Rimini Street Inc
For the period ended Mar 31, 2025. Filed May 1, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 1, 2025
RMNI$5.22+0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0001635282-24-000173
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0001635282-25-000131
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 151 previous paragraphs and 137 current paragraphs.
64 unchanged; 57 reworded; 11 added; 22 removed; 8 previous and 5 current paragraphs rearranged.
Tables are not compared: 5 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
•our ability to maintain an adequate rate of revenue growth;
Current report
•our business plan and our ability to effectively manage our growth and associated investments;
Current report
•our expectations regarding new product offerings, partnerships and alliance programs, including but not limited to our partnership with ServiceNow;
Current report
•our ability to develop and maintain strategic partnerships;
Current report
•tariff costs (including tariff relief or the ability to mitigate tariffs, in light of new or increased tariffs imposed by the United States government and the potential for retaliatory trade measures by affected countries);
Current report
•any negative impact of environmental, social and governance matters on our reputation or business and the exposure of our business to additional costs or risks from our reporting on such matters;
Current report
•our ability to maintain our good standing with the United States government and international governments and capture new contracts with governmental entities;
Current report
•the expected impact of reductions in our workforce during the last and current fiscal year;
Current report
Previously, we announced that we would reassess our wind down of services for Oracle PeopleSoft products. We have determined that we will continue to wind down these services going forward.
Current report
Cash used in investing activities totaled $0.9 million for the three months ended March 31, 2025 and cash provided by investing activities totaled $8.7 million for the three months ended March 31, 2024. For the three months ended March 31, 2025, cash used in investing activities was primarily driven by capital expenditures for leasehold improvements, software development costs, and computer equipment of $0.9 million. Specifically, these capital expenditures included construction in progress for leasehold improvements in Brazil of $0.4 million and Korea of $0.1 million, as well as capitalized software development costs in our U.S. entity of $0.3 million.
Current report
Recently Issued Accounting Standards Not Yet Adopted
Removed paragraphs (22)
Previous report
•our ability to grow our revenue, implement cost reduction programs and control our expenses;
Previous report
•our business plan, our ability to grow in the future and our ability to achieve and maintain profitability;
Previous report
•our plans to wind down the offering of services for Oracle PeopleSoft products;
Previous report
•the volatility of our stock price and related compliance with stock exchange requirements;
Previous report
•the expected impact of recent and anticipated future reductions in our workforce and associated reorganization costs;
Previous report
•our ability to develop strategic partnerships;
Previous report
•uncertainty from the discontinuance of LIBOR and the transition to SOFR or other interest rate benchmarks;
Previous report
Litigation expense increased from no expense for the three months ended September 30, 2023 to $58.5 million for the three months ended September 30, 2024. On September 23, 2024, the District Court issued its order on Oracle’s motion for attorneys’ fees and taxable costs. The District Court awarded Oracle $58.2 million in attorneys’ fees and $0.3 million in costs. As a result, we have accrued $58.5 million related to this matter for the three months ended September 30, 2024.
Previous report
There were no insurance costs and related recoveries, net incurred for either the three months ended September 30, 2023 or for the three months ended September 30, 2024. We are self-insured for any costs related to any current or future intellectual property litigation. We currently believe our cash on hand, accounts receivable, contractually committed backlog and borrowing capacity under our 2024 Credit Facility provides us with sufficient liquidity to cover our ongoing attorneys’ fees and related costs, such as travel, hotels and consultants, associated with ongoing litigation, including Rimini II. However, please refer to the litigation matters as disclosed in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for further information.
Previous report
Comparison of Nine Months Ended September 30, 2024 and 2023
Previous report
Cost of revenue. Cost of revenue increased from $118.8 million for the nine months ended September 30, 2023 to $126.2 million for the nine months ended September 30, 2024, an increase of $7.4 million or 6%. The key drivers related to the cost of revenue increase were a $4.5 million increase in employee compensation and benefits to support an average headcount increase of 16%, a $1.7 million increase in administrative allocations and a $1.6 million increase in all other costs. These cost increases were offset by a $0.4 million decline in engineering consulting costs.
Previous report
Gross profit. Gross profit decreased from $200.6 million for the nine months ended September 30, 2023 to $188.3 million for the nine months ended September 30, 2024, a decrease of $12.3 million or 6%. Gross profit margin for the nine months ended September 30, 2023 was 62.8% compared to 59.9% for the nine months ended September 30, 2024. For the nine months ended September 30, 2024, the total cost of revenue increased by 6%, primarily due to an increase in average headcount of 16% compared to a decline in revenue of 2% for the nine months ended September 30, 2024. As a result, our gross profit margin declined by 290 basis points period over period. We expect margin pressures as our ability to increase revenue remains challenged by a lack of new client contracts combined with unfavorable mix and continued investment in our new products and services.
Previous report
Sales and marketing expenses. As a percentage of our revenue, sales and marketing expenses were 36% and 34% for the nine months ended September 30, 2024 and 2023, respectively. In dollar terms, sales and marketing expenses increased from $107.4 million for the nine months ended September 30, 2023 to $112.3 million for the nine months ended September 30, 2024, an increase of $4.9 million or 5%. This increase was primarily due to an increase in travel and entertainment costs of $5.2 million, primarily related to a sales training event held in January 2024. In addition, we incurred an increase in employee compensation and benefits of $0.6 million and an increase of administrative allocations and all other costs of $1.9 million. These increases were offset by declines in marketing and advertising costs of $1.8 million and contract labor of $1.2 million. We will continue to seek additional revenue growth by selectively investing in resources and marketing programs that we believe will be scalable and help drive revenue growth.
Previous report
General and administrative expenses. General and administrative expenses decreased from $55.5 million for the nine months ended September 30, 2023 to $54.5 million for the nine months ended September 30, 2024, a decrease of $1.0 million or 2%. This decrease was comprised of several items, which included a decline in employee compensation and benefits of $2.0 million, a favorable increase in the administrative allocations of $2.4 million, a reduction of sales and other taxes of $0.5 million and a decrease in travel and entertainment of $0.2 million. These decreases were offset, in part, by an increase for computer supplies, software and licenses of $2.4 million, an increase in all other costs of $0.8 million, an increase in contract labor of $0.7 million and an increase of rent and facility costs of $0.2 million.
Previous report
Reorganization costs. Given our current business conditions, we began a process to evaluate and optimize our cost structure through a headcount reduction during the nine months ended September 30, 2024. As a result, we recognized reorganization costs of $4.6 million for the nine months ended September 30, 2024 compared to $59.0 thousand for the nine months ended September 30, 2023. The costs were primarily related to severance costs associated with employee terminations. We are continuing our evaluation and expect to incur additional reorganization costs during the fourth quarter of 2024, which will be primarily related to severance costs. These reorganization costs are not related to our plans to wind down the offering of services for Oracle PeopleSoft products as described above.
Previous report
Litigation costs, net of related insurance recoveries. Litigation costs, net of related insurance recoveries, consist of the following (in thousands):
Previous report
Litigation expense increased from no expense for the nine months ended September 30, 2023 to $58.5 million for the nine months ended September 30, 2024. On September 23, 2024, the District Court issued its order on Oracle’s motion for attorneys’ fees and taxable costs. The District Court awarded to Oracle $58.2 million in attorneys’ fees and $0.3 million in costs. As a result, we have accrued $58.5 million related to this matter for the nine months ended September 30, 2024.
Previous report
There were no insurance costs and related recoveries, net incurred for either the nine months ended September 30, 2023 or for the nine months ended September 30, 2024. We are self-insured for any costs related to any current or future intellectual property litigation. We currently believe our cash on hand, accounts receivable, contractually committed backlog and borrowing capacity under our 2024 Credit Facility provides us with sufficient liquidity to cover our ongoing attorneys’ fees and related costs, such as travel, hotels and consultants, associated with ongoing litigation, including Rimini II. However, please refer to the litigation matters as disclosed in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for further information.
Previous report
Interest expense. Interest expense increased from $4.1 million for the nine months ended September 30, 2023 to $4.4 million for the nine months ended September 30, 2024. Interest expense slightly increased primarily due to rising interest rates on our Credit Facilities, which increased from an average interest rate of 6.8% for the nine months ended September 30, 2023 to an average interest rate of 7.7% for the nine months ended September 30, 2024.
Previous report
For the nine months ended September 30, 2024, we used cash flows in our operating activities of approximately $1.2 million, which was derived from a net loss of $42.9 million as well as adjustments to reconcile net loss to net cash of approximately $0.8 million and a favorable change in operating assets and liabilities of approximately $41.0 million.
Previous report
For the nine months ended September 30, 2023, cash used in investing activities of $4.2 million consisted of investment purchases of $24.1 million and capital expenditures of $3.7 million, which were offset by proceeds from maturities of short-term investments of $23.6 million. The capital expenditures of $3.7 million consisted primarily of new computer equipment and capitalized development costs in our U.S. entity of $2.3 million and for computer equipment at our foreign locations of $1.4 million, primarily in Brazil of $0.3 million and India of $0.9 million.
Previous report
Recently Issued Accounting Standards
Reworded paragraphs (57)
Previous wording
This Quarterly Report on Form 10-Q (this “Report”) includes forward-looking statements. All statements other than statements of historical facts contained in this Report, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “currently,” “estimate,” “expect,” “future,” “intend,” “may,” “might,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “seem,” “seek,” “should,” “will,” “would” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements include, but are not limited to, information concerning:
Current wording
This Quarterly Report on Form 10-Q (this “Report”) includes forward-looking statements. All statements other than statements of historical facts contained in this Report, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “assume,” “believe,” “continue,” “could,” “currently,” “estimate,” “expect,” “forecast,” “future,” “intend,” “may,” “might,” “outlook,” “plan,” “possible,” “goal,” “potential,” “predict,” “project,” “seem,” “seek,” “should,” “will,” “would” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements include, but are not limited to, information concerning:
Previous wording
•costs, including attorneys’ fees, associated with defending intellectual property infringement and other claims, such as those claims discussed under “Legal Proceedings” in Part II, Item 1 of this Report, and our expectations with respect to such litigation, including the disposition of pending motions to appeal, and any new claims;
Current wording
•costs, including attorneys’ fees, associated with defending intellectual property infringement and other claims, such as those claims discussed under “Legal Proceedings” in Part II, Item 1 of this Report, and our expectations with respect to such litigation, including the disposition of matters currently on appeal, and any new claims;
Previous wording
•any additional expenses to be incurred to comply with the Rimini II Injunction and the impact on future period revenue and costs;
Current wording
•any expenses to be incurred to comply with any injunction ordered by the courts relating to the Rimini II litigation matter and the impact on future period revenue and costs incurred related to these efforts;
Previous wording
•the impact of the debt service obligations and financial and operational covenants under our 2024 Credit Facility on our business and related interest rate risk;
Current wording
•the impact of our Credit Facility’s debt service obligations and financial and operational covenants on our business and related interest rate risk;
Previous wording
•the impact of any macro-economic trends, including inflation, changing interest rates and changes in foreign exchange rates;
Current wording
•the impact of any recessionary macro-economic trends, including inflation, rising interest rates and changes in foreign exchange rates;
Previous wording
•expected results and objectives for future operations;
Current wording
•beliefs and objectives for future operations;
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•our ability to expand our leadership position in independent enterprise software support and to sell our application management services (“AMS”) and Rimini ONE™ integrated services;
Current wording
•our ability to expand our leadership position in independent enterprise software support and to sell our application management services (“AMS”), our Rimini ONE™ integrated services and the individual services comprising our Rimini ONE solutions portfolio;
Previous wording
•cost of revenue, including changes in costs associated with production and client support;
Current wording
•cost of revenue, including changes in costs associated with production and client support, and the results of any efforts to manage costs in light of current revenue expectations and expansion of our offerings;
Previous wording
•changes in laws or regulations, including tax laws or unfavorable outcomes of tax positions we take, a failure by us to establish adequate reserves for tax events or our ability to realize benefits from our net operating losses;
Current wording
•changes in laws or regulations, including tax laws or unfavorable outcomes of tax positions we take;
Previous wording
•our ability to prevent unauthorized access to our information technology systems and other cybersecurity threats, protect the confidential information of our employees and clients and comply with privacy and data protection regulations;
Current wording
•our ability to prevent unauthorized access to our information technology systems and other cybersecurity threats, protect the confidential information of our employees and clients and comply with privacy and data protection regulations, as well as any deficiencies associated with generative artificial intelligence (AI) technologies potentially used by us or used by our third-party vendors and service providers;
Previous wording
•the attraction and retention of additional qualified personnel, including sales personnel, and the retention of key personnel;
Current wording
•the attraction and retention of additional qualified personnel and the retention of key personnel;
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•future acquisitions of or investments in complementary businesses, products, subscriptions or technologies;
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•future acquisitions of or investments in complementary companies, products, subscriptions or technologies;
Previous wording
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those referred to under “Risk Factors” in Part II, Item 1A of this Report. Moreover, we operate in very competitive and rapidly changing markets. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
Current wording
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those referred to under “Risk Factors” in Part II, Item 1A of this Report, many of which are beyond our control. Moreover, we operate in very competitive and rapidly changing markets. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
Previous wording
To meet the needs of our clients and prospects and to service what we believe is a significantly expanded addressable market opportunity, we designed, developed and are now delivering a new, expanded solutions portfolio (our “Solutions Portfolio”) for a wider array of enterprise software – including an expanded list of supported software; managed services for Oracle, SAP, IBM, Salesforce and open-source database software; and new solutions for security, interoperability, observability and consulting. We also now offer an integrated package of our services as Rimini ONE™, a unique end-to-end, “turnkey” outsourcing option for Oracle and SAP landscapes designed to optimize our clients’ existing technologies with a minimum of 15 extended years of operating lifespan and enable our clients to focus their IT talent and budget on potentially higher-value, innovative projects that will support competitive advantage and growth.
Current wording
To meet the needs of our clients and prospects and to service what we believe is a significantly expanded addressable market opportunity, we continue to expand our solutions portfolio (our “Solutions Portfolio”) to a wider array of enterprise software – including an expanded list of supported software for VMware; managed services for Oracle, SAP, Salesforce®, IBM, ServiceNow®, and open-source database software; and new solutions for security, interoperability, observability and consulting. We also offer a unified package of our services as Rimini ONE™, a unique end-to-end, “turnkey” outsourcing option for Oracle and SAP landscapes designed to optimize our clients’ existing technologies with a minimum of 15 extended years of operating lifespan and enable our clients to focus their IT talent and budget on potentially higher-value, innovative projects that will support competitive advantage and growth.
Previous wording
Enterprise software support, products and services is one of the largest categories of overall global information technology (“IT”) spending. We believe enterprise resource planning (“ERP”), customer relationship management (“CRM”), product lifecycle management (“PLM”) database and technology software systems have become increasingly important in the operation of mission-critical business processes over the last 30 years. Also the costs associated with running and supporting these systems, system failure and downtime, security exposure, system integration and monitoring, and maintaining the tax, legal and regulatory compliance of these software systems have each contributed to increases in both actual spend and as a percentage of the typical full IT budget. As a result, we believe that licensees often view enterprise software support, products and services as a mandatory cost of doing business. The majority of our revenue through September 30, 2024, was generated from our support solutions.
Current wording
Enterprise software support, products and services is one of the largest categories of overall global information technology (“IT”) spending. We believe enterprise resource planning (“ERP”), customer relationship management (“CRM”), product lifecycle management (“PLM”) database and technology software systems have become increasingly important in the operation of mission-critical business processes over the last 30 years. We also believe organizations are increasingly creating more complex IT environments that are a mixture of multiple technologies, business models and vendors, including perpetual license and subscription license software solutions, deployed across the client’s system and cloud computing providers (hybrid IT environments), and consisting of proprietary and non-proprietary open-source software, all from a multitude of different technology vendors. The costs associated with running and supporting these systems; failure and downtime; security exposure; integrating and monitoring; and maintaining the tax, legal and regulatory compliance of these software systems, have increased in both actual spend and as a percentage of the full IT budget. As a result, we believe that licensees often view enterprise software support, products and services as a mandatory cost of doing business. The majority of our revenue through March 31, 2025, was generated from our support solutions.
Previous wording
As of September 30, 2024, we employed approximately 2,070 professionals and supported over 3,090 active clients globally, including 76 Fortune 500 companies and 22 Fortune Global 100 companies across a broad range of industries. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active clients instances where we provide support for two different products to the same entity.
Current wording
As of March 31, 2025, we employed over 2,000 professionals and supported over 3,090 active clients globally, including 71 Fortune 500 companies and 19 Fortune Global 100 companies across a broad range of industries. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active clients instances where we provide support for two different products to the same entity.
Previous wording
Our subscription-based revenue provides a foundation for, and visibility into, future period results. For the three months ended September 30, 2024 and 2023, we generated revenue of $104.7 million and $107.5 million, respectively, representing a decrease of 3%. During the three months ended September 30, 2024, we recorded a net loss of $43.1 million, and as of September 30, 2024, we had an accumulated deficit of $245.1 million. Approximately 49% and 52% of our revenue was generated in the United States for the three months ended September 30, 2024 and 2023, respectively. Approximately 51% and
Current wording
Our subscription-based revenue provides a foundation for, and visibility into, future period results. For the three months ended March 31, 2025 and 2024, we generated revenue of $104.2 million and $106.7 million, respectively, representing a decrease of 2%. During the three months ended March 31, 2025, we recorded net income of $3.4 million, and as of March 31, 2025, we had an accumulated deficit of $235.1 million. Approximately 48% and 50% of our revenue was generated in the United States for the three months ended March 31, 2025 and 2024, respectively. Approximately 52% and 50% of our revenue was generated in foreign jurisdictions for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
During the three months ended September 30, 2024, we announced that we would wind down services for Oracle PeopleSoft products and began the wind down project. The wind down includes our Rimini Support™, Rimini Manage™ and Rimini Consult™ services for Oracle PeopleSoft products. As we provide services for Oracle PeopleSoft products to clients globally, the wind-down process is expected to take place over several phases. We expect significant reductions in Oracle PeopleSoft-related revenue over time, but it is unclear when we will be able to cease providing all Oracle PeopleSoft services. Revenue related to providing services for Oracle PeopleSoft products accounted for approximately $24.9 million, or 8% of revenue, for the nine months ended September 30, 2024 and $27.6 million, or 9% of revenue, for the nine months ended September 30, 2023, respectively.
Current wording
In 2024, we announced that we would wind down services for Oracle PeopleSoft products and began the wind down project. The wind-down includes our Rimini Support™, Rimini Manage™ and Rimini Consult™ services for Oracle PeopleSoft products. As we provide services for Oracle PeopleSoft products to clients globally, the wind-down process is expected to take place over several phases. We expect significant reductions in revenue related to support for Oracle PeopleSoft products over time, but it is unclear when we will cease providing support services for Oracle PeopleSoft products, altogether, other than at the expiration of existing remaining client contracts for such services. Revenue related to providing services for Oracle PeopleSoft products accounted for approximately $7.0 million, or 7% of revenue, for the three months ended March 31, 2025 and $8.2 million, or 8% of revenue, for the three months ended March 31, 2024, respectively.
Previous wording
We have experienced some clients not renewing our services due to the adverse impact on their businesses from current global economic uncertainty, as well as by the economic disruption continuing to be caused by the Israel-Hamas conflict, the Russian invasion of Ukraine in early 2022 and recent political and trade turmoil with China, amongst other global challenges. While we do not physically operate in Russia, Ukraine or in mainland China, we do have operations in Israel. These global events, together with inflationary pressures, have negatively impacted the global economy, causing the U.S. Federal Reserve to raise interest rates in 2022 and reduce interest rates in September 2024. Despite these macroeconomic and geopolitical pressures, we expect to continue to be able to market, sell and provide our current and future products and services to clients globally. We also expect to continue investing in the development and improvement of new and existing products and services to address client needs. Further, although our operations are influenced by general economic conditions, we do not believe the impacts of economic disruptions described above had a significant net impact on our revenue or results of operations during the three and nine months ended September 30, 2024.
Current wording
Uncertainty regarding changes continuing to be made in laws and regulations by the current U.S. Presidential administration, along with uncertainty about the trade policies of such administration, particularly when pertaining to treaties, tariffs and other limitations on international trade, are causing economic and geopolitical uncertainty. Despite these macroeconomic and geopolitical pressures, we expect to continue to be able to market, sell and provide our current and future products and services to clients globally. We also expect to continue investing in the development and improvement of new and existing products and services to address client needs. Further, although our operations are influenced by general economic conditions, we do not believe the impacts of the economic disruptions described above had a significant net impact on our revenue or results of operations during the three months ended March 31, 2025.
Previous wording
The extent to which rising inflation, interest rate changes and continuing global economic and geopolitical uncertainty impact our business going forward, however, will depend on numerous evolving factors we cannot reliably predict, including continued governmental and business actions in response to increasing global economic and geopolitical uncertainty. As such, the effects of rising inflation, interest rate increases and other negative impacts on the global economy may not be fully reflected in our financial results until future periods. Refer to “Risk Factors” (Part II, Item 1A of this Report) for a discussion of these factors and other risks.
Current wording
The extent to which rising inflation, interest rate changes and continuing global economic and geopolitical uncertainty impact our business going forward, however, will depend on numerous evolving factors we cannot reliably predict and that are beyond our control, including continued governmental and business actions in response to increasing global economic and geopolitical uncertainty. As such, the effects of rising inflation, interest rate increases and other negative impacts on the global economy may not be fully reflected in our financial results until future periods. Refer to “Risk Factors” (Part II, Item 1A of this Report) for a discussion of these factors and other risks.
Previous wording
Reference is made to Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for a discussion of recent developments regarding our litigation with Oracle, including the award of $58.5 million in attorneys’ fees and costs to Oracle in the Rimini II litigation matter referenced above.
Current wording
Reference is made to Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for a discussion of recent developments regarding our litigation with Oracle.
Previous wording
Since we founded our company, we have made the expansion of our client base a priority. We believe that our ability to expand our client base 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. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active clients when support for two different products is being provided to the same entity. As of September 30, 2024 and 2023, we had 3,097 and 3,099 active clients, respectively.
Current wording
Since we founded our company, we have made the expansion of our client base a priority. We believe that our ability to expand our client base 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. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active clients when support for two different products is being provided to the same entity. As of March 31, 2025 and 2024, we had 3,092 and 3,040 active clients, respectively.
Previous wording
We define a unique client as a distinct entity, such as a company, an educational or government institution or a subsidiary, division or business unit of a company that purchases one or more of our products or services. We count as two separate unique clients when two separate subsidiaries, divisions or business units of an entity purchase our products or services. As of September 30, 2024 and 2023, we had 1,577 and 1,547 unique clients, respectively.
Current wording
We define a unique client as a distinct entity, such as a company, an educational or government institution or a subsidiary, division or business unit of a company that purchases one or more of our products or services. We count as two separate unique clients when two separate subsidiaries, divisions or business units of an entity purchase our products or services. As of March 31, 2025 and 2024, we had 1,575 and 1,535 unique clients, respectively.
Previous wording
The increase in our unique client count was due to obtaining new unique client contracts. In contrast, our active client count has declined slightly as the number of specific products and services which we are supporting for our unique clients has decreased as clients are retaining fewer of their respective products and services. In addition, we intend to focus future growth on both new and existing clients. We believe that the growth in our number of our unique clients is an indication that we can grow our enterprise software products and services in the future.
Current wording
The increases in both our active and unique client counts have been a combination of new unique client wins as well as cross-sales of new support products and services to existing clients. We intend to focus future growth on both new and existing clients and we believe that growth in our number of unique clients is an indication that we can grow our enterprise software products and services in the future.
Previous wording
Our annualized recurring revenue was $402 million and $416 million as of September 30, 2024 and 2023, respectively. The decline reflects the recent reduction in client retention.
Current wording
Our annualized recurring revenue was $396 million and $416 million as of March 31, 2025 and 2024, respectively. The decline reflects the recent reduction in client retention.
Previous wording
We define revenue retention rate as the actual subscription revenue (dollar-based) recognized in a 12-month period from clients that existed on the day prior to the start of the 12-month period divided by our annualized recurring revenue as of the day prior to the start of the 12-month period. Our revenue retention rate was 89% and 94% for the 12 months ended September 30, 2024 and 2023, respectively. The decline in our revenue retention rate for the 12 months ended September 30, 2024 was due to attrition during the trailing twelve months, as certain clients did not renew specific subscriptions due to a variety of reasons; however, in some cases these clients maintained or added subscriptions for other products and services. Our net billings during the three months ended September 30, 2024 increased $4.7 million compared to the three months ended September 30, 2023, primarily because we were able to increase client invoicing during the current period. However, our net billing for the nine months ended September 30, 2024 decreased $7.0 million compared to the nine months ended September 30, 2023 as a result of clients not renewing some services.
Current wording
We define revenue retention rate as the actual subscription revenue (dollar-based) recognized in a 12-month period from clients that existed on the day prior to the start of the 12-month period divided by our annualized recurring revenue as of the day prior to the start of the 12-month period. Our revenue retention rate was 88% and 89% for the 12 months ended March 31, 2025 and 2024, respectively. The decline in our revenue retention rate for the 12 months ended March 31, 2025 was due to attrition during the trailing twelve months, as certain clients did not renew specific subscriptions due to a variety of reasons; however, in some cases these clients maintained or added subscriptions for other products and services. Our calculated net billings during the three months ended March 31, 2025 increased $5.4 million compared to the three months ended March 31, 2024, primarily due to foreign currency exchange rate changes.
Previous wording
We define gross profit as the difference between revenue and the costs incurred in providing the software products and services. Gross profit margin is the ratio of gross profit divided by revenue. Our gross profit margin was approximately 60.7% and 62.7% for the three months ended September 30, 2024 and 2023, respectively. Our gross profit margin declined for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to our continued investments in delivery of our products and services, larger contribution from lower margin products and services, as well as an overall decline in revenue.
Current wording
We define gross profit as the difference between revenue and the costs incurred in providing the software products and services. Gross profit margin is the ratio of gross profit divided by revenue. Our gross profit margin was approximately 61.0% and 59.8% for the three months ended March 31, 2025 and 2024, respectively. Our gross profit margin increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due to better management of costs in our non-core products and services.
Previous wording
Revenue. Revenue declined from $107.5 million for the three months ended September 30, 2023 to $104.7 million for the three months ended September 30, 2024, a decrease of $2.8 million or 3%. Although there was an increase in the average number of unique clients from 1,532 for the three months ended September 30, 2023 to 1,555 for the three months ended September 30, 2024, revenue declined primarily due to the attrition of some large client contracts as certain clients did not renew specific subscriptions in prior periods due to varying reasons, which is now being reflected in our revenue within the current period. On a geographic basis, United States revenue declined from $55.7 million for the three months ended September 30, 2023 to $51.6 million for the three months ended September 30, 2024, a decrease of $4.2 million or 7%. Our international revenue grew from $51.7 million for the three months ended September 30, 2023 to $53.1 million for the three months ended September 30, 2024, an increase of $1.4 million or 3%.
Current wording
Revenue. Revenue declined from $106.7 million for the three months ended March 31, 2024 to $104.2 million for the three months ended March 31, 2025, a decrease of $2.5 million or 2%. Although there was an increase in the average number of unique clients from 1,535 for the three months ended March 31, 2024 to 1,577 for the three months ended March 31, 2025, revenue declined primarily due to the attrition of some large client contracts as certain clients did not renew specific subscriptions in prior periods due to varying reasons, which is now being reflected in our revenue within the current period. On a geographic basis, United States revenue declined from $53.8 million for the three months ended March 31, 2024 to $50.1 million for the three months ended March 31, 2025, a decrease of $3.7 million or 7%. Our international revenue grew from $52.9 million for the three months ended March 31, 2024 to $54.1 million for the three months ended March 31, 2025, an increase of $1.2 million or 2%.
Previous wording
Cost of revenue. Cost of revenue increased from $40.1 million for the three months ended September 30, 2023 to $41.1 million for the three months ended September 30, 2024, an increase of $1.0 million or 3%. The key drivers related to the cost of revenue increase were a $0.6 million increase in administrative allocations, a $0.4 million increase in all other costs and a $0.2 million increase in engineering consulting costs. These increases were offset, in part, by a decline in employee compensation and benefits of $0.1 million.
Current wording
Cost of revenue. Cost of revenue decreased from $42.9 million for the three months ended March 31, 2024 to $40.7 million for the three months ended March 31, 2025, a decrease of $2.2 million or 5%. The key drivers related to the cost of revenue decrease were a decline in employee compensation and benefits of $2.2 million and a $0.3 million decrease in engineering consulting costs. These costs were offset, in part, by a $0.2 million increase in administrative allocations and a $0.1 million increase in all other costs.
Previous wording
As discussed in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report, the District Court issued its findings of fact and conclusions of law in Rimini II, accompanied by the “Rimini II Injunction” on July 24, 2023. The District Court found infringement as to Oracle’s PeopleSoft and Oracle Database products. As a result of the findings, we are likely to incur additional expenses for incremental labor costs and other contingencies in order to comply with the District Court’s Rimini II Injunction as we commence the process of winding down the offering of services for Oracle PeopleSoft products over time. Due to the large number of uncertainties surrounding the outcome of the appeal, we are unable to determine the final impact on future period costs until a decision is rendered. Any adverse outcome in our ongoing judicial proceedings could have a material adverse effect on our results of operations.
Current wording
As discussed in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report, various matters related to the Rimini II litigation have been returned to the District Court for reconsideration on remand from the Ninth Circuit. No assurance is or can be given that the District Court will rule in a manner that is favorable to us on any issues relating to the Rimini II litigation or that the District Court will not issue another permanent injunction impacting the manner in which we can provide support for Oracle’s PeopleSoft software product lines. Any required changes to how support services are delivered to our PeopleSoft clients could have a material adverse impact on our financial position, results of operations and cash flows. Due to the large number of uncertainties surrounding the final outcome of the ongoing litigation, we are unable to determine the final impact on future period costs until a decision is rendered.
Previous wording
Gross profit. Gross profit decreased from $67.3 million for the three months ended September 30, 2023 to $63.5 million for the three months ended September 30, 2024, a decrease of $3.8 million or 6%. Gross profit margin for the three months ended September 30, 2023 was 62.7% compared to 60.7% for the three months ended September 30, 2024. For the three months ended September 30, 2024, the total cost of revenue increased by 3% compared to a decline in revenue of 3% for the three months ended September 30, 2024. As a result, our gross profit margin declined by 200 basis points period over period. We expect margin pressures in the short-term as our ability to increase revenue remains challenged by a lack of new client contracts combined with unfavorable mix and continued investment in our new products and services.
Current wording
Gross profit. Gross profit decreased from $63.8 million for the three months ended March 31, 2024 to $63.5 million for the three months ended March 31, 2025, a decrease of $0.3 million or 0.5%. Gross profit margin for the three months ended March 31, 2024 was 59.8% compared to 61.0% for the three months ended March 31, 2025. For the three months ended March 31, 2025, the total cost of revenue decreased by 5% compared to a decline in revenue of 2% for the three months ended March 31, 2025. As a result, our gross profit margin improved by 120 basis points period over period. We expect margin pressures in the short-term as our ability to increase revenue remains challenged by a relative lack of new client contracts combined with unfavorable mix of margin level and continued investment in our new products and services.
Previous wording
Sales and marketing expenses. As a percentage of our revenue, sales and marketing expenses were 34% and 33% for the three months ended September 30, 2024 and 2023, respectively. In dollar terms, sales and marketing expenses increased from $35.6 million for the three months ended September 30, 2023 to $35.8 million for the three months ended September 30, 2024, an increase of $0.2 million or 0.5%. This increase was primarily due to an increase in employee compensation and benefits of $0.4 million, an increase of administrative allocations and all other costs of $0.8 million. These increases were offset by declines in marketing and advertising costs of $0.6 million and contract labor of $0.5 million. We will continue to seek additional revenue by selectively investing in resources and marketing programs that we believe will be scalable and help drive future revenue growth.
Current wording
Sales and marketing expenses. As a percentage of our revenue, sales and marketing expenses were 33% and 37% for the three months ended March 31, 2025 and 2024, respectively. In dollar terms, sales and marketing expenses decreased from $39.1 million for the three months ended March 31, 2024 to $34.3 million for the three months ended March 31, 2025, a decrease of $4.9 million or 12%. This decline was primarily due to a reduction of $4.0 million related to travel and entertainment costs incurred as part of a sales training event held in January 2024. In addition, our employee compensation and benefits declined $0.9 million for the three months ended March 31, 2025. We will continue to seek additional revenue by selectively investing in resources and marketing programs that we believe will be scalable and help drive future revenue growth.
Previous wording
General and administrative expenses. General and administrative expenses decreased from $18.4 million for the three months ended September 30, 2023 to $16.5 million for the three months ended September 30, 2024, a decrease of $1.9 million or 10%. This decrease was comprised of several items, which included a decrease in salaries, wages, bonuses and benefits of $2.1 million, an increase in administrative allocations of $1.0 million, a decline in sales and other taxes of $0.1 million and a decrease of travel expenses of $0.1 million. These favorable variances were offset by an increase in computer supplies, software and license costs of $1.0 million, an increase in all other costs of $0.2 million, an increase in professional fees of $0.1 million and an increase in facility costs of $0.1 million.
Current wording
General and administrative expenses. General and administrative expenses decreased from $18.4 million for the three months ended March 31, 2024 to $17.5 million for the three months ended March 31, 2025, a decrease of $0.9 million or 5%. This decrease was comprised of several items, which included a decrease in employee compensation and benefits of $0.8 million, an increase in administrative allocations of $0.5 million and a decrease of contract labor of $0.4 million. These favorable variances were offset by an increase in all other costs of $0.3 million, an increase in professional fees of $0.2 million, an increase in rent and facility costs of $0.2 million and an increase in computer supplies, software and license costs of $0.1 million.
Previous wording
Reorganization costs. Given our current business conditions, we began a process to evaluate and optimize our cost structure through a headcount reduction during the nine months ended September 30, 2024. As a result, we recognized reorganization costs of $1.4 million for the three months ended September 30, 2024 compared to none for the three months ended September 30, 2023. The costs were primarily related to severance costs associated with employee terminations. We are continuing our evaluation and expect to incur additional reorganization costs during the fourth quarter of 2024, which will be primarily related to severance costs. These reorganization costs are not related to our plans to wind down the offering of services for Oracle PeopleSoft products as described above.
Current wording
Reorganization costs. During the year ended December 31, 2024, we began a process to optimize our cost structure through a headcount reduction. We recognized reorganization costs of $0.5 million for the three months ended March 31, 2025 compared to no costs for the three months ended March 31, 2024. The costs were primarily related to severance costs associated with our 2024 reorganization plan. We are likely to incur additional reorganization costs during the second quarter of 2025 as we continue to optimize our cost structure in areas where opportunities to streamline our operations exist.
Previous wording
Litigation costs, net of related insurance recoveries. Litigation costs, net of related insurance recoveries, consist of the following (in thousands):
Current wording
Litigation costs and related recoveries, net. Litigation costs and related recoveries, net consist of the following (in thousands):
Previous wording
Professional fees and other costs associated with litigation decreased from $2.1 million for the three months ended September 30, 2023 to $0.9 million for the three months ended September 30, 2024, a decrease of $1.2 million. This decrease was primarily due to the timing of when the costs were incurred related to our appeal of the Rimini II decision with the Ninth Circuit.
Current wording
Professional fees and other costs associated with litigation decreased from $2.9 million for the three months ended March 31, 2024 to $1.9 million for the three months ended March 31, 2025, a decrease of $1.0 million. This decrease was primarily due to the timing of when the litigation costs were incurred related to our appeal of the Rimini II decision with the Ninth Circuit, which occurred on June 5, 2024. Please refer to the litigation matters as disclosed in Note 8 to our Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Report for further information.
Previous wording
Interest expense. Interest expense increased from $1.4 million for the three months ended September 30, 2023 to $1.6 million for the three months ended September 30, 2024. Interest expense slightly increased primarily due to rising interest rates on our Credit Facilities, which increased from an average interest rate of 7.1% for the three months ended September 30, 2023 to an average interest rate of 8.1% for the three months ended September 30, 2024.
Current wording
Interest expense. Interest expense increased from $1.3 million for the three months ended March 31, 2024 to $1.7 million for the three months ended March 31, 2025. Interest expense increased primarily due to borrowing $15.0 million in October 2024 under the revolving line of credit, which resulted in interest expense of $0.3 million for the three months ended March 31, 2025. Our effective interest rates related to our term loan decreased from an interest rate of 8.6% for the three months ended March 31, 2024 to an interest rate of 8.0% for the three months ended March 31, 2025. The interest expense for the term loan increased by $0.1 million due to a higher principal balance outstanding for the respective periods.
Previous wording
Other income (expenses), net. Other income (expenses), net is primarily comprised of interest income, foreign exchange gains and losses, and other non-operating income and expenses. For the three months ended September 30, 2024, net other expenses of approximately $0.6 million was comprised primarily of foreign exchange losses of $1.7 million and other expenses of $0.1 million, which were offset by interest income from cash and cash equivalents of $1.1 million. For the three months ended September 30, 2023, net other income of approximately $1.0 million was comprised primarily of gains from cash equivalents and investments of $1.1 million which were offset, in part, by foreign exchange losses of approximately $0.1 million.
Current wording
Other income (expenses), net. Other income (expenses), net is primarily comprised of interest income, foreign exchange gains and losses, and other non-operating income and expenses. For the three months ended March 31, 2025, net other expenses of approximately $0.1 million was comprised primarily of foreign exchange losses of $0.5 million and other expenses of $0.1 million, which were offset by interest income from cash and cash equivalents of $0.6 million. For the three months ended March 31, 2024, net other income of approximately $1.0 million was comprised primarily of gains from cash equivalents and investments.
Previous wording
Income taxes. We had an income tax expense of $4.0 million for the three months ended September 30, 2023 compared to an income tax benefit of $8.7 million for the three months ended September 30, 2024. For the three months ended September 30, 2024, the primary reason for the change in income taxes was due to a decrease of income (loss) before taxes of $62.6 million in the current year period compared to the prior year period.
Current wording
Income taxes. We had an income tax expense of $1.7 million for the three months ended March 31, 2024 compared to $4.3 million for the three months ended March 31, 2025. For the three months ended March 31, 2025, the primary reason for the change in income taxes was due to an increase of income before taxes of $4.6 million in the current year period compared to the prior year period.
Previous wording
As of September 30, 2024, we had a working capital deficit of $93.7 million and an accumulated deficit of $245.1 million. For the three months ended September 30, 2024, we recorded a net loss of $43.1 million. As of September 30, 2024, we had available cash, cash equivalents and restricted cash of $119.9 million.
Current wording
As of March 31, 2025, we had a working capital deficit of $60.1 million and an accumulated deficit of $235.1 million. For the three months ended March 31, 2025, we recorded net income of $3.4 million. As of March 31, 2025, we had available cash, cash equivalents and restricted cash of $123.8 million.
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•a failure by us to establish adequate reserves for tax events;
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•our ability to realize benefits from our net operating losses;
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We have experienced some clients not renewing our services due to the adverse impact on their businesses from current global economic uncertainty, as well as by the economic disruption continuing to be caused by current military conflicts, and recent political and trade turmoil between the U.S. and other countries, amongst other global challenges. While we do not physically operate in some of these countries where conflict is occurring, we do have operations in Israel. These global events, together with inflationary pressures, have negatively impacted the global economy and driven changes in interest rates.
Current report — wording carried from elsewhere
For the next year, assuming that our operations are not significantly impacted by rising inflation, continued interest rate changes, other global economic or geopolitical uncertainties, political and trade turmoil between the U.S. and China and other countries, or the litigation matters as disclosed in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report, we believe that cash, cash equivalents and restricted cash of $123.8 million as of March 31, 2025, plus future cash flows from operating activities and our 2024 Credit Facility will be sufficient to meet our anticipated cash needs including working capital requirements, planned capital expenditures and our contractual obligations.
Current report — wording carried from elsewhere
Cash Flows Used In Financing Activities
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Previous report — wording carried elsewhere
48% of our revenue was generated in foreign jurisdictions for the three months ended September 30, 2024 and 2023, respectively.
Previous report — wording carried elsewhere
Our consolidated statements of operations for the nine months ended September 30, 2024 and 2023, are presented below (in thousands):
Previous report — wording carried elsewhere
(1)Includes the portion of costs for IT, security services and facilities costs that are allocated to cost of revenue. In our Unaudited Condensed Consolidated Financial Statements, the total of such costs is allocated between cost of revenue, sales and marketing, and general and administrative expenses, based primarily on relative headcount, except for facilities which is based on occupancy.
Previous report — wording carried elsewhere
Revenue. Revenue declined from $319.4 million for the nine months ended September 30, 2023 to $314.5 million for the nine months ended September 30, 2024, a decrease of $4.8 million or 2%. Although there was a 2% increase in the average number of unique clients from 1,520 for the nine months ended September 30, 2023 to 1,545 for the nine months ended September 30, 2024, revenue declined primarily due to the attrition of some large client contracts as certain clients did not renew specific subscriptions in prior periods due to varying reasons, which is now being reflected in our revenue during the current period. On a geographic basis, United States revenue declined from $163.1 million for the nine months ended September 30, 2023 to $156.9 million for the nine months ended September 30, 2024, a decrease of $6.3 million or 4%. Our international revenue grew from $156.2 million for the nine months ended September 30, 2023 to $157.7 million for the nine months ended September 30, 2024, an increase of $1.5 million or 1%.
Previous report — wording carried elsewhere
Professional fees and other costs associated with litigation decreased from $5.5 million for the nine months ended September 30, 2023 to $5.4 million for the nine months ended September 30, 2024, a decrease of $0.1 million. This decrease was primarily due to the timing of when costs were incurred for our appeal preparation of the Rimini II decision with the Ninth Circuit.
Previous report — wording carried elsewhere
Other income (expenses), net. Other income (expenses), net is primarily comprised of interest income, foreign exchange gains and losses, and other non-operating income and expenses. For the nine months ended September 30, 2024, net other income of approximately $1.8 million was comprised primarily of income from cash equivalents and investments of $3.0 million which were offset, in part, by foreign exchange losses of $0.6 million and other expenses of $0.6 million. For the nine months ended September 30, 2023, net other income of approximately $1.8 million was comprised primarily of gains from cash equivalents and investments of $2.8 million which were offset, in part, by foreign exchange losses of approximately $0.7 million and other expenses of $0.3 million.
Previous report — wording carried elsewhere
Income taxes. We recorded income tax expense of $13.2 million for the nine months ended September 30, 2023 compared to an income tax benefit of $6.7 million for the nine months ended September 30, 2024. For the nine months ended September 30, 2024, the primary reason for the change in income taxes was due to a decline of income (loss) before taxes of $79.5 million in the current year period compared to the prior year period.
Previous report — wording carried elsewhere
Cash Flows Provided By (Used In) Financing Activities