Rimini Street posts record results

Rimini Street posted record revenues for Q4 2010 and the year. Highlights from the press release:

4th quarter 2010

• $47 million in sales bookings an 87% increase in sequential quarterly bookings, 68% increase on a year over year basis
• $7 million in revenue, 37% increase on a year-over-year basis and a new company record
• Completed more than 30 transactions, exiting the quarter at more than 200% of plan

Fiscal year 2010

• Exceeded $25 million in revenue, a 44% increase on 2009
• Sales booking backlog increased from $149 million to $220 million, a 47% increase over 2009
• Deferred revenue increased 40% compared with 2009

Other highlights

• Average contract term increased 22% from 9 to 11 years
• Average sales price increased 12% on a year over year basis
• Client retention increased to more than 95%
• Client satisfaction topped 99%
• Total clients signed: c.400, including 25 of Fortune 500 and 11 Global 100.
• Operations supported in 60 countries, with capability extending to 200 countries.
• Tripled SAP client base in second year.

Despite these results, 2010 was something of a mixed bag for the company. Seth Ravin, CEO Rimini Street confirmed to me that there was an impact from the SAP/TomorrowNow case. "Some potential customers were hesitant...that's understandable...but in the end the numbers speak for themselves."

Rimini Street says that it is regularly fielding calls from financial analysts keen to know how it is progressing. In an earlier press release, the company reported:

• JMP Securities featured Rimini Street at the JMP Securities Technology Forum in San Francisco. The Company discussed the rapid growth of the third-party support market and the implications for current and future software providers.
• Cowen and Company featured Rimini Street at its 38th Annual Technology, Media and Telecommunications Conference in New York City. The Company participated in a panel discussion with other industry executives on the topic of changes taking place in the multi-billion dollar software and hardware maintenance business, including the impact of third-party support offerings.
• Piper Jaffray & Co. featured Rimini Street at its Technology, Media and Telecommunications Conference held in New York City. The Company discussed the dynamic growth of the third-party support industry and its significant impact on the future of the enterprise software market.
• Needham & Company is featuring Rimini Street at its 13th Annual Growth Conference being held in New York City in January 2011. The Company will provide an overview of the large market opportunity for third-party enterprise software support and Rimini Street’s award-winning service offering.

Analysis and forward view

Despite the drama of lawsuits between Oracle, SAP, Rimini Street and anyone else Oracle feels like suing, customers are voting with their wallets. In this regard the numbers to consider are: hard dollar savings and customer satisfaction. On both counts, Rimini Street performs way better than SAP or Oracle. That ends up reflected in customer retention.

Rimini Street remains a tiny player in this market when compared to the billions of dollars that both SAP and Oracle rake in on this line item. However, the long term risk to the bottom line of both companies is real.

Many are keeping a close eye on the pending Oracle v Rimini Street lawsuit. If Rimini Street wins then both financial and industry analysts believe the third party maintenance market will likely explode. This will have a significant impact on both SAP and Oracle. Oracle looks the most vulnerable based upon its growing reliance upon third party maintenance support fees.

As always with these things, timing is of the essence. My best guess suggests that Oracle will try string this case out to 2013 at the earliest. That is the year many analysts believe Oracle Fusion will come on stream as a significant upgrade alternative for Oracle E-Business Suite and eventual revenue contributor. SAP will not be immune from the wave of interest in 3PM but may fair better if it is able to make demonstrable headway with SAP Business ByDesign and its On-Demand lines of business in the subsidiaries of its Global 2000 customer base.

Other coverage: Rimini Street fires back at Oracle; Alleges 'anticompetitive tactics' Rimini Street: A small, but threatening fish to Oracle, SAP Rimini Street to Oracle: enough is enough