Rimini Street Inc

NOTE 1 —NATURE OF BUSINESS AND BASIS OF PRESENTATION

Nature of Business

Rimini Street, Inc. (the “Company”) is a global provider of end-to-end enterprise software support, products and services. The Company offers a comprehensive family of unified solutions to run, manage, support, customize, configure, connect, protect, monitor, and optimize clients’ enterprise application, database, and technology software platforms.

Basis of Presentation and Consolidation

The Unaudited Condensed Consolidated Financial Statements, which include the accounts of the Company and its wholly-owned subsidiaries, are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by U.S. GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Unaudited Condensed Consolidated Financial Statements have been included. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Audited Consolidated Financial Statements for the year ended December 31, 2024, included in the Company’s 2024 Annual Report on Form 10-K as filed with the SEC on February 27, 2025 (the “2024 Form 10-K”).

The accompanying Unaudited Condensed Consolidated Balance Sheet and related disclosures as of December 31, 2024 have been derived from the Company’s audited financial statements. The Company’s financial condition as of March 31, 2025, and operating results for the three months ended March 31, 2025, are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the year ending December 31, 2025.

NOTE 2 —LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES

Liquidity

As of March 31, 2025, the Company’s current liabilities exceeded its current assets by $60.1 million, and the Company recorded net income of $3.4 million for the three months ended March 31, 2025. As of March 31, 2025, the Company had available cash, cash equivalents and restricted cash of $123.8 million. As of March 31, 2025, the Company’s current liabilities included $234.8 million of deferred revenue whereby the costs of fulfilling the Company's commitments to provide services to its clients was approximately 39% of the related deferred revenue for the three months ended March 31, 2025.

On April 30, 2024, the Company amended its $90 million five-year term loan (the “Original Credit Facility”) into a newfive-year term loan of $75 million (the “2024 Credit Facility,” and together with the Original Credit Facility, the “Credit Facilities”). Annual minimum principal payments over thefive-year term for the 2024 Credit Facility are 5%,5%,7.5%,7.5% and 10%, respectively, with the remaining balance due at the end of the term. See Note 5 for further information regarding the Company's 2024 Credit Facility and the Original Credit Facility.

Additionally, the Company is obligated to make operating and financing lease payments that are due within the next 12 months in the aggregate amount of $4.8 million. During the three months ended March 31, 2025, the global economy continued to experience interest rate and inflationary pressures, geopolitical conflicts, global supply chain issues, a rise in energy prices and the continuing effects of fiscal and monetary policies adopted by governments. Assuming the Company’s ability to operate continues not to be significantly adversely impacted by the related changes in the macroeconomic environment, geopolitical pressures, or the litigation matters described in Note 8, the Company believes that current cash, cash equivalents, restricted cash, and future cash flow from operating activities will be sufficient to meet the Company’s anticipated cash needs, including 2024 Credit Facility repayments, working capital needs, capital expenditures and other contractual obligations for at least 12 months from the issuance date of these financial statements.

Use of Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances to determine the carrying values of assets and liabilities that are not readily apparent from other sources. The Company’s accounting estimates include, but are not necessarily limited to, the allowance for doubtful accounts receivable, valuation of the swap agreement, valuation assumptions for stock options and leases, deferred income taxes and the related valuation allowances, accretion of discounts on debt and the evaluation and measurement of contingencies. To the extent there are material differences between the Company’s estimates and actual results, the Company’s future consolidated results of operations may be affected.

Risks and Uncertainties

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable. The Company maintains its cash, cash equivalents and restricted cash at high-quality financial institutions, primarily in the United States. Deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. As of March 31, 2025 and December 31, 2024, the Company had cash, cash equivalents and restricted cash with a single financial institution for an aggregate of $76.5 million and $32.0 million, respectively. In addition, as of March 31, 2025 and December 31, 2024, the Company had cash and cash equivalents with three other single financial institutions of $25.3 million and $44.9 million, respectively. As of March 31, 2025 and December 31, 2024, the Company had restricted cash of $1.2 million and $0.4 million, respectively. The Company has never experienced any losses related to these balances.

Generally, credit risk with respect to accounts receivable is diversified due to the number of entities comprising the Company’s client base and their dispersion across different geographies and industries. The Company performs ongoing credit evaluations on certain clients and generally does not require collateral on accounts receivable. The Company maintains reserves for potential bad debts and historically such losses are generally not significant.

Recent Accounting Pronouncements

Recently Adopted Standards. The following accounting standards will be adopted during fiscal year 2025:

In December 2023, the FASB issued ASU 2023-09,“Income Taxes - Improvements to Income Tax Disclosures.” The guidance requires disaggregating income tax disclosures relating to the effective tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, though early adoption is permitted. The implementation of this ASU will result in additional disclosures and will not have an impact on the Consolidated Financial Statements.

NOTE 3 -DEFERRED CONTRACT COSTS AND DEFERRED REVENUE

Activity for deferred contract costs consisted of the following (in thousands):

Deferred revenue activity consisted of the following (in thousands):

The Company typically invoices its customers at the start of the support period, in annual and multi-year installments. When revenue recognized on a contract exceeds billings, the Company records a contract asset. As of March 31, 2025 and December 31, 2024, contract assets amounted to $0.6 million and $1.3 million, respectively, and are included in prepaid expenses and other on the condensed consolidated balance sheets. Deferred revenue is a contract liability that consists of billings issued that are non-cancellable in advance of revenue recognition. Deferred revenue is recognized as the Company satisfies its performance obligations over the term of the contracted service period.

The Company’s remaining performance obligations represent all future non-cancellable revenue under contract that has not yet been recognized as revenue and includes deferred revenue and unbilled amounts. As of March 31, 2025, remaining performance obligations amounted to $553.1 million, of which $256.4 million was billed and recorded as deferred revenue.

The Company expects to recognize revenue on approximately $234.8 million of deferred revenue over the next 12 months, with the remaining deferred revenue balance recognized thereafter.

NOTE 4 —OTHER FINANCIAL INFORMATION

Other Accrued Liabilities, including Accrued Reorganization Costs

Other accrued liabilities consisted of the following (in thousands):

During the second quarter of 2024, the Company began a process to optimize its cost structure. For the three months ended March 31, 2025 and 2024, the reorganization activity consisted primarily of severance expense as follows (in thousands):

NOTE 5 —DEBT

Debt is presented net of debt discounts and issuance costs in the Company's balance sheets and consisted of the following (in thousands):

For the three months ended March 31, 2025 and 2024, the Company made principal payments under the Credit Facilities totaling $0.9 million and $1.7 million, respectively.

On April 30, 2024, the Company refinanced its Original Credit Facility, which had an outstanding principal balance of $70.9 million, with the 2024 Credit Facility, a newfive-year senior secured credit facility consisting of a $75.0 million term loan and a $35.0 million revolving line of credit.

For the term loan, the Company has a choice of interest rates between (a) the Secured Overnight Financing Rate (“SOFR”) and (b) a Base Rate (as defined in the 2024 Credit Facility), in each case plus an applicable margin. The applicable margin is based on the Company’s Consolidated Total Leverage Ratio (as defined in the 2024 Credit Facility) and whether the Company elects SOFR (ranging from 2.75% to 3.5%) or Base Rate (ranging from 1.75% to 2.5%). The revolving line of credit bears interest on the unused portion of the credit line at rates of 25 to 40 basis points, depending on the Company’s Consolidated Total Leverage Ratio. Annual minimum principal payments over thefive-year term for the 2024 Credit Facility are 5%,5%,7.5%,7.5%, and 10%, respectively, with the remaining balance due at the end of the term.

The refinancing was accounted for as a debt modification under ASC 470-50 as the terms of the 2024 Credit Facility were not substantially different than the terms of the Original Credit Facility. Under debt modification accounting, third party costs are expensed as incurred. During the year ended December 31, 2024, the Company expensed $0.2 million in third party transaction costs in connection with the modification. Fees paid to the creditor of $1.1 million were included with the remaining unamortized discount from the Original Credit Facility and are being amortized as an adjustment to interest expense over the remaining term of the 2024 Credit Facility.

Pursuant to a Guaranty and Security Agreement, dated April 30, 2024, among the Credit Parties (as defined in the 2024 Credit Facility) and Capital One, National Association, as agent (the “2024 Guaranty and Security Agreement”), the obligations under the 2024 Credit Facility are guaranteed by certain of the Company’s subsidiaries and are secured, subject to customary permitted liens and exceptions, by a lien on substantially all assets of the Credit Parties.

The 2024 Credit Facility contains certain financial covenants, including a minimum fixed charge coverage ratio greater than 1.25, a total leverage ratio less than 3.75, and a minimum liquidity balance of at least $20 million in U.S. cash.

The fair value of the term loan under the 2024 Credit Facility was $72.9 million (Level 2 inputs) as of March 31, 2025 compared to the carrying value of $69.5 million as of March 31, 2025. The fair value of the 2024 Credit Facility was $73.9 million (Level 2 inputs) as of December 31, 2024 compared to the carrying value of $70.3 million as of December 31, 2024.

For the three months ended March 31, 2025 and 2024, the effective interest rate under both the 2024 Credit Facility and the Original Credit Facility was 8.0% and 8.6%, respectively.

In October 2024, the Company borrowed $15.0 million under the revolving line of credit, which remained outstanding as of March 31, 2025. The Company has $20.0 million in net available borrowings under the revolving line of credit as of March 31, 2025.

For the three months ended March 31, 2025, the average interest rate under the revolving line of credit under the 2024 Credit Facility was 7.1%.

Effective April 30, 2024, the Company’s interest rate swap agreement was amended in connection with the 2024 Credit Facility to match the newfive-year term. The amended interest rate swap agreement has a notional value of $40.0 million, with a fixed payer SOFR rate of 3.71% and an initial floating SOFR rate of 5.32%. The floating rate is reset at each month end and the term of the interest rate swap agreement coincides with that of the 2024 Credit Facility. See Note 11 for further information regarding the fair value accounting for the interest rate swap agreement. The modification of the interest rate swap agreement did not have a material impact on the Company’s Unaudited Condensed Consolidated Financial Statements.

Interest Expense

The components of interest expense are presented below (in thousands):

For the three months ended March 31, 2025 and 2024, interest expense included a reduction related to interest rate swap payments received of $0.1 million and $0.2 million, respectively.

NOTE 6 —COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS

Common Stock Repurchased

During the three months ended March 31, 2025 and 2024, the Company didnot acquire any shares of its Common Stock on the open market.

Stock Plan

The Company’s stock plan consists of the 2013 Equity Incentive Plan, as amended and restated in July 2017 (the “2013 Plan”). On February 26, 2025, pursuant to the “evergreen” provisions of the 2013 Plan, the Board of Directors authorized an increase of approximately 3.6 million shares available for grant under the 2013 Plan.

On March 4, 2025, the Company’s Board of Directors, approved the Company’s 2025 Long-Term Incentive Plan (the “2025 LTI Plan”), consisting of awards of performance units (“PSUs”), restricted stock units (“RSUs”) and stock options to purchase shares of the Company’s Common Stock under the terms of the Company’s 2013 Plan, as amended, effective March 4, 2025.

On May 3, 2024, the Company’s Board of Directors, approved the Company’s 2024 Long-Term Incentive Plan (the “2024 LTI Plan”), consisting of awards of PSUs, RSUs and stock options to purchase shares of the Company’s Common Stock under the terms of the Company’s 2013 Plan, as amended, effective May 6, 2024.

For additional information about the 2013 Plan, please refer to Note 7 to the Company’s Consolidated Financial Statements for the year ended December 31, 2024, included in Part II, Item 8 of the 2024 Form 10-K. The information presented below provides an update for activity under the 2013 Plan for the three months ended March 31, 2025.

Performance Units

Under the 2025 LTI Plan, the Company granted PSUs which will be measured over a performance period beginning on January 1, 2025 and ending on December 31, 2025 (the “Performance Period”), but will remain subject to a continued service-based vesting requirement. Half of the PSUs awarded are eligible to vest based on the Company’s achievement against a target adjusted EBITDA goal for fiscal year 2025, and the remaining half of the PSUs awarded will be eligible to vest based on the

Company’s achievement against a target total revenue goal for fiscal year 2025. The ultimate number of PSUs that may vest (as calculated, the “Earned PSUs”) range from zero to 200% of the granted PSUs. On March 4, 2025, the Company granted 0.6 million PSUs at a grant price of $3.48.

The Earned PSUs under the May 6, 2024 grant were earned at 28%. Under the terms of the 2024 LTI Plan, the Earned PSUs will vest in equal annual installments on the first, second and third anniversaries of the Date of Grant, generally subject to the awardee continuing to be a Service Provider through the applicable vesting date.

The Earned PSUs under the April 3, 2023 grant were earned at 151%. Under the terms of the 2023 LTI Plan, the Earned PSUs will vest in equal annual installments on the first, second and third anniversaries of the Date of Grant, generally subject to the awardee continuing to be a Service Provider through the applicable vesting date.

The Company recognized compensation expense related to PSUs of $0.4 million and $0.6 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, the unrecognized expense of $2.3 million net of forfeitures is expected to be charged to expense on a graded basis as the PSUs vest over a weighted-average period of approximately 2 years.

Restricted Stock Units

For the three months ended March 31, 2025, the Board of Directors granted RSUs under the 2013 Plan to employees for an aggregate of approximately 0.6 million shares of Common Stock. RSU grants vest over periods generally ranging from 12 to 36 months from the respective grant dates and the awards are subject to forfeiture upon termination of employment or service on the Board of Directors, as applicable. Based on the weighted average fair market value of the Common Stock on the date of grant of $3.48 per share, the aggregate fair value for the shares underlying the RSUs amounted to $1.9 million as of the grant date that will be recognized as compensation cost over the vesting period.

For the three months ended March 31, 2025 and 2024, the Company recognized compensation expense related to RSUs of approximately $1.4 million and $1.2 million, respectively. As of March 31, 2025, the unrecognized expense of $9.6 million net of forfeitures is expected to be charged to expense on a straight-line basis as the RSUs vest over a weighted-average period of approximately 2.2 years.

Stock Options

For the three months ended March 31, 2025, the Board of Directors granted stock options for the purchase of an aggregate of approximately 0.5 million shares of Common Stock at exercise prices that were equal to the fair market value of the Common Stock on the date of grant. Options granted to employees generally vest as to one-third of the shares subject to the award on each anniversary of the designated vesting commencement date, which may precede the grant date of such award, and expireten years after the grant date.

The following table sets forth a summary of stock option activity under the 2013 Plan for the three months ended March 31, 2025 (shares in thousands):

(1)Represents the weighted average exercise price.

(2)Represents the weighted average remaining contractual term until the stock options expire in years.

(3)As of March 31, 2025, the aggregate intrinsic value of all stock options outstanding was $2.9 million. As of March 31, 2025, there was an aggregate intrinsic value of $0.1 million related to the vested stock options.

(4)The number of outstanding stock options that are not expected to ultimately vest due to forfeiture amounted to 0.6 million shares as of March 31, 2025.

The aggregate fair value of approximately 0.5 million stock options granted for the three months ended March 31, 2025 amounted to $1.1 million, or $2.18 per stock option as of the grant date utilizing the Black-Scholes-Merton (“BSM”) method. The fair valued derived under the BSM method will result in the recognition of compensation cost over the vesting period of the stock options. For the three months ended March 31, 2025, the fair value of each stock option grant under the 2013 Plan was estimated on the date of grant using the BSM option-pricing model, with the following weighted-average assumptions:

As of March 31, 2025 and December 31, 2024, total unrecognized compensation costs related to unvested stock options, net of estimated forfeitures, was $6.1 million and $5.7 million, respectively. As of March 31, 2025, the unrecognized costs are expected to be charged to expense on a straight-line basis over a weighted-average vesting period of approximately 2.2 years.

Shares Available for Grant

The following table presents activity affecting the total number of shares available for grant under the 2013 Plan for the three months ended March 31, 2025 (in thousands):

Stock-Based Compensation Expense

Stock-based compensation expense attributable to PSUs, RSUs and stock options is classified as follows (in thousands):

Warrants

As of March 31, 2025, warrants were outstanding for an aggregate of 3.4 million shares of Common Stock exercisable at $5.64 per share. For additional information about these warrants, please refer to Note 7 to the Company’s Consolidated Financial Statements for the year ended December 31, 2024, included in Part II, Item 8 of the 2024 Form 10-K.

NOTE 7 —INCOME TAXES

For the three months ended March 31, 2025 and 2024, the Company’s effective tax rate was 56.0% and 55.9%, respectively. The Company’s income tax expense was attributable to the income before income taxes and foreign withholding taxes. The Company did not have any changes to its conclusions regarding valuation allowances for deferred income tax assets or uncertain tax positions for the three months ended March 31, 2025 and 2024.

For additional information about income taxes, please refer to Note 8 to the Company’s Consolidated Financial Statements for the year ended December 31, 2024, included in Part II, Item 8 of the 2024 Form 10-K.

NOTE 8 —COMMITMENTS AND CONTINGENCIES

Purchase Commitments

The Company’s purchase commitments as of March 31, 2025 are primarily related to agreements to purchase services in the ordinary course of business. As of March 31, 2025, the total minimum purchase obligations totaled $11.1 million. There have been no other material changes outside the normal course of business to the Company’s non-cancellable purchases commitments. For additional information, please refer to Note 9 to the Company’s Consolidated Financial Statements for the year ended December 31, 2024, included in Part II, Item 8 of the 2024 Form 10-K.

Retirement Plan

The Company has defined contribution plans for both its U.S. and foreign employees. For certain of these plans, employees may contribute up to the statutory maximum, which is set by law each year. The plans also provide for employer contributions. For the three months ended March 31, 2025 and 2024, the Company’s matching contributions to these plans totaled $0.8 million and $0.9 million, respectively.

Litigation with Oracle

The Company and its President, Chief Executive Officer and Chairman of the Board, Seth Ravin, have been involved in litigation with certain subsidiaries of Oracle Corporation (together with its subsidiaries individually and collectively, “Oracle”) since 2010. All matters relating to the initial lawsuit, Oracle USA, Inc. et al. v. Rimini Street, Inc. et al. (United States District Court for the District of Nevada) (the “District Court”), known as “Rimini I,” have concluded, with the exception of a permanent injunction (discussed below) that remains in effect. Please refer to Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Form 10-K for the year ended December 31, 2024 for additional information regarding the Rimini I litigation.

Rimini I Permanent Injunction

Since August 2018, the Company has been subject to a permanent injunction (the “Rimini I Injunction”) prohibiting it from using certain support processes that had been found in Rimini I to “innocently” infringe certain Oracle copyrights. The Rimini I Injunction does not prohibit the Company’s provision of support services for any Oracle product lines, but rather defines the manner in which the Company can provide support services for certain Oracle product lines.

Previously, the Company was the subject of contempt proceedings filed by Oracle in July 2020 alleging that the Company was in violation of the Rimini I Injunction. As of December 2023, all matters relating to the Rimini I Injunction contempt proceedings have been resolved. For additional information regarding the July 2020 Rimini I Injunction contempt proceedings, please refer to Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Form 10-K for the year ended December 31, 2024.

At this time, the Company believes that it is in substantial compliance with the Rimini I Injunction.

Rimini II Litigation

In October 2014, the Company filed a separate lawsuit, now captioned Oracle Int’l Corp. v. Rimini Street, Inc., in the District Court against Oracle seeking a declaratory judgment that the Company’s revised “Process 2.0” support practices, in use since at least July 2014, did not infringe certain Oracle copyrights (“Rimini II”). The Company’s operative complaint in the Rimini II litigation asserted declaratory judgment, tort, and statutory claims, including a request for injunctive relief against Oracle for unfair competition in violation of the California Unfair Competition Law. Oracle asserted counterclaims including copyright infringement claims, violations of the Digital Millennium Copyright Act (“DMCA”) and Lanham Act, breach of contract and business tort violations with respect to PeopleSoft and other Oracle-branded products, including J.D. Edwards (“JDE”), Siebel, Oracle Database and Oracle E-Business Suite (“EBS”).

In October 2022, Oracle withdrew all of its monetary damages claims against the Company and Mr. Ravin in Rimini II and moved to proceed with a bench trial instead of a jury trial for its claims for equitable relief.

The ensuing order entered by the District Court dismissed with prejudice Oracle’s claims in Rimini II “for monetary relief of any kind under any legal theory[,] including but not limited to claims for damages, restitution, unjust enrichment, and engorgement. . . .” In addition, Oracle’s claims for breach of contract, inducing breach of contract, an accounting and monetary relief of any kind were dismissed with prejudice. Prior to the date of the District Court’s order dismissing with prejudice all of Oracle’s claims for monetary relief, no damages of any kind were awarded by the District Court in Rimini II. The parties each reserved the right to seek or object to any attorneys’ fees and/or costs to the extent permissible by law.

The District Court issued its findings of fact and conclusions of law in Rimini II in July 2023, accompanied by a permanent injunction against the Company (the “Original Rimini II Injunction”), which was vacated in large part by the Ninth Circuit Court of Appeals (the “Ninth Circuit”) on appeal and subsequently vacated in its entirety by the District Court prior to being reissued in modified form in late April 2025, in each case as described further below.

In its July 2023 ruling, the District Court found infringement as to Oracle’s PeopleSoft and Oracle Database products but did not find infringement as to Oracle’s EBS, Siebel and JDE products, further ordering that the Company was entitled to a declaration of non-infringement for Oracle’s EBS product. The District Court also found in favor of Oracle on its DMCA and Lanham Act claims, enjoining the Company from publicly making fifteen statements (or statements substantially similar to these statements) identified in the Original Rimini II Injunction that were found by the District Court to be “false and misleading” (such statements, collectively, the “Enjoined Statements”) and prohibiting certain actions in connection with the manner of marketing, selling and providing services to clients of the Oracle products in question, as well as on indirect and vicarious copyright infringement claims against Mr. Ravin. The District Court denied the Company’s California Unfair Competition Law claim and other declaratory judgment claims.

In July 2023, the Company filed a notice of appeal in the District Court, commencing an appeal of the District Court’s July 2023 Rimini II judgment and Injunction with the Ninth Circuit. During the course of the appeal (and until it was eventually vacated in its entirety by the District Court prior to being reissued in modified form in late April 2025), the Original Rimini II Injunction was subject to an administrative stay imposed by the District Court (meaning that it was not in effect and could not be enforced).

The Ninth Circuit issued its decision on the Company’s appeal on December 16, 2024. In its decision, the Ninth Circuit vacated multiple copyright rulings, reversed in part the District Court’s Lanham Act ruling, and vacated the portions of the Original Rimini II Injunction that the Company appealed. The Ninth Circuit rejected the test for derivative works adopted by the District Court and, accordingly, the District Court’s associated holdings based on the application of this erroneous standard, remanding this issue to the District Court. The Ninth Circuit also vacated a previous order of the District Court striking the “essential step” defense provided to the Company under Section 117(a) of the Copyright Act (the “Section 117(a) Defense”), as well as the District Court’s ruling that certain client environments containing Oracle Database software violated the license agreements, also remanding these issues to the District Court. The Court found all but one of twelve statements regarding security to be nonactionable under the Lanham Act and, therefore, reversed the ruling and vacated the injunction as to eleven statements (the Company chose not to appeal the actionability under the Lanham Act of three of the original fifteen Enjoined Statements). Finally, the Ninth Circuit denied the Company’s previously filed motion to stay the Original Rimini II Injunction, finding that the Company’s motion was moot based on its decision.

On January 29, 2025, Oracle filed a petition for panel rehearing and rehearingen banc in the Ninth Circuit, arguing that the panel had erred in its rulings regarding Section 117(a), derivative works, one of the security-related statements under the Lanham Act, and vacatur of portions of the injunction the Company appealed. On February 25, 2025, the Ninth Circuit denied Oracle’s petition for panel rehearing and rehearingen banc.

On March 5, 2025, the Ninth Circuit issued its mandate, returning jurisdiction over the Rimini II litigation, including the Original Rimini II Injunction, to the District Court, which, in turn, issued an order requiring the parties to meet and confer and file a joint status report with the District Court addressing the effect of the Ninth Circuit’s December 2024 decision on its July 2023 rulings (including the Original Rimini II Injunction), outlining how the District Court should proceed to expeditiously address the remaining Rimini II litigation matters on remand and proposing a schedule to bring the Rimini II litigation to final resolution. The parties filed the joint status report on April 1, 2025, and a hearing on the joint status report was conducted on April 21, 2025, during which the District Court ordered the parties to meet and confer and file by May 5, 2025, a proposed schedule for limited discovery regarding the Company’s Section 117(a) Defense and the parties’ briefing regarding liability, affirmative defenses, and injunctive relief.

On April 24, 2025, the District Court entered its order on mandate, identifying the items to be considered by the District Court on remand, as follows: (i) the merits of Oracle’s copyright infringement claim regarding the Company’s support practices for Oracle PeopleSoft products using the test for “derivative works” specifically identified by the Ninth Circuit in its December 2024 decision, (ii) the disposition of the Company’s resurrected affirmative defense against claims of copyright infringement under Section 117(a) of the Copyright Act (which provides, in part, that “it is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided [ . . . ] that such a new copy or adaptation is created as an essential step in the utilization of the computer program”) and (iii) the scope and content of any injunctive relief to be awarded to Oracle should it prevail on its copyright infringement claims.

In its order on mandate, the District Court clarified that “the parties agreed at the [April 21, 2025] hearing that all outstanding copyright infringement issues [in the Rimini II litigation] relate [only] to the Company’s PeopleSoft support processes” and, consistent with this statement, vacated previous conclusions of law that were either reversed or partially or entirely vacated by the Ninth Circuit. The District Court also (i) vacated its July 2023 judgment (indicating that it will issue a new judgment upon conclusion of the mandate proceedings, (ii) vacated the Original Rimini II Injunction in its entirety, issuing a modified permanent injunction (the “Modified Rimini II Injunction”), as described further below under the heading “Modified Rimini II Injunction,” and (iii) affirmed that it would permit the Company to conduct limited discovery relevant to its Section 117(a) Defense.

The parties must jointly file proposed discovery, briefing and hearing schedules with the District Court no later than May 5, 2025.

Oracle has 90 days from the date the Ninth Circuit denied its petition for rehearing to file a petition for writ of certiorari in the United States Supreme Court. Oracle may or may not choose to pursue an appeal, and the Company cannot predict whether any such appeal would be successful. Further, no assurance is or can be given that the District Court will rule in a manner that is favorable to the Company on any issues relating to the Rimini II litigation that are reconsidered on remand.

Finally, no assurance is or can be given that the District Court will not issue another permanent injunction impacting the manner in which the Company can provide support for Oracle’s PeopleSoft software product lines. Any required changes to how support services are delivered to the Company’s PeopleSoft clients could have a material adverse impact on the Company’s financial position, results of operations and cash flows. The percentage of revenue derived from services the Company provides solely for Oracle’s PeopleSoft software product was approximately 7% of the Company’s total revenue for the three months ended March 31, 2025.

The Company reserves all rights, including appellate rights, with respect to the matters described above.

Modified Rimini II Injunction

The Original Rimini II Injunction, if effective substantially as originally ordered by the District Court, would have limited, but not fully prohibited, the support services the Company could provide its clients using Oracle’s PeopleSoft software product. The Modified Rimini II Injunction contains no such limitations.

Like the Original Rimini II Injunction, the Modified Rimini II Injunction specifies that the Company shall not remove, alter or omit any Oracle copyright notices or other Oracle copyright management information from any file that contains an Oracle copyright notice.

Further, the Modified Rimini II Injunction prohibits the Company from publicly making four statements (or statements substantially similar to such statements), consisting of the three (out of the original fifteen) Enjoined Statements that were not included in the Company’s appeal to the Ninth Circuit and the one Enjoined Statement (out of the twelve Enjoined Statements included in the Company’s appeal to the Ninth Circuit) that the Ninth Circuit found was actionable under the Lanham Act. Unlike the Original Rimini II Injunction, however, the Modified Rimini II Injunction does not require the Company to issue a corrective press release regarding the four statements.

As of the date of this Report, the Company believes that it is in substantial compliance with the Modified Rimini II Injunction. For additional information regarding the Original Rimini II Injunction, please refer to Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Form 10-K for the year ended December 31, 2024.

The Company’s Appeal of the District Court’s Award of Attorneys’ Fees and Costs to Oracle

In November 2023, Oracle filed a motion with the District Court requesting attorneys’ fees and costs of approximately $70.6 million relating to the Rimini II litigation. On September 23, 2024, the District Court issued its order on Oracle’s motion for attorneys’ fees and costs, granting in part and denying in part the motion, awarding Oracle $58.2 million in attorneys’ fees and $0.3 million in costs. For the year ended December 31, 2024, the Company paid a total of $58.7 million to Oracle related to this matter, including post-judgment interest of $0.2 million paid to Oracle on November 13, 2024.

In September 2024, the Company filed a notice of appeal in the District Court, commencing an appeal of the District Court’s award of attorneys’ fees and costs to Oracle. As of the date of this Report, the Company’s appeal remains pending. On March 5, 2025, Oracle filed a motion for an indicative ruling in the District Court regarding the award of attorneys’ fees and costs. After being briefed by both the Company and Oracle on this matter, on April 21, 2025, the District Court denied Oracle’s motion and, shortly thereafter, the Company notified the Ninth Circuit of the District Court’s ruling.

The Company filed its opening brief with the Ninth Circuit on March 11, 2025, and Oracle’s answering brief is due on May 12, 2025. The Company’s optional reply brief is due 21 days after Oracle files its answering brief.

While the Company plans to continue to vigorously pursue its appeal of the District Court’s award of attorneys’ fees and costs to Oracle in the Rimini II litigation, the Company is unable to predict the timing or outcome of this matter. No assurance is or can be given that the Company will prevail in its appeal of the District Court’s award of attorneys’ fees and costs to Oracle in the Rimini II litigation or if there are any issues in the Rimini II litigation that become subject to further appeal.

The Company reserves all rights, including appellate rights, with respect to the District Court’s rulings on the matters currently on remand in the Rimini II litigation, as well as its pending appeal of the award of attorneys’ fees and costs to Oracle.

Other Litigation

From time to time, the Company may be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business. Regardless of the outcome, litigation can have an adverse impact on the Company because of judgment, defense and settlement costs, diversion of management resources and other factors. At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies. Legal fees are expensed as incurred.

Liquidated Damages

The Company enters into agreements with clients that contain provisions related to liquidated damages that would be triggered in the event that the Company is no longer able to provide services to these clients. The maximum cash payments related to these liquidated damages is approximately $7.7 million and $7.2 million as of March 31, 2025 and December 31, 2024, respectively. To date, the Company has not incurred any costs as a result of such provisions and has not accrued any liabilities related to such provisions in these Unaudited Condensed Consolidated Financial Statements.

NOTE 9 —RELATED PARTY TRANSACTIONS

An affiliate of Adams Street Partners and its affiliates (collectively referred to as “ASP”) is a member of the Company’s Board of Directors. As of March 31, 2025, ASP owned approximately 25.8% of the Company’s issued and outstanding shares of Common Stock.

NOTE 10 —EARNINGS PER SHARE

The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share of Common Stock is computed by dividing net income attributable to common stockholders by the weighted average number of shares of basic Common Stock outstanding. Diluted earnings per share of Common Stock is calculated by adjusting the basic earnings per share of Common Stock for the effects of potential dilutive Common Stock shares outstanding such as stock options, restricted stock units and warrants.

For the three months ended March 31, 2025 and 2024, basic and diluted net earnings per share of Common Stock were computed by dividing the net income attributable to common stockholders by the weighted average number of common shares outstanding during the respective periods. The following tables set forth the computation of basic and diluted net income attributable to common stockholders (in thousands, except per share amounts):

The following potential Common Stock equivalents were excluded from the computation of diluted net income per share for the respective periods ending on these dates, since the impact of inclusion was anti-dilutive (in thousands):

NOTE 11 —FINANCIAL INSTRUMENTS

Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. Additional information on fair value measurements is included in Note 12 to the Company’s Consolidated Financial Statements for the year ended December 31, 2024, included in Part II, Item 8 of the 2024 Form 10-K.

The Company’s policy is to recognize asset or liability transfers among Level 1, Level 2 and Level 3 as of the actual date of the events or change in circumstances that caused the transfer.

Investments

All of the Company’s investments as of March 31, 2025 are classified as cash equivalents. During the three months ended March 31, 2024, the Company transferred its investments in U.S. Federal agency bonds and U.S. treasury notes into other highly liquid interest-earning investments with maturities of less than three months. The fair values of these investments approximate their carrying values and are considered Level 1 assets.

The Company considers all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Debt investments are classified as available-for-sale and gains and losses are recorded using the specific identification method. Changes in fair value are recorded in the operating statement. Fair value is calculated based on publicly available market information.

Derivatives

The Company uses derivatives to manage the risk associated with changes in interest rates. The Company does not enter into derivatives for speculative purposes. As discussed in Note 5, the interest rate swap agreement has a notional value of $40.0 million, with a fixed payer SOFR rate of 3.71% and an initial floating SOFR rate of 5.32%. The derivative was recognized in the accompanying Unaudited Condensed Consolidated Balance Sheets at its estimated fair value as of March 31, 2025.

To estimate fair value for the Company's interest rate swap agreement as of March 31, 2025, the Company utilized a present value of future cash flows, leveraging a model-derived valuation that uses Level 2 observable inputs such as interest rate yield curves. The Company estimated the fair value of the interest rate swap agreement to be a liability of $0.2 million as of March 31, 2025.

Changes in the fair value of the derivatives that qualify as cash flow hedges are recorded in Accumulated other comprehensive loss in the accompanying Unaudited Condensed Consolidated Balance Sheets until earnings are affected by the variability of the cash flows.

The amounts recorded for the interest rate swap agreement are described below (in thousands):

NOTE 12 -LEASES

The Company has operating leases for real estate and equipment with an option to renew the leases for up toone month tofive years. Some of the leases include the option to terminate the leases upon a specified notice period with a penalty. The Company’s leases have various remaining lease terms ranging fromtwo months tofifty-nine months.

As of March 31, 2025, the Company did not have any additional material operating leases that had not yet commenced.

The components of lease expense and supplemental balance sheet information were as follows (in thousands):

Other information related to leases was as follows (in thousands):

Maturities of operating lease liabilities as of March 31, 2025 were as follows (in thousands):

For the three months ended March 31, 2025 and 2024, the Company paid $1.5 million and $1.4 million, respectively, for operating lease liabilities.

NOTE 13 -SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

The Company operates asone operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (the “CODM”) in deciding how to allocate resources and assess performance. The CODM assesses the performance of the Company and decides how to allocate resources based on consolidated net income, which is identical to the information presented in the accompanying Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. The measure of segment assets is reported in the Unaudited Condensed Consolidated Balance Sheets as total assets. Additional information on segment information is included in Note 13 to the Company’s Consolidated Financial Statements for the year ended December 31, 2024, included in Part II, Item 8 of the 2024 Form 10-K.

The following table presents selected financial information with respect to the Company’s single operating segment for the three months ended March 31, 2025 and 2024 (in thousands):

(a) Adjusted to exclude stock-based compensation expense.

(b) Adjusted to exclude depreciation and amortization expense.

(c) Adjusted to exclude stock-based compensation expense as well as depreciation and amortization expense.

Geographic Information

The Company attributes revenues to geographic regions based on the location of its clients. The following table shows revenues by geographic region (in thousands):

For the three months ended March 31, 2025 and 2024, Japan represented 10.4% and 9.6% of total revenue, respectively.

No clients represented more than 10% of revenue for the three months ended March 31, 2025 and 2024. As of March 31, 2025 and December 31, 2024, no clients accounted for more than 10% of total net accounts receivable.

The Company tracks its assets by physical location. The following shows the net carrying value of the Company’s property and equipment by geographic region (in thousands):

The operating lease ROU assets by geographic region were as follows (in thousands):

Prior year amounts of property and equipment for India and Brazil, and ROU assets for Korea, have been reclassified from Rest of World for consistency with the current year presentation. This reclassification had no effect on the Unaudited Condensed Consolidated Financial Statements.