Q&A: Rimini Street CEO Seth Ravin
Rimini Street, which offers third party support for SAP and Oracle applications, delivered 2015 revenue of $118 million, up 37 percent from a year ago.
In addition, the company delivered strong fourth quarter revenue of $34 million, up 33 percent from a year ago.
But Rimini's year in review largely revolved around a long-running lawsuit with Oracle that was put to bed. In October, Oracle was awarded $50 million in damages after seeking nearly $250 million. There are more skirmishes ahead between Rimini and Oracle, but third party support continues to gain in popularity among large enterprises with legacy applications.
Previously: Oracle awarded $50M damages against Rimini Street | Oracle vs. Rimini Street nears finale, but third party maintenance blueprint far from set
We caught up with Rimini CEO Seth Ravin in an email interview. Here's the exchange.
How have things changed since the Oracle lawsuit? Where do things stand now regarding appeals and the other trial, which if I recall is in discovery.
Since the trial has completed, we have seen continued sales growth and acceleration globally. We exceeded our 2015 plan numbers for revenue as well as total invoicing, demonstrating the strong and growing market demand for our services globally. In fact, for Q4, we set several new financial records, including surpassing 100 client transactions in a quarter, for the first time.
With respect to remaining post-trial activities, Rimini has filed motions with the Court to dismiss both the "innocent infringement" and "computer access" findings by the jury. Oracle had previously withdrawn or lost the other ten (10) claims it had asserted in the litigation. Oracle has filed motions requesting reimbursement for some of its legal fees and costs, as well as interest on the jury award (that Rimini is contesting). Rimini has filed responses denying that Oracle is entitled to any such reimbursements given the jury's verdict and the law. Oracle and Rimini have also filed competing motions over whether or not any injunction is warranted by the Court that would relate to the processes the jury found to be "innocently" infringed ("innocent" infringement is a legal term, and the jury instruction defines "innocent" infringement as "infringement that Rimini did not know - nor should have reasonably known - that it was committing"). Rimini has argued that it has already ceased using those processes at the latest in 2014, and therefore no injunction relating to such processes is warranted or appropriate. The Court has not ruled on any of these open matters yet.
What did the trial clarify regarding third party support? What needs to be resolved?
During trial, Oracle admitted the legality of third party support. All the rest of the trial was regarding certain, specific processes and activities of Rimini Street. The jury rejected Oracle's claims of Rimini willful, tortuous actions. Essentially, the trial confirmed the rights of Rimini and other third parties to compete and offer alternative maintenance programs for Oracle licensees.
How has the dialogue with customers gone given the ongoing litigation?
As you can see from our average annual revenue growth rate north of 36%, global demand has remained strong and continued to grow during the entire pendency of the Oracle litigation. Of course, many prospects have asked about the litigation during the sales cycle, and Rimini provides them the information they need to get comfortable with the facts and move forward.
I noticed from releases in 2015 that your Oracle third party support grew at a faster clip than SAP over prior years? Why the discrepancy between the two.
We service 10 Oracle product lines, so our total offerings under Oracle are cumulatively bigger than the SAP product line. We also would attribute an accelerating portion of Oracle sales growth to the Oracle Database product - a massive global opportunity that Rimini is uniquely positioned to service for the largest companies in the world.
What does a SAP customer look for relative to one supporting Oracle applications or databases?
We sell the same set of services for SAP products and Oracle products. Of course, every product line has its own unique technical attributes, but those are addressed at the sales and sales engineering level. The primary difference between an SAP and Oracle client is that - more often than not - an SAP client is going to include a large manufacturing system. So, the differences in selling to different clients is less about whether it is SAP or Oracle, but more about the software being covered, what software functionality is covered, and what part of the business the software is running.
When do you anticipate Rimini re-filing for an IPO? Is it necessary?
Rimini will actively pursue an IPO if and when the Board of Directors decides (a) it is both appropriate for the Company and (b) market conditions support an IPO. In the meantime, Rimini continues to focus on its global growth and expansion and may pursue additional private financing rounds if and when opportunities make such capital attractive.
Your workforce is now at 660 and you've hired 253 employees in 2015. What are dynamics are you seeing in the labor pool and talent?
Rimini is finding extremely good talent globally, and we are able to attract it because we are a bigger company with a ten year track record of growth and success (40 consecutive quarters of growth - since the Company's founding in 2005). Every labor market is slightly different, and it is easier to find different experienced talent in different markets. Now that Rimini Street has physical operations in ten countries, we have more opportunity to leverage local talent pools and expand Rimini's knowledge, experience and capabilities for global service delivery.
How have contract lengths and terms changed in 2015 relative to 2013?
We have seen contract "non-cancelable contract commitment terms" increase as a percentage of our total invoicing each year since 2011. We continued to see such an increase in the recently completed fiscal 2015 (based on preliminary results).
We had previously talked about two trends. First, third party support as a bridge to a cloud deployment. And second, the potential for Rimini to get into white label support for software providers. Where do those two things stand today?
As Rimini disclosed in its SEC S-1 filings, we intend to offer support services for both SaaS software products and offer "white label support" as a BPO option for software publishers. These businesses are accretive to our massive TAM for the tens of thousands of large, global software deployments just for Oracle and SAP. A (minority) portion of Rimini's business certainly is helping some clients "bridge" or "gap" between a current Oracle or SAP deployment and a transition to say, Workday for HCM or Salesforce.com for CRM.
What new product lines are ripe for third party support for 2016?
Oracle and SAP both have additional product lines that Rimini is actively considering for new support offerings. Additionally, as we have always pointed out, there are significant product support opportunities outside of Oracle and SAP that Rimini intends to pursue when the strategic timing is right.
The Oracle award had a hefty chunk ($14 million) that held you directly liable. Is that being appealed and how personal is the Oracle vs. Rimini thing?
Yes, the jury held me jointly and severally liable with the Company on the damages award for the "computer access" claims. However, we have filed a motion with the Court to dismiss the entire finding by the jury as not supported by the law (see answer to #1 above).
As for "is the Oracle vs. Rimini" litigation "personal" to me - no, not personal at all. Rimini is simply trying to (aggressively) compete with its support services on a level, legal and fair playing field against software vendors. Software vendors don't want competition to eat away at their life blood, and - as we have seen - they will go to extreme measures to protect this revenue stream that represents approximately half their business. We are pushing through this phase of market development and the market will mature into a robust set of different vendors, different offerings at different price points. The consumer will be the ultimate winner.