Rimini Street Balances AI Bets With Margin Pressures

Rimini Street ((RMNI)) has held its Q4 earnings call. Read on for the main highlights of the call.

Rimini Street’s latest earnings call painted a cautious but constructive picture, with management stressing strategic wins in AI and subscription metrics even as near‑term revenue, margins, and earnings remain under pressure. Executives argued that today’s investment-heavy posture and product transition should set up a return to sustainable growth by 2026, but acknowledged clear execution and retention risks.

RPO and Billings Momentum

Rimini’s remaining performance obligations climbed to $653.0 million at year-end, up 11% year over year and 12% excluding PeopleSoft, signaling solid contracted revenue visibility. Billings were softer but stable, with Q4 flat at $171.3 million and full-year up 1.2% or 4.2% excluding PeopleSoft, supported by a stronger pipeline and close rates above 30%.

Agentic AI Product Launch and Early Gains

Management spotlighted the Rimini Agentic UX launch, a suite of 20 AI-driven solutions built with ServiceNow and designed to sit on top of existing ERP systems. Early deployments are producing sharp operational improvements, such as 50%–60% faster approvals, 70%–80% shorter order cycles, and data accuracy above 95%, which the company framed as a key long-term growth and margin driver.

Large Deal Wins and New Logos

Large deal activity remained healthy, with 19 client transactions above $1.0 million in total contract value reaching $58.1 million versus $51.9 million a year ago, an almost 12% TCV increase despite fewer deals. Rimini also added 73 new logos across global and regional brands, underscoring continued demand for third-party enterprise software support.

Cash Build and Operating Cash Flow Strength

The balance sheet improved with cash rising to $120.0 million from $88.8 million a year earlier, giving the company more flexibility to fund its AI and sales initiatives. Operating cash flow swung positively, with full-year 2025 improving by $60.2 million versus a prior-year decline, aided by $37.9 million in litigation settlement proceeds.

Return to GAAP Profitability and 2026 Targets

Rimini returned to GAAP profitability for 2025, posting $0.39 in diluted earnings per share compared with a $0.40 loss a year earlier, a notable milestone amid business mix shifts. Management reaffirmed 2026 goals for 4%–6% revenue growth and adjusted EBITDA margins of 12.5%–15.5%, signaling confidence that today’s investments will translate into better operating leverage.

Underlying Growth Excluding PeopleSoft

The company emphasized that core operations are healthier once the planned PeopleSoft wind-down is stripped out, with full-year revenue up 1.0% and Q4 down only 0.4% on that adjusted basis. Management argued Q4 revenue would have grown roughly 2.6% excluding one-time items and said ARR was up about 3.1% year over year excluding PeopleSoft.

GAAP Revenue and ARR Declines

On a reported basis the top line remained under pressure, with Q4 revenue slipping 3.9% to $109.8 million and full-year revenue falling 1.7% to $421.5 million. Annualized recurring revenue came in at $411.4 million, down 0.8% year over year, underscoring that the transformation is not yet translating into headline growth.

Margin Compression and Lower Adjusted EBITDA

Profitability deteriorated as gross margin narrowed to 60.4% in both Q4 and the full year, down from 63.7% in the prior-year quarter, reflecting higher delivery and investment costs. Non-GAAP operating margin dropped to 9.3% in Q4 from 16.7%, while adjusted EBITDA fell to $11.5 million in Q4 and $49.8 million for the year, both down versus the prior period.

Rising Opex and Sales & Marketing Spend

Sales and marketing costs climbed to 37.7% of revenue in Q4 and 36.0% for the year, up from 32.8% and 34.9% respectively, as Rimini ramps its go-to-market engine. The company is adding roughly 20 salespeople and raising quotas by low-teens percentages, a deliberate near-term drag intended to support its Agentic AI push and accelerate bookings.

Customer Retention Pressure

Retention proved a weak spot, with service subscription revenue retention around 88% and higher-than-expected churn weighing on growth metrics. Management noted that about 86% of subscription revenue is noncancelable for at least 12 months, but acknowledged that improving retention is critical to hitting future growth and margin goals.

PeopleSoft Wind-Down as Structural Headwind

The ongoing wind-down of PeopleSoft support remains a structural drag, with that revenue now roughly 4% of Q4 and 5% of full-year sales, down from about 8% at the start of the exit. While this provides visibility into a shrinking portion of the portfolio through 2028, investors must discount it as a known headwind that masks healthier trends in the rest of the business.

Non-GAAP Earnings Pressure

Despite GAAP improvement, non-GAAP earnings retreated, with full-year diluted EPS falling to $0.23 from $0.48 as operating investments weighed on adjusted profitability. Q4 non-GAAP EPS was $0.06 versus $0.12 and GAAP EPS slipped to $0.01 from $0.07, highlighting that the transition phase still carries an earnings cost.

Guidance and Outlook

For Q1 2026, Rimini guided revenue to $101.5 million–$103.5 million, a range that implies a modest GAAP year-over-year decline when PeopleSoft is included but underlying growth excluding that wind-down. Management reiterated full-year 2026 expectations for 4%–6% revenue growth and 12.5%–15.5% adjusted EBITDA margins, leaning on rising RPO, stable ARR, and expanded sales capacity to drive stronger performance later in the year.

Rimini Street’s call left investors balancing tangible strategic progress in AI, large deals, and cash generation against short-term revenue softness, margin pressure, and retention issues. If the company executes on its sales expansion and manages the PeopleSoft exit while stabilizing churn, 2026 could mark the turning point from investment phase to visible, profitable growth.