管理層發言
Now before taking questions, we will begin with prepared remarks. With that, I would like to turn the call over to Seth.
Thank you, Dean, and thank you, everyone, for joining us. Second quarter results. At our December 2025 Investor Day, we shared our vision, strategy, and plan for evolving into an innovation company, and returning to growth and improved profitability. We provided fiscal year 2026 guidance for achieving rule of 20 results. We have now delivered four consecutive quarters of improved growth metrics, in alignment with the vision, strategy, and plan we shared at the 2025 Investor Day. And we reiterate our rule of 20 guidance for fiscal 2026. Second quarter results demonstrate strong demand for our core Rimini support offering, increasing adoption of our broader enterprise software service portfolio, and improving sales execution. Key transactions included household brands in many countries, and we sold across our solutions portfolio. During the quarter, we closed 14 new client transactions with over $1 million in total contract value, totaling $30 million, and added 58 new logos. And for the first half of 2026, we closed 25 new client transactions with over $1 million in TCV totaling $62.9 million and added 100 new logos. Partnerships and alliances sourced or assisted with the closing of a meaningful number of sales transactions in the quarter. Also during the quarter, clients continued their adoption of Rimini Street's AI solutions that are helping them solve real business problems using innovative technology quickly and economically deployed over the top of their existing ERP software and releases, without any need for ERP software upgrades, migrations, or replatforming. Our clients use the collective savings from switching to Rimini Street annual maintenance on their ERP software and avoided costly, low-value ERP upgrades and migrations to fund their Rimini AI ERP solution deployments, and they did not have to spend beyond their current IT budgets for the innovation, driving increased growth and profitability. Organizations today are under increasing pressure to innovate and modernize their enterprise systems while managing cost, risk, and disruption. Many are finding that large-scale ERP replacements are expensive, time-consuming, and often fail to deliver the expected business value. Real innovation is not about a software vendor's next AI release. It is about reducing total operating costs, improving profitability, and enhancing competitive advantage. We help organizations achieve these goals by avoiding unnecessary ERP software upgrades, migration, or replatforming, and instead deploying Rimini Street's innovative Agentic AI ERP solutions over the top of existing ERP software to deliver faster, better, cheaper, and more agile ERP process execution, funded within the current IT budget. As we continue to expand sales and cross-sales of our entire service portfolio, our focus remains on enabling clients to extract more value from their existing systems and achieving innovation and modernization that lowers total cost of operations, improves profitability, and enhances competitive advantage. Leadership in Agentic AI ERP. We are helping more and more clients set a new vision, technical, and functional path forward from their current vendor ERP software release — a path that does not require any return to the vendor for a future upgrade or migration to their current ERP software release in order to achieve innovation or modernization. The client can innovate and modernize their existing ERP software and other enterprise systems using Agentic AI ERP solutions deployed easily, economically, right over the top of their existing software releases. We guide clients through this path using our proprietary three-step methodology called the Rimini SmartPath. Our methodology is being used by clients to self-fund and accelerate innovation, especially AI and automation, without undergoing costly, risky, or unnecessary ERP upgrades or rip-and-replace migrations. By leveraging and modernizing existing IT environments, all without operational disruption. Today, we rounded out our end-to-end AI capabilities with the launch and immediate availability of Rimini Govern for AI, our new governance-as-a-service solution. Rimini Govern for AI is the newest offering in our governance, risk, and compliance solutions. The service brings together AI governance capabilities, deep enterprise application expertise, and global managed services that enable organizations to control, secure, and scale AI agent activity with confidence. With Rimini Govern for AI, organizations can now confidently and securely deploy AI agents and scale AI agent operations with the oversight, control, visibility, and measurement needed to accelerate adoption, measure ROI, and achieve business outcomes that include reduced total operating cost, improved profitability, and enhanced competitive advantage. As Ray Wang, CEO of Constellation Research, noted with the launch of Rimini Govern for AI, "As organizations move from AI experimentation to enterprise scale adoption, they need trusted visibility, governance, and control to deploy AI responsibly and securely." Other Rimini AI solutions include Rimini Agentic UX, our AI-driven experience and automation layer that is deployed right over existing client ERP software and turns their ERP software from a static system of record into an autonomous system of action, delivering innovation and modernization in weeks not years, and at a fraction of the cost of a major upgrade, migration, or replatforming project. Rimini AgentWorks, our comprehensive AI agent lifecycle service, enables organizations to move from AI concepts to trusted production deployment. The service helps clients define agent strategies, design and build AI agents and workflows, validate interoperability, perform functional and security testing, and certify operational readiness. As part of this process, Rimini AgentWorks helps assure, before any approved deployment, that AI agents operate within approved business accuracy, security, and compliance guardrails and meet stringent requirements for governance, monitoring, and production operation. Rimini AgentWorks tests and certifies both AI agents developed by Rimini Street and those from other third parties. Together, Rimini AgentWorks, Rimini Agentic UX, and Rimini Govern for AI provide organizations with an end-to-end set of services to design, deploy, govern, and optimize AI agent operations across mission-critical enterprise environments. Partners, alliances, and channels. We continue strengthening and maturing our indirect sales ecosystem, including adding new partner managers for strategic technology, services, and channel relationships and completing new partnership agreements. These partnerships extend our reach, bring complementary expertise, and help clients execute modernization strategies that combine Rimini Street support with world-class platforms, cloud services, and AI tooling. The ecosystem is becoming a strategic multiplier for us, accelerating adoption, expanding influence, and enabling shared go-to-market opportunities. Client success stories. We are helping clients across many industries, geographies, and software protect and optimize their core ERP systems while funding innovation and modernization, including fixing broken processes, automating workflows and functions, and using AI to solve specific business challenges — all without disruptive, costly, and risky ERP software upgrades, migrations, or replatforming. Here are some examples of how our solutions are reducing operating costs and enabling innovation, transformation, and improved competitive advantage for clients across different geographies and industries. Bivari Group, an Indonesian interior contractor and furniture manufacturer, selected Rimini support for SAP ECC 6 to strengthen business continuity, avoid a costly and disruptive SAP migration, and redirect resources toward digital transformation and innovation. This win further demonstrates the ongoing demand for our proven model of reducing operating costs while creating capacity for growth and innovation. 1NZ, a New Zealand telecommunications company, chose Rimini support to optimize its Oracle environment, including Siebel CRM and Oracle database, while accelerating its AI transformation strategy. The company describes Rimini Street as a trusted "co-innovation partner," enabling it to redirect capital and talent towards future growth and its vision of becoming a world-leading AI-enabled telecommunications provider. Medical Micro Instruments, an Italian robotic microsurgery company, leveraged Rimini Consult for Salesforce to maximize ROI on its technology investment, help eliminate unnecessary third-party software costs, implement critical training and certification work, and develop a long-term Salesforce roadmap to support the company's global growth and continued innovation in life-enhancing surgical technology. The client noted the strategic value Rimini Street brings to their Salesforce evolution. Cochlear Limited, an Australian hearing technology leader, chose Rimini's support for Oracle to gain greater control and flexibility over its ERP roadmap, avoid vendor-driven upgrade cycles, and free critical resources for digital transformation and new AI-powered customer service and analytics initiatives. The company noted, "Moving to Rimini Street gave us back control of our ERP platform. It took us out of the vendor-driven upgrade cycle." Summary. We are focused on growth acceleration, improving profitability, and shareholder return. We will continue executing against our vision, strategy, and plan laid out at the December 2025 Investor Day. Our vision, strategy, and plan leverage Rimini Street's proprietary and proven SmartPath methodology along with our comprehensive service portfolio and capabilities, to help a growing number of clients regain control of their technology roadmap and spending while also achieving modernization and innovation that drives down total operating costs, improves profitability, and enhances competitive advantage — all within their current budget. Now over to you, Michael.
Thank you, Seth. And thank you for joining us, everyone. Q2 results. We delivered strong second quarter 2026 results as positive growth drivers over the past four quarters have lifted revenue and revenue retention rates on a year-over-year basis. We continue to invest strategically in new AI-driven innovation offerings while streamlining global operations to enhance scale and efficiency. Looking ahead, we remain focused on profitable growth, disciplined cost management, and maintaining a strong balance sheet. During the quarter, we prepaid $10 million of debt, reduced outstanding debt to $48.4 million, and we maintained a healthy total cash balance of $123.4 million as of June 30, 2026. Revenue for the second quarter was $111.1 million, up 6.7% year over year. Excluding revenue for PeopleSoft products, the adjusted revenue grew 10% year over year. Foreign exchange movements were negligible in the quarter, reducing second quarter revenue by approximately 0.2%. Annualized recurring revenue, excluding PeopleSoft products, was $401.1 million in the second quarter, an 8.1% increase year over year. Our revenue retention rate for service subscriptions, which represent 93% of total revenue, was 90% with approximately 84% of subscription revenue non-cancelable for at least 12 months. Billings for the second quarter were $100.9 million, down 8.8% year over year. Excluding billings associated with support services for PeopleSoft products, the year-over-year decline was 8%. The past four quarters' results provide a more complete view. As first-half billings grew 3.2% year over year, and excluding PeopleSoft products, grew 4.7%. Gross margin for the second quarter was 60.9%, compared to 60.4% in the prior year period, and rose 190 basis points sequentially from the first quarter to again exceed our key objective above 60%. On a non-GAAP basis, gross margin was 61.3%, up from 60.8% in the prior year second quarter. Operating expenses: sales and marketing expense was 38.5% of revenue in the second quarter, compared to 36.5% in the prior year period. On a non-GAAP basis, sales and marketing expense was 37.6% of revenue, up from 35.5% a year ago. The increase reflects our investments in go-to-market for our expanded and new service offerings during the quarter. General and administrative expenses were 15.6% of revenue in the second quarter, down from 16.2% in the prior year period. On a non-GAAP basis, G&A was 14.5% of revenue, down from 14.9% in the prior year second quarter. Net income attributable to shareholders for the second quarter was $2.4 million, or $0.03 per diluted share, compared to $0.32 per diluted share in the prior year period. Last year's net income benefited from a one-time pretax gain of $37.9 million associated with the Oracle settlement. Therefore, on a non-GAAP basis, net income was $5.9 million, or $0.06 per diluted share, versus $0.08 per diluted share a year ago. Adjusted EBITDA, as defined in our earnings release, was $10.5 million for the second quarter, representing 9.5% of revenue. This compares to $14 million, or 13.4% of revenue, in the prior year second quarter. Balance sheet. We ended the second quarter of 2026 with a cash balance of $123.4 million, up from $101.3 million in the prior year's second quarter. Operating cash flow for the quarter decreased by $1.6 million compared to a decrease of $17.8 million in the prior year period. Year-to-date operating cash flow was $22.9 million, representing a cash flow conversion of 118%, placing us in a strong position to achieve our goal, laid out at our recent Investor Day, of 90%-plus conversion on an annual basis. Deferred revenue as of June 30, 2026 was $267.1 million, up from $262.9 million in the prior year second quarter. Remaining performance obligations (RPO), which include billed deferred revenue, contract assets, and non-cancelable future revenue, were $636.9 million as of June 30, 2026, an increase of 8%. Excluding RPO associated with support services for PeopleSoft products, adjusted RPO increased 8.8%, reflecting our continued growth momentum in new bookings and longer-duration client commitments. PeopleSoft support wind-down update. We continue to execute the wind-down of our PeopleSoft support services. PeopleSoft revenue declined to 3% of total revenue this quarter, down from 6% a year ago, and 8% when we began the transition in 2024 — reflecting steady progress toward completing the wind-down by July 2028. Business outlook. The company expects third quarter 2026 revenue to be in the range of $110 million to $112 million. The company also is reiterating its full-year 2026 outlook, which calls for revenue growth of 4% to 6% and adjusted EBITDA margins of 12.5% to 15.5% and is consistent with the goal of achieving the rule of 20 for fiscal year 2026. For additional information, please see the disclosures in our Form 10-Q filed today, July 30, 2026, with the U.S. Securities and Exchange Commission. This concludes our prepared remarks. Operator, we will now take questions.
分析師問答
Thank you. Ladies and gentlemen, we will now begin the Q&A session. Should you wish to cancel your request, please press star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Thank you. And your first question comes from the line of Richard Baldry from ROTH Capital Partners. Please go ahead.
Thanks. Could you talk about how much, maybe to date and how much ahead, AI should be able to impact your cost model? I'm sorry. We are hearing from people it is not just faster development or lower service cost, but things like virtual sales development reps are improving sales efficiencies and things. So where are we at? How much could that impact your adjusted EBITDA margins over the long term? Thanks.
Sure, Richard. When you talk about internal usage and deployment of AI, we, like everybody else, are looking for good use cases. We are using it for sales. We are using it to gather broad amounts of information about prospects very quickly and present it in a way that sales reps can see what is happening at a prospect before they ever pick up the phone and call them. That is certainly a huge improvement in time and productivity. We also use tools like Clari on top of Salesforce to be able to understand and predict close rates, and it is very accurate. What we have seen over the last couple years that we have used it is that these tools in the pipeline management allow us to aggregate very large views of what is happening when you have sellers all over the world working different types of transactions. It makes it much easier to manage at a very large level. And, of course, we are using AI in finance. We are continuing to deploy those items. Overall, when we look at a more thoughtful way of using it, not just throwing AI all over the place, we will achieve a meaningful reduction in total operating cost and more leverage as we move forward in the coming years.
And can you talk a little bit about any color you can give us on sort of top-of-the-funnel prospect changes? It's been maybe a year now, I guess, since the big settlement with Oracle. I'm curious how that top-of-the-funnel growth is going — whether it is mostly driven by sales headcount increases or whether there is really some natural growth of the addressable market or the willingly addressable market. Thanks.
You are looking at a few different things. There is no doubt that our change in the world of litigation, our change in the world, putting AI services and the evolution into being an innovation company have driven a lot more customers to us. I think there are other elements. First, the fact that we are now giving customers a path where they can leave the vendor's maintenance, forego upgrades, and go on a path that has innovation and modernization in it — where they do not have to think about a potential return to the vendor's roadmap at some point down the line — has been a game changer in terms of overall demand generation. There are deals we lost years ago where customers said we love the support, we know we are going to get better service, but we were afraid to leave the vendor's path because we thought we might have to go back someday. Now that is changing and those customers, several of them, have signed with us because they are confident they do not need to make that return trip to the vendor — the boomerang effect. I think that is the single biggest driver of the top of the funnel. There are also macro issues. With SAP setting deadlines, we have all sorts of release deadlines happening in the software world, and those deadlines are driving customers to seek other alternatives to extend the life of their products because they are not ready to make change, they do not see the value, and they feel like they are being pressured from every angle. Those things combined are creating a much higher top-of-the-funnel experience.
And last for me, beyond the balance sheet, you knocked out $10 million of debt ahead of schedule. You have been pretty steadily taking that number down. How do you think about the flexibility on your balance sheet and where best to allocate capital? You have a good amount of cash. You could take out the debt overnight if you wanted to. Arguably, shares are undervalued. You could do buybacks or, as M&A an interesting option? How do you view the best use of the balance sheet flexibility you have now?
Yeah, Richard, Michael here. As you noted, we have been heavily concentrated on one of our two levers identified for capital return, the debt repayment, so far this year and the last two quarters of last year, the lower amounts, share repurchases. We continue to evaluate share repurchases, but looking forward, we may see a shift in how we allocate capital. So, still the two levers, but we may see a shift moving forward.
Congrats on a good quarter.
Thank you.
Thank you.
And your next question comes from the line of Andrew Sherman from TD Cowen. Please go ahead.
Great. Hey, guys. Thanks, and nice quarter. Seth, I was not sure if I heard a whole lot on the go-to-market side in the prepared remarks. How's the sales hiring? Where do you stand versus plan on that? And how are some of the newer reps ramping to productivity?
Thanks, Andrew. I think we are doing okay. We have had a little more turnover than I would like in some of the sales reps, and part of that was we have been readjusting the skill sets that we are looking for. Our sellers now have to talk about AI and innovation in different ways with a lot more technology than they did even two to three years ago. Some reps are not going to make that turn, and that is not just true for us; you are seeing it across technology. We are making changes in the force, and those with more aptitude to discuss technology in ways that business people can understand are doing better. Those who could not make that turn were not doing as well. The total number of sellers is increasing. We are committed to growing our sales force. We have begun aggressive hiring of sellers, but not just sellers: a lot of different sales support. We had to build out a new AI support team and new capabilities as we launched the new services. Those needed to come in, and we had to retrain sellers as well. Overall, the go-to-market is working for the sellers. The go-to-market in the alliances and channels is another very big part. We expect a substantial amount of our pipeline to come from indirect channels, so we continue to work with our partners such as ServiceNow and many others to build out more pipeline into that operation to reduce our total cost of sale and increase our leverage on sales.
And then, Michael, just on the Q3 guide and the implied Q4, what would help us get a little bit more confident in the acceleration there? I know some of it is easier comps. The RPO ex PeopleSoft did slow down a little bit, but anything you can give us on the confidence or the pipeline heading into the second half that will help us with the second half numbers would be great. Thanks.
Sure, Andrew. Highlighting, as Seth noted, we have built positive year-over-year metrics in four quarters in a row. Our retention rate has a nine in front of it. Relative to billings, renewal timing has impacted quarter-to-quarter comparisons. Putting all of this together, we are still seeing healthy — meaning double-digit-plus — new bookings growth year over year, which puts us in a strong position. We have reiterated guidance, and we feel we are in a very good position to achieve what we have laid out for the second half of the year.
Great. Thanks, guys.
Thank you.
Thank you.
And your next question comes from the line of Jeff Van Rhee from Craig Hallum. Please go ahead.
Great. Yes, thanks for taking the question. So Seth, on the European Commission decision about SAP's anti-competitive practices seems dead spot on in terms of forcing SAP to stop the punitive measures they were imposing on customers and allow them to choose third-party support; that would seem to have some pretty direct ramifications for you and possibly even be kind of a shot across the bow for Oracle's behavior. Any thoughts on that? Seen any impact? Obviously it is very recent, but just love a little feedback there.
Sure, Jeff. When you look at the decision and agreement in Europe with SAP, this is really bigger than SAP. Software licensing is getting extremely complex. We are connecting systems all over the place; this is the new world — it is an integrated environment. How we integrate, what we are allowed to move, data moving between places, licenses get brought together, they get separated. Companies merge and separate. A lot of the points raised and agreed upon between SAP and the European Union were around challenges companies have with their licenses and what might be fair or unfair practices. These challenges are impacting people's ability to run their businesses. I think the decisions are good. They are not everything we would want, but there are positives. For example, if a company splits apart and has to split its licenses or merges and comes together with another company, there are provisions about not being able to overcharge for the cost of that merger and not being able to hold people hostage around taking things apart and moving them back together. That has downstream impact on third-party providers like Rimini Street and other IT providers because it increases the overall competitive environment and allows customers much more choice.
Mhmm. Yeah, I would think it would be obviously very positive. Let me revisit billings quickly. I understand the lumpiness, but sort of back to overall momentum in pipeline. Dean, obviously, you have had very steady build in that overall momentum over the last handful of quarters — is there any more quantification you can give on the scope size growth in the pipeline around, again, getting that conviction in second-half billings?
Yes. That is why we felt reiterating the guidance we put out at the end of 2025 was important. We feel good about it. As Michael mentioned, we pulled forward a bit of cost. We said that at the end of Q1 as well, which is why you saw sales cost be higher than last year — we decided to forward-load some of those costs. We wanted to reiterate guidance because we are committed to the top line and bottom line. This is not an easy time. There is a lot of investment being made in AI, bringing new people in, tools and technologies, launching new products. That drives up sales and marketing costs as you get those launched and it is also driving up COGS. That is why, even though we moved up to a 60% gross margin target, we wanted to ensure there was a six in front of gross margin because we are increasing costs on the back end to support all these new products. It is a balancing act when you are in growth mode and trying to deliver top-line and bottom-line growth. We are balancing it well and the pipeline keeps growing. We have seen double-digit growth in the pipeline year over year, so we are feeling good about what we are seeing. We are optimistic about the numbers that are flowing through. The close rate, for example, we are hitting 30% pipe close rates, which are very good numbers. That means we have a solid pipe, it is a clean pipe, and we have good visibility as to what is coming. So I feel we are in a good place as we reiterate guidance.
Yeah. You preempted a bit of my follow-on. I want to clarify: on sales and marketing expense, it ticked up from 34% to 35% to 37% — we're at 37.5% this quarter on non-GAAP. Is this the peak in non-GAAP as a percent of revenue? Or do we still see that tick higher through the remainder of this year and then come down in 2027?
I think we are around the peak. There are still some pieces to put in place: we launched a brand new service, Rimini Govern for AI, which will have a marketing push that goes with it. But as a percentage of revenue, revenue on a ratable basis will always follow the expense when you are in growth mode. For most people who do not know, our average first-year contract is essentially a 15-month contract with three months of onboarding, so you are amortized over 15 months and you sign a contract. We start delivering service the next day usually, which means we have to hire the resources and take the expense immediately long before the revenue starts to add in on a ratable basis. Scale is the challenge in the growth model we are balancing right now.
Got it. Maybe one last quick one if I could. On the partner front, you talked about momentum with partners. Can you give any quantification there? What percent of pipeline at this point or what percent of new bookings are being driven through those partner relationships versus what it was a year ago?
We are definitely seeing increases. We are doing million-dollar deals with partners, which is great. If I were to use the old walk, jog, run approach, I would say we are in the jog phase: we are off and running, but we are a little more immature in our partner program compared to longer-established partner programs because we started later in the partner world. We are making progress. We are working with dozens of partners globally and solidifying around our top global strategic partners, and we will have more announcements around that very soon.
Congrats on the ARR growth and revenue growth. There's a lot working here, so congrats, guys.
Thank you.
Thank you.
Thank you. And your next question comes from the line of Alex Fuhrman from Lucid Capital Markets. Please go ahead.
Hey, guys, thanks very much for taking my question. It looks like the last couple of years you lost about 30 clients or so in the second quarter before getting back to net client acquisition in the back half of the year. This year, you actually gained a few in the second quarter. Can you talk a bit about what is driving that? Has that been some of the sales pipeline and just moving some of those customers through the funnel that you mentioned, or is that maybe some of the sequential uptick in retention starting to show in the numbers a little bit more?
I think it is a combination of all those factors. First, retention plays a role. Second, we have been very focused on new logo acquisition. In prior years we had net client losses in the second quarter; we turned that around by focusing exclusively on new logo acquisition and putting programs in place. In the Americas, we moved to a separated model with hunters and farmers: hunters focused only on new logo acquisition while farmers manage existing clients and focus on cross-sell and renewal activity. That has yielded significant growth in new logo acquisition, especially in North America. There's no perfect sales model — we evolve as our business evolves — but this model has worked very well for Rimini over the last couple years and we can see the results.
Okay. That is really good to hear. Thank you for that, Seth.
Certainly.
Thank you. And our next question comes from the line of Brian Kinstlinger from Alliance Global Partners. Please go ahead.
Hi. This is Shrey in for Brian. During your last analyst day, you highlighted that there were 26 customers testing out your Agentic AI ERP solution with ServiceNow. Can you provide an update on how many customers have moved into production with this new solution and how many are currently still in the test phase?
Great question. We have several customers that have moved into production. In fact, there is a Rimini catalog on our website where many of those customers are featured with case studies and quotes. Progress has been very interesting as we've rolled these solutions out. We have learned a lot about the technology and how to solve specific business issues, which has positioned us well in Agentic AI ERP solutions. A good number are already in production and some of those are expanding to multiple projects. We are seeing strong success and are now expanding further because of the new solutions and the new Rimini governance offerings that clients have been waiting to deploy.
Thank you. That is helpful. As a quick follow-up, are you able to quantify the pipeline for your ServiceNow partnership, and how much of it is existing customers versus brand-new customers?
The pipeline has been a combination of both partners' and our-sourced opportunities, which is what we wanted. ServiceNow would like access to our customers and we would like access to theirs. We share over a thousand customers together who use both our services, so there is already a strong base where we can expand footprints together. We are very pleased with where this can go and we expect to see more productive joint opportunities with other partners such as T-Systems and many others.
Thank you.
Certainly.
Thank you. And there are no further questions at this time. I will now hand the call back to Mr. Seth A. Ravin for any closing remarks.
Great. Well, thank you, everyone. I appreciate you joining us. I want to thank our clients for all their trust in our business and allowing us to be part of their innovation story. And, of course, to all of our colleagues for the work that they did in the quarter and delivering some great results. Thanks, everybody, and we look forward to talking to you at our third-quarter call. Thank you very much.
Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.