Rimini Street Earnings Call: Growth Gains, Margin Pains

Rimini Street ((RMNI)) has held its Q1 earnings call. Read on for the main highlights of the call.

Rimini Street’s latest earnings call balanced upbeat growth signals with sobering margin pressure. Executives highlighted robust billings, larger deals, and a stronger balance sheet, while acknowledging that aggressive investments and churn are weighing on profitability. Management framed the near-term squeeze as a deliberate trade-off to secure a bigger role in the evolving ERP and AI landscape.

Revenue Returns to Modest Growth

Rimini Street reported Q1 revenue of $105.5 million, up 1.2% year over year, marking a return to top-line growth. Excluding the declining Oracle PeopleSoft support business, revenue climbed a more solid 5.2%, with foreign exchange shaving about 0.5 percentage points off the quarter.

Billings and ARR Signal Commercial Momentum

Billings surged 19.9% to $95.3 million, or 22.9% when stripping out PeopleSoft, pointing to healthy demand and stronger selling activity. Annualized recurring revenue reached $400.8 million, up 1.2%, suggesting that the core recurring base is edging higher even as legacy programs wind down.

RPO and Deferred Revenue Build Future Visibility

Remaining performance obligations climbed to $643.6 million, a 16.4% year-over-year increase and 18.2% growth excluding PeopleSoft, underscoring improving multi‑year deal visibility. Deferred revenue also rose to $277.3 million from $256.4 million, reinforcing the pipeline of contracted but not yet recognized revenue.

Larger Deals and New Logos Expand Franchise

The company closed 11 client transactions above $1 million in total contract value, totaling $33 million in Q1 versus just five deals worth $5.6 million a year earlier. Rimini Street also added 50 new customer logos, including both global and regional brands, pointing to growing recognition of its support and services model.

Cash Strength and Debt Reduction Bolster Flexibility

Rimini Street ended the quarter with $132.2 million in cash, up from $122.6 million in the prior-year period, giving it more room to invest and weather volatility. The firm also made a $10 million voluntary principal prepayment, trimming debt to $58.4 million and lifting its net cash position to $73.8 million.

Operating Cash Flow Rebounds Sharply

Operating cash flow improved by $24.5 million year over year in Q1, a notable swing that supports both growth initiatives and balance sheet cleanup. This rebound in cash generation contrasts with the margin compression in reported earnings and underpins management’s willingness to invest ahead of revenue.

Agentic AI ERP Anchors Strategic Pivot

Management spotlighted investments in Rimini Agentic AI ERP and a new Agentic UX as central to the company’s next leg of growth. A dedicated R&D line item, early customer pilots, and a growing pipeline are intended to support longer-duration contracts and higher-value wins as clients modernize their ERP landscapes.

Gross Margin Feels the Weight of Investment

GAAP gross margin slipped to 59.0% from 61.0% a year ago, with non‑GAAP margin at 59.5% versus 61.5% previously, reflecting meaningful pressure. Executives pinned the decline on pulled‑forward investments and a mix shift toward large, front‑loaded non‑subscription engagements that recognize more cost upfront.

Adjusted EBITDA Nearly Halved

Adjusted EBITDA dropped to $8.9 million, or 8.4% of revenue, compared with $15.7 million and a 15.1% margin in the prior-year quarter. The contraction underscores how stepped‑up spending, particularly around growth initiatives, is outpacing near‑term revenue gains and compressing operating leverage.

Net Income and EPS Under Strain

GAAP net income attributable to shareholders fell to $1.4 million, or $0.01 per share, versus $0.04 per share a year earlier. On a non‑GAAP basis, net income declined to $4.0 million, or $0.04 per share, from $0.10 per share, reflecting both lower margins and higher investment levels across the business.

Sales and Marketing Spend Steps Higher

Sales and marketing expense increased to 36.6% of revenue on a GAAP basis, up from 32.9% last year, with non‑GAAP spend at 35.8% versus 32.0%. Management described this as a deliberate move to capture current market opportunities, particularly as it pursues larger, more strategic wins in enterprise accounts.

Customer Retention Below Target Remains a Drag

Rimini Street’s trailing 12‑month revenue retention rate for service subscriptions, which make up 95% of revenue, stood at 88%, below the company’s goal of above 90%. Leadership expressed confidence that retention will improve in coming quarters, but acknowledged that current churn levels are still a headwind to growth and profitability.

PeopleSoft Wind-Down Continues to Pressure Growth

Revenue from PeopleSoft support services slipped to about 3% of Q1 revenue, down from roughly 7% a year ago and around 8% when the wind‑down began. The formal PeopleSoft phase‑out runs through mid‑2028 and remains a structural drag, masking stronger underlying growth in the rest of the portfolio.

Cautious Stance on Upgrading Outlook

Despite beating internal expectations on billings and deal sizes, management chose not to raise its full‑year outlook, preferring to see another quarter of execution. The decision signals caution about the durability of the recent momentum and acknowledges ongoing churn, margin pressure, and the PeopleSoft headwind.

Guidance Points to Gradual Growth and Margin Recovery

For Q2 2026, Rimini Street guided revenue to a range of $106 million to $108 million, implying modest sequential growth from Q1’s $105.5 million. The company reiterated its full‑year 2026 targets of 4% to 6% revenue growth and an adjusted EBITDA margin of 12.5% to 15.5%, aligned with a medium‑term Rule‑of‑20 ambition and a longer‑term aim toward Rule‑of‑40 performance.

Rimini Street’s earnings call painted a picture of a company leaning into growth with bigger deals, stronger bookings, and a clear strategic push into Agentic AI‑enabled ERP, but doing so at the cost of near‑term margins and earnings. For investors, the story hinges on whether these upfront investments, improving cash flow, and expanding backlog can ultimately translate into higher retention, faster revenue growth, and a sustainable rebound in profitability over the coming years.