|
)
|
||||
Write-off of deferred debt financing costs
|
—
|
|
|
—
|
|
|
—
|
|
|
704
|
|
||||
Stock-based compensation expense
|
1,621
|
|
|
1,178
|
|
|
3,829
|
|
|
3,143
|
|
||||
Gain from change in fair value of embedded derivatives
|
—
|
|
|
(7,800
|
)
|
|
—
|
|
|
(1,600
|
)
|
||||
Other debt financing expenses
|
—
|
|
|
48,375
|
|
|
—
|
|
|
58,331
|
|
||||
Adjusted EBITDA
|
$
|
7,637
|
|
|
$
|
10,833
|
|
|
$
|
22,233
|
|
|
$
|
21,409
|
|
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, non-GAAP net income (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 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 Annualized Subscription
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, and stock-based compensation expense. The exclusions
are discussed in further detail below.
Non-GAAP Net Income (Loss) is
net income (loss) adjusted to exclude: litigation costs and related
recoveries, net, post-judgment interest in litigation awards, write-off
of deferred debt financing costs, extinguishment charges upon payoff of
credit facility, stock-based compensation expense, and gain from change
in fair value of embedded derivatives. 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.
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.
Post-judgment interest in litigation awards: Post-judgment
interest resulted from our appeals of ongoing litigation and does not
relate to the day-to-day operations or our core business of serving our
clients.
Write-off of Deferred Debt Financing Costs: The
write-off of deferred financing costs related to certain costs that
were expensed in 2018 due to an unsuccessful debt financing.
Extinguishment charges upon payoff of Credit Facility: These
costs included interest expense and other debt financing expenses,
including the make-whole applicable premium and the write-off of debt
discount and issuance costs that resulted from the payoff of our former
credit facility on July 19, 2018. Since these amounts related to our
debt financing structure, we have excluded them since they do not relate
to the day-to-day operations or our core business of serving our
clients.
Gain from Change in Fair Value of Embedded Derivatives: Our
former credit facility included 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 related to the change in fair value of
these instruments given the financial nature of this fair value
requirement. We were not able to manage these amounts as part of our
business operations, nor were the costs core to servicing our clients,
so we have excluded them.
Other Debt Financing Expenses: Other
debt financing expenses included non-cash write-offs (including
write-offs due to payoff), accretion, amortization of debt discounts and
issuance costs, and collateral monitoring and other fees payable in
cash related to our former credit facility. Since these amounts related
to our debt financing structure, we have excluded them since they do not
relate to the day-to-day operations or our core business of serving our
clients.
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 and related recoveries,
net, write-off of deferred debt financing costs, post-judgment interest
in litigation awards, write-off of deferred debt financing costs,
stock-based compensation expense, gain from change in fair value of
embedded derivatives, and other debt financing expenses, as discussed
above.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20191107005743/en/
Contacts
Investor Relations Contact
Dean Pohl
Rimini Street, Inc.
+1 203 347-4446
dpohl@riministreet.com
Media Relations Contact
Michelle McGlocklin
Rimini Street, Inc.
+1 925 523-8414
mmcglocklin@riministreet.com