"We have learned and we've learned very quickly" - CEO Seth Ravin points to customer successes as Rimini Street turns in solid Q2

It’s traditional by now to point to ‘unprecedented’ times and market conditions over the past 18 months, but some things have ridden out the pandemic unchanged. For example, take the findings of a recent global study of 1500 CFOs across multiple industry sectors and 13 countries.

It turns out that most CFOs want to cut spending on non-essential IT investments,  such major ERP reimplementation and migration projects that lack clear value or strong ROI, while wanting to see their CIOs optimize existing technology investments.

Plus ça change etc etc. According to Rimini Street CEO Seth Ravin:

Many CFOs and CIOs believe that large and expensive ERP migrations and upgrades may be better further avoided. And existing ERP systems can be optimized through strategies and services offered by third-party service providers like Rimini Street enabling the CIO to free up budget and IT resources to help accelerate strategic digital transformation programs.

Rimini Street late last week turned in its Q2 2021 numbers. Revenue was $91.6 million, up 16.9% year-on-year, with Annual Recurring Revenue coming in at $362.1 million, up 16.4%. GAAP net income was $6.8 million compared to $2.9 million for the same period last year.

Customers

The firm exited the quarter with 2,645 active clients, up 22.5% year-on-year. CEO Seth Ravin commented:

From the company's inception in 2005 to-date, we have signed more than 4,200 clients including 180 Fortune 500 and Fortune Global 100 companies and added a net of 95 new clients in the second quarter compared to a net add of 82 clients in the year ago period. To-date, we have saved our clients more than $5 billion.

During the second quarter, our global service delivery team closed nearly 10,000 support cases and delivered more than 15,000 tax legal and regulatory updates across 35 countries and achieved an average client satisfaction rating of 4.9 out of 5.0 on the company's support delivery where 5.0 is excellent. 

He pointed to a number of key use case exemplars to illustrate the firm’s performance:

The largest agricultural producing county in the US, the county of Fresno California switched to Rimini Street support for its Oracle database, middleware, and PeopleSoft applications, resulting in immediate annual savings of $800,000. The county also now receives faster response times of proactive guidance from Rimini Street expert engineers. This in turn has freed up the county's internal IT personnel to focus on more critical business initiatives. 

He went on to quote Sheri Walden, Deputy Director of Information Technology for the county of Fresno as saying:

Rimini Street recently helped create a legislative update for us, which according to our PeopleSoft team took substantially less time to implement the previous updates from Oracle. Rimini Street tailored a path specifically to our environment, so our team didn't need to waste time applying code that we didn't need like global payroll. 

Ravin also cited Brazilian chemical distributor quantiQ which has tapped Rimini Street for support of its SAP S/4HANA system, offering a 10 minute response Service Level Agreement:

quantiQ significantly reduced its operating cost and plans to reallocate the savings to invest in innovation and process efficiencies across the organization, including a new customer portal, e-commerce initiatives and implementing intelligent automation and RFID capabilities. These initiatives are considered essential projects to maintain its competitive edge and better serve its customers and partners.

Finally he picked out commercial aviation trade association, the International Air Transport Association (IATA) which has switched to Rimini Street support and application management services for its SAP system:

The organization now benefits from Rimini Street's unified turnkey service solution that integrates application management and support services enabling IATA to substantially reduce operating costs and new business demand expected in the post-pandemic recovery.

Investing long term

And many customers are putting hard cash behind long term investment in Rimini Street, added Ravin:

It is a really interesting indicator of the way that people think about the business. I mean, first of all, how many people get paid not only a year upfront for their service, but have customers put up potentially millions of dollars for years in advance in exchange for relatively small additional discount for current present value? That I think is an important indicator of the confidence that the customers have not only in our service, but in the length of time of their long-term commitment.

I think the other interesting note [is that] most people don't get nine year signed contracts. And we've signed contracts for nine years, non-cancelable, and actually I think a few longer than that, which is unusual in a lot of companies. But I think they're all indicators of long-term commitment, long-term clients in terms of their commitment to us, and intent of staying on our solutions for years into the future. 

The firm is also evolving its sales approach as its range of offerings expands, he said:

Part of the challenge is, when you go from a one product company to a multi-product portfolio - every company goes through this when you go through that kind of expansion - the sales reps change from being very focused on a particular product that they know well to a different kind of model. You now are positioning a sales rep who has to position an entire portfolio of services. They have to be able to tell a bigger story about how the company can help another company with all of their different challenges, not just one challenge.

That really does change some of the qualities of the sales rep that you're hiring. They have to be able to be much more of a project manager. If a company is interested in three or four different products in your solution portfolio, you have to bring in different pre-sales people. You have to juggle with different buyers, often they're different departments. So, the combination of all that work makes the situation far more complicated in terms of the sale and they play much more of a project manager role. 

That’s working out, he concluded, and the firm has moved on from what Ravin recalled as “some embarrassing losses of early proposals where we just were very rookie in the way that we were proposing compared to the people who have been in this business for a long time”. But there’s been a lot of fast learning since then, he said:

I can tell you that the proposals we're putting out today, our win rates are higher. The proposals are excellent in quality. I'm really proud of the proposals that are going out. We have learned and we've learned very quickly.

 

My take

 

A solid quarter for a firm with a business proposition that has ridden out the pandemic crisis intact.