Rimini Street (RMNI) Q1 2025: Billings Rise 7.2% as Partnerships and Cost Actions Offset PeopleSoft Decline
Rimini Street’s Q1 2025 reveals a business in disciplined transition, with billings growth and gross margin gains offsetting revenue pressure from the planned PeopleSoft wind-down. New global partnerships, cost optimization, and international sales momentum signal a pivot to diversified growth, but Oracle litigation and legacy attrition still cloud the outlook.
Summary
- Strategic Partnerships Accelerate: ServiceNow, T-Systems, and Workday alliances are reshaping growth levers beyond legacy support.
- Operational Discipline Yields Margin Upside: Cost controls and process optimization drove margin expansion despite top-line contraction.
- PeopleSoft Wind-Down Remains a Drag: Revenue headwinds persist, but management expects crossover to growth as new drivers scale.
Performance Analysis
Rimini Street’s Q1 2025 performance underscores a business managing through legacy headwinds while executing on new growth bets. Revenue declined 2.4% year-over-year, reflecting the ongoing wind-down of PeopleSoft support, which now accounts for just 7% of revenue. However, billings climbed 7.2% year-over-year, and gross margin expanded to 61%, up from 59.8% a year ago, signaling effective cost management and improved sales execution.
International sales now comprise a majority of revenue, with EMEA and Asia-Pacific driving the billings uptick. The company’s recurring revenue base remains high, with 95% of revenue from subscriptions and 77% of that non-cancelable for at least a year. Operating cash flow improved sharply, and net income ticked up, supported by a leaner cost base and lower litigation spend. Deferred revenue and backlog (RPO) were stable, hinting at underlying demand resilience even as the company transitions away from PeopleSoft.
- Billings Growth Outpaces Revenue: New subscriptions and project services, especially in EMEA and APAC, drove billings up despite legacy attrition.
- Margin Expansion Signals Execution: Gross margin and adjusted EBITDA both rose, reflecting cost discipline and operational leverage.
- PeopleSoft Wind-Down Continues: Revenue from PeopleSoft dropped to $7 million, with the customer base shrinking further as planned.
The quarter marks a pivot point: While legacy drag weighs on revenue, new partnerships and disciplined execution are building a foundation for future growth and profitability.
Executive Commentary
"We maintained positive momentum in billings and cost controls during the first quarter. Sales included a mix of our products, services, and solutions, and a notable acceleration in sales of our new support subscriptions for VMware across a broad set of industries and geographies."
Seth Raven, CEO and President
"We are pleased with this gross margin level in spite of lower revenue, underscoring our continued focus on driving operational leverage through improved systems, processes, and global staffing models while continuing to deliver best-in-class support for a wider array of support, optimization, and transformational offerings."
Michael Parika, CFO
Strategic Positioning
1. Diversification via Strategic Partnerships
Rimini Street is actively repositioning its growth engine through high-potential alliances. The ServiceNow partnership stands out, with a joint go-to-market effort and playbooks distributed to 6,000 ServiceNow sellers globally. Early joint wins and planned showcases at major industry events signal meaningful traction, with management targeting 2026 for significant revenue contribution. The T-Systems alliance leverages Rimini’s SAP and Oracle expertise with T-Systems’ cloud hosting, targeting enterprises seeking to extend legacy IT while adopting automation. The new Workday AMS certification opens a fresh application management services channel, tapping into Rimini’s existing Workday client base.
2. Cost Optimization and Global Delivery Shift
Cost discipline remains a core lever, with operating expenses as a percentage of revenue down sharply. The company continues to streamline back-office and administrative functions, while investing in lower-cost global delivery hubs in Brazil, India, and Malaysia—each targeting up to 1,000 engineers. This shift improves labor cost structure and supports scalable service delivery, particularly as the company ramps ServiceNow and cloud-based offerings.
3. Managing Through Legacy Attrition
The planned PeopleSoft wind-down is a controlled but persistent headwind, with revenue and client count declining as expected. Management reiterated a gradual, multi-year phase-out, with lumpy impacts as large clients roll off. The company’s confidence in new growth drivers eventually offsetting this drag is firm, but the timing remains “lumpy,” with crossover to net revenue growth expected as new partnerships mature.
4. Litigation Overhang and Resolution Path
Oracle litigation remains a material uncertainty, but recent court developments have narrowed the scope and reduced financial exposure. The main remaining issue is confined to legacy PeopleSoft development processes, with no damages at stake and a final resolution targeted within a year. Rimini is also seeking the return of $58.7 million in legal fees from Oracle, which could further bolster cash reserves if successful.
Key Considerations
This quarter’s results reflect a business in the midst of a strategic pivot, balancing legacy attrition with disciplined execution and new growth bets. Investors should weigh the following:
Key Considerations:
- ServiceNow Partnership Ramp: The ServiceNow alliance is expected to become meaningful in 2026, with early momentum but a long ramp to scale.
- PeopleSoft Attrition Remains Material: Revenue drag from the PeopleSoft wind-down will persist and be lumpy, but is being managed down as planned.
- Cost Controls Fuel Margin Resilience: Ongoing cost optimization and global delivery center expansion are supporting margin gains even as revenue contracts.
- Litigation Uncertainty Still Present: Oracle litigation is narrowing, but the outcome and timing of fee recovery remain open variables.
- Macro Volatility as a Net Positive: Management sees macro uncertainty and IT budget pressures as catalysts for Rimini’s value proposition, but renewal risk and customer cash constraints must be monitored.
Risks
Key risks include continued revenue headwinds from the PeopleSoft wind-down, potential delays or underperformance in scaling new partnerships, and ongoing uncertainty around Oracle litigation outcomes. Macro volatility and customer cost pressures could impact renewals or new sales, particularly in the event of a broader IT spending pullback. While management views macro disruption as a net positive for Rimini’s cost-saving value proposition, execution risk remains high during this transition period.
Forward Outlook
For Q2 and the remainder of 2025, Rimini Street continues to suspend formal guidance pending further clarity on Oracle litigation impacts. Management commentary highlighted:
- Continued ramp of ServiceNow, T-Systems, and Workday partnerships, with significant revenue contribution expected in 2026 and beyond.
- Ongoing cost optimization and global delivery expansion to support margin and scalability.
Management expects the PeopleSoft wind-down to remain lumpy but manageable, with confidence that new growth drivers will eventually offset legacy declines and return the company to net revenue growth.
Takeaways
Rimini Street’s Q1 2025 shows a company executing on a disciplined pivot, offsetting legacy drag with new partnerships and operational leverage. The next phase hinges on the ramp of ServiceNow and other alliances, successful management of PeopleSoft attrition, and resolution of Oracle litigation.
- Strategic Partnerships Are Key to Future Growth: ServiceNow, T-Systems, and Workday alliances must scale to offset legacy headwinds and drive the next growth chapter.
- Cost Structure Now Supports Profitability: Margin gains and cash flow improvement provide a buffer as the company navigates through transition risks.
- Investors Should Monitor Execution on New Revenue Streams: The pace and magnitude of new business ramp will determine the timing of a return to sustainable growth.
Conclusion
Rimini Street’s Q1 2025 results highlight a business in disciplined transition, with operational execution and new partnerships building a bridge to future growth. The next several quarters will test management’s ability to scale new revenue streams and fully offset legacy attrition, with Oracle litigation resolution and macro dynamics adding further complexity.
Industry Read-Through
The quarter’s results offer several read-throughs for the broader enterprise IT and third-party support sector. Rimini’s pivot to workflow automation, cloud, and application management services mirrors industry trends as customers seek to extend legacy investments while adopting modern platforms. The strategic focus on alliances with ServiceNow, T-Systems, and Workday signals growing demand for integrated, cost-saving alternatives to vendor-driven upgrades. The ongoing PeopleSoft wind-down and litigation overhang are reminders of the challenges facing legacy support models, while Rimini’s margin and cash flow discipline set a benchmark for peers navigating similar transitions.