Rimini Street, Inc 10-Q for FY2021 Q3

Rimini Street, Inc. (RMNI)

10-Q 2021-11-03 For: 2021-09-30

Added on April 10, 2026

About this 10-Q

Rimini Street, Inc filed this 10-Q on November 3, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

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

Revenue: $95.64M; up 15.9% from $82.52M a year earlier
Net income: $1.93M; down 46.5% from net income of $3.61M a year earlier
Diluted EPS: -$0.08; compared with -$0.04 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	25

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	39

ITEM 4.	Controls and Procedures	39

PART II. OTHER INFORMATION		40

ITEM 1.	Legal Proceedings	40

ITEM 1A.	Risk Factors	41

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63

ITEM 3.	Defaults Upon Senior Securities	63

ITEM 4.	Mine Safety Disclosures	63

ITEM 5.	Other Information	63

ITEM 6.	Exhibits	64

SIGNATURES		65


	September 30,		December 31,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	103,015	$	87,575
Restricted cash	425		334
Accounts receivable, net of allowance of $566 and $723, respectively	76,258		117,937
Deferred contract costs, current	15,008		13,918
Prepaid expenses and other	17,041		13,456
Total current assets	211,747		233,220
Long-term assets:
Property and equipment, net of accumulated depreciation and amortization of $12,664 and $10,985, respectively	4,547		4,820
Operating lease right-of-use assets	15,023		17,521
Deferred contract costs, noncurrent	21,716		21,027
Deposits and other	1,940		1,476
Deferred income taxes, net	1,756		1,871
Total assets	$	256,729	$	279,935
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current maturities of long-term debt	$	3,670	$	—
Accounts payable	9,051		3,241
Accrued compensation, benefits and commissions	38,115		38,026
Other accrued liabilities	17,118		21,154
Operating lease liabilities, current	4,226		3,940
Deferred revenue, current	203,806		228,967
Total current liabilities	275,986		295,328
Long-term liabilities:
Long-term debt, net of current maturities	80,556		—
Deferred revenue, noncurrent	39,876		27,966
Operating lease liabilities, noncurrent	13,574		15,993
Accrued PIK dividends payable	—		1,193
Liability for redeemable warrants	5,145		2,122
Other long-term liabilities	1,756		2,539
Total liabilities	416,893		345,141
Commitments and contingencies (Note 9)
Redeemable Series A Preferred Stock:
Authorized 180 shares; issued and outstanding — shares and 155 shares, respectively. Liquidation preference of $0, net of discount of $0 and $154,911, net of discount of $17,057, respectively.	—		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 86,658 and 76,406 shares, respectively	9		8
Additional paid-in capital	139,505		98,258
Accumulated other comprehensive loss	(2,716)		(318)
Accumulated deficit	(295,846)		(301,008)
Treasury stock, at cost	(1,116)		—
Total stockholders' deficit	(160,164)		(203,060)
Total liabilities, redeemable preferred stock and stockholders' deficit	$	256,729	$	279,935


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue	$	95,642	$	82,518	$	275,151	$	238,952
Cost of revenue	33,376		31,991		101,807		92,627
Gross profit	62,266		50,527		173,344		146,325
Operating expenses:
Sales and marketing	32,527		29,195		96,067		84,443
General and administrative	15,631		13,025		48,728		38,159
Impairment charge related to operating right of use assets	—		—		393		—
Litigation costs and related recoveries:
Professional fees and other costs of litigation	6,581		3,773		14,130		9,247
Insurance costs and recoveries, net	—		—		—		1,062
Litigation costs and related recoveries, net	6,581		3,773		14,130		10,309
Total operating expenses	54,739		45,993		159,318		132,911
Operating income	7,527		4,534		14,026		13,414
Non-operating income and (expenses):
Interest expense	(653)		(10)		(738)		(35)
Gain (loss) on change in fair value of redeemable warrants	(2,053)		303		(3,023)		(243)
Other income (expenses), net	(1,161)		54		(885)		(731)
Income before income taxes	3,660		4,881		9,380		12,405
Income tax expense	(1,729)		(1,272)		(4,218)		(3,327)
Net income	1,931		3,609		5,162		9,078
Other comprehensive income:
Foreign currency translation gain (loss)	(454)		520		(2,398)		109
Comprehensive income	$	1,477	$	4,129	$	2,764	$	9,187

Net loss attributable to common stockholders	$	(6,691)	$	(3,136)	$	(21,382)	$	(10,986)

Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.08)	$	(0.04)	$	(0.26)	$	(0.16)
Weighted average number of shares of Common Stock outstanding:
Basic and diluted	86,189		72,377		83,449		69,521


☑			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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Common Stock, Shares
Beginning of period	85,704		68,530		76,406		67,503
Exercise of stock options for cash	383		976		1,183		1,540
Restricted stock units vested	708		601		1,456		1,064
Issuance of Common Stock in March 2021 and August 2020 Offerings	—		6,100		7,750		6,100
Treasury shares	(137)		—		(137)		—
End of period	86,658		76,207		86,658		76,207

Total Stockholders' Deficit, beginning of period	$	(156,299)	$	(227,788)	$	(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 and August 2020 Offerings, net	—		1		1		1
End of period	9		8		9		8
Additional Paid-in Capital
Beginning of period	143,801		81,170		98,258		90,695
Stock based compensation expense	2,393		2,189		7,104		5,425
Exercise of stock options for cash	1,933		1,081		5,046		1,639
Restricted stock units vested	—		—		—		—
Issuance of Common Stock in March 2021 and August 2020 Offerings, net	—		25,103		55,641		25,103
Share redemption of Series A Preferred Stock in July 2021 and April 2021:
Accretion related to redemption of Series A Preferred Stock	(8,020)		—		(13,693)		—
Make-whole dividends related to redemption of Series A Preferred Stock	(602)		—		(2,945)		—
Return on repurchase of Series A Preferred Stock shares in January 2021	—		—		(38)		—
Accretion of discount on Series A Preferred Stock	—		(1,587)		(2,277)		(4,702)
Accrued dividends on Series A Preferred Stock:
Payable in cash	—		(3,968)		(5,839)		(11,817)
Payable in kind	—		(1,190)		(1,752)		(3,545)
End of period	139,505		102,798		139,505		102,798
Accumulated Other Comprehensive Loss
Beginning of period	(2,262)		(1,840)		(318)		(1,429)
Foreign currency translation gain (loss)	(454)		520		(2,398)		109
End of period	(2,716)		(1,320)		(2,716)		(1,320)
Accumulated Deficit
Beginning of period	(297,777)		(307,125)		(301,008)		(312,594)
Net income	1,931		3,609		5,162		9,078
End of period	(295,846)		(303,516)		(295,846)		(303,516)
Treasury Stock	(1,116)		—		(1,116)		—
Total Stockholders' Deficit, end of period	$	(160,164)	$	(202,030)	$	(160,164)	$	(202,030)


	2021		2020
Accrued sales and other taxes	$	4,238	$	5,213
Accrued professional fees	6,997		5,912
Accrued dividends on Redeemable Series A Preferred Stock	—		3,842
Current maturities of capital lease obligations	334		429
Income taxes payable	721		2,245
Other accrued expenses	4,828		3,513
Total other accrued liabilities	$	17,118	$	21,154


	2021		2020
Credit Facility	$	84,226	$	—
Less current maturities	3,670		—
Long-term debt, net of current maturities	$	80,556	$	—


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Credit Facility:
Interest expense	$	435	$	—	$	435	$	—
Accretion expense related to discount and issuance costs	196		—		196		—
Interest on finance leases	22		10		107		35
	$	653	$	10	$	738	$	35


	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
Less dividends settled on July 1, 2021	(2,186)		(647)		(2,833)		(32.27)
Dividends payable as of September 30, 2021	$	—	$	—	$	—	$	—


Smaller reporting company ☑						Emerging growth company ☐


	Shares	Price (1)		Term (2)
Outstanding, December 31, 2020	7,007	$	5.24	5.0
Granted	928	7.77
Forfeited	(170)	6.21
Expired	(113)	6.63
Exercised	(1,184)	4.26
Outstanding, September 30, 2021 (3)(4)	6,468	5.73		5.1
Vested, September 30, 2021 (3)	5,056	5.53		4.0


Available, December 31, 2020			4,037
Newly authorized by Board of Directors			3,056
Stock options granted			(928)
Restricted stock units granted			(1,394)
Expired options under Stock Plans			113
Forfeited options under Stock Plans			170
Forfeited restricted stock units under Stock Plans			348
Shares repurchased			137
Available, September 30, 2021			5,539


Expected life (in years)			6.0
Volatility			42%
Dividend yield			0%
Risk-free interest rate			0.87%
Fair value per common share on date of grant			$7.77


Supplemental Balance Sheet Information	September 30, 2021		December 31, 2020
Operating lease right-of-use assets, noncurrent	$	15,023	$	17,521

	September 30, 2021		December 31, 2020
Operating lease liabilities, current	$	4,226	$	3,940
Operating lease liabilities, noncurrent	13,574		15,993
Total operating lease liabilities	$	17,800	$	19,933


Weighted Average Remaining Lease Term	Years
Operating leases	4.18
Weighted Average Discount Rate
Operating leases	10.5	%


Year ending September 30:
2022	$	5,831
2023	5,046
2024	4,409
2025	3,544
2026	2,422
Thereafter	832
Total future undiscounted lease payments	22,084
Less imputed interest	(4,284)
Total	$	17,800


	Three Months Ended September 30,						Variance
	2021			2020			Amount		Percent
Revenue	$	95,642		$	82,518		$	13,124	15.9%
Cost of revenue:
Employee compensation and benefits	23,174			20,996			2,178		10.4%
Engineering consulting costs	4,648			5,656			(1,008)		(17.8)%
Administrative allocations (1)	3,574			3,544			30		0.8%
All other costs	1,980			1,795			185		10.3%
Total cost of revenue	33,376			31,991			1,385		4.3%
Gross profit	62,266			50,527			11,739		23.2%
Gross margin	65.1		%	61.2		%
Operating expenses:
Sales and marketing	32,527			29,195			3,332		11.4%
General and administrative	15,631			13,025			2,606		20.0%
Litigation costs and related recoveries, net	6,581			3,773			2,808		74.4%
Total operating expenses	54,739			45,993			8,746		19.0%
Operating income	7,527			4,534			2,993		66.0%
Non-operating income and (expenses):
Interest expense	(653)			(10)			(643)		6,430.0%
Gain (loss) on change in fair value of redeemable warrants	(2,053)			303			(2,356)		(777.6)%
Other income (expenses), net	(1,161)			54			(1,215)		(2,250.0)%
Income before income taxes	3,660			4,881			(1,221)		(25.0)%
Income tax expense	(1,729)			(1,272)			(457)		35.9%
Net income	$	1,931		$	3,609		$	(1,678)	(46.5)%


	2021		2020		Change
Professional fees and other costs of litigation	$	6,581	$	3,773	$	2,808
Insurance costs and recoveries, net	—		—		—
Litigation costs and related recoveries, net	$	6,581	$	3,773	$	2,808


	Nine Months Ended September 30,						Variance
	2021			2020			Amount		Percent
Revenue	$	275,151		$	238,952		$	36,199	15.1%
Cost of revenue:
Employee compensation and benefits	71,522			61,842			9,680		15.7%
Engineering consulting costs	13,663			15,526			(1,863)		(12.0)%
Administrative allocations (1)	10,883			10,637			246		2.3%
All other costs	5,739			4,622			1,117		24.2%
Total cost of revenue	101,807			92,627			9,180		9.9%
Gross profit	173,344			146,325			27,019		18.5%
Gross margin	63.0		%	61.2		%
Operating expenses:
Sales and marketing	96,067			84,443			11,624		13.8%
General and administrative	48,728			38,159			10,569		27.7%
Impairment charge related to operating right of use assets	393			—			393		100.0%
Litigation costs and related recoveries, net	14,130			10,309			3,821		37.1%
Total operating expenses	159,318			132,911			26,407		19.9%
Operating income	14,026			13,414			612		4.6%
Non-operating income and (expenses):
Interest expense	(738)			(35)			(703)		2,008.6%
Loss on change in fair value of redeemable warrants	(3,023)			(243)			(2,780)		1,144.0%
Other income (expenses), net	(885)			(731)			(154)		21.1%
Income before income taxes	9,380			12,405			(3,025)		(24.4)%
Income tax expense	(4,218)			(3,327)			(891)		26.8%
Net income	$	5,162		$	9,078		$	(3,916)	(43.1)%


	2021		2020
Net cash provided by (used in):
Operating activities	$	47,814	$	31,833
Investing activities	(1,455)		(1,159)
Financing activities	(25,990)		15,123


			RIMINI STREET, INC.

Date: November 3, 2021			/s/ Seth A. Ravin
			Name: Seth A. Ravin
			Title: Chief Executive Officer
			(Principal Executive Officer)


Date: November 3, 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: November 3, 2021	By:	/s/ Seth A. Ravin
		Seth A. Ravin
		Title: Chief Executive Officer
		(Principal Executive Officer)