Rimini Street, Inc 10-Q for FY2021 Q2

Rimini Street, Inc. (RMNI)

10-Q 2021-08-04 For: 2021-06-30

Added on April 10, 2026

About this 10-Q

Rimini Street, Inc filed this 10-Q on August 4, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $91.61M; up 16.9% from $78.4M a year earlier
Net income: $6.81M; up 132.8% from net income of $2.92M a year earlier
Diluted EPS: -$0.06; compared with -$0.06 a year earlier

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Delaware						36-4880301
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3993 Howard Hughes Parkway, Suite 500, Las Vegas, NV						89169
(Address of principal executive offices)						(Zip Code)

Registrant's telephone number, including area code:						(702) 839-9671


Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:

Common Stock, par value $0.0001 per share	RMNI	The Nasdaq Global Market

Public Units, each consisting of one share of Common Stock, $0.0001 par value, and one-half of one Warrant	RMNIU	OTC Pink Current Information Marketplace

Warrants, exercisable for one share of Common Stock, $0.0001 par value	RMNIW	OTC Pink Current Information Marketplace


		Page

PART I. FINANCIAL INFORMATION		2

ITEM 1.	Financial Statements	2

	Unaudited Condensed Consolidated Balance Sheets	2

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income	3

	Unaudited Condensed Consolidated Statements of Stockholders' Deficit	4

	Unaudited Condensed Consolidated Statements of Cash Flows	5

	Notes to Unaudited Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	40

ITEM 4.	Controls and Procedures	41

PART II. OTHER INFORMATION		42

ITEM 1.	Legal Proceedings	42

ITEM 1A.	Risk Factors	42

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64

ITEM 3.	Defaults Upon Senior Securities	64

ITEM 4.	Mine Safety Disclosures	64

ITEM 5.	Other Information	64

ITEM 6.	Exhibits	65

SIGNATURES		66


	June 30,		December 31,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	110,387	$	87,575
Restricted cash	334		334
Accounts receivable, net of allowance of $960 and $723, respectively	85,665		117,937
Deferred contract costs, current	14,722		13,918
Prepaid expenses and other	15,593		13,456
Total current assets	226,701		233,220
Long-term assets:
Property and equipment, net of accumulated depreciation and amortization of $12,123 and $10,985, respectively	4,465		4,820
Operating lease right-of-use assets	15,772		17,521
Deferred contract costs, noncurrent	21,839		21,027
Deposits and other	1,717		1,476
Deferred income taxes, net	1,630		1,871
Total assets	$	272,124	$	279,935
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	4,427	$	3,241
Accrued compensation, benefits and commissions	38,650		38,026
Other accrued liabilities	15,926		21,154
Operating lease liabilities, current	4,055		3,940
Deferred revenue, current	229,768		228,967
Total current liabilities	292,826		295,328
Long-term liabilities:
Deferred revenue, noncurrent	35,870		27,966
Operating lease liabilities, noncurrent	14,495		15,993
Accrued PIK dividends payable	647		1,193
Liability for redeemable warrants	3,092		2,122
Other long-term liabilities	2,288		2,539
Total liabilities	349,218		345,141
Commitments and contingencies (Note 8)
Redeemable Series A Preferred Stock:
Authorized 180 shares; issued and outstanding 87 shares and 155 shares as of June 30, 2021 and December 31, 2020, respectively. Liquidation preference of $87,155, net of discount of $8,020 and $154,911, net of discount of $17,057, as of June 30, 2021 and December 31, 2020, respectively.	79,135		137,854
Stockholders’ deficit:

Preferred stock; $0.0001 par value. Authorized 99,820 shares (excluding 180 shares of Series A Preferred Stock); no other series has been designated	—		—
Common stock; $0.0001 par value. Authorized 1,000,000 shares; issued and outstanding 85,704 and 76,406 shares as of June 30, 2021 and December 31, 2020, respectively	9		8
Additional paid-in capital	143,801		98,258
Accumulated other comprehensive loss	(2,262)		(318)
Accumulated deficit	(297,777)		(301,008)
Total stockholders' deficit	(156,229)		(203,060)
Total liabilities, redeemable preferred stock and stockholders' deficit	$	272,124	$	279,935


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue	$	91,614	$	78,402	$	179,509	$	156,434
Cost of revenue	34,595		30,437		68,431		60,636
Gross profit	57,019		47,965		111,078		95,798
Operating expenses:
Sales and marketing	33,157		26,836		63,540		55,248
General and administrative	16,494		13,133		33,097		25,134
Impairment charge related to operating right of use assets	—		—		393		—
Litigation costs and related recoveries:
Professional fees and other costs of litigation	2,786		2,722		7,549		5,474
Insurance costs and recoveries, net	—		141		—		1,062
Litigation costs and related recoveries, net	2,786		2,863		7,549		6,536
Total operating expenses	52,437		42,832		104,579		86,918
Operating income	4,582		5,133		6,499		8,880
Non-operating income and (expenses):
Interest expense	(38)		(12)		(85)		(25)
Gain (loss) on change in fair value of redeemable warrants	3,698		(546)		(970)		(546)
Other income (expenses), net	(496)		(567)		276		(785)
Income before income taxes	7,746		4,008		5,720		7,524
Income tax expense	(939)		(1,084)		(2,489)		(2,055)
Net income	6,807		2,924		3,231		5,469
Other comprehensive income:
Foreign currency translation gain (loss)	420		402		(1,944)		(411)
Comprehensive income	$	7,227	$	3,326	$	1,287	$	5,058

Net loss attributable to common stockholders	$	(4,846)	$	(3,763)	$	(14,691)	$	(7,848)

Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.06)	$	(0.06)	$	(0.18)	$	(0.12)
Weighted average number of shares of Common Stock outstanding:
Basic and diluted	85,343		68,290		82,056		68,076


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


Rimini Street, Inc.
(Exact name of registrant as specified in its charter)


Large accelerated filer ¨			Accelerated filer þ			Non-accelerated filer ¨


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Common Stock, Shares
Beginning of period	85,140		68,032		76,406		67,503
Exercise of stock options for cash	84		260		800		564
Restricted stock units vested	480		238		748		463
Issuance of Common Stock in March 2021 Offering	—		—		7,750		—
End of period	85,704		68,530		85,704		68,530

Total Stockholders' Deficit, beginning of period	$	(154,495)	$	(226,405)	$	(203,060)	$	(223,321)
Common Stock, Amount
Beginning of period	9		7		8		7
Exercise of stock options for cash	—		—		—		—
Restricted stock units vested	—		—		—		—
Issuance of Common Stock in March 2021 Offering, net	—		—		1		—
End of period	9		7		9		7
Additional Paid-in Capital
Beginning of period	152,762		85,879		98,258		90,695
Stock based compensation expense	2,478		1,726		4,711		3,236
Exercise of stock options for cash	201		252		3,113		556
Restricted stock units vested	—		—		—		—
Issuance of Common Stock in March 2021 Offering, net	13		—		55,641		—
Redemption of 60,000 shares of Series A Preferred Stock in April 2021:
Accretion related to redemption of Series A Preferred Stock	(5,673)		—		(5,673)		—
Make-whole dividends related to redemption of Series A Preferred Stock	(2,343)		—		(2,343)		—
Return on repurchase of Series A Preferred Stock shares in January 2021	—		—		(38)		—
Accretion of discount on Series A Preferred Stock	(804)		(1,567)		(2,277)		(3,114)
Accrued dividends on Series A Preferred Stock:
Payable in cash	(2,179)		(3,939)		(5,839)		(7,849)
Payable in kind	(654)		(1,181)		(1,752)		(2,354)
End of period	143,801		81,170		143,801		81,170
Accumulated Other Comprehensive Loss
Beginning of period	(2,682)		(2,242)		(318)		(1,429)
Foreign currency translation gain (loss)	420		402		(1,944)		(411)
End of period	(2,262)		(1,840)		(2,262)		(1,840)
Accumulated Deficit
Beginning of period	(304,584)		(310,049)		(301,008)		(312,594)
Net income	6,807		2,924		3,231		5,469
End of period	(297,777)		(307,125)		(297,777)		(307,125)
Total Stockholders' Deficit, end of period	$	(156,229)	$	(227,788)	$	(156,229)	$	(227,788)


	2021		2020
Accrued sales and other taxes	$	4,288	$	5,213
Accrued professional fees	4,908		5,912
Accrued dividends on Redeemable Series A Preferred Stock	2,186		3,842
Current maturities of capital lease obligations	369		429
Income taxes payable	1,038		2,245
Other accrued expenses	3,137		3,513
Total other accrued liabilities	$	15,926	$	21,154


	Series A Preferred Stock				Common			Convertible
	Shares	Amount			Stock			Notes		Total
Fair value on July 19, 2018:
Series A Preferred Stock	140,000	$	126,763	(1)	$	—		$	—	$	126,763
Common Stock	—	—			20,131		(2)	—		20,131
Convertible Notes	—	—			—			—		—
Total	140,000	$	126,763		$	20,131		$	—	$	146,894
Relative fair value allocation on July 19, 2018
Aggregate cash proceeds on July 19, 2018	140,000	$	114,773	(3)	$	18,227	(3)	$	—	$	133,000
Incremental and direct costs	—	(3,994)		(4)	(634)		(4)	—		(4,628)
Net carrying value on July 19, 2018	140,000	$	110,779		$	17,593		$	—	$	128,372


	Dividends Payable in:				Total		Dividends
	Cash		PIK		Dividends		Per Share
Dividends payable as of December 31, 2020	$	3,842	$	1,193	$	5,035	$	32.50
Cash Dividends @ 10% per annum	3,660		—		3,660		23.40
PIK Dividends @ 3% per annum	—		1,098		1,098		7.02
Fractional PIK shares settled for cash	47		(47)		—		—
Less dividends settled January 4, 2021	(4,009)		(1,193)		(5,202)		(33.26)
Dividends payable as of March 31, 2021	3,540		1,051		4,591		32.14
Cash Dividends @ 10% per annum	2,179		—		2,179		25.00
PIK Dividends @ 3% per annum	—		654		654		7.50
Fractional PIK shares settled for cash	7		(7)		—		—
Less dividends settled April 1, 2021	(3,540)		(1,051)		(4,591)		(52.68)
Dividends payable as of June 30, 2021	$	2,186	$	647	$	2,833	$	32.51


	Shares	Price (1)		Term (2)
Outstanding, December 31, 2020	7,007	$	5.24	5.0
Granted	665	7.61
Forfeited	(65)	4.74
Expired	(95)	6.45
Exercised	(801)	3.87
Outstanding, June 30, 2021 (3)(4)	6,711	5.62		5.2
Vested, June 30, 2021 (3)	5,386	5.50		4.3


Available, December 31, 2020			4,037
Newly authorized by Board of Directors			3,056
Stock options granted			(665)
Restricted stock units granted			(1,085)
Expired options under Stock Plans			95
Forfeited options under Stock Plans			65
Forfeited restricted stock units under Stock Plans			105
Available, June 30, 2021			5,608


Smaller reporting company ☑						Emerging growth company ☐


Expected life (in years)			6.0
Volatility			41%
Dividend yield			0%
Risk-free interest rate			0.86%
Fair value per common share on date of grant			$7.61


Weighted Average Remaining Lease Term	Years
Operating leases	4.41
Weighted Average Discount Rate
Operating leases	10.5	%


Year ending June 30:
2022	$	5,774
2023	5,198
2024	4,489
2025	4,002
2026	2,402
Thereafter	1,443
Total future undiscounted lease payments	23,308
Less imputed interest	(4,758)
Total	$	18,550


Supplemental Balance Sheet Information	June 30, 2021		December 31, 2020
Operating lease right-of-use assets, noncurrent	$	15,772	$	17,521

	June 30, 2021		December 31, 2020
Operating lease liabilities, current	$	4,055	$	3,940
Operating lease liabilities, noncurrent	14,495		15,993
Total operating lease liabilities	$	18,550	$	19,933


	Three Months Ended June 30,						Variance
	2021			2020			Amount		Percent
Revenue	$	91,614		$	78,402		$	13,212	16.9%
Cost of revenue:
Employee compensation and benefits	24,689			20,475			4,214		20.6%
Engineering consulting costs	4,280			5,005			(725)		(14.5)%
Administrative allocations (1)	3,718			3,501			217		6.2%
All other costs	1,908			1,456			452		31.0%
Total cost of revenue	34,595			30,437			4,158		13.7%
Gross profit	57,019			47,965			9,054		18.9%
Gross margin	62.2		%	61.2		%
Operating expenses:
Sales and marketing	33,157			26,836			6,321		23.6%
General and administrative	16,494			13,133			3,361		25.6%
Litigation costs and related recoveries, net	2,786			2,863			(77)		(2.7)%
Total operating expenses	52,437			42,832			9,605		22.4%
Operating income	4,582			5,133			(551)		(10.7)%
Non-operating income and (expenses):
Interest expense	(38)			(12)			(26)		216.7%
Gain (loss) on change in fair value of redeemable warrants	3,698			(546)			4,244		(777.3)%
Other income (expenses), net	(496)			(567)			71		(12.5)%
Income before income taxes	7,746			4,008			3,738		93.3%
Income tax expense	(939)			(1,084)			145		(13.4)%
Net income	$	6,807		$	2,924		$	3,883	132.8%


	2021		2020		Change
Professional fees and other costs of litigation	$	2,786	$	2,722	$	64
Insurance costs and recoveries, net	—		141		(141)
Litigation costs and related recoveries, net	$	2,786	$	2,863	$	(77)


	Six Months Ended June 30,						Variance
	2021			2020			Amount		Percent
Revenue	$	179,509		$	156,434		$	23,075	14.8%
Cost of revenue:
Employee compensation and benefits	48,349			40,845			7,504		18.4%
Engineering consulting costs	9,015			9,871			(856)		(8.7)%
Administrative allocations (1)	7,308			7,093			215		3.0%
All other costs	3,759			2,827			932		33.0%
Total cost of revenue	68,431			60,636			7,795		12.9%
Gross profit	111,078			95,798			15,280		16.0%
Gross margin	61.9		%	61.2		%
Operating expenses:
Sales and marketing	63,540			55,248			8,292		15.0%
General and administrative	33,097			25,134			7,963		31.7%
Impairment charge related to operating right of use assets	393			—			393		100.0%
Litigation costs and related recoveries, net	7,549			6,536			1,013		15.5%
Total operating expenses	104,579			86,918			17,661		20.3%
Operating income	6,499			8,880			(2,381)		(26.8)%
Non-operating income and (expenses):
Interest expense	(85)			(25)			(60)		240.0%
Loss on change in fair value of redeemable warrants	(970)			(546)			(424)		77.7%
Other income (expenses), net	276			(785)			1,061		(135.2)%
Income before income taxes	5,720			7,524			(1,804)		(24.0)%
Income tax expense	(2,489)			(2,055)			(434)		21.1%
Net income	$	3,231		$	5,469		$	(2,238)	(40.9)%


	2021		2020
Net cash provided by (used in):
Operating activities	$	47,162	$	44,244
Investing activities	(832)		(725)
Financing activities	(20,226)		(7,348)


			RIMINI STREET, INC.

Date: August 4, 2021			/s/ Seth A. Ravin
			Name: Seth A. Ravin
			Title: Chief Executive Officer
			(Principal Executive Officer)


Date: August 4, 2021			/s/ Michael L. Perica
			Name: Michael L. Perica
			Title: Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)


			/s/ Seth A. Ravin
			Seth A. Ravin
			Title: Chief Executive Officer
			(Principal Executive Officer)


			/s/ Michael L. Perica
			Michael L. Perica
			Title: Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)


Dated: August 4, 2021	By:	/s/ Seth A. Ravin
		Seth A. Ravin
		Title: Chief Executive Officer
		(Principal Executive Officer)