Rimini Street, Inc.
For the period ended Jun 30, 2026. Filed Jul 30, 2026.
View on SEC.govAbout this filing
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.
Jun 30, 2026 · Filed Jul 30, 2026
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 2026-03-31; filed 2026-04-30.
0001635282-26-000042
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-30.
0001635282-26-000056
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 132 previous paragraphs and 155 current paragraphs.
93 unchanged; 37 reworded; 12 added; 2 removed; 0 previous and 13 current paragraphs rearranged.
Tables are not compared: 3 previous and 7 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 (12)
Current report
•risks relating to sales of our products and services to governmental entities;
Current report
On a geographic basis, United States revenue declined from $49.2 million for the three months ended June 30, 2025 to $48.4 million for the three months ended June 30, 2026, a decrease of $0.8 million or 2%. Excluding revenue for Oracle’s PeopleSoft software products, U.S. revenue increased 3%. Our international revenue grew from $55.0 million for the three months ended June 30, 2025 to $62.7 million for the three months ended June 30, 2026, an increase of $7.8 million or 14%. Excluding revenue for Oracle’s PeopleSoft software products, international revenue increased 16%.
Current report
Presented below is a reconciliation of actual reported revenue to adjusted revenue, which excludes PeopleSoft revenue (in thousands):
Current report
General and administrative expenses. General and administrative expenses increased from $16.8 million for the three months ended June 30, 2025 to $17.3 million for the three months ended June 30, 2026, an increase of $0.5 million or 3%. This increase was generally due to the following: (i) an increase in employee compensation and benefits of $0.3 million, (ii) an increase in computer and software licenses of $0.6 million, (iii) an increase in professional services of $0.3 million and (iv) an increase of other costs of approximately $1.0 million. The unfavorable variances were offset primarily by an increased benefit of administrative allocation expenses of $1.6 million.
Current report
On July 9, 2025, in accordance with the terms of the Settlement Agreement, we received from Oracle approximately $37.9 million of the $58.7 million in attorneys’ fees and costs that we previously paid to Oracle in late 2024. As a result, we recognized the loss recovery as litigation settlement income of $36.2 million and interest income of $1.7 million for the three months ended June 30, 2025.
Current report
Comparison of Six Months Ended June 30, 2026 and 2025
Current report
Revenue. Revenue grew from $208.3 million for the six months ended June 30, 2025 to $216.5 million for the six months ended June 30, 2026, an increase of $8.2 million or 4%. The increase in revenue was driven primarily by growth in our subscription revenue of $5.9 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Excluding revenue for Oracle’s PeopleSoft software products, adjusted revenue increased by 8% for the six months ended June 30, 2026.
Current report
On a geographic basis, United States revenue declined from $99.3 million for the six months ended June 30, 2025 to $95.3 million for the six months ended June 30, 2026, a decrease of $4.0 million or 4%. Excluding revenue for Oracle’s PeopleSoft software products, U.S. revenue increased by 1% for the six months ended June 30, 2026. Our international revenue grew from $109.1 million for the six months ended June 30, 2025 to $121.3 million for the six months ended June 30, 2026, an increase of $12.2 million or 11%. Excluding revenue for Oracle’s PeopleSoft software products, international revenue increased by 13% for the six months ended June 30, 2026.
Current report
Presented below is a reconciliation of actual reported revenue to adjusted revenue, which excludes PeopleSoft revenue (in thousands):
Current report
Cost of revenue. Cost of revenue increased from $81.9 million for the six months ended June 30, 2025 to $86.6 million for the six months ended June 30, 2026, an increase of $4.7 million or 6%. The key drivers related to the cost of revenue increase were a $2.8 million increase in engineering consulting costs, a $1.5 million increase in administrative allocations, and a $0.5 million increase in all other costs. These unfavorable variances were slightly offset by a decrease in employee compensation and benefits of $0.2 million.
Current report
On July 9, 2025, in accordance with the terms of the Settlement Agreement, we received from Oracle approximately $37.9 million of the $58.7 million in attorneys’ fees and costs that we previously paid to Oracle in late 2024. As a result, we recognized the loss recovery as litigation settlement income of $36.2 million and interest income of $1.7 million for the six months ended June 30, 2025.
Current report
Interest expense. Interest expense decreased from $3.3 million for the six months ended June 30, 2025 to $2.4 million for the six months ended June 30, 2026. Interest expense declined due to multiple reasons. First, we had no borrowings under the revolving line of credit during the six months ended June 30, 2026 compared to an average principal balance of $13.5 million during the six months ended June 30, 2025. As result, the interest expense incurred under the revolving line of credit declined $0.5 million during the six months ended June 30, 2026. Second, we made voluntary prepayments of $10.0 million, $5.0 million and $5.0 million on June 25, 2026, March 30, 2026 and February 4, 2026, respectively, on the outstanding term loan principal balance. These payments resulted in a reduction of the outstanding average principal balance for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, which helped to reduce the interest expense by $0.5 million.
Removed paragraphs (2)
Previous report
Recent Developments
Previous report
Reference is made to Note 5 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for a discussion of recent developments regarding the first amendment dated March 27, 2026 to our Credit Facility, as originally executed.
Reworded paragraphs (37)
Previous wording
•our need and ability to raise equity or debt financing on favorable terms; our ability to generate cash flows from operations to help fund increased investment in our growth initiatives and the sufficiency of our cash and cash equivalents to meet our liquidity requirements;
Current wording
•our ability to generate cash flows from operations to help fund increased investment in our growth initiatives and the sufficiency of our cash and cash equivalents to meet our liquidity requirements;
Previous wording
As of March 31, 2026, we employed over 1,950 professionals and supported over 3,130 active clients globally, including 78 Fortune 500 companies and 20 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 June 30, 2026, we employed over 1,980 professionals and supported 3,132 active clients globally, including 78 Fortune 500 companies and 20 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 March 31, 2026 and 2025, we generated revenue of $105.5 million and $104.2 million, respectively, representing an increase of 1%. During the three months ended March 31, 2026, we recorded net income of $1.4 million, and as of March 31, 2026, we had an accumulated deficit of $200.0 million. Approximately 44% and 48% of our revenue was generated in the United States for the three months ended March 31, 2026 and 2025, respectively. Approximately 56% and 52% of our revenue was generated in foreign jurisdictions for the three months ended March 31, 2026 and 2025, respectively.
Current wording
Our subscription-based revenue provides a foundation for, and visibility into, future period results. For the three months ended June 30, 2026 and 2025, we generated revenue of $111.1 million and $104.1 million, respectively, representing an increase of 7%. During the three months ended June 30, 2026, we recorded net income of $2.4 million, and as of June 30, 2026, we had an accumulated deficit of $197.6 million. Approximately 44% and 47% of our revenue was generated in the United States for the three months ended June 30, 2026 and 2025, respectively. Approximately 56% and 53% of our revenue was generated in foreign jurisdictions for the three months ended June 30, 2026 and 2025, respectively.
Previous wording
On July 7, 2025, we and Mr. Ravin entered into a Settlement Agreement with Oracle Corporation relating to the Rimini II litigation. Under the terms of this agreement, we are required to complete the Wind Down no later than July 31, 2028 (the “Wind Down Period”). As we provide services for Oracle PeopleSoft products to clients globally, the Wind Down process is expected to take place over the Wind Down Period, but both the pace of revenue reduction and the final date that the Company will receive revenue from the discontinued services is unknown as of the date of this Report. We expect significant reductions in revenue related to services for Oracle PeopleSoft products over the course of the Wind Down Period. Revenue related to providing services for Oracle PeopleSoft products accounted for approximately 3% of revenue for the three months ended March 31, 2026 and approximately 7% of revenue for the three months ended March 31, 2025.
Current wording
On July 7, 2025, we and Mr. Ravin entered into a Settlement Agreement with Oracle Corporation relating to the Rimini II litigation. Under the terms of this agreement, we are required to complete the Wind Down no later than July 31, 2028 (the “Wind Down Period”). As we provide services for Oracle PeopleSoft products to clients globally, the Wind Down process is expected to take place over the Wind Down Period, but both the pace of revenue reduction and the final date that the Company will receive revenue from the discontinued services is unknown as of the date of this Report. We expect significant reductions in revenue related to services for Oracle PeopleSoft products over the course of the Wind Down Period. Revenue related to providing services for Oracle PeopleSoft products accounted for approximately 3% and 6% of revenue for the six months ended June 30, 2026 and 2025, respectively.
Previous wording
Uncertainty regarding changes continuing to be made in laws and regulations by the current U.S. administration, changing interest rates, along with uncertainty about U.S. trade policies, 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 in non-sanctioned countries 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, 2026.
Current wording
Uncertainty regarding changes continuing to be made in laws and regulations by the current U.S. administration, changing interest rates, along with uncertainty about U.S. trade policies, 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 in non-sanctioned countries 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 and six months ended June 30, 2026.
Previous wording
The extent to which 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 inflation, interest rate changes 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 inflation, interest rate changes and continuing global economic and geopolitical uncertainty will 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 inflation, interest rate changes 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
Since the founding of 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, 2026 and 2025, we had approximately 3,130 and 3,092 active clients, respectively.
Current wording
Since the founding of 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 June 30, 2026 and 2025, we had 3,132 and 3,060 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 March 31, 2026 and 2025, we had approximately 1,572 and 1,575 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 June 30, 2026 and 2025, we had 1,569 and 1,553 unique clients, respectively.
Previous wording
The increase in our active client counts is attributable to a combination of new unique client wins as well as to cross-sales of new support, products and services to existing clients. While we saw strong unique client wins throughout the quarter, we did lose some clients with a single product line, which resulted in a decline in our ending unique client count. As noted previously, we intend to focus future growth on both new and existing clients who more broadly adopt our enterprise software products and services.
Current wording
The increase in both our active and unique client counts is attributable to a combination of new unique client wins as well as to cross-sales of new support, products and services to existing clients. As noted previously, we intend to focus future growth on both new and existing clients who more broadly adopt our enterprise software products and services.
Previous wording
We recognize subscription revenue on a daily basis. We define annualized recurring revenue as the amount of subscription revenue recognized during a quarter and multiplied by four. This gives us an indication of the revenue that can be earned in the following 12-month period from our existing client base, assuming no cancellations or price changes occur during that period. Subscription revenue, which excludes any non-recurring revenue, was $100 million, or 95% of total revenue for the three months ended March 31, 2026 and $99 million, or 95% of total revenue for the three months ended March 31, 2025. Excluding subscription revenue from support for Oracle PeopleSoft products, our subscription revenue was $97 million and $92 million as of March 31, 2026 and 2025, respectively.
Current wording
We recognize subscription revenue on a daily basis. We define annualized recurring revenue as the amount of subscription revenue recognized during a quarter and multiplied by four. This gives us an indication of the revenue that can be earned in the following 12-month period from our existing client base, assuming no cancellations or price changes occur during that period. Subscription revenue, which excludes any non-recurring revenue, was $103 million, or 93% of total revenue, for the three months ended June 30, 2026 and $99 million, or 95% of total revenue for the three months ended June 30, 2025. Excluding subscription revenue from support for Oracle PeopleSoft products, our subscription revenue was $100 million and $93 million for the three months ended June 30, 2026 and 2025, respectively.
Previous wording
Our annualized recurring revenue was $401 million and $396 million as of March 31, 2026 and 2025, respectively. Excluding subscription revenue from support for Oracle PeopleSoft products, our annualized subscription revenue was $388 million and $370 million as of March 31, 2026 and 2025, respectively.
Current wording
Our annualized recurring revenue was $413 million and $394 million as of June 30, 2026 and 2025, respectively. Excluding subscription revenue from support for Oracle PeopleSoft products, our annualized subscription revenue was $401 million and $371 million as of June 30, 2026 and 2025, respectively.
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 88% and 88% for the 12 months ended March 31, 2026 and 2025, respectively.
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 90% and 90% for the 12 months ended June 30, 2026 and 2025, respectively.
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 59.0% and 61.0% for the three months ended March 31, 2026 and 2025, respectively. Our gross profit margin declined for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to increases in engineering consulting costs and allocations of overhead costs.
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 60.9% and 60.4% for the three months ended June 30, 2026 and 2025, respectively.
Previous wording
Revenue. Revenue grew from $104.2 million for the three months ended March 31, 2025 to $105.5 million for the three months ended March 31, 2026, an increase of $1.3 million or 1%. The increase in revenue was driven by growth in our subscription revenue of $1.2 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. On a geographic basis, United States revenue declined from $50.1 million for the three months ended March 31, 2025 to $46.9 million for the three months ended March 31, 2026, a decrease of $3.2 million or 6%. Our international revenue grew from $54.1 million for the three months ended March 31, 2025 to $58.6 million for the three months ended March 31, 2026, an increase of $4.5 million or 8%.
Current wording
Revenue. Revenue grew from $104.1 million for the three months ended June 30, 2025 to $111.1 million for the three months ended June 30, 2026, an increase of $7.0 million or 7%. The increase in revenue was driven primarily by growth in our subscription revenue of $4.7 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Excluding revenue for Oracle’s PeopleSoft software products, adjusted revenue increased by 10% for the three months ended June 30, 2026.
Previous wording
We are required to complete our previously-announced Wind Down of support and services for Oracle PeopleSoft products no later than July 31, 2028. The percentage of revenue derived from support and services the Company provides solely for Oracle PeopleSoft products was approximately 3% and 7% of the Company’s total revenue for the three months ended March 31, 2026 and 2025, respectively.
Current wording
We are required to complete our previously-announced Wind Down of support and services for Oracle PeopleSoft products no later than July 31, 2028. The percentage of revenue derived from support and services the Company provides solely for Oracle PeopleSoft products was approximately 3% and 6% of the Company’s total revenue for the three months ended June 30, 2026 and 2025, respectively.
Previous wording
Cost of revenue. Cost of revenue increased from $40.7 million for the three months ended March 31, 2025 to $43.2 million for the three months ended March 31, 2026, an increase of $2.5 million or 6%. The key drivers related to the cost of revenue increase were a $1.5 million increase in engineering consulting costs and a $0.9 million increase in administrative allocations and an increase in employee compensation and benefits of $0.3 million. These items were offset slightly by a $0.1 million decrease in all other costs.
Current wording
Cost of revenue. Cost of revenue increased from $41.3 million for the three months ended June 30, 2025 to $43.4 million for the three months ended June 30, 2026, an increase of $2.1 million or 5%. The key drivers related to the cost of revenue increase were a $1.3 million increase in engineering consulting costs, a $0.6 million increase in administrative allocations and a $0.6 million increase in all other costs. These items were slightly offset by a decrease in employee compensation and benefits of $0.5 million.
Previous wording
Gross profit. Gross profit decreased from $63.5 million for the three months ended March 31, 2025 to $62.3 million for the three months ended March 31, 2026, a decrease of $1.3 million or 2%. Gross profit margin for the three months ended March 31, 2025 was 61.0% compared to 59.0% for the three months ended March 31, 2026. For the three months ended March 31, 2026, the total cost of revenue increased by 6% compared to an increase in revenue of 1% for the three months ended March 31, 2026. As a result, our gross profit margin declined by 200 basis points period over period. We will continue to monitor and manage our overall gross margin as we enter and invest in a broader mix of products and services.
Current wording
Gross profit. Gross profit grew from $62.9 million for the three months ended June 30, 2025 to $67.7 million for the three months ended June 30, 2026, an increase of $4.8 million or 8%. Gross profit margin for the three months ended June 30, 2025 was 60.4% compared to 60.9% for the three months ended June 30, 2026. For the three months ended June 30, 2026, the total cost of revenue increased by 5% compared to an increase in revenue of 7% for the three months ended June 30, 2026. As a result, our gross profit margin improved by 50 basis points period over period. We will continue to monitor and manage our overall gross margin as we enter and invest in a broader mix of products and services.
Previous wording
Sales and marketing expenses. As a percentage of our revenue, sales and marketing expenses were 37% and 33% for the three months ended March 31, 2026 and 2025, respectively. In dollar terms, sales and marketing expenses increased from $34.3 million for the three months ended March 31, 2025 to $38.6 million for the three months ended March 31, 2026, an increase of $4.4 million or 13%. This increase was primarily due to the following; (i) a $1.5 million increase in employee compensation and benefits, (ii) a $1.2 million increase related to marketing programs and promotions, (iii) a $1.0 million increase in allocated costs, (iv) a $0.3 million increase in travel costs and (v) a $0.4 million increase in contract labor and all other costs. 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 38% and 37% for the three months ended June 30, 2026 and 2025, respectively. In dollar terms, sales and marketing expenses increased from $38.0 million for the three months ended June 30, 2025 to $42.7 million for the three months ended June 30, 2026, an increase of $4.7 million or 12%. This increase was primarily due to the following: (i) a $1.8 million increase in employee compensation and benefits, (ii) a $1.1 million increase in travel costs, (iii) a $1.1 million increase related to marketing programs and promotions and (iv) a $0.9 million increase in allocated costs. 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
Research and development expenses. In 2026, we made a strategic decision to utilize key personnel and resources to focus on research and development in regard to existing products as well as to develop new products for our technology solutions. Research and development expenses were $0.6 million for the three months ended March 31, 2026.
Current wording
Research and development expenses. In 2026, we made a strategic decision to utilize key personnel and resources to focus on research and development in regard to existing products as well as to develop new products for our technology solutions. Our primary development strategy is to incorporate Agentic AI solutions to extend the life cycle of existing highly customizable ERP systems by automating and organizing business processes for enhanced flexibility, scalability and integration. Research and development expenses were $1.1 million for the three months ended June 30, 2026.
Previous wording
Reorganization costs. Reorganization costs decreased from $0.5 million for the three months ended March 31, 2025 to $0.4 million for the three months ended March 31, 2026. The costs were primarily related to severance costs associated with our reorganization plan. We may incur additional reorganization costs during 2026 as we continue to optimize our cost structure in areas where opportunities exist to streamline our operations.
Current wording
Reorganization costs. Reorganization costs decreased from $0.7 million for the three months ended June 30, 2025 to $0.2 million for the three months ended June 30, 2026. The costs were primarily related to severance costs associated with our reorganization plan. We may incur additional reorganization costs during the second half of 2026 as we continue to optimize our cost structure in areas where opportunities exist to streamline our operations.
Previous wording
Professional fees and other costs associated with litigation decreased from $1.9 million for the three months ended March 31, 2025 to none for the three months ended March 31, 2026, a decrease of $1.9 million. Please refer to Note 8 to our Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Report, for additional information regarding our litigation with Oracle.
Current wording
Professional fees and other costs associated with the above litigation decreased from $2.3 million for the three months ended June 30, 2025 to none for the three months ended June 30, 2026. Please refer to Note 8 to our Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Report, for additional information regarding our litigation with Oracle.
Previous wording
Interest expense. Interest expense decreased from $1.7 million for the three months ended March 31, 2025 to $1.3 million for the three months ended March 31, 2026. Interest expense declined due to several reasons. To begin with, we had no borrowings under the revolving line of credit during the three months ended March 31, 2026 compared to borrowing $15.0 million during the three months ended March 31, 2025. As result, the interest expense incurred under the revolving line of credit declined $0.3 million during the three months ended March 31, 2026. In addition, the effective interest rate for the term loan was 7.4% for the three months ended March 31, 2026 compared to 8.0% for the three months ended March 31, 2025 as the SOFR was approximately 60 bps lower during three months ended March 31, 2026 compared to the three months ended March 31, 2025. Also, we made principal prepayments of $5.0 million on February 4, 2026 and $5.0 million on March 30, 2026 which impacted the interest expense incurred.
Current wording
Interest expense. Interest expense decreased from $1.6 million for the three months ended June 30, 2025 to $1.1 million for the three months ended June 30, 2026. Interest expense declined due to multiple reasons. First, we had no borrowings under the revolving line of credit during the three months ended June 30, 2026 compared to an average principal balance of $12.0 million during the three months ended June 30, 2025. As result, the interest expense incurred under the revolving line of credit declined $0.2 million during the three months ended June 30, 2026. Second, we made voluntary prepayments of $10.0 million, $5.0 million and $5.0 million on the outstanding term loan principal balance on June 25, 2026, March 30, 2026 and February 4, 2026, respectively. These payments resulted in a reduction of the outstanding average principal balance for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, which helped to reduce the interest expense by $0.3 million.
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 March 31, 2026, net other expense of approximately $1.2 million was comprised of foreign exchange losses of $1.7 million and other expenses of $0.2 million, which were offset by other income from cash and cash equivalent of $0.6 million. For the three months ended March 31, 2025, net other expense 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.
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 June 30, 2026, net other expense of approximately $0.3 million was comprised of foreign exchange losses of $1.1 million and other expenses of $0.1 million, which were offset by interest income from cash and cash equivalents of $0.9 million. For the three months ended June 30, 2025, net other income of approximately $1.2 million was comprised primarily of interest income from cash and cash equivalents of $2.6 million, which was offset by foreign exchange losses of $1.2 million and other expenses of $0.1 million.
Previous wording
Income taxes. We had an income tax expense of $4.3 million for the three months ended March 31, 2025 compared to $0.9 million for the three months ended March 31, 2026. For the three months ended March 31, 2026, the primary reason for the change in income taxes was due to a decrease of income before taxes of $5.3 million in the current year period compared to the prior year period.
Current wording
Income taxes. We had an income tax expense of $10.5 million for the three months ended June 30, 2025 compared to $2.6 million for the three months ended June 30, 2026. For the three months ended June 30, 2026, the primary reason for the change in income taxes was due to a decrease of income before taxes of $35.8 million in the current year period compared to the prior year period.
Previous wording
General and administrative expenses. General and administrative expenses increased from $17.5 million for the three months ended March 31, 2025 to $17.9 million for the three months ended March 31, 2026, an increase of $0.3 million or 2%. This increase was due to an increase in employee compensation and benefits of $1.6 million and an increase in computer and software licenses of $0.7 million. The unfavorable variances were offset primarily by an increased benefit of administrative allocation expenses of $1.9 million.
Current wording
General and administrative expenses. General and administrative expenses increased from $34.4 million for the six months ended June 30, 2025 to $35.2 million for the six months ended June 30, 2026, an increase of $0.8 million or 2%. This increase was due to the following; (i) an increase in employee compensation and benefits of $1.9 million, (ii) an increase in computer and software licenses of $1.2 million and (iii) an increase of other expenses totaling $1.1 million. These unfavorable variances were offset primarily by an increased benefit of administrative allocation expenses of $3.5 million.
Previous wording
As of March 31, 2026, we had a working capital deficit of $50.3 million and an accumulated deficit of $200.0 million. For the three months ended March 31, 2026, we recorded net income of $1.4 million. As of March 31, 2026, we had available cash, cash equivalents and restricted cash of $133.3 million.
Current wording
As of June 30, 2026, we had a working capital deficit of $50.0 million and an accumulated deficit of $197.6 million. For the three months ended June 30, 2026, we recorded net income of $2.4 million. As of June 30, 2026, we had available cash and cash equivalents of $123.4 million.
Previous wording
In April 2024, we refinanced our $90 million five-year term loan, which had an outstanding principal balance of $70.9 million, with our Credit Facility, a five-year senior secured credit facility consisting of a $75.0 million term loan and a $35.0 million revolving line of credit. As of March 31, 2026, we had outstanding term loan borrowings of $58.4 million and no borrowings on the revolving line of credit under our Credit Facility. During the three months ended March 31, 2026, we made principal payments of $5.0 million, $5.0 million and $0.9 million on February 4, 2026, March 30, 2026 and March 31, 2026, respectively. Our next scheduled principal payment is not until March 31, 2028, though we will evaluate whether additional principal prepayments will be made prior to that date. We are scheduled to pay $5.9 million of principal during fiscal 2028, with the remaining principal payments of $1.9 million and $50.6 million to be paid on March 30, 2029 and April 30, 2029, respectively.
Current wording
In April 2024, we refinanced our $90 million five-year term loan, which had an outstanding principal balance of $70.9 million, with our Credit Facility, a five-year senior secured credit facility consisting of a $75.0 million term loan and a $35.0 million revolving line of credit. As of June 30, 2026, we had outstanding term loan borrowings of $48.4 million and no borrowings on the revolving line of credit under our Credit Facility. During the six months ended June 30, 2026, we made aggregate principal payments of $20.9 million. Our next scheduled principal payment of $48.4 million is not due until April 30, 2029, though we will continue to evaluate whether any additional principal prepayments will be made prior to that date.
Previous wording
A key component of our business model requires that substantially all clients prepay us annually for the services we will provide over the following year or longer. As a result, we typically collect cash from our clients in advance of when the related service costs are incurred, which resulted in deferred revenue of $257.4 million that is included in current liabilities as of March 31, 2026. Therefore, we believe that working capital deficit is not as meaningful in evaluating our liquidity since the costs of fulfilling our commitments to provide services to clients are currently limited to approximately 41% of the related deferred revenue based on our gross profit percentage of 59% for the three months ended March 31, 2026.
Current wording
A key component of our business model requires that substantially all clients prepay us annually for the services we will provide over the following year or longer. As a result, we typically collect cash from our clients in advance of when the related service costs are incurred, which resulted in deferred revenue of $243.1 million that is included in current liabilities as of June 30, 2026. Therefore, we believe that working capital deficit is not as meaningful in evaluating our liquidity since the costs of fulfilling our commitments to provide services to clients are currently limited to approximately 39% of the related deferred revenue based on our gross profit percentage of 61% for the three months ended June 30, 2026.
Previous wording
For the next year, assuming that our operations are not significantly impacted by inflation, continued interest rate changes, other global economic or geopolitical uncertainties, 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 and cash equivalents of $132.2 million as of March 31, 2026, plus future cash flows from operating activities and our Credit Facility, will be sufficient to meet our anticipated cash needs including working capital requirements, planned capital expenditures and our contractual obligations.
Current wording
For the next year, assuming that our operations are not significantly impacted by inflation, continued interest rate changes, other global economic or geopolitical uncertainties, 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 and cash equivalents of $123.4 million as of June 30, 2026, plus future cash flows from operating activities and our Credit Facility, will be sufficient to meet our anticipated cash needs including working capital requirements, planned capital expenditures and our contractual obligations.
Previous wording
Our primary source of operating cash is collections from client billings. A key component of our business model generally requires that customers prepay us annually for the services we will provide over the following year or longer. As a result, we collect cash in advance of the date when the vast majority of the related services are provided. Our primary uses of operating cash are for employee-related expenditures, outsourced labor, marketing activities, computer supplies, software and licenses, litigation and leased facilities. For the three months ended March 31, 2026 and March 31, 2025, cash flow provided by operating activities amounted to $24.5 million and $33.7 million, respectively.
Current wording
Our primary source of operating cash is collections from client billings. A key component of our business model generally requires that customers prepay us annually for the services we will provide over the following year or longer. As a result, we collect cash in advance of the date when the vast majority of the related services are provided. Our primary uses of operating cash are for employee-related expenditures, outsourced labor, marketing activities, computer supplies, software and licenses, litigation and leased facilities. For the six months ended June 30, 2026 and June 30, 2025, cash flow provided by operating activities amounted to $22.9 million and $15.9 million, respectively.
Previous wording
For the three months ended March 31, 2026, cash flows provided by operating activities of $24.5 million consisted of net income of $1.4 million adjusted for non-cash expenses, net of $3.7 million, and favorable changes in operating assets and liabilities, net of $19.4 million. The favorable changes in operating assets and liabilities were driven primarily by a decrease in accounts receivable as we collected $138.1 million during the three months ended March 31, 2026 which was offset by billings, net of $95.3 million during the same period. Offsetting this favorable change was a decrease in deferred revenue as we recognized $10.2 million more in revenue than we billed, and a decrease in accrued compensation as we paid bonuses and commissions from the prior year.
Current wording
For the six months ended June 30, 2026, cash flows provided by operating activities of $22.9 million consisted of net income of $3.8 million adjusted for non-cash expenses, net of $8.7 million, and favorable changes in operating assets and liabilities, net of $10.4 million. The favorable changes in operating assets and liabilities were driven primarily by a decrease in accounts receivable as we collected $242.5 million during the six months ended June 30, 2026, which was offset by billings, net of $196.1 million during the same period. Offsetting this favorable change was a decrease in deferred revenue as we recognized $20.4 million more in revenue than we billed, and a decrease in accrued compensation as we paid bonuses and commissions from the prior year.
Previous wording
For the three months ended March 31, 2025, cash flows provided by operating activities of $33.7 million consisted of net income of $3.4 million adjusted for non-cash expenses, net of $7.4 million, and favorable changes in operating assets and liabilities, net of $22.9 million. The favorable changes in operating assets and liabilities were primarily driven by a decrease in accounts receivable as we collected $134.3 million during the three months ended March 31, 2025, which was offset by billings, net of $79.4 million during the same period. Offsetting this favorable change was a decrease in deferred revenue as we recognized $24.8 million more in revenue than we billed during the three months ended March 31, 2025.
Current wording
For the six months ended June 30, 2025, cash flows provided by operating activities of $15.9 million consisted of net income of $33.6 million adjusted for non-cash expenses, net of $20.7 million, and unfavorable changes in operating assets and liabilities, net of $38.4 million. The unfavorable changes in operating assets and liabilities were primarily driven by a decrease in accounts receivable as we collected $218.4 million during the six months ended June 30, 2025, which was offset by billings, net of $190.1 million during the same period. Offsetting this favorable change was a decrease in deferred revenue as we recognized $18.3 million more in revenue than we billed during the six months ended June 30, 2025.
Previous wording
For the three months ended March 31, 2026, cash flows used in investing activities of $0.6 million were driven by capital expenditures for computer equipment as we continued to invest in our business infrastructure and geographic locations, primarily in the U.S. and India.
Current wording
For the six months ended June 30, 2026, cash flows used in investing activities of $1.4 million were driven by capital expenditures for computer equipment and software as we continued to invest in our business infrastructure and geographic locations, primarily in the U.S. and India.
Previous wording
For the three months ended March 31, 2025, cash flows used in investing activities of $0.9 million were primarily driven by capital expenditures for leasehold improvements, software development costs, and computer equipment, primarily in Brazil, Korea and the U.S.
Current wording
For the six months ended June 30, 2025, cash flows used in investing activities of $2.7 million were primarily driven by capital expenditures for leasehold improvements, software development costs, and computer equipment, primarily in Brazil, Korea and the U.S.
Previous wording
For the three months ended March 31, 2026, cash utilized in financing activities of $10.6 million was attributable to principal payments related to the Credit Facility term loan offset, in part, by proceeds from stock option exercises.
Current wording
For the six months ended June 30, 2026, cash utilized in financing activities of $20.4 million was primarily attributable to principal payments of $20.9 million related to the Credit Facility term loan which were offset, in part, by proceeds from stock option exercises.
Previous wording
For the three months ended March 31, 2025, cash utilized in financing activities of $1.0 million was attributable to principal payments related to the Credit Facility term loan and finance lease payments offset, in part, by proceeds from stock option exercises.
Current wording
For the six months ended June 30, 2025, cash utilized in financing activities of $7.1 million was attributable to principal payments related to the Credit Facility revolving line of credit and term loan, and finance lease payments which were offset, in part, by proceeds from stock option exercises.
Previous wording
The effect of foreign currency translation changes was unfavorable for $1.1 million and favorable for $2.8 million for the three months ended March 31, 2026 and 2025, respectively. For the three months ended March 31, 2026, the unfavorable foreign currency impact was related to the local currencies in our foreign subsidiaries, such as Japan, strengthening against the U.S. Dollar. As of March 31, 2026, we had cash and cash equivalents of $63.8 million held by our foreign subsidiaries.
Current wording
The effect of foreign currency translation changes was favorable for $2.4 million and $7.0 million for the six months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026, the favorable foreign currency impact was related to our foreign subsidiaries’ local currencies. As of June 30, 2026, we had cash and cash equivalents of $29.4 million held by our foreign subsidiaries.
Rearranged current paragraphs (13)
Current report — wording carried from elsewhere
•our need and ability to raise equity or debt financing on favorable terms;
Current report — wording carried from elsewhere
Our consolidated statements of operations for the six months ended June 30, 2026 and 2025, are presented below (in thousands):
Current report — wording carried from 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.
Current report — wording carried from elsewhere
We are required to complete our previously-announced Wind Down of support and services for Oracle PeopleSoft products no later than July 31, 2028. The percentage of revenue derived from support and services the Company provides solely for Oracle PeopleSoft products was approximately 3% and 6% of the Company’s total revenue for the six months ended June 30, 2026 and 2025, respectively.
Current report — wording carried from elsewhere
Gross profit. Gross profit increased from $126.4 million for the six months ended June 30, 2025 to $130.0 million for the six months ended June 30, 2026, an increase of $3.6 million or 3%. Gross profit margin for the six months ended June 30, 2025 was 60.7% compared to 60.0% for the six months ended June 30, 2026. For the six months ended June 30, 2026, the total cost of revenue increased by 6% compared to an increase in revenue of 4% for the six months ended June 30, 2026. As a result, our gross profit margin declined by 70 basis points period over period. We will continue to monitor and manage our overall gross margin as we enter and invest in a broader mix of products and services.
Current report — wording carried from elsewhere
Sales and marketing expenses. As a percentage of our revenue, sales and marketing expenses were 38% and 35% for the six months ended June 30, 2026 and 2025, respectively. In dollar terms, sales and marketing expenses increased from $72.3 million for the six months ended June 30, 2025 to $81.4 million for the six months ended June 30, 2026, an increase of $9.1 million or 13%. This increase was primarily due to the following; (i) a $3.3 million increase in employee compensation and benefits, (ii) a $2.4 million increase related to marketing programs and promotions, (iii) a $1.9 million increase in allocated costs and (iv) a $1.4 million increase in travel costs. 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 report — wording carried from elsewhere
We expect to incur higher sales and marketing expenses associated with supporting the growth of our business as we continue to bring to market our new solutions and partnerships.
Current report — wording carried from elsewhere
Research and development expenses. In 2026, we made a strategic decision to utilize key personnel and resources to focus on research and development in regard to existing products as well as to develop new products for our technology solutions. Our primary development strategy is to incorporate Agentic AI solutions to extend the life cycle of existing highly customizable ERP systems by automating and organizing business processes for enhanced flexibility, scalability and integration. Research and development expenses were $1.7 million for the six months ended June 30, 2026.
Current report — wording carried from elsewhere
Reorganization costs. Reorganization costs decreased from $1.2 million for the six months ended June 30, 2025 to $0.6 million for the six months ended June 30, 2026. The costs were primarily related to severance costs associated with our reorganization plan. We may incur additional reorganization costs during the second half of 2026 as we continue to optimize our cost structure in areas where opportunities exist to streamline our operations.
Current report — wording carried from elsewhere
Litigation costs and related recoveries, net. Litigation costs and related recoveries, net consist of the following (in thousands):
Current report — wording carried from elsewhere
Professional fees and other costs associated with the above litigation decreased from $4.2 million for the six months ended June 30, 2025 to none for the six months ended June 30, 2026. Please refer to Note 8 to our Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Report, for additional information regarding our litigation with Oracle.
Current report — wording carried from 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 six months ended June 30, 2026, net other expense of approximately $1.5 million was comprised of foreign exchange losses of $2.8 million and other expenses of $0.2 million, which were offset by interest income from cash and cash equivalents of $1.5 million. For the six months ended June 30, 2025, net other income of approximately $1.2 million was comprised primarily of interest income of $3.2 million, which included $1.7 million related to interest income comprising a portion of the total $37.9 million of attorneys’ fees and costs remitted by Oracle to us as well as interest income earned from cash and cash equivalents. The interest income was offset, in part, by foreign exchange losses of $1.8 million and other expenses of $0.2 million for the six months ended June 30, 2025.
Current report — wording carried from elsewhere
Income taxes. We recorded an income tax expense of $14.8 million for the six months ended June 30, 2025 compared to $3.5 million for the six months ended June 30, 2026. For the six months ended June 30, 2026, the primary reason for the change in income taxes was due to a decrease of income before taxes of $41.1 million in the current year period compared to the prior year period.