Rimini Street has issued its 48th consecutive figures showing growth. The fourth quarter and fiscal year 2017 figures revealed a 24% growth for the quarter year on year and an annual growth rate of a solid 33%. Revenue was $57.9 million for the fourth quarter and they had full year revenues of $212.6 million. Profits also rose, up to 61% from 58%.
Seth Ravin, CEO Rimini Street commented: “We continue to see a growing global demand for our enterprise software support products and services, and our current offerings cover an addressable market of more than $30 billion in annual IT services spend. With total annual global market spend on software and maintenance services exceeding $160 billion, and considering additional spend on IT services adjacencies, Rimini Street sees a substantial opportunity for continued growth in the years ahead.
“As the global leader for independent support and maintenance, we are well-positioned to continue growth through additional sales and marketing investments, as well as expansion into new countries, products and services.”
The silver lining behind the cloud
It has 1,566 active clients, up by 28% year on year. However, its retention rate of 93% has dropped from the previous trailing 12 months of 94.5%. Those figures are still high and the variance is small. However, it is a concern that the Rimini Street core model was based on removing maintenance costs from expensive on-premises installations of SAP and Oracle. Those companies that took up the discounted offering often use it to invest in newer cloud technologies, that Rimini does not currently support.
It has, however diversified in recent months adding support models for six new database products including IBM DB2, Microsoft SQL Server, and SAP’s Sybase family of database products. It also launched Rimini Street Advanced Database Security.
Rimini Street does have its own silver lining for the future though. It first announced packaged integration services for Workday and Salesforce in 2014. Ravin revealed that 2018 is likely to see a major extension of those services launched in 2018. This may see it retain some of its revenues as customers move to the cloud. It should let it leverage the business knowledge it gains during the years of maintenance it has undertaken.
The litigation rumbles on
ET has previously reported about the ongoing litigation between Oracle and Rimini Street, both sides claiming a win in the latest ruling. Rimini Street is still looking to claim back $50.3 million previously paid. It expects some of those monies to be paid later this year, with which it will reduce debt. It also has an outstanding claim against Oracle under a violation of California and Nevada unfair business practices statutes. That case is unlikely to each trial until 2020.
What does this mean
Rimini Street performed ahead of expectations in Q4 and while the growth is healthy it is slowing. Looking ahead, Tom Sabol, CFO Rimini Street stated: “For the first quarter of fiscal 2018, we expect revenue to be in the range of approximately $59 million to $60 million in the first quarter of 2018. For full-year 2018 guidance, we expect revenue to be in the range of approximately $250 million to $270 million.” Source Seekingalpha.com
This is a growth of between roughly 15% and 21%. It is still significant growth but is lower than this year. It will also be important to see what the customer retention figure is and how that is measured. Customers will not cut off support immediately, but revenues may drop as they migrate to cloud solutions. That number is likely based on customer numbers rather than the revenue from those customers though. The new products that Rimini Street is launching could however see it push up those growth figures again. If it can deliver revenues from the Salesforce and Workday products quickly, that will also help.
Rimini Street could become a significant partner for both Workday and Salesforce. It already has deep relationships with companies that are almost certainly looking at cloud solutions. If it can maintain a friendly relationship with both Workday and Salesforce the silver lining might banish the cloud entirely as Rimini Street becomes a significant player and heads towards $1 billion in revenue.