Rimini Street Q3-2026 Earnings Conference Call - RIMINI STREET INC

Explicit Guidance:

• Q4 2026 Revenue: Guidance reiterated as a range of $117 million to $119 million.
• FY 2026 Full Year: Reiteration of "Rule of 20" guidance (combining revenue growth and EPS growth).
• FY 2027 Outlook: Management to provide the FY 2027 plan and guidelines at the Investor Day on January 14, 2027.

Business-Segment Outlook:

• PeopleSoft Wind-Down: Progressing toward completion by July 31, 2028; revenue was $2.7 million in Q3 2026 vs. $4.7 million in the prior year.
• SAP Support: Recorded third-quarter sales for SAP software; identified as a primary focus for the quarter due to contractual timing.
• Oracle Support: Management expresses a "bullish" outlook on the Oracle side, citing opportunities as customers seek stability during Oracle's transformation into a hyperscaler; coverage expected to expand across hundreds of Oracle family products.
• Sales Force Productivity: Shift in strategy from pure headcount growth to driving higher productivity and full-ramp participation; aim for a higher percentage of sellers achieving fully ramped annualized quota via new enablement leadership.
• RPO (Remaining Performance Obligations): Current level of $652.9 million is 2.5% sequentially higher; only $96,000 shy of record highs, indicating continued contracted revenue visibility.
• Partner Channel: Targeting a 40% pipeline contribution from the indirect channel; currently "a few quarters away" from this sustained target, with current traction described as "onesies and twosies" despite multi-million dollar transactions.

Market and Competitive Outlook:

• Demand Trends: Strong demand for existing software maintenance and modernization; clients prioritizing cost reduction to fund innovation (e.g., AI) within existing IT budgets rather than upgrading.
• Pricing and Value Proposition: Differentiation based on "AI Last" methodology (fixing processes/automation before AI deployment); clients viewing Rimini Street as a source of value creation and budget advice during spending decisions.
• Market Share/Competition: Anticipated benefits from Oracle's transformation creating a favorable environment for third-party support providers; focus on higher-quality pipeline deals (closing rates of 25–30%) rather than volume.
• AI Adoption: Expectation that client AI investments will precede actual financial returns, requiring an educational period for customers to determine starting points.

Macro / Industry Outlook:

• Economic/IT Budgets: Clients are redirecting savings from cost-avoidance (avoiding migration/replatforming) toward AI-driven innovation and transformation.
• Regulatory/Compliance: New offering "Rimini Govern for AI" launched to address governance, security, and control barriers to enterprise AI adoption.

Strategic Initiatives:

• AI Product Launches:
  • Rimini Govern for AI: Comprehensive governance, security, and control offering delivered as a service, leveraging ServiceNow Control Tower.
  • Rimini Agentic UX: AI-driven experience layer deployed over existing ERP to deliver automation in weeks, not years.
  • Rimini AgentWorks: Lifecycle service for designing, building, validating, and certifying AI agents (both internal and third-party).
• Partnerships:
  • ServiceNow: Deepening integration of ServiceNow AI tools and governance into Rimini's primary AI offerings.
  • Datacom: New strategic partnership in Australia/New Zealand to offer support, security, and compliance solutions.
• Capital Allocation: Near-term bias toward share repurchases over debt reduction; fiscal 2026 YTD capital returns/debt reduction totaled $30.9 million.
• Event: FY 2027 strategic plan and guidelines to be presented at the Investor Day on January 14, 2027, in New York City.

Risks and Headwinds to Outlook:

• AI Implementation Velocity: Clients require significant time and education to determine how to start AI deployments; returns on AI investments are expected to follow upfront IT spend, implying a lag in financial impact.
• Partner Channel Ramp: Integrating with partners is a complex process; achieving the 40% indirect channel pipeline target is expected to take several more quarters.
• Pipeline Quality vs. Quantity: Focus on high-quality deals implies potentially slower volume growth if the "high-quality" bar excludes lower-value opportunities.
• Oracle Transformation: Uncertainty surrounding Oracle's shift to a hyperscaler model, though viewed as an opportunity for Rimini's support services.
• General Risks: Forward-looking statements are subject to risks and uncertainties outlined in the Form 10-Q, including factors that could cause actual results to differ materially.

Management Tone on the Future:

• Confidence: High confidence in the "Rule of 20" trajectory; noted five consecutive quarters of improving financial and growth results.
• Efficiency Mindset: Strong focus on operational leverage and cost optimization; management indicates significant room for further efficiency gains as scale increases.
• Strategic Patience: Willing to take a patient approach with AI adoption education and partner integration, prioritizing sustainable, quality growth over short-term volume.
• Capital Discipline: Continued commitment to debt reduction and shareholder returns, with a specific preference for buybacks in the near term.

Miscellaneous:

• Operational Targets: Management outlined long-term operational targets for scale north of $1B: ~30% S&M ratio, ~10% G&A ratio, and gross margin in the mid-60s range.
• Headcount Strategy: Total headcount significantly reduced from historical highs; future focus is on productivity and leverage rather than net headcount addition.