4. Rimini Street, Inc. (NASDAQ: RMNI)
Number of Hedge Fund Holders: 13
Rimini Street, Inc. (NASDAQ: RMNI) is a software application company that provides software products, services, and support to enterprises. The company was founded in 2005 and offers a third-party software solution including support, managed services, and, maintenance for software companies like Oracle, IBM, SAP, Salesforce, and AWS partners.
Rimini ONE is a service program that offers a unified set of integrated systems that can run, manage, support, configure, protect, and optimize its client’s database and technology apps.
Similarly, Rimini Connect is an interoperability solution to connect email systems, operating systems, and browsers. Rimini Protect is a personalized security service solution. In addition, there is Rimini support, Rimini watch and Rimini consult service solutions for software enterprises.
Rimini Street, Inc. (NASDAQ: RMNI) serves clients in nearly 150 countries and has over 2100 employees. The company’s active clients have grown by 1.1% to 3,040 in Q1 2024 from 3,007 same period last year. Rimini award-winning software support has an average engineered response time of less than 2 minutes and achieved an outstanding client satisfaction score of 4.9/5. However, the stock is currently undervalued with a trailing P/E ratio of 12.88 compared to the industry’s average P/E of 44.36.
Rimini Street. Inc. (NASDAQ: RMNI) has continued to streamline its operations and adopt innovative solutions to better serve and expand its clients. Early in June 2024 Ricoh Company Limited, a Japanese-based multinational firm that processes images and makes electronic products chose Rimini Support and Rimini Protect to ensure the safeguard of its Oracle EBS and database environments.
In addition, the company is focused on diversifying its portfolio by launching new services to expand its support and services to a broader scope. For instance, in February 2024, Rimini Custom was launched and is poised to be a game-changer for enterprises that need to focus their scarce IT resources on innovations and transformations while ensuring that the current database continues to support mission-critical operations. Rimini Custom helps organizations lower operating costs and complexities involved in heterogeneous IT environments and allows them to narrow down their focus on higher-value projects.
In the first quarter of 2024, Rimini Street, Inc. (NASDAQ: RMNI) reported a revenue of $106.7 million that improved marginally by 1.2% compared to $105.5 million for the same quarter last year. Whereas the annualized recurring revenue was $415.8 million for the first quarter and grew 1.8% YoY. However, the management noted that the total revenue was affected negatively by 0.8% due to FX movements.
Although recurring sales were in line with the quarter growth plan, new client sales were a bit demanding. Several new sales failed to close in the quarter and slipped to the next quarter. To address these challenges, the company held a comprehensive sales kick-off in January to train and develop the sales skills of 400 global revenue team members.
In addition, a major headwind faced by Rimini Street is a 14-year-long legal battle with Oracle. The company is still facing ongoing litigation with Oracle which has led to uncertainties and affected guidance on future financial results. In 2010, Oracle Corporation, a database software and cloud-based solution provider sued Rimini Street accusing the company of infringing its copyrights and engaging in unfair business practices.
Oracle alleged that Rimini Street illegally copied Oracle’s software and provided unauthorized support services to its customers. In defense, Rimini Street argued that its practices were legal as it provided a low-cost support service within the bounds of fair use and complied with the licenses held by its customers who were unsatisfied with Oracle’s costly service. In 2014, Rimini filed a declaratory judgment action aka Rimini2 declaring that it had made changes to its software support practices.
In 2015, the jury found Rimini Street liable for copyright infringement and awarded Oracle $125 million in damages. The decision was challenged by Rimini, and the court made some changes and reaffirmed some damages while modifying others.
Oracle withdrew its monetary relief claim of $1.4 billion as the court rejected Oracle’s arguments that its license agreements prevent Rimini from documenting its own operations and technical specifications.
Last year, Nevada Federal Judge Miranda Du found that Rimini Street once again violated Oracle’s copyright claims. The judge ordered a permanent injunction limiting Rimini Street’s long-term support practices. The court issued further orders that the company must issue a press release and provide its customers with true information regarding misleading marketing campaigns.
The company disagreed with many points of this ruling, appealing the injunction at the court of appeals. As of now, an administrative stay of the injunction remains in effect. The appeal is pending and may or may not turn in favor of the company. However, the uncertainty of events may yet impact the stock’s share price in the future.
According to Insider Monkey’s database, 13 hedge funds held stakes in Rimini Street, Inc. (NASDAQ: RMNI) and Adams Street Partners held the largest stake of over 23.56 million shares with a value of $76.82 million.
