Scream chaos as macroeconomics leads to decision paralysis, but Rimini Street will be ready to pick up the pieces, says CEO Seth Ravin

Seth Ravin

The macro environment will help Rimini Street over the longer term, says CEO Seth Ravin, but right now it’s creating some headwinds that hurt revenue growth in the second quarter.

The company had quarterly revenue of $101.2 million, a 10.5% increase over the prior year, with net income of $0.1 million versus $6.8 million for the same period last year. Rabin said:

Like other companies, we were confronted with the global macroeconomic environment and negative exchange rates, which impacted quarterly results. We believe the macro environment will eventually benefit our business as organizations complete a replanning adjustment cycle and we are addressing this and other opportunities with changes, including my return to overseeing global revenue operations to accelerate growth again .

He added:

Companies worldwide are facing impacts on their profits caused by ongoing post-pandemic supply chain challenges, global macro challenges such as war, sanctions, trade disputes, deglobalization, inflation, rising interest rates and exchange rate fluctuations. These macro shocks were initially viewed as short-term impacts, but are now viewed as a likely multi-year headwind, forcing companies to re-evaluate their businesses, including their IT investment plans.

The replanning phase has frozen many investment decisions. Frozen IT decisions impacted the market as a whole in the second quarter, reflected in prolonged and delayed IT sales cycles for many companies, including Rimini Street. However, as previously mentioned, we believe that once organizations complete their replanning process, Rimini Street is well positioned to ultimately benefit from this macro environment of growth in new customer acquisition.

Other notable stats from the post-earnings analyst call:

• Annualized recurring revenue for the second quarter was $396.7 million, up 9.6% compared to $362.1 million for the same period last year.
• Subscription revenue was $99.2 million, representing 98.0% of total revenue for the second quarter of 2022, compared to subscription revenue of $90.5 million in the comparable period.
• The number of active customers as of June 30, 2022 was 2,905, an increase of 9.8% compared to 2,645 active customers as of June 30, 2021.
• In the second quarter, the company completed more than 9,411 support cases and delivered nearly 9,813 tax, legal and regulatory updates to customers in 30 countries.
• Average customer satisfaction was 4.9 out of 5.0.

Customers

New customers in the second quarter included Labeyrie Fine Food, Sajo Systems, SK Networks, Lwart, E-LAND Innople and the State Library of Victoria, Australia’s oldest library. Ravin named a few use cases:

The State Library of Victoria, Australia’s oldest library, trusted Rimini Street to support their Oracle e-business and Oracle database software. Rimini Street also provides the library with its advanced database security and advanced application with our security solutions; 2 solutions and its Rimini Protect suite of security products. These solutions offer an innovative security approach that can block vulnerabilities before an attack or close an attack vector in hours, as opposed to traditional and legacy vendor software patch models that can take days, weeks, months or years to patch they receive a patch, and which require significant testing time and implementation costs.

Rimini Street’s cybersecurity solutions give the library peace of mind that digital threats are being addressed. Chief Financial Officer, Bradley Vice, noted that his finance team is very pleased with the support and security Rimini Street provides, which protects its assets and its customers, and keeps its financial services thriving. He further noted that Rimini Street has worked with his team to identify and provide solutions to the risks they face and that the team enjoys the services they receive.

He also referred to Labeyrie Fine Food, a French retailer with branches in 48 countries:

Labeyrie has transitioned its support for Oracle JD Edwards and Oracle Database to Rimini Street. With 80 application modules connected to the Oracle ecosystem, Labeyrie processes more than 500,000 batches of orders every night. Maintaining the system became a challenge after the software vendor stopped full support for this mission-critical system. Labeyrie was looking for a solution to provide the mission-critical support they needed and add value to the business while reducing costs.

Labeyrie CIO Louis Goffaux explained that Rimini Street’s experts not only support the ERP system, but also provide guidance on possible changes in the use of the platform. And that the monthly and quarterly meetings with Rimini Street are very rewarding, just the kind of close, all-round mentoring they’ve been looking for. He further notes that Rimini Street provides an efficient, agile service at half the price they previously paid to the software vendor.

My recording

There are deals that have pushed. As you see in so many different corporate earnings, delayed sales cycles, extended sales cycles, we’re certainly seeing some of that, too, because these companies and government organizations are rethinking their plans to prepare for a multi-year potential recession, different type of environment, they’re not doing anything, because they don’t buy anything while completing these plans. Based on the engagement we’ve seen, the type of work we’re doing with clients and prospects around the world, we’re pretty confident that we’ll benefit when they finally finalize their plans. We intend to be a part of them.

Here’s a long game at play where the underlying message is “keep calm and move on” as what Ravin calls “this daily global macrodrama” unfolds:

It’s chaos for business. I mean, there’s no other way to say it. If you have so many different questions – should I build a factory in China? Do I get political problems with that? How do I deal with Eastern Europe? How do I think about energy when building a facility within Europe? All these questions are now causing so much chaos that they are crippling many companies and they have to step back and rethink. But that doesn’t mean they don’t want to save money. That’s why I said, ultimately, I expect to prevail

Continue.