Rimini Street (NASDAQ: RMNI) posts Q1 2026 revenue gain but lower net income
Filing Impact
Filing Sentiment
Form Type
10-Q
Rimini Street, Inc. reports Q1 2026 results with revenue of $105.5 million, up slightly from $104.2 million a year ago. Subscription revenue remained about 95% of total revenue, and annualized recurring revenue reached $401 million.
Net income declined to $1.4 million from $3.4 million as gross margin slipped to 59.0% from 61.0%, mainly due to higher engineering consulting and allocated overhead costs and increased sales and marketing spending. U.S. revenue fell while international revenue grew, and services tied solely to Oracle PeopleSoft products represented about 3% of revenue during the quarter.
Rimini Street ended the quarter with $133.3 million in cash, cash equivalents and restricted cash, deferred revenue of $277.3 million and a $56.4 million term loan outstanding under its credit facility. The company reported a 12‑month revenue retention rate of 88% and continues winding down Oracle PeopleSoft services under its settlement agreement while investing in Agentic AI ERP and broader enterprise support solutions.
Positive
- None.
Negative
- Profitability deterioration: Q1 2026 net income fell to $1.4 million from $3.4 million year over year, and gross margin declined from 61.0% to 59.0%, reflecting higher engineering consulting costs, overhead allocations and sales and marketing spending relative to modest 1% revenue growth.
Insights
Modest revenue growth but weaker profitability and margin compression in Q1 2026.
Rimini Street grew Q1 2026 revenue to $105.5M, up about 1% year over year, with annualized recurring revenue of $401M. The model remains dominated by subscriptions, and international sales rose while U.S. revenue declined.
Profitability weakened: gross margin fell from 61.0% to 59.0%, and net income dropped to $1.4M from $3.4M. Higher engineering consulting, overhead allocations, and sales and marketing spend drove most of the pressure, while litigation expense fell after the Oracle settlement.
Liquidity appears solid, with $133.3M in cash, cash equivalents and restricted cash and $277.3M of deferred revenue as of March 31, 2026. Term‑loan principal fell to $56.4M after voluntary prepayments, and key metrics such as an 88% revenue retention rate and growing non‑PeopleSoft subscription revenue support the recurring model even as the mandated PeopleSoft wind‑down continues.
Key Figures
Q1 2026 revenue: $105.5M
Q1 2026 net income: $1.4M
Gross margin: 59.0%
+5 more
8 metrics
Q1 2026 revenue
$105.5M
Three months ended March 31, 2026
Q1 2026 net income
$1.4M
Three months ended March 31, 2026
Gross margin
59.0%
Q1 2026 vs 61.0% in Q1 2025
Cash and restricted cash
$133.3M
As of March 31, 2026
Term loan balance
$56.4M
Credit Facility principal outstanding at March 31, 2026
Deferred revenue
$277.3M
Current and noncurrent as of March 31, 2026
Annualized recurring revenue
$401M
Based on Q1 2026 subscription revenue
Revenue retention rate
88%
12 months ended March 31, 2026
Key Terms
annualized recurring revenue, revenue retention rate, Credit Facility, Rimini Smart Path, +2 more
6 terms
annualized recurring revenue financial
"Our annualized recurring revenue was $401 million and $396 million as of March 31, 2026 and 2025, respectively."
Annualized recurring revenue is the predictable income a business expects to earn over a year from ongoing customer subscriptions or contracts. It’s similar to estimating how much money you would make in a year if your current monthly income stayed the same. Investors use this figure to assess the stability and growth potential of a company's revenue stream.
revenue retention rate financial
"Our revenue retention rate was 88% and 88% for the 12 months ended March 31, 2026 and 2025, respectively."
Measure of how much income a company keeps from its existing customers over a set period (usually a month or year), after accounting for lost customers, reduced spending, and any extra spending by remaining customers. Investors use it to judge the predictability and health of recurring revenue—high retention is like a garden that keeps producing the same or more fruit each season, signaling steadier future cash flow and lower risk.
Credit Facility financial
"On April 30, 2024, the Company refinanced its $90 million five-year term loan into a new five-year term loan of $75 million (as amended by Amendment No. 1 thereto dated March 27, 2026, the “Credit Facility”)."
A credit facility is a flexible loan arrangement that allows a borrower to access funds up to a set limit whenever needed, similar to a company having an overdraft option on a bank account. It matters to investors because it indicates how easily a business can secure cash when required, affecting its ability to manage expenses, invest, or respond to financial challenges.
Rimini Smart Path technical
"we have developed a proprietary operating model for enterprise software, the Rimini Smart Path."
Agentic AI ERP technical
"managed services and Agentic AI ERP innovation solutions."
Agentic AI ERP combines autonomous software agents—AI that can make decisions and take actions—with an enterprise resource planning (ERP) system that runs a company’s core operations like finance, inventory and HR. For investors it matters because this pairing can speed routine work, cut costs and unlock new revenue by letting software act like an extra, self-directed team member, but it also raises execution risk, implementation cost and questions about oversight and data controls.
interest rate swap financial
"the interest rate swap agreement has a notional value of $40.0 million, with a fixed payer SOFR rate of 3.71%"
An interest rate swap is a financial agreement where two parties exchange interest payments on a set amount of money over time. Typically, one side pays a fixed interest rate, while the other pays a variable rate that can change with market conditions. This helps investors manage or reduce their exposure to interest rate fluctuations, much like locking in a mortgage rate to avoid future cost increases.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the Quarterly Period Ended March 31, 2026
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the Transition Period from to
Commission File Number: 001-37397
| (Exact name of registrant as specified in its charter) | ||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
| Registrant's telephone number, including area code: | ||||||||
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol(s) | Name of each exchange on which registered: | |||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ | Non-accelerated filer ¨ | |||||||
Smaller reporting company | Emerging growth company | |||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No þ
The registrant had approximately 92,560,000 shares of its $0.0001 par value common stock outstanding as of April 28, 2026.
RIMINI STREET, INC.
TABLE OF CONTENTS
| Page | ||||||||
PART I. FINANCIAL INFORMATION | 2 | |||||||
ITEM 1. | Financial Statements | 2 | ||||||
| Unaudited Condensed Consolidated Balance Sheets | 2 | |||||||
| Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income | 3 | |||||||
| Unaudited Condensed Consolidated Statements of Stockholders' Deficit | 4 | |||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | 5 | |||||||
Notes to Unaudited Condensed Consolidated Financial Statements | 7 | |||||||
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 | ||||||
ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | 33 | ||||||
ITEM 4. | Controls and Procedures | 33 | ||||||
PART II. OTHER INFORMATION | 34 | |||||||
ITEM 1. | Legal Proceedings | 34 | ||||||
ITEM 1A. | Risk Factors | 34 | ||||||
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 57 | ||||||
ITEM 3. | Defaults Upon Senior Securities | 57 | ||||||
ITEM 4. | Mine Safety Disclosures | 57 | ||||||
ITEM 5. | Other Information | 57 | ||||||
ITEM 6. | Exhibits | 58 | ||||||
SIGNATURES | 59 | |||||||
1
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
RIMINI STREET, INC.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
| March 31, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash, current | |||||||||||
Accounts receivable, net of allowance of $ | |||||||||||
| Deferred contract costs, current | |||||||||||
| Prepaid expenses and other | |||||||||||
| Total current assets | |||||||||||
| Long-term assets: | |||||||||||
| Restricted cash, noncurrent | |||||||||||
Property and equipment, net of accumulated depreciation and amortization of $ | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Deferred contract costs, noncurrent | |||||||||||
| Deposits and other | |||||||||||
| Deferred income taxes, net | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | |||||||||||
| Current liabilities: | |||||||||||
| Current maturities of long-term debt | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Accrued compensation, benefits and commissions | |||||||||||
| Other accrued liabilities | |||||||||||
| Operating lease liabilities, current | |||||||||||
| Deferred revenue, current | |||||||||||
| Total current liabilities | |||||||||||
| Long-term liabilities: | |||||||||||
| Long-term debt, net of current maturities | |||||||||||
| Deferred revenue, noncurrent | |||||||||||
| Operating lease liabilities, noncurrent | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 8) | |||||||||||
| Stockholders’ deficit: | |||||||||||
Preferred stock; $ | |||||||||||
Common stock; $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Accumulated deficit | ( | ( | |||||||||
Treasury stock, at cost; | ( | ( | |||||||||
| Total stockholders' deficit | ( | ( | |||||||||
| Total liabilities and stockholders' deficit | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
RIMINI STREET, INC.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share amounts)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue | $ | $ | |||||||||
| Cost of revenue | |||||||||||
| Gross profit | |||||||||||
| Operating expenses: | |||||||||||
| Sales and marketing | |||||||||||
| General and administrative | |||||||||||
| Reorganization costs | |||||||||||
| Research and development | |||||||||||
| Litigation costs and related recoveries: | |||||||||||
| Professional fees and other costs of litigation | |||||||||||
Litigation costs and related recoveries, net | |||||||||||
| Total operating expenses | |||||||||||
| Operating income | |||||||||||
| Non-operating income and (expenses): | |||||||||||
| Interest expense | ( | ( | |||||||||
| Other income (expenses), net | ( | ( | |||||||||
| Income before income taxes | |||||||||||
| Income taxes | ( | ( | |||||||||
| Net income | |||||||||||
| Other comprehensive income | |||||||||||
| Foreign currency translation gain (loss) | ( | ||||||||||
| Derivative instrument and other adjustments, net of tax | ( | ||||||||||
| Comprehensive income | $ | $ | |||||||||
| Net income per share attributable to common stockholders: | |||||||||||
| Basic | $ | $ | |||||||||
| Diluted | $ | $ | |||||||||
| Weighted average number of shares of Common Stock outstanding: | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
RIMINI STREET, INC.
Unaudited Condensed Consolidated Statements of Stockholders' Deficit
(In thousands)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Common Stock, Shares | |||||||||||
| Beginning of period | |||||||||||
| Exercise of stock options for cash | |||||||||||
| Restricted and performance stock units vested | |||||||||||
| End of period | |||||||||||
| Total Stockholders' Deficit, beginning of period | $ | ( | $ | ( | |||||||
| Common Stock, Amount | |||||||||||
| Beginning of period | |||||||||||
| Exercise of stock options for cash | — | — | |||||||||
| Restricted and performance stock units vested | — | — | |||||||||
| End of period | |||||||||||
| Additional Paid-in Capital | |||||||||||
| Beginning of period | |||||||||||
| Stock based compensation expense | |||||||||||
| Exercise of stock options for cash | |||||||||||
| Restricted and performance stock units vested | — | — | |||||||||
| End of period | |||||||||||
| Accumulated Other Comprehensive Loss | |||||||||||
| Beginning of period | ( | ( | |||||||||
| Other comprehensive income (loss) | ( | ||||||||||
| End of period | ( | ( | |||||||||
| Accumulated Deficit | |||||||||||
| Beginning of period | ( | ( | |||||||||
| Net income | |||||||||||
| End of period | ( | ( | |||||||||
| Treasury Stock | ( | ( | |||||||||
| Total Stockholders' Deficit, end of period | $ | ( | $ | ( | |||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
RIMINI STREET, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Stock-based compensation expense | |||||||||||
| Depreciation and amortization | |||||||||||
| Accretion and amortization of debt discount and issuance costs | |||||||||||
| Deferred income taxes | ( | ||||||||||
| Amortization and accretion related to operating right of use assets | |||||||||||
| Other | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable, net | |||||||||||
| Prepaid expenses, deposits and other | ( | ( | |||||||||
| Deferred contract costs | |||||||||||
| Accounts payable | ( | ( | |||||||||
| Accrued compensation and other accruals | ( | ( | |||||||||
| Deferred revenue | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Principal payments on term loan borrowings | ( | ( | |||||||||
| Principal payments on capital leases | ( | ||||||||||
| Proceeds from exercise of employee stock options | |||||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of foreign currency translation changes | ( | ||||||||||
| Net change in cash, cash equivalents and restricted cash | |||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
RIMINI STREET, INC.
Unaudited Condensed Consolidated Statements of Cash Flows, Continued
(In thousands)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| Cash paid for income taxes | |||||||||||
| Cash paid for withholding taxes | |||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business
Rimini Street, Inc. (the “Company”) is a global provider of end-to-end third-party enterprise software support, managed services and Agentic AI ERP innovation solutions. Its products and services offer enterprise software licensees a choice of solutions that replace or supplement the support products offered by enterprise software vendors.
Basis of Presentation and Consolidation
The Unaudited Condensed Consolidated Financial Statements, which include the accounts of the Company and its wholly-owned subsidiaries, are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by U.S. GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Unaudited Condensed Consolidated Financial Statements have been included. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Audited Consolidated Financial Statements for the year ended December 31, 2025, included in the Company’s 2025 Annual Report on Form 10-K as filed with the SEC on February 19, 2026 (the “2025 Form 10-K”).
The accompanying Unaudited Condensed Consolidated Balance Sheet and related disclosures as of December 31, 2025 have been derived from the Company’s audited financial statements. The Company’s financial condition as of March 31, 2026, and operating results for the three months ended March 31, 2026, are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the year ending December 31, 2026.
NOTE 2 — LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES
Liquidity
As of March 31, 2026, the Company’s current liabilities exceeded its current assets by $50.3 million, and the Company recorded net income of $1.4 million for the three months ended March 31, 2026. As of March 31, 2026, the Company had available cash, cash equivalents and restricted cash of $133.3 million. As of March 31, 2026, the Company’s current liabilities included $257.4 million of deferred revenue whereby the costs of fulfilling the Company’s commitments to provide services to its clients was approximately 41 % of the related deferred revenue for the three months ended March 31, 2026.
On April 30, 2024, the Company refinanced its $90 million five-year term loan into a new five-year term loan of $75 million (as amended by Amendment No. 1 thereto dated March 27, 2026, the “Credit Facility”). On February 4, 2026 and March 30, 2026, the Company made voluntary prepayments of $5.0 0.9 million on March 31, 2026. As a result, the Company’s next scheduled principal payment is not until March 31, 2028. See Note 5 for further information regarding the Company’s Credit Facility, including the first amendment thereto dated March 27, 2026.
Additionally, the Company is obligated to make operating lease payments that are due within the next 12 months in the aggregate amount of $5.0 million. During the three months ended March 31, 2026, the global economy continued to experience changing interest rates, geopolitical conflicts, global supply chain issues, a rise in energy prices and the continuing effects of fiscal and monetary policies adopted by governments. Assuming the Company’s ability to operate continues not to be significantly adversely impacted by the related changes in the macroeconomic environment, geopolitical pressures, or the litigation matters described in Note 8, the Company believes that current cash, cash equivalents, restricted cash, and future cash flow from operating activities will be sufficient to meet the Company’s anticipated cash needs, including Credit Facility repayments, working capital needs, capital expenditures and other contractual obligations for at least 12 months from the issuance date of these financial statements.
7
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Research and Development
In 2026, the Company made a strategic decision to utilize key personnel and resources to focus on research and development in regard to existing products as well as to develop new products for its technology solutions.
Research and development expenses include payroll and other related employee benefit costs associated with product solutions, as well as any third party development costs utilized to conduct research and development. Such costs related to software development are included in research and development expense until the point that technological feasibility is met, which allows for our software solutions to be released into service for our clients. As technological feasibility is reached, these costs will be capitalized and amortized as part of cost of revenue. As of March 31, 2026, no costs have been capitalized.
Use of Estimates
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances to determine the carrying values of assets and liabilities that are not readily apparent from other sources. The Company’s accounting estimates include, but are not necessarily limited to, the allowance for doubtful accounts receivable, valuation of the swap agreement, valuation assumptions for stock options and leases, deferred income taxes and the related valuation allowances, accretion of discounts on debt and the evaluation and measurement of contingencies. To the extent there are material differences between the Company’s estimates and actual results, the Company’s future consolidated results of operations may be affected.
Risks and Uncertainties
Generally, credit risk with respect to accounts receivable is diversified due to the number of entities comprising the Company’s client base and their dispersion across different geographies and industries. The Company performs ongoing credit evaluations on certain clients and generally does not require collateral on accounts receivable. The Company maintains reserves for potential bad debts, and historically such losses are generally not significant.
Recently Adopted Accounting Pronouncements
The following accounting standards have been adopted during fiscal year 2026:
In July 2025, the FASB issued ASU 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” ASU 2025-05 provides entities with a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606, “Revenue from Contracts with Customers” by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset. ASU 2025-05 is effective for annual periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company has adopted the practical expedient effective for fiscal year 2026 and the impact of this adoption did not have a significant impact on the Consolidated Financial Statements and related disclosures.
Recent Accounting Pronouncements Not Yet Effective
In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses," and in January 2025, the
8
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FASB issued ASU 2025-01, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date." ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027 on a prospective basis. Both early adoption and retrospective application are permitted. The Company is assessing the impact of the adoption of these standards on the financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” ASU 2025-06 modernizes the accounting for internal-use software by removing the stage-based model and introducing a principles-based framework for capitalization. ASU 2025-06 is effective for annual periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is assessing the impact of the adoption of this standard on the Consolidated Financial Statements and related disclosures.
In November 2025, the FASB issued ASU 2025-09, “Derivatives and Hedging (Topic 815): Hedge Accounting Improvements.” ASU 2025-09 provides targeted improvements to more closely align hedge accounting with the economics of an entity’s risk management activities. ASU 2025-09 is effective for annual periods beginning after December 15, 2026 and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is assessing the impact of the adoption of this standard on the Consolidated Financial Statements and related disclosures.
The Company believes that no other recently issued accounting standards will have a material impact on the Consolidated Financial Statements.
NOTE 3 - DEFERRED CONTRACT COSTS AND DEFERRED REVENUE
Activity for deferred contract costs consisted of the following (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Deferred contract costs, current and noncurrent, as of the beginning of period | $ | $ | |||||||||
| Capitalized commissions during the period | |||||||||||
| Amortized deferred contract costs during the period | ( | ( | |||||||||
| Deferred contract costs, current and noncurrent, as of the end of period | $ | $ | |||||||||
Deferred revenue activity consisted of the following (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Deferred revenue, current and noncurrent, as of the beginning of period | $ | $ | |||||||||
| Billings, net | |||||||||||
| Revenue recognized | ( | ( | |||||||||
| Deferred revenue, current and noncurrent, as of the end of period | $ | $ | |||||||||
The Company typically invoices its customers at the start of the support period, in annual and multi-year installments. When revenue recognized on a contract exceeds billings, the Company records a contract asset. As of March 31, 2026 and December 31, 2025, contract assets amounted to $0.6 million and $1.9 million, respectively, and are included in prepaid expenses and other on the condensed consolidated balance sheets. Deferred revenue is a contract liability that consists of billings issued that are non-cancellable in advance of revenue recognition. Deferred revenue is recognized as the Company satisfies its performance obligations over the term of the contracted service period.
9
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company’s remaining performance obligations represent all future non-cancellable revenue under contract that has not yet been recognized as revenue and includes deferred revenue and unbilled amounts. As of March 31, 2026, remaining performance obligations amounted to $643.6 million, of which $277.3 million was billed and recorded as deferred revenue.
The Company expects to recognize revenue on approximately $257.4 million of deferred revenue over the next 12 months, with the remaining deferred revenue balance recognized thereafter.
NOTE 4 — OTHER FINANCIAL INFORMATION
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
| March 31, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| Prepaid expenses | $ | $ | |||||||||
| Foreign tax refunds receivable | |||||||||||
| Contract assets | |||||||||||
| Deposits | |||||||||||
| Other | |||||||||||
| Total prepaid expenses and other current assets | $ | $ | |||||||||
Other Accrued Liabilities, including Accrued Reorganization Costs
Other accrued liabilities consisted of the following (in thousands):
| March 31, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| Accrued sales and other taxes | $ | $ | |||||||||
| Accrued professional fees | |||||||||||
| Accrued reorganization costs | |||||||||||
| Income taxes payable | |||||||||||
| Accrued litigation costs | |||||||||||
| Other accrued expenses | |||||||||||
| Total other accrued liabilities | $ | $ | |||||||||
The reorganization activity was primarily comprised of severance costs, and consisted of the following (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Accrued reorganization costs, as of the beginning of period | $ | $ | |||||||||
| Charges | |||||||||||
| Cash payments | ( | ( | |||||||||
| Foreign currency impact | ( | ||||||||||
| Accrued reorganization costs, as of the end of period | $ | $ | |||||||||
NOTE 5 — DEBT
Debt is presented net of debt discounts and issuance costs in the Company's balance sheets and consisted of the following (in thousands):
10
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| March 31, | December 31, | |||||||||||||
| 2026 | 2025 | |||||||||||||
| Term Loan | $ | $ | ||||||||||||
| Less current maturities | ( | |||||||||||||
| Long-term debt, net of current maturities | $ | $ | ||||||||||||
On April 30, 2024, the Company refinanced its $90 million five-year term loan, which had an outstanding principal balance of $70.9 million, with the Credit Facility, a new five-year senior secured credit facility consisting of a $75.0 million term loan and a $35.0 million revolving line of credit.
On March 27, 2026, the Company amended the Credit Facility, as originally executed, to implement certain changes to the aggregate amounts of permitted “Restricted Payments” (as such term is defined in the Credit Facility) such that (a) commencing with the Company’s fiscal year ending on December 31, 2026 and for each fiscal year thereafter, the aggregate Restricted Payments shall not exceed $20.0 million per fiscal year and (b) in respect of Restricted Payments made on and after January 1, 2026, the aggregate Restricted Payments shall not exceed $50.0 million, in each case subject to the satisfaction of applicable conditions set forth in the Credit Facility
Cash proceeds and payment activity relating to the Credit Facility consisted of the following (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Principal payments on term loan | $ | ( | $ | ( | |||||||
On February 4, 2026 and March 30, 2026, the Company made voluntary prepayments of $5.0 0.9 million on March 31, 2026. The Company’s next scheduled quarterly principal payment is March 31, 2028. The Company is scheduled to repay $5.9 million of principal during fiscal 2028, with the remaining principal payments of $1.9 million and $50.6 million to be paid on March 30, 2029 and April 30, 2029, respectively.
For the term loan, the Company has a choice of interest rates between (a) the Secured Overnight Financing Rate (“SOFR”) and (b) a Base Rate (as defined in the Credit Facility), in each case plus an applicable margin. The applicable margin is based on the Company’s Consolidated Total Leverage Ratio (as defined in the Credit Facility) and whether the Company elects SOFR (ranging from 2.75 % to 3.5 %) or Base Rate (ranging from 1.75 % to 2.5 %). The revolving line of credit bears interest on the unused portion of the credit line at rates of 25 to 40 basis points, depending on the Company’s Consolidated Total Leverage Ratio.
For the three months ended March 31, 2026 and 2025, the effective interest rate for the term loan under the Credit Facility was 7.4 % and 8.0 %, respectively.
The fair value of the term loan under the Credit Facility was $58.9 million (Level 2 inputs) as of March 31, 2026 compared to the carrying value of $56.4 million as of March 31, 2026. The fair value of the Credit Facility was $69.5 million (Level 2 inputs) as of December 31, 2025 compared to the carrying value of $67.2 million as of December 31, 2025.
Under the Credit Facility, the Company has $35.0 million of net available borrowing capacity under the revolving line of credit as of March 31, 2026.
In October 2024, the Company borrowed $15.0 million under the revolving line of credit, which remained outstanding as of March 31, 2025. For the three months ended March 31, 2025, the average interest rate under the revolving line of credit under the Credit Facility was 7.1 %. As of December 31, 2025, there were no outstanding borrowings on the revolving line of credit.
Pursuant to a Guaranty and Security Agreement, dated April 30, 2024, among the Credit Parties (as defined in the Credit Facility) and Capital One, National Association, as agent (the “Guaranty and Security Agreement”), the obligations under the Credit Facility are guaranteed by certain of the Company’s subsidiaries and are secured, subject to customary permitted liens and exceptions, by a lien on substantially all assets of the Credit Parties.
11
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Credit Facility contains certain financial covenants, including a minimum fixed charge coverage ratio greater than 1.25 , a total leverage ratio less than 3.75 , and a minimum liquidity balance of at least $20.0 million in U.S. cash.
Effective April 30, 2024, the Company’s interest rate swap agreement was amended in connection with the Credit Facility to match the new five-year term. The amended interest rate swap agreement has a notional value of $40.0 million, with a fixed payer SOFR rate of 3.71 % and an initial floating SOFR rate of 5.32 %. The floating rate is reset at each month end and the term of the interest rate swap agreement coincides with that of the Credit Facility. See Note 11 for further information regarding the fair value accounting for the interest rate swap agreement. The modification of the interest rate swap agreement did not have a material impact on the Company’s Unaudited Condensed Consolidated Financial Statements.
Interest Expense
The components of interest expense are presented below (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Credit Facility: | |||||||||||
| Interest expense under term loan | $ | $ | |||||||||
| Accretion expense related to discount and issuance costs | |||||||||||
| Interest expense under revolving line of credit | |||||||||||
| Interest for other items | |||||||||||
| $ | $ | ||||||||||
For the three months ended March 31, 2026, interest expense included an increase related to interest rate swap net payments made for $2 thousand.
NOTE 6 — COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS
Common Stock Repurchased
During the three months ended March 31, 2026 and 2025, the Company did not
On September 29, 2025, the Board of Directors authorized an extension to the common stock repurchase program to extend the termination date from June 1, 2026 to June 1, 2029, subject to compliance with the Company’s Credit Facility, provided that all other applicable conditions and legal requirements are satisfied. The Board of Directors had previously authorized a Common Stock repurchase program of up to $50.0 million, of which $36.7 million still remains available as of March 31, 2026.
Stock Plan
The Company’s stock plan consists of the 2013 Equity Incentive Plan, as amended and restated in July 2017 (the “2013 Plan”). On February 12, 2026, pursuant to the “evergreen” provisions of the 2013 Plan, the Board of Directors authorized an increase of approximately 3.7 million shares available for grant under the 2013 Plan.
On February 26, 2026, the Company’s Board of Directors approved the Company’s 2026 Long-Term Incentive Plan (the “2026 LTI Plan”), consisting of awards of performance units (“PSUs”), restricted stock units (“RSUs”) and stock options to purchase shares of the Company’s Common Stock under the terms of the Company’s 2013 Plan, as amended, effective March 2, 2026.
12
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On March 4, 2025, the Company’s Board of Directors approved the Company’s 2025 Long-Term Incentive Plan (the “2025 LTI Plan”), consisting of awards of PSUs, RSUs and stock options to purchase shares of the Company’s Common Stock under the terms of the Company’s 2013 Plan, as amended, effective March 4, 2025.
For additional information about the 2013 Plan, please refer to Note 7 to the Company’s Consolidated Financial Statements for the year ended December 31, 2025, included in Part II, Item 8 of the 2025 Form 10-K. The information presented below provides an update for activity under the 2013 Plan for the three months ended March 31, 2026.
Performance Units
Under the 2026 LTI Plan, the Company granted PSUs which will be measured over a performance period beginning on January 1, 2026 and ending on December 31, 2026 (the “Performance Period”), but will remain subject to a continued service-based vesting requirement. Half of the PSUs awarded are eligible to vest based on the Company’s achievement against a target adjusted EBITDA goal for fiscal year 2026, and the remaining half of the PSUs awarded will be eligible to vest based on the Company’s achievement against a target total revenue goal for fiscal year 2026. The ultimate number of PSUs that may vest (as calculated, the “Earned PSUs”) range from zero to 200 % of the granted PSUs. On March 2, 2026, the Company granted 0.6 million PSUs at a grant price of $3.72 .
The Earned PSUs under the March 4, 2025, May 6, 2024 and April 3, 2023 grants were earned at 49 %, 28 % and 151 %, respectively. Under the terms of the 2025, 2024 and 2023 LTI Plans, the Earned PSUs will vest in equal annual installments on the first, second and third anniversaries of the Date of Grant, generally subject to the awardee continuing to be a Service Provider through the applicable vesting date.
The Company recognized compensation expense related to PSUs of $0.4 million and $0.4 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the unrecognized expense of $2.3 million net of forfeitures is expected to be charged to expense on a graded basis as the PSUs vest over a weighted-average period of approximately 1.9 years.
Restricted Stock Units
For the three months ended March 31, 2026, the Company granted RSUs under the 2013 Plan for an aggregate of approximately 0.6 million shares of Common Stock. RSU grants vest over periods generally ranging from 12 to 36 months from the respective grant dates and the awards are subject to forfeiture upon termination of employment or service on the Board of Directors, as applicable. Based on the weighted average fair market value of the Common Stock on the date of grant of $3.78 per share, the aggregate fair value for the shares underlying the RSUs amounted to $2.2 million as of the grant date that will be recognized as compensation cost over the vesting period.
For the three months ended March 31, 2026 and 2025, the Company recognized compensation expense related to RSUs of approximately $1.5 million and $1.4 million, respectively. As of March 31, 2026, the unrecognized expense of $7.8 million net of forfeitures is expected to be charged to expense on a straight-line basis as the RSUs vest over a weighted-average period of approximately 1.6 years.
Stock Options
For the three months ended March 31, 2026, the Company granted stock options for the purchase of an aggregate of approximately 1.3 million shares of Common Stock at exercise prices that were equal to the fair market value of the Common Stock on the date of grant. Options granted to employees generally vest as to one-third of the shares subject to the award on each anniversary of the designated vesting commencement date, which may precede the grant date of such award, and expire ten years after the grant date.
13
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table sets forth a summary of stock option activity under the 2013 Plan for the three months ended March 31, 2026 (shares in thousands):
| Shares | Price (1) | Term (2) | |||||||||||||||
| Outstanding, December 31, 2025 | $ | ||||||||||||||||
| Granted | |||||||||||||||||
| Exercised | ( | ||||||||||||||||
| Forfeited | ( | ||||||||||||||||
| Expired | ( | ||||||||||||||||
| Outstanding, March 31, 2026 (3)(4) | |||||||||||||||||
| Vested, March 31, 2026 (3) | |||||||||||||||||
(1)Represents the weighted average exercise price.
(2)Represents the weighted average remaining contractual term until the stock options expire in years.
(3)As of March 31, 2026, the aggregate intrinsic value of all stock options outstanding was $1.9 million. As of March 31, 2026, there was an aggregate intrinsic value of $0.6 million related to the vested stock options.
(4)The number of outstanding stock options that are not expected to ultimately vest due to forfeiture amounted to 0.6 million shares as of March 31, 2026.
The aggregate fair value of approximately 1.3 million stock options granted for the three months ended March 31, 2026 amounted to $3.2 million, or $2.43 per stock option as of the grant date utilizing the Black-Scholes-Merton (“BSM”) method. The fair valued derived under the BSM method will result in the recognition of compensation cost over the vesting period of the stock options. For the three months ended March 31, 2026, the fair value of each stock option grant under the 2013 Plan was estimated on the date of grant using the BSM option-pricing model, with the following weighted-average assumptions:
| Expected life (in years) | |||||
| Volatility | |||||
| Dividend yield | |||||
| Risk-free interest rate | |||||
| Fair value per share of Common Stock on date of grant | $ | ||||
As of March 31, 2026 and December 31, 2025, total unrecognized compensation costs related to unvested stock options, net of estimated forfeitures, was $6.3 million and $4.9 million, respectively. As of March 31, 2026, the unrecognized costs are expected to be charged to expense on a straight-line basis over a weighted-average vesting period of approximately 1.9 years. For the three months ended March 31, 2026 and 2025, the Company recognized compensation expense related to stock options of approximately $0.8 million and $0.9 million, respectively.
Shares Available for Grant
The following table presents activity affecting the total number of shares available for grant under the 2013 Plan for the three months ended March 31, 2026 (in thousands):
| Available, December 31, 2025 | |||||
| Newly authorized by Board of Directors | |||||
| Stock options granted | ( | ||||
| RSUs and PSUs granted | ( | ||||
| Expired options | |||||
| Forfeited options | |||||
| Forfeited RSUs and PSUs | |||||
| Available, March 31, 2026 | |||||
14
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Stock-Based Compensation Expense
Stock-based compensation expense attributable to PSUs, RSUs and stock options is classified as follows (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cost of revenue | $ | $ | |||||||||
| Sales and marketing | |||||||||||
| General and administrative | |||||||||||
| Research and development | |||||||||||
| Total | $ | $ | |||||||||
Warrants
NOTE 7 — INCOME TAXES
For the three months ended March 31, 2026 and 2025, the Company’s effective tax rate was 41.1 % and 56.0 %, respectively. The Company’s income tax expense was attributable to the income before income taxes and foreign withholding taxes. The Company has been exploring opportunities to reduce withholding taxes such that its effective tax rate may decrease in future periods. After full utilization of net operating losses, the benefit of foreign tax and other credits would further reduce the Company’s effective tax rate.
The Company did not have any changes to its conclusions regarding valuation allowances for deferred income tax assets or uncertain tax positions for the three months ended March 31, 2026 and 2025.
NOTE 8 — COMMITMENTS AND CONTINGENCIES
Purchase Commitments
The Company’s purchase commitments as of March 31, 2026 are primarily related to agreements to purchase services in the ordinary course of business. As of March 31, 2026, the total minimum purchase obligations totaled $12.9 million. There have been no other material changes outside the normal course of business to the Company’s non-cancellable purchases commitments. For additional information, please refer to Note 9 to the Company’s Consolidated Financial Statements for the year ended December 31, 2025, included in Part II, Item 8 of the 2025 Form 10-K.
Retirement Plan
The Company has defined contribution plans for both its U.S. and foreign employees. For certain of these plans, employees may contribute up to the statutory maximum, which is set by law each year. The plans also provide for employer contributions. For the three months ended March 31, 2026 and 2025, the Company’s matching contributions to these plans totaled $0.8 million and $0.8 million, respectively.
Oracle PeopleSoft Services Wind Down; July 2025 Rimini II Settlement Agreement with Oracle and Subsequent Stay of Rimini II Litigation
15
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Oracle PeopleSoft Services Wind Down
In July 2024, the Company announced during its fiscal second quarter earnings call that it had unilaterally decided to wind down its offering of support and services for Oracle PeopleSoft software, and the Company repeated this announcement during subsequent earnings calls held in October 2024 and May 2025. At the time of the Company’s initial announcement on July 31, 2024, the annual revenue associated with the Company’s provision of services for Oracle’s PeopleSoft products was approximately $30 million.
The percentage of revenue derived from services the Company provides solely for Oracle’s PeopleSoft software product was approximately 3 % and 7 % of the Company’s total revenue for the three months ended March 31, 2026 and 2025, respectively.
The Rimini II Settlement Agreement
On July 7, 2025 (the “Effective Date”), the Company and Mr. Seth Ravin, the Company’s President, Chief Executive Officer and Chairman of the Board, entered into a confidential settlement agreement (the “Settlement Agreement”) with certain affiliates of Oracle Corporation (together with its subsidiaries individually and collectively “Oracle,” and all signatories to the Settlement Agreement, collectively, the “Parties”). If all Parties complete their agreed upon responsibilities, the Settlement Agreement will allow for the final resolution and ultimate dismissal of Case Number 2:14-cv-01699-MMD-DJA (“Rimini II”) involving the Company, Mr. Ravin and Oracle. The Parties entered into the Settlement Agreement to provide a full, final, complete and global settlement of the subject matter of the Rimini II case.
As of July 18, 2025, the Rimini II case has been stayed and administratively closed by the District Court.
Please refer to Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Form 10-K for the year ended December 31, 2025, for additional information and disclosures regarding the Company’s litigation with Oracle.
In addition to the above, the Settlement Agreement provides, in part:
•No Parties admit any liability or wrongdoing.
•If, among other obligations, the Company (a) completes its previously announced wind down of its provision of support and services for Oracle’s PeopleSoft software (the “Wind Down”) no later than July 31, 2028 (the “Wind Down Period”), (b) notifies all existing customers for which it supplies such support and services of the Wind Down, (c) provides required quarterly Wind Down progress reports to Oracle with certain agreed-upon information and (d) signs a declaration, under penalty of perjury, affirming that the Wind Down is complete and issues a public statement as to the same, which statement can be in the form of a filing made with the SEC, then, within 14 days after the Company certifies to Oracle that the Wind Down has been completed, the Parties will jointly file a stipulation with the District Court to dismiss the Rimini II litigation with prejudice.
•During the Wind Down Period, the Parties covenant and agree not to make, initiate, join, take action in connection with, or assert any claim, action, litigation or proceeding of any kind, known or unknown, anywhere in the world against each other during the Wind Down Period based on any claim for conduct at issue in Oracle USA, Inc. v. Rimini, No. 2:10-cv-00106 (D. Nev.) (“Rimini I”) or in the Rimini II case that accrued either (i) before the end of the Wind Down Period, if related to PeopleSoft products, or (ii) before the Settlement Agreement Effective Date, if related to any other Oracle product or service (such agreement and covenant, the “Litigation Standstill”), including any new lawsuits, contempt proceedings, actions to enforce the Rimini I Injunction or the Rimini II Injunction (as defined below), or for discovery. In the event of a breach by any Party that remains uncured after the cure period and leads to the termination of the Settlement Agreement, Oracle may ask the District Court to lift the Litigation Standstill.
•The Rimini I Injunction and the Rimini II Injunction shall remain in effect, and the District Court will retain jurisdiction to enforce them.
“The Rimini I Injunction” refers to a permanent injunction that was entered by the District Court in 2018 in the Rimini I case that remains in effect, defining the manner in which the Company can provide support services for certain Oracle product lines (but not prohibiting Company support of any Oracle products).The Rimini I litigation has run its course through trial and appeals, and there are no current litigation activities.
16
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
“The Rimini II Injunction” refers to the permanent injunction that was entered by the District Court in April 2025 in the Rimini II case, which requires the Company to comply with the Digital Millennium Copyright Act and to refrain from making four statements – none of which are part of the Company’s current marketing.
The Settlement Agreement also contains customary representations, warranties and covenants. The above descriptions of the Settlement Agreement and the Rimini I and Rimini II injunctions do not purport to be complete. Please refer to the Company’s Current Report on Form 8-K filed on July 9, 2025 and the redacted copy of the Settlement Agreement filed as Exhibit 10.1 to the Company’s Form 10-K for the year ended December 31, 2025 for additional information.
The Company reserves all rights, including appellate rights, with respect to the matters described above. For a description of potential risks relating to the Settlement Agreement, please refer to Part II, Item 1A of this Report (Risk Factors).
Other Litigation
From time to time, the Company may be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business. Regardless of the outcome, litigation can have an adverse impact on the Company because of judgment, defense and settlement costs, diversion of management resources and other factors. At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies. Legal fees are expensed as incurred.
Liquidated Damages
The Company enters into agreements with clients that contain provisions related to liquidated damages that would be triggered in the event that the Company is no longer able to provide services to these clients. The maximum cash payments related to these liquidated damages are approximately $9.2 million and $8.2 million as of March 31, 2026 and December 31, 2025, respectively. To date, the Company has not incurred any costs as a result of such provisions and has not accrued any liabilities related to such provisions in these Unaudited Condensed Consolidated Financial Statements.
NOTE 9 — RELATED PARTY TRANSACTIONS
An affiliate of Adams Street Partners and its affiliates (collectively referred to as “ASP”) is a member of the Company’s Board of Directors. As of March 31, 2026, ASP owned approximately 25.6 % of the Company’s issued and outstanding shares of Common Stock.
NOTE 10 —EARNINGS PER SHARE
The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share of Common Stock is computed by dividing net income attributable to common stockholders by the weighted average number of shares of basic Common Stock outstanding. Diluted earnings per share of Common Stock is calculated by adjusting the basic earnings per share of Common Stock for the effects of potential dilutive Common Stock shares outstanding such as stock options, restricted stock units and warrants.
For the three months ended March 31, 2026 and 2025, basic and diluted net earnings per share of Common Stock were computed by dividing the net income attributable to common stockholders by the weighted average number of common shares outstanding during the respective periods. The following tables set forth the computation of basic and diluted net income attributable to common stockholders (in thousands, except per share amounts):
17
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Income attributable to common stockholders: | |||||||||||
| Net income | $ | $ | |||||||||
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Weighted average number of shares of Common Stock outstanding: | |||||||||||
| Basic | |||||||||||
| Stock options | |||||||||||
| PSUs | |||||||||||
| RSUs | |||||||||||
| Diluted | |||||||||||
| Net income per share attributable to common stockholders: | |||||||||||
| Basic | $ | $ | |||||||||
| Diluted | $ | $ | |||||||||
The following potential Common Stock equivalents were excluded from the computation of diluted net income per share for the respective periods ending on these dates, since the impact of inclusion was anti-dilutive (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| RSUs and PSUs | |||||||||||
| Stock options | |||||||||||
| Warrants | |||||||||||
| Total | |||||||||||
NOTE 11 — FINANCIAL INSTRUMENTS
Fair Value Measurements
Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. Additional information on fair value measurements is included in Note 12 to the Company’s Consolidated Financial Statements for the year ended December 31, 2025, included in Part II, Item 8 of the 2025 Form 10-K. The Company’s policy is to recognize asset or liability transfers among Level 1, Level 2 and Level 3 as of the actual date of the events or change in circumstances that caused the transfer.
Investments
All of the Company’s investments as of March 31, 2026 are classified as cash equivalents. The Company holds highly liquid interest-earning investments with maturities of less than three months. The fair values of these investments approximate their carrying values and are considered Level 1 assets.
The Company considers all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Debt investments are classified as available-for-sale and gains and losses are recorded using the specific identification method. Changes in fair value are recorded in the operating statement. Fair value is calculated based on publicly available market information.
18
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Derivatives
The Company uses derivatives to manage the risk associated with changes in interest rates. The Company does not enter into derivatives for speculative purposes. As discussed in Note 5, the interest rate swap agreement has a notional value of $40.0 million, with a fixed payer SOFR rate of 3.71 % and an initial floating SOFR rate of 5.32 %. The derivative was recognized in the accompanying Unaudited Condensed Consolidated Balance Sheets at its estimated fair value as of March 31, 2026.
To estimate fair value for the Company's interest rate swap agreement as of March 31, 2026, the Company utilized a present value of future cash flows, leveraging a model-derived valuation that uses Level 2 observable inputs such as interest rate yield curves. The Company estimated the fair value of the interest rate swap agreement to be a liability of $0.2 million as of March 31, 2026.
Changes in the fair value of the derivatives that qualify as cash flow hedges are recorded in accumulated other comprehensive loss in the accompanying Unaudited Condensed Consolidated Balance Sheets until earnings are affected by the variability of the cash flows.
The amounts recorded for the interest rate swap agreement are described below (in thousands):
| Derivative Instrument | Balance Sheet Classification | March 31, 2026 | December 31, 2025 | ||||||||||||||
| Interest rate swap | Other long-term liabilities | $ | $ | ||||||||||||||
| Accumulated other comprehensive income (loss) | ( | ( | |||||||||||||||
| Three Months Ended | |||||||||||||||||
| March 31, | |||||||||||||||||
| Derivative Instrument | Income Statement Classification | 2026 | 2025 | ||||||||||||||
| Interest rate swap | Interest expense (benefit) | $ | $ | ( | |||||||||||||
NOTE 12 - LEASES
The Company has operating leases for real estate and equipment with an option to renew the leases for up to one month to five years . Some of the leases include the option to terminate the leases upon a specified notice period with a penalty. The Company’s leases have various remaining lease terms ranging from approximately three months to approximately nine years .
The components of lease expense and supplemental balance sheet information were as follows (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Operating lease expense related to ROU assets and liabilities | $ | $ | |||||||||
| Other lease expense | |||||||||||
| Total lease expense | $ | $ | |||||||||
Other information related to leases was as follows (in thousands):
19
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Supplemental Balance Sheet Information | March 31, 2026 | December 31, 2025 | |||||||||
| Operating lease right-of-use assets, noncurrent | $ | $ | |||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
| Operating lease liabilities, current | $ | $ | |||||||||
| Operating lease liabilities, noncurrent | |||||||||||
| Total operating lease liabilities | $ | $ | |||||||||
As of March 31, 2026, the Company has one additional operating lease with a net present value of $2.7 million that will commence in November 2026.
| Weighted Average Remaining Lease Term | Years | |||||||
| Operating leases | ||||||||
| Weighted Average Discount Rate | ||||||||
| Operating leases | % | |||||||
Maturities of operating lease liabilities as of March 31, 2026 were as follows (in thousands):
| Year Ending March 31, | ||||||||
| 2027 | $ | |||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 | ||||||||
| Thereafter | ||||||||
| Total future undiscounted lease payments | ||||||||
| Less imputed interest | ( | |||||||
| Total | $ | |||||||
For the three months ended March 31, 2026 and 2025, the Company paid $1.6 million and $1.5 million, respectively, for operating lease liabilities.
NOTE 13 - SEGMENT AND GEOGRAPHIC INFORMATION
Segment Information
The Company operates as one
The following table presents selected financial information with respect to the Company’s single operating segment for the three months ended March 31, 2026 and 2025 (in thousands):
20
RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue | $ | $ | |||||||||
| Less: | |||||||||||
| Cost of revenue, adjusted | |||||||||||
Employee compensation and benefits (a) | |||||||||||
| Engineering consulting costs | |||||||||||
| Administrative allocations | |||||||||||
All other costs (b) | |||||||||||
| Total cost of revenue, adjusted | |||||||||||
Sales and marketing, adjusted (c) | |||||||||||
General and administrative, adjusted (c) | |||||||||||
Research and development, adjusted (a) | |||||||||||
| Stock-based compensation expense | |||||||||||
| Depreciation and amortization expense | |||||||||||
| Reorganization costs | |||||||||||
| Litigation costs and related recoveries, net | |||||||||||
| Interest expense | |||||||||||
| Other (income) expenses, net | |||||||||||
| Income taxes | |||||||||||
| Segment net income | |||||||||||
| Reconciliation of profit | |||||||||||
| Adjustments and reconciling items | |||||||||||
| Consolidated net income | $ | $ | |||||||||
(a) Adjusted to exclude stock-based compensation expense.
(b) Adjusted to exclude depreciation and amortization expense.
(c) Adjusted to exclude stock-based compensation expense as well as depreciation and amortization expense.
Geographic Information
The Company attributes revenues to geographic regions based on the location of its clients. The following table shows revenues by geographic region (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| United States of America | $ | $ | |||||||||
| International | |||||||||||
| Total | $ | $ | |||||||||
For the three months ended March 31, 2026 and 2025, Japan represented approximately 12 % and 10 % of total revenue, respectively.
No clients represented more than 10% of revenue for the three months ended March 31, 2026 and 2025. As of March 31, 2026 and December 31, 2025, no clients accounted for more than 10% of total net accounts receivable.
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RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company tracks its assets by physical location. The following shows the net carrying value of the Company’s property and equipment by geographic region (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| United States of America | $ | $ | |||||||||
| Brazil | |||||||||||
| India | |||||||||||
| Rest of World | |||||||||||
| Total property and equipment, net | $ | $ | |||||||||
The operating lease ROU assets by geographic region were as follows (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| India | $ | $ | |||||||||
| United States of America | |||||||||||
| Malaysia | |||||||||||
| Brazil | |||||||||||
| Rest of World | |||||||||||
| Total operating lease right-of-use assets | $ | $ | |||||||||
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”) includes forward-looking statements. All statements other than statements of historical facts contained in this Report, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” assume,” “believe,” budget,” “continue,” “could,” “currently,” “estimate,” “expect,” “forecast,” “future,” “intend,” “may,” “might,” “outlook,” “plan,” “possible,” “goal,” “potential,” “predict,” “project,” “reflect,” “results,” “seem,” “seek,” “should,” “will,” “would” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements include, but are not limited to, information concerning:
•our ability to attract new clients or retain and/or sell additional products or services to existing clients;
•our ability to achieve and maintain an adequate rate of revenue growth;
•cost of revenue, including changes in costs associated with our efforts to grow and the results of any efforts to manage costs to align with current revenue expectations and the expansion of our offerings;
•the effects of increased intense competition in our industry and our ability to compete effectively;
•our ability to successfully educate the market regarding the advantages of our support and managed services for enterprise resource planning (ERP) software and to sell the products and services comprising our “Rimini Smart Path™” solutions portfolio, including but not limited to our Agentic AI ERP solutions;
•our intentions with respect to our pricing model and expectations of client savings relative to use of other providers;
•the evolution of the ERP software management and support landscape facing our clients and prospects;
•estimates of our total addressable market;
•the effects of seasonal trends on our results of operations, including the contract renewal cycles for vendor-supplied software support and managed services;
•the effects of the efforts of enterprise software vendors to sell upgrades or migrations to cloud-based versions of their enterprise software on our results of operations;
•our ability to scale our operations quickly enough to meet our clients’ changing needs or decrease our costs adequately in response to changing client demand;
•risks arising from incorporating artificial intelligence (“AI”) technologies into our products or services or any deficiencies associated with AI technologies used by us or by our third-party vendors and service providers;
•our ability to maintain, protect, and enhance our brand;
•the loss of one or more members of our management team and our ability to attract and retain additional qualified technical, sales and marketing personnel;
•our ability to expand our marketing and sales capabilities;
•our ability to avoid interruptions to, or degraded performance of, our services and the impact of interruptions or performance problems on our operations;
•our ability to defend against cybersecurity threats, protect the confidential information of our employees and clients and comply with data protection and privacy regulations;
•our expectations regarding new product offerings, innovation solutions, partnerships and alliance programs and our ability to develop and maintain strategic partnerships;
•our ability to expand internationally and the risks associated with global operations;
•the continuing impact of the July 2025 Settlement Agreement, among us, our President, Chief Executive Officer and Chairman of the Board, Mr. Seth Ravin, and certain affiliates of Oracle Corporation relating to the Rimini II litigation and our Wind Down of support services for Oracle PeopleSoft software products;
•our successful completion of the Wind Down by July 31, 2028 to comply with the Settlement Agreement and our expectations as to future period revenue loss and costs incurred related to the Wind Down;
•the impact of macro-economic trends, including inflation and changes in foreign exchange rates, as well as general financial, economic, regulatory and political conditions affecting the industry in which we operate and the industries in which our clients operate;
•our ability to generate significant capital through our operations or to raise additional capital necessary to fund and expand our operations and invest in new services and products;
•our business plan and our ability to effectively secure and manage our growth and associated investments;
•risks relating to retention rates, including our ability to accurately forecast retention rates;
•our ability to protect our intellectual property;
•our ability to maintain an effective system of internal control over financial reporting;
•changes in laws or regulations, including tax laws or unfavorable outcomes of tax positions we take;
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•tariff costs, including those imposed by the United States government and the potential for retaliatory trade measures by affected countries;
•our ability to realize benefits from our net operating losses;
•any negative impact of environmental, social and governance (“ESG”) matters on our reputation or business and the exposure of our business to additional costs or risks from our reporting on such matters;
•the impact of the debt service obligations and financial and operational covenants under our amended and restated credit agreement dated as of April 30, 2024, as amended (our “Credit Facility”) on our business and related interest rate risk;
•our need and ability to raise equity or debt financing on favorable terms; our ability to generate cash flows from operations to help fund increased investment in our growth initiatives and the sufficiency of our cash and cash equivalents to meet our liquidity requirements;
•the volatility of our stock price;
•the amount and timing of repurchases, if any, under our stock repurchase program and our ability to enhance stockholder value through such program or any other actions to provide value to stockholders;
•our ability to maintain our good standing with the United States government and international governments and capture new contracts with governmental entities/agencies;
•the occurrence of catastrophic events, including terrorism and geopolitical actions that may disrupt our business or that of our current and prospective clients;
•future acquisitions of, or investments in, complementary companies, products, subscriptions or technologies;
•the expected impact of reductions in our workforce during the last and current fiscal year; and
•other risks and uncertainties, including those discussed under “Risk Factors” in Part I, Item 1A of this Report.
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those referred to under “Risk Factors” in Part I, Item 1A of this Report. Moreover, we operate in very competitive and rapidly changing markets in which new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Report may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable when made, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements in this Report are made as of the date of the filing, and except as required by law, we disclaim and do not undertake any obligation to update or revise publicly any forward-looking statements in this Report. You should read this Report and the documents that we reference in this Report and have filed with the United States Securities and Exchange Commission (the “SEC”) as exhibits with the understanding that our actual future results, levels of activity and performance, as well as other events and circumstances, may be materially different from what we expect.
Overview
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the related notes to those statements included in Part I, Item 1 of this Report, and our Audited Consolidated Financial Statements for the year ended December 31, 2025, included in Part II, Item 8 of our 2025 Form 10-K.
Certain figures, such as interest rates and other percentages included in this section have been rounded for ease of presentation. Percentage figures included in this section have not in all cases been calculated based on such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our Unaudited Condensed Consolidated Financial Statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding.
Rimini Street, Inc. was formed in the State of Nevada in 2005 and, through a merger in 2017 with a public company, became Rimini Street, Inc., a Delaware corporation, trading on the Nasdaq Global Market under the ticker symbol “RMNI.”
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Rimini Street, Inc. and its subsidiaries (referred to as “Rimini Street”, the “Company”, “we” and “us”) are global providers of end-to-end third-party enterprise software support, managed services and Agentic AI ERP innovation solutions.
Our mission is to enable our clients to better control their IT roadmap by offering a comprehensive portfolio of unified software support services and related ERP solutions – designed to be funded within existing budgets – to accelerate the vision of Transformation without Disruption,™ empowering clients to put technology to work to produce more efficient business outcomes to provide a competitive advantage and facilitate growth.
We founded Rimini Street to disrupt and redefine the enterprise software support market by developing and delivering new solutions that filled an unmet need in the enterprise software market: an alternative to software vendor support. We became and remain the leading independent software support provider for enterprise software based on both the number of active clients supported and recognition by industry analyst firms.
As our reputation for technical capability, value, ingenuity, responsiveness and reliability has grown over the past twenty years, clients and prospects have asked us to expand the scope of our support, product and service offerings to meet other current and evolving needs and opportunities related to their enterprise software. As a result, we began expanding our solutions portfolio (our “Solutions Portfolio”) to provide a wider array of support for enterprise software – including an expanded list of supported software through our Rimini Custom program; managed services for Workday, Dayforce and ServiceNow; and new solutions for security, interoperability, observability and consulting.
We believe that our current and prospective clients often seek to reduce the number of IT vendors to allow more manageable governance, with a desire to select vendors who can provide a wider scope of IT services and become true trusted partners.
We also understand that clients and client prospects increasingly face shrinking IT budgets, driving a further need to obtain efficiencies and savings across their entire enterprise software landscape while meeting expectations of continued new innovation to remain competitive in their respective industries – doing more with less.
To address these evolving needs and to service what we believe is a significantly expanded addressable market opportunity, we have developed a proprietary operating model for enterprise software, the Rimini Smart Path.
The Rimini Smart Path methodology applies a portfolio of solutions to transform how businesses support and optimize their software portfolio so they can innovate with new technologies, such as agentic artificial intelligence (AI). It has three steps: Support > Optimize > Innovate. We believe that by following the Rimini Smart Path, IT and business leaders can transform how they support and optimize their enterprise software portfolio to maximize return on their software investments, save on software support costs and improve operational performance. In our experience, these measures unlock the ability to innovate within existing IT budgets, including by investing in AI solutions such as Rimini Agentic UX, which was initially launched in December 2025 in partnership with ServiceNow® as an intelligent user experience layer powered by AI and deployed across existing enterprise software systems for process automation, AI-enabled productivity and enterprise visibility. For more details about the Rimini Smart Path, please see Item 1 “Business” included in Part I of our 2025 Form 10-K.
As of March 31, 2026, we employed over 1,950 professionals and supported over 3,130 active clients globally, including 78 Fortune 500 companies and 20 Fortune Global 100 companies across a broad range of industries. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active clients instances where we provide support for two different products to the same entity.
Our subscription-based revenue provides a foundation for, and visibility into, future period results. For the three months ended March 31, 2026 and 2025, we generated revenue of $105.5 million and $104.2 million, respectively, representing an increase of 1%. During the three months ended March 31, 2026, we recorded net income of $1.4 million, and as of March 31, 2026, we had an accumulated deficit of $200.0 million. Approximately 44% and 48% of our revenue was generated in the United States for the three months ended March 31, 2026 and 2025, respectively. Approximately 56% and 52% of our revenue was generated in foreign jurisdictions for the three months ended March 31, 2026 and 2025, respectively.
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In July 2024, we announced that we would Wind Down services for Oracle PeopleSoft products and began the Wind Down project. The Wind Down includes, but is not limited to, our Rimini Support™, Rimini Manage™ and Rimini Consult™ services for Oracle PeopleSoft products.
On July 7, 2025, we and Mr. Ravin entered into a Settlement Agreement with Oracle Corporation relating to the Rimini II litigation. Under the terms of this agreement, we are required to complete the Wind Down no later than July 31, 2028 (the “Wind Down Period”). As we provide services for Oracle PeopleSoft products to clients globally, the Wind Down process is expected to take place over the Wind Down Period, but both the pace of revenue reduction and the final date that the Company will receive revenue from the discontinued services is unknown as of the date of this Report. We expect significant reductions in revenue related to services for Oracle PeopleSoft products over the course of the Wind Down Period. Revenue related to providing services for Oracle PeopleSoft products accounted for approximately 3% of revenue for the three months ended March 31, 2026 and approximately 7% of revenue for the three months ended March 31, 2025.
Since our inception, we have financed our operations through cash collected from clients and net proceeds from equity financings and borrowings.
Global Economic Uncertainty
We have experienced some clients not renewing our services due to the adverse impact on their businesses from current global economic uncertainty, as well as by the economic disruption continuing to be caused by current military conflicts, and recent political and trade turmoil between the U.S. and other countries, amongst other geopolitical challenges. While we do not physically operate in some of these countries where conflict is occurring, we do have operations in Israel. These global events, together with inflationary pressures, have negatively impacted the global economy.
Uncertainty regarding changes continuing to be made in laws and regulations by the current U.S. administration, changing interest rates, along with uncertainty about U.S. trade policies, particularly when pertaining to treaties, tariffs and other limitations on international trade, are causing economic and geopolitical uncertainty. Despite these macroeconomic and geopolitical pressures, we expect to continue to be able to market, sell and provide our current and future products and services to clients in non-sanctioned countries globally. We also expect to continue investing in the development and improvement of new and existing products and services to address client needs. Further, although our operations are influenced by general economic conditions, we do not believe the impacts of the economic disruptions described above had a significant net impact on our revenue or results of operations during the three months ended March 31, 2026.
The extent to which inflation, interest rate changes and continuing global economic and geopolitical uncertainty impact our business going forward, however, will depend on numerous evolving factors we cannot reliably predict and that are beyond our control, including continued governmental and business actions in response to increasing global economic and geopolitical uncertainty. As such, the effects of inflation, interest rate changes and other negative impacts on the global economy may not be fully reflected in our financial results until future periods. Refer to “Risk Factors” (Part II, Item 1A of this Report) for a discussion of these factors and other risks.
Recent Developments
Reference is made to Note 5 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for a discussion of recent developments regarding the first amendment dated March 27, 2026 to our Credit Facility, as originally executed.
Key Business Metrics
Number of clients
Since the founding of our Company, we have made the expansion of our client base a priority. We believe that our ability to expand our client base is an indicator of the growth of our business, the success of our sales and marketing activities, and the value that our services bring to our clients. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active clients when support for two different products is being provided to the same entity. As of March 31, 2026 and 2025, we had approximately 3,130 and 3,092 active clients, respectively.
We define a unique client as a distinct entity, such as a company, an educational or government institution or a subsidiary, division or business unit of a company that purchases one or more of our products or services. We count as two
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separate unique clients when two separate subsidiaries, divisions or business units of an entity purchase our products or services. As of March 31, 2026 and 2025, we had approximately 1,572 and 1,575 unique clients, respectively.
The increase in our active client counts is attributable to a combination of new unique client wins as well as to cross-sales of new support, products and services to existing clients. While we saw strong unique client wins throughout the quarter, we did lose some clients with a single product line, which resulted in a decline in our ending unique client count. As noted previously, we intend to focus future growth on both new and existing clients who more broadly adopt our enterprise software products and services.
Annualized recurring revenue
We recognize subscription revenue on a daily basis. We define annualized recurring revenue as the amount of subscription revenue recognized during a quarter and multiplied by four. This gives us an indication of the revenue that can be earned in the following 12-month period from our existing client base, assuming no cancellations or price changes occur during that period. Subscription revenue, which excludes any non-recurring revenue, was $100 million, or 95% of total revenue for the three months ended March 31, 2026 and $99 million, or 95% of total revenue for the three months ended March 31, 2025. Excluding subscription revenue from support for Oracle PeopleSoft products, our subscription revenue was $97 million and $92 million as of March 31, 2026 and 2025, respectively.
Our annualized recurring revenue was $401 million and $396 million as of March 31, 2026 and 2025, respectively. Excluding subscription revenue from support for Oracle PeopleSoft products, our annualized subscription revenue was $388 million and $370 million as of March 31, 2026 and 2025, respectively.
Revenue retention rate
A key part of our business model is the recurring nature of our revenue. As a result, it is important that we retain clients after the completion of the non-cancellable portion of the support period. We believe that our revenue retention rate provides insight into the quality of our products and services and the value that our products and services provide to our clients.
We define revenue retention rate as the actual subscription revenue (dollar-based) recognized in a 12-month period from clients that existed on the day prior to the start of the 12-month period divided by our annualized recurring revenue as of the day prior to the start of the 12-month period. Our revenue retention rate was 88% and 88% for the 12 months ended March 31, 2026 and 2025, respectively.
Gross profit margin
We derive revenue through the provision of our enterprise software products and services. All the costs incurred in providing these products and services are recognized as part of the cost of revenue. The cost of revenue includes all direct product line expenses, as well as the expenses incurred by our shared services organization which supports all product lines.
We define gross profit as the difference between revenue and the costs incurred in providing the software products and services. Gross profit margin is the ratio of gross profit divided by revenue. Our gross profit margin was approximately 59.0% and 61.0% for the three months ended March 31, 2026 and 2025, respectively. Our gross profit margin declined for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to increases in engineering consulting costs and allocations of overhead costs.
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Results of Operations
Comparison of Three Months Ended March 31, 2026 and 2025
Our consolidated statements of operations for the three months ended March 31, 2026 and 2025, are presented below (in thousands):
| Three Months Ended March 31, | Variance | ||||||||||||||||||||||
| 2026 | 2025 | Amount | Percent | ||||||||||||||||||||
| Revenue | $ | 105,473 | $ | 104,204 | $ | 1,269 | 1.2% | ||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
| Employee compensation and benefits | 25,874 | 25,565 | 309 | 1.2% | |||||||||||||||||||
| Engineering consulting costs | 7,597 | 6,145 | 1,452 | 23.6% | |||||||||||||||||||
Administrative allocations (1) | 5,163 | 4,262 | 901 | 21.1% | |||||||||||||||||||
| All other costs | 4,574 | 4,698 | (124) | (2.6)% | |||||||||||||||||||
| Total cost of revenue | 43,208 | 40,670 | 2,538 | 6.2% | |||||||||||||||||||
| Gross profit | 62,265 | 63,534 | (1,269) | (2.0)% | |||||||||||||||||||
| Gross profit margin | 59.0 | % | 61.0 | % | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | 38,636 | 34,255 | 4,381 | 12.8% | |||||||||||||||||||
| General and administrative | 17,850 | 17,531 | 319 | 1.8% | |||||||||||||||||||
| Reorganization costs | 407 | 462 | (55) | (11.9)% | |||||||||||||||||||
| Research and development | 571 | — | 571 | N/A | |||||||||||||||||||
| Litigation costs and related recoveries, net | — | 1,925 | (1,925) | (100.0)% | |||||||||||||||||||
| Total operating expenses | 57,464 | 54,173 | 3,291 | 6.1% | |||||||||||||||||||
| Operating income | 4,801 | 9,361 | (4,560) | (48.7)% | |||||||||||||||||||
| Non-operating income and (expenses): | |||||||||||||||||||||||
| Interest expense | (1,251) | (1,675) | 424 | (25.3)% | |||||||||||||||||||
| Other income (expenses), net | (1,240) | (77) | (1,163) | 1,510.4% | |||||||||||||||||||
| Income before income taxes | 2,310 | 7,609 | (5,299) | (69.6)% | |||||||||||||||||||
| Income taxes | (949) | (4,259) | 3,310 | (77.7)% | |||||||||||||||||||
| Net income | $ | 1,361 | $ | 3,350 | $ | (1,989) | (59.4)% | ||||||||||||||||
(1)Includes the portion of costs for IT, security services and facilities costs that are allocated to cost of revenue. In our Unaudited Condensed Consolidated Financial Statements, the total of such costs is allocated between cost of revenue, sales and marketing, and general and administrative expenses, based primarily on relative headcount, except for facilities which is based on occupancy.
Revenue. Revenue grew from $104.2 million for the three months ended March 31, 2025 to $105.5 million for the three months ended March 31, 2026, an increase of $1.3 million or 1%. The increase in revenue was driven by growth in our subscription revenue of $1.2 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. On a geographic basis, United States revenue declined from $50.1 million for the three months ended March 31, 2025 to $46.9 million for the three months ended March 31, 2026, a decrease of $3.2 million or 6%. Our international revenue grew from $54.1 million for the three months ended March 31, 2025 to $58.6 million for the three months ended March 31, 2026, an increase of $4.5 million or 8%.
We are required to complete our previously-announced Wind Down of support and services for Oracle PeopleSoft products no later than July 31, 2028. The percentage of revenue derived from support and services the Company provides solely for Oracle PeopleSoft products was approximately 3% and 7% of the Company’s total revenue for the three months ended March 31, 2026 and 2025, respectively.
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Cost of revenue. Cost of revenue increased from $40.7 million for the three months ended March 31, 2025 to $43.2 million for the three months ended March 31, 2026, an increase of $2.5 million or 6%. The key drivers related to the cost of revenue increase were a $1.5 million increase in engineering consulting costs and a $0.9 million increase in administrative allocations and an increase in employee compensation and benefits of $0.3 million. These items were offset slightly by a $0.1 million decrease in all other costs.
Gross profit. Gross profit decreased from $63.5 million for the three months ended March 31, 2025 to $62.3 million for the three months ended March 31, 2026, a decrease of $1.3 million or 2%. Gross profit margin for the three months ended March 31, 2025 was 61.0% compared to 59.0% for the three months ended March 31, 2026. For the three months ended March 31, 2026, the total cost of revenue increased by 6% compared to an increase in revenue of 1% for the three months ended March 31, 2026. As a result, our gross profit margin declined by 200 basis points period over period. We will continue to monitor and manage our overall gross margin as we enter and invest in a broader mix of products and services.
Sales and marketing expenses. As a percentage of our revenue, sales and marketing expenses were 37% and 33% for the three months ended March 31, 2026 and 2025, respectively. In dollar terms, sales and marketing expenses increased from $34.3 million for the three months ended March 31, 2025 to $38.6 million for the three months ended March 31, 2026, an increase of $4.4 million or 13%. This increase was primarily due to the following; (i) a $1.5 million increase in employee compensation and benefits, (ii) a $1.2 million increase related to marketing programs and promotions, (iii) a $1.0 million increase in allocated costs, (iv) a $0.3 million increase in travel costs and (v) a $0.4 million increase in contract labor and all other costs. We will continue to seek additional revenue by selectively investing in resources and marketing programs that we believe will be scalable and help drive future revenue growth.
We expect to incur higher sales and marketing expenses associated with supporting the growth of our business as we continue to bring to market our new solutions and partnerships.
General and administrative expenses. General and administrative expenses increased from $17.5 million for the three months ended March 31, 2025 to $17.9 million for the three months ended March 31, 2026, an increase of $0.3 million or 2%. This increase was due to an increase in employee compensation and benefits of $1.6 million and an increase in computer and software licenses of $0.7 million. The unfavorable variances were offset primarily by an increased benefit of administrative allocation expenses of $1.9 million.
Reorganization costs. Reorganization costs decreased from $0.5 million for the three months ended March 31, 2025 to $0.4 million for the three months ended March 31, 2026. The costs were primarily related to severance costs associated with our reorganization plan. We may incur additional reorganization costs during 2026 as we continue to optimize our cost structure in areas where opportunities exist to streamline our operations.
Research and development expenses. In 2026, we made a strategic decision to utilize key personnel and resources to focus on research and development in regard to existing products as well as to develop new products for our technology solutions. Research and development expenses were $0.6 million for the three months ended March 31, 2026.
Litigation costs and related recoveries, net. Litigation costs and related recoveries, net consist of the following (in thousands):
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | Variance | |||||||||||||||
| Professional fees and other costs of litigation | $ | — | $ | 1,925 | $ | (1,925) | |||||||||||
| Litigation costs and related recoveries, net | $ | — | $ | 1,925 | $ | (1,925) | |||||||||||
Professional fees and other costs associated with litigation decreased from $1.9 million for the three months ended March 31, 2025 to none for the three months ended March 31, 2026, a decrease of $1.9 million. Please refer to Note 8 to our Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Report, for additional information regarding our litigation with Oracle.
Interest expense. Interest expense decreased from $1.7 million for the three months ended March 31, 2025 to $1.3 million for the three months ended March 31, 2026. Interest expense declined due to several reasons. To begin with, we had no borrowings under the revolving line of credit during the three months ended March 31, 2026 compared to borrowing $15.0 million during the three months ended March 31, 2025. As result, the interest expense incurred under the revolving line
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of credit declined $0.3 million during the three months ended March 31, 2026. In addition, the effective interest rate for the term loan was 7.4% for the three months ended March 31, 2026 compared to 8.0% for the three months ended March 31, 2025 as the SOFR was approximately 60 bps lower during three months ended March 31, 2026 compared to the three months ended March 31, 2025. Also, we made principal prepayments of $5.0 million on February 4, 2026 and $5.0 million on March 30, 2026 which impacted the interest expense incurred.
Other income (expenses), net. Other income (expenses), net is primarily comprised of interest income, foreign exchange gains and losses, and other non-operating income and expenses. For the three months ended March 31, 2026, net other expense of approximately $1.2 million was comprised of foreign exchange losses of $1.7 million and other expenses of $0.2 million, which were offset by other income from cash and cash equivalent of $0.6 million. For the three months ended March 31, 2025, net other expense of approximately $0.1 million was comprised primarily of foreign exchange losses of $0.5 million and other expenses of $0.1 million, which were offset by interest income from cash and cash equivalents of $0.6 million.
Income taxes. We had an income tax expense of $4.3 million for the three months ended March 31, 2025 compared to $0.9 million for the three months ended March 31, 2026. For the three months ended March 31, 2026, the primary reason for the change in income taxes was due to a decrease of income before taxes of $5.3 million in the current year period compared to the prior year period.
Liquidity and Capital Resources
Overview
As of March 31, 2026, our primary source of cash is collections from client billings. Other customary sources of cash have historically included proceeds from interest income earned on cash and cash equivalents and short-term investments, sales and maturities of short-term investments and proceeds from our Credit Facility. Our primary uses of cash are general business expenses, capital expenditures and repayments of borrowings on our Credit Facility. Other customary uses of cash have included purchases of short-term investments and our stock repurchase program, from time to time.
As of March 31, 2026, we had a working capital deficit of $50.3 million and an accumulated deficit of $200.0 million. For the three months ended March 31, 2026, we recorded net income of $1.4 million. As of March 31, 2026, we had available cash, cash equivalents and restricted cash of $133.3 million.
Credit Facility
In April 2024, we refinanced our $90 million five-year term loan, which had an outstanding principal balance of $70.9 million, with our Credit Facility, a five-year senior secured credit facility consisting of a $75.0 million term loan and a $35.0 million revolving line of credit. As of March 31, 2026, we had outstanding term loan borrowings of $58.4 million and no borrowings on the revolving line of credit under our Credit Facility. During the three months ended March 31, 2026, we made principal payments of $5.0 million, $5.0 million and $0.9 million on February 4, 2026, March 30, 2026 and March 31, 2026, respectively. Our next scheduled principal payment is not until March 31, 2028, though we will evaluate whether additional principal prepayments will be made prior to that date. We are scheduled to pay $5.9 million of principal during fiscal 2028, with the remaining principal payments of $1.9 million and $50.6 million to be paid on March 30, 2029 and April 30, 2029, respectively.
We have a choice of interest rates under the Credit Facility between (a) SOFR and (b) Base Rate, in each case plus an applicable margin. The applicable margin is based on our Consolidated Total Leverage Ratio (as defined in the Credit Facility) and whether we elect SOFR (ranging from 2.75% to 3.50%) or a Base Rate (ranging from 1.75% to 2.5%). Interest on the unused portion of the revolving credit line is at rates of between 25 to 40 basis points, depending on our Consolidated Total Leverage Ratio.
The Credit Facility contains certain financial covenants, including a minimum fixed charge coverage ratio greater than 1.25, a total leverage ratio less than 3.75, and a minimum liquidity balance of at least $20.0 million in U.S. cash. We believe that we are in compliance with these financial covenants for the three months ended March 31, 2026.
Please refer to Note 5 to the Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for information regarding our Credit Facility, including the first amendment dated March 27, 2026 thereto.
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A key component of our business model requires that substantially all clients prepay us annually for the services we will provide over the following year or longer. As a result, we typically collect cash from our clients in advance of when the related service costs are incurred, which resulted in deferred revenue of $257.4 million that is included in current liabilities as of March 31, 2026. Therefore, we believe that working capital deficit is not as meaningful in evaluating our liquidity since the costs of fulfilling our commitments to provide services to clients are currently limited to approximately 41% of the related deferred revenue based on our gross profit percentage of 59% for the three months ended March 31, 2026.
For the next year, assuming that our operations are not significantly impacted by inflation, continued interest rate changes, other global economic or geopolitical uncertainties, or the litigation matters as disclosed in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report, we believe that cash and cash equivalents of $132.2 million as of March 31, 2026, plus future cash flows from operating activities and our Credit Facility, will be sufficient to meet our anticipated cash needs including working capital requirements, planned capital expenditures and our contractual obligations.
Our future capital requirements depend on many factors, including client growth, number of employees, expansion of sales and marketing activities, research and development efforts, and the introduction of new and enhanced services offerings. We may also enter into arrangements to acquire or invest in complementary businesses, services, technologies, or intellectual property rights in the future. In the long term, we may choose to seek additional debt or equity financing to support these capital requirements. In an economic downturn, however, we may be unable to raise capital through debt or equity financings on terms acceptable to us or at all. Covenants in our Credit Facility could also have consequences on our operations, including restricting or delaying our ability to obtain additional financing, potentially limiting our ability to adjust to rapidly changing market conditions or respond to business opportunities. Additionally, in challenging and uncertain economic environments, we cannot predict when macroeconomic uncertainty may arise, whether or when such circumstances may improve or worsen or what impact such circumstances could have on our business and our liquidity requirements.
Cash Flows Summary
Presented below is a summary of our operating, investing and financing cash flows (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash provided by (used in): | |||||||||||
| Operating activities | $ | 24,523 | $ | 33,708 | |||||||
| Investing activities | (648) | (895) | |||||||||
| Financing activities | (10,601) | (1,026) | |||||||||
| Effect of foreign currency on cash | (1,059) | 2,768 | |||||||||
| Net change in cash, cash equivalents and restricted cash | $ | 12,215 | $ | 34,555 | |||||||
Cash Flows From Operating Activities
Our primary source of operating cash is collections from client billings. A key component of our business model generally requires that customers prepay us annually for the services we will provide over the following year or longer. As a result, we collect cash in advance of the date when the vast majority of the related services are provided. Our primary uses of operating cash are for employee-related expenditures, outsourced labor, marketing activities, computer supplies, software and licenses, litigation and leased facilities. For the three months ended March 31, 2026 and March 31, 2025, cash flow provided by operating activities amounted to $24.5 million and $33.7 million, respectively.
For the three months ended March 31, 2026, cash flows provided by operating activities of $24.5 million consisted of net income of $1.4 million adjusted for non-cash expenses, net of $3.7 million, and favorable changes in operating assets and liabilities, net of $19.4 million. The favorable changes in operating assets and liabilities were driven primarily by a decrease in accounts receivable as we collected $138.1 million during the three months ended March 31, 2026 which was offset by billings, net of $95.3 million during the same period. Offsetting this favorable change was a decrease in deferred revenue as we recognized $10.2 million more in revenue than we billed, and a decrease in accrued compensation as we paid bonuses and commissions from the prior year.
For the three months ended March 31, 2025, cash flows provided by operating activities of $33.7 million consisted of net income of $3.4 million adjusted for non-cash expenses, net of $7.4 million, and favorable changes in operating assets and
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liabilities, net of $22.9 million. The favorable changes in operating assets and liabilities were primarily driven by a decrease in accounts receivable as we collected $134.3 million during the three months ended March 31, 2025, which was offset by billings, net of $79.4 million during the same period. Offsetting this favorable change was a decrease in deferred revenue as we recognized $24.8 million more in revenue than we billed during the three months ended March 31, 2025.
Cash Flows From Investing Activities
For the three months ended March 31, 2026, cash flows used in investing activities of $0.6 million were driven by capital expenditures for computer equipment as we continued to invest in our business infrastructure and geographic locations, primarily in the U.S. and India.
For the three months ended March 31, 2025, cash flows used in investing activities of $0.9 million were primarily driven by capital expenditures for leasehold improvements, software development costs, and computer equipment, primarily in Brazil, Korea and the U.S.
Cash Flows From Financing Activities
For the three months ended March 31, 2026, cash utilized in financing activities of $10.6 million was attributable to principal payments related to the Credit Facility term loan offset, in part, by proceeds from stock option exercises.
For the three months ended March 31, 2025, cash utilized in financing activities of $1.0 million was attributable to principal payments related to the Credit Facility term loan and finance lease payments offset, in part, by proceeds from stock option exercises.
Effect of Foreign Currency Translation and Foreign Subsidiaries
The effect of foreign currency translation changes was unfavorable for $1.1 million and favorable for $2.8 million for the three months ended March 31, 2026 and 2025, respectively. For the three months ended March 31, 2026, the unfavorable foreign currency impact was related to the local currencies in our foreign subsidiaries, such as Japan, strengthening against the U.S. Dollar. As of March 31, 2026, we had cash and cash equivalents of $63.8 million held by our foreign subsidiaries.
Our foreign subsidiaries and branches are dependent on our U.S.-based parent for continued funding. We currently do not intend to repatriate any amounts that have been invested overseas back to the U.S.-based parent. However, we may still be liable for withholding taxes, state taxes, or other income taxes that might be incurred upon the repatriation of foreign earnings. We have not made any provision for additional income taxes on undistributed earnings of our foreign subsidiaries.
Critical Accounting Estimates
Our management’s discussion and analysis of financial condition and results of operations is based on our Unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, as well as the reported revenue and expenses during the reporting periods. These items are monitored and analyzed for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ from these estimates under different assumptions or conditions.
We describe our significant accounting policies in Note 2 to our Consolidated Financial Statements for the year ended December 31, 2025, included in Part II, Item 8 of our 2025 Form 10-K, and we discuss our critical accounting policies and estimates in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included in Part II, Item 7 of our 2025 Form 10-K. Since the filing of our 2025 Form 10-K, there have been no material changes in our critical accounting policies and estimates from those disclosed therein.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by us as of the specified effective date. For additional information on recently issued accounting standards and our
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plans for adoption of those standards, please refer to the section titled Recent Accounting Pronouncements under Note 2 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
Foreign Currency Exchange Risk
We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. Dollar, primarily the Australian Dollar, Brazilian Real, British Pound Sterling, Euro, Indian Rupee and Japanese Yen. For the three months ended March 31, 2026 and 2025, we generated approximately 56% and 52% of our revenue from our international business, respectively. Increases in the relative value of the U.S. Dollar to other currencies may negatively affect our revenue, partially offset by a positive impact to operating expenses in other currencies as expressed in U.S. Dollars. We have experienced and will continue to experience fluctuations in our net income as a result of transaction gains or losses related to revaluing certain current asset and current liability balances, including intercompany receivables and payables, which are denominated in currencies other than the functional currency of the entities in which they are recorded. While we have not engaged in the hedging of our foreign currency transactions to date, we evaluate the costs and benefits of entering into future hedge transaction for currencies other than the U.S. Dollar.
As of March 31, 2026, the effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would have impacted our income before income taxes by a plus or minus of $0.4 million in our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income and would have impacted the effect of foreign currency changes on cash by a plus or minus $6.9 million in our Unaudited Condensed Consolidated Statement of Cash Flows.
Interest Rate Risk
Risk with Respect to Investments
We hold cash and cash equivalents for working capital purposes. We do not have material exposure to market risk with respect to investments, as any investments we enter into are primarily highly liquid investments.
Variable Rate Debt
In 2024, we refinanced our $90 million five-year term loan with our Credit Facility consisting of a $75.0 million term loan and a $35.0 million revolving line of credit. For the term loan, we have a choice of interest rates between (a) SOFR and (b) a Base Rate (as defined in our Credit Facility), in each case plus an applicable margin.
Accordingly, we are exposed to market risk due to variable interest rates based on SOFR. As of March 31, 2026, we had $58.4 million outstanding debt under the Credit Facility and no borrowings under the revolving line of credit. As of March 31, 2026, a hypothetical adverse change of 100 basis points in SOFR would have resulted in an increase of approximately $0.6 million in annual interest expense. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 as well as Note 5 and Note 11 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for more information related to the Credit Facility.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain a system of disclosure controls and procedures that are designed to reasonably ensure that information required to be disclosed in our SEC reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and to reasonably ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) (“Disclosure Controls”) will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and
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instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We monitor our Disclosure Controls and make modifications as necessary; our intent in this regard is that the Disclosure Controls will be modified as systems change and conditions warrant.
In connection with the preparation of this Report, as of March 31, 2026, an evaluation of the effectiveness of the design and operation of our Disclosure Controls was performed. This evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on this evaluation, they concluded that our disclosure controls and procedures were effective to provide reasonable assurance that
information required to be disclosed in our SEC reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and to reasonably ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
The legal proceedings described in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report are incorporated herein by reference. In addition, from time to time, we may be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of judgment, defense and settlement costs, diversion of management resources and other factors.
ITEM 1A. Risk Factors.
Various factors could affect our business, financial condition, results of operations and cash flows. Any of the factors described in this section or other risks described elsewhere in this Report could result in a significant or material adverse effect on our business, financial condition, results of operations and cash flows. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. If any of these factors should materialize, the trading price of our securities and the value of your investment might significantly decline.
These disclosures reflect our beliefs and opinions as to factors that could materially and adversely affect our company and our securities in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.
You should also refer to the explanation of the qualifications and limitations on forward-looking statements under “Cautionary Note Regarding Forward-Looking Statements” set forth in the introduction to Part I, Item 2 of this Report. All forward-looking statements made by us are qualified by the risk factors described below.
The following is a summary of some of the principal risk factors which are more fully described below.
Risks Related to Our Ability to Grow Our Business
•If we are unable to attract new clients or retain and/or sell additional products or services to existing clients, our revenue growth could be adversely affected.
•If our revenue continues to decline or fails to grow at a rate sufficient to offset expenses associated with efforts to grow, or if we are unable to manage our costs to be profitable, we may not be able to maintain or increase our level of profitability.
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•We face significant competition for each component of our Solutions Portfolio.
•We may need to change our pricing models to compete successfully.
•We may experience fluctuations in our results of operations due to the sales cycles for our products and services and from the efforts of enterprise software vendors to sell upgrades or migrations to cloud-based versions of their enterprise software, which could make our future results difficult to predict and could cause our results of operations to fall below expectations.
•We may not be able to scale our operations quickly enough to meet our clients’ changing needs or decrease our costs adequately in response to changing client demand, and if we are not able to manage these changes efficiently, our results of operations could be harmed.
•We may not be successful in implementing our Agentic AI ERP initiatives.
•Incorporating AI technologies into our products and services or using AI in our operations may result in challenges that could adversely affect our business, reputation or financial results.
•If we fail to enhance and protect our brand, our ability to expand our client base will be impaired.
•If there is a widespread shift by clients or potential clients to enterprise software vendors, products and releases for which we do not provide products or services, or if our efforts to enhance, expand and develop new products and services are not successful, our business, financial condition and results of operations would be adversely impacted.
Risks Related to the Operation of Our Business
•The loss or disability of one or more key employees could harm our business.
•The failure to attract and retain qualified technical, sales and marketing personnel, or to expand our marketing and sales capabilities could prevent us from executing our business strategy.
•Interruptions to, or degraded performance of, our services could result in client dissatisfaction, damage to our reputation, loss of clients, limited growth and reduction in revenue.
•If our products and services fail due to defects or other similar problems, and if we fail to correct any defect or other software problems, we could lose clients, become subject to service performance or warranty claims and/or incur significant costs.
•Interruptions or performance problems with technologies and services from third parties that we use to operate critical functions of our business, including any deficiencies associated with AI technologies incorporated by us in our services offerings or used by us, could harm our business.
•Cybersecurity threats continue to increase in frequency and sophistication; if our data security measures are compromised or our services are perceived as not being secure, clients may curtail or cease their use of our services, our reputation may be harmed, and we may incur significant liabilities.
•Our client engagements are becoming more complex, with longer, more expensive sales cycles, increased pricing pressure and implementation and configuration challenges.
•Because our long-term strategy involves further expansion of our sales outside the United States, our business is increasingly susceptible to risks associated with global operations, including currency exchange rate fluctuations and taxes, trade and data regulations.
•Consolidation in our target sales markets is continuing at a rapid pace, which could harm our business if our clients are acquired and their agreements are terminated, or not renewed or extended.
•Our Settlement Agreement with Oracle requires us to complete the Wind Down within a certain time period, and we are unable to guarantee the outcome of our efforts to comply with such requirements or the timing of the associated, expected significant reductions in revenue. Nor can we predict the total anticipated costs associated with the Wind Down, which could have a material adverse effect on our business and financial condition.
•Any uncured, material breach by us of our 2025 Settlement Agreement with Oracle could result in future adverse outcomes in litigation currently subject to a judicial stay and/or litigation standstill, which could have a material adverse effect on our business and financial results.
•Our history of litigation with Oracle may continue to present challenges to our business for the unforeseeable future.
•Oracle could pursue new litigation against us.
Risks Related to General Economic Conditions and Our Financial Performance
•Economic uncertainties and adverse changes in the general economy or in the industries in which our clients operate may result in increased costs of operations, disproportionately affect the demand for our products and services and could negatively impact our results of operations.
•Our failure to generate significant capital through our operations or raise additional capital necessary to fund and expand our operations, invest in new services and products and service our debt could reduce our ability to compete and harm our business.
•If our retention rates continue to decrease or we do not accurately forecast retention rates, our future revenue and results of operations may be harmed.
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•Because we recognize revenue from subscriptions over the term of the relevant contract, downturns or upturns in sales are not immediately reflected in full in our results of operations.
•Due to the variability of timing in our sales cycle, if we fail to forecast our revenue accurately, or if we fail to match our expenditures with corresponding revenue, our results of operations and liquidity could be adversely affected.
•Our future liquidity and results of operations may be adversely affected by the timing of new orders, the level of client renewals and cash receipts from clients.
Risks Related to Laws, Regulations and Policies
•Our business may suffer if it is alleged or determined that our technology infringes others’ intellectual property rights.
•We are subject to legal and contractual obligations related to privacy and security, and our actual or perceived failure to comply with such obligations could harm our business.
•If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, experience reduced revenue and incur costly litigation to protect our rights.
•If we are not able to maintain an effective system of internal control over financial reporting, investors could lose confidence in our financial reporting, which could harm our business and have an adverse effect on our Common Stock price.
•We may be subject to additional obligations to collect and remit sales tax, VAT and other taxes, and we may be subject to tax liability, interest and/or penalties for past sales, which could adversely harm our business.
•Our realization of the benefits from our net operating loss carryforwards for income tax purposes depends, in part, upon future events, the effects of which cannot be determined; and if we are not able to use a significant portion of our net operating loss carryforwards, our profitability could be adversely affected.
•We are a multinational organization, and we could be obligated to pay additional taxes in various jurisdictions.
•Our reputation and/or business could be negatively impacted by ESG matters and/or our reporting of such matters and expose us to additional costs and risks.
Risks Related to Our Indebtedness, Securities and Corporate Governance
•Our level of indebtedness and any future indebtedness we may incur may limit our operational and financing flexibility.
•Our Credit Facility imposes operating and financial restrictions on us.
•Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.
•The price of our Common Stock may be volatile.
•Any issuance of Common Stock upon the exercise of outstanding warrants expiring in June 2026 will dilute existing stockholders and such issuances and/or any sales of Common Stock by large stockholders may depress the market price of our Common Stock.
•Certain of our common stockholders can exercise significant control, which could limit our stockholders’ ability to influence the outcome of key transactions, including a change of control.
•Our stock repurchase program could affect the price of our Common Stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our Common Stock.
•There can be no assurance that we will pay dividends on our Common Stock; if we do not pay cash dividends, the ability to achieve a return on investment in our Common Stock will depend on price appreciation of our Common Stock.
•The DGCL and our organizational documents contain provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
•Our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or stockholders could be limited by our choice of forum in our bylaws.
Risks Related to Our Ability to Grow Our Business
If we are unable to attract new clients or retain and/or sell additional products or services to our existing clients. our revenue growth could be adversely affected. Further, if our revenue continues to decline or fails to grow at a rate sufficient to offset expenses associated with efforts to grow, or if we are unable to manage our costs to be profitable, we may not be able to maintain or increase our level of profitability.
We will need to generate and sustain increased revenue levels in future periods while managing our costs to be profitable, and, even if we do, we may not be able to maintain or increase our level of profitability. Our revenue increased from $104.2 million for the three months ended March 31, 2025 to $105.5 million for the three months ended March 31, 2026, representing a period over period increase of 1.2%. We believe our revenue growth depends on a number of factors, including our ability to:
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•add new clients, secure renewals or service extensions by existing clients on terms favorable to us and sell additional products and services to existing clients;
•price our products and services so that we are able to attract new clients and retain existing clients without compromising our profitability;
•introduce our products and services to new geographic markets;
•introduce new enterprise software products and services supporting additional enterprise software vendors, products and releases;
•manage relationships with our strategic partners to provide, develop and create applications that integrate with our Solutions Portfolio;
•satisfactorily complete our obligations under our Settlement Agreement with Oracle, as described below; and
•increase awareness of our Company, products and services on a global basis.
We may not successfully accomplish these objectives.
As competitors introduce low-cost and/or differentiated services that are perceived to compete with ours, or as enterprise software vendors introduce competitive pricing or additional products and services or implement other sales strategies to compete with us, our ability to sell to new clients and renew agreements with existing clients based on pricing, service levels, technology and functionality could be impaired. In addition, certain of our existing clients may choose to license a new or different version of enterprise software from an enterprise software vendor, and such clients’ license agreements with the enterprise software vendor will typically include a minimum one-year mandatory maintenance and support services agreement. In such cases, it is unlikely that these clients would renew their maintenance and support services agreements with us, at least during the early term of the license agreement. In addition, such existing clients could move to another enterprise software vendor, product or release for which we do not offer any products or services. As a result, we may be unable to renew or extend our agreements with existing clients or attract new clients or new business from existing clients on terms that would be favorable or comparable to prior periods, which could have an adverse effect on our revenue and growth.
Additionally, we intend to continue to expend significant funds to expand our sales and marketing efforts. We will continue to collaborate and partner in key strategic areas, including agentic AI, to drive revenue growth for both new and existing offerings. Client adoption rates are less certain in these highly competitive and rapidly developing areas. Additionally, emerging business models may unfavorably impact demand and profitability for our other service offerings and introduce additional competition. If we do not adequately and timely anticipate and respond to changes in client and market preferences, competitive actions, disruptive technologies and emerging business models, client demand for our service offerings may decline. Further, our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses.
In addition, efforts to encourage growth have placed and may continue to place significant demands on our management and our operational and financial resources. Recent changes to our organizational structure and reductions in our workforce to align our operational needs with our ability to achieve and sustain profitability will necessitate adjustments to our operational, financial and management controls, as well as our reporting systems and procedures. We may not realize the anticipated benefits, savings and improvements from the recent changes to our organizational structure and associated reductions in workforce if our revenue continues to decline, which could have a material adverse effect on our business.
Further, we believe that our corporate culture has been a critical component of our success. However, efforts to encourage growth may make it difficult to maintain our corporate culture. For example, recent changes to our organizational structure and reductions in our workforce may yield unintended consequences, such as attrition beyond our intended reduction in workforce and reduced employee morale. We must allocate valuable management resources to drive our reorganizational efforts without undermining our corporate culture of rapid innovation, teamwork and attention to client service. Any failure to manage efforts to encourage growth and related organizational changes in a manner that preserves our culture could negatively impact the achievement of our business objectives and our ability to achieve and maintain profitability.
Our revenue for any previous periods should not be relied upon as an indication of our revenue or revenue growth in the future. Further, our efforts to produce future growth may not result in increased revenue. If we are unable to achieve and sustain revenue growth or profitability, the market price of our securities may significantly decrease.
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We face significant competition for each component of our Solutions Portfolio, including from enterprise software vendors and other companies offering independent enterprise software support, products and services, from other suppliers of managed IT and IT consulting services, as well as from software licensees that self-support, which may harm our ability to add new clients, retain existing clients and grow our client base across all of our offerings.
Our current and potential competitors across each component of our Solutions Portfolio may have significantly more financial, technical, sales and marketing teams and other resources than we have, may be able to devote greater resources to the development, promotion, sale and support of their products and services, may have more extensive customer bases and broader customer relationships than we have and may have longer operating histories and greater name recognition than we have. Our competitors include enterprise software vendors and companies offering independent enterprise software support, products and services, as well as other suppliers of managed IT and IT consulting services. These competitors include companies of various sizes and both public and private companies, including large, global companies and smaller companies with more specialized focuses, new entrants and AI or cloud-native companies. Specifically, we face intense competition from enterprise software vendors, such as Oracle and SAP, who provide software support for their own products. Competitors have offered, and may continue to offer, discounts to companies to whom we have marketed our services. In addition, competitors, including enterprise software vendors, may take other actions to maintain their business, including changing the terms of their customer agreements, the functionality of their support, products or services, or their pricing. For example, since 2017, Oracle has prohibited us from accessing its support websites to download software updates on behalf of our clients who are authorized to do so and permitted to authorize a third party to do so on their behalf. In addition, the support, license or other contractual policies of our competitors, including Oracle and SAP, may penalize customers that choose to use our or any independent provider’s services or products. Further, the contractual policies of enterprise software vendors, such as Oracle and SAP, may contain clauses that penalize customers that seek to return to the software vendor to purchase new licenses or support following a departure from the software vendor’s support program, thus deterring such customers from transitioning to our services. In addition, our current and potential competitors, including enterprise platform vendors that are acquiring, building or investing in automation and AI functionality of partnering with automation and AI providers, including agentic AI providers, may develop and market new technologies that render our existing or future enterprise software support, products or services (including our Agentic AI ERP solutions) less competitive or obsolete. Finally, we also face competition from software licensees that choose to self-support. Many enterprise software licensees have invested substantial personnel, infrastructure and financial resources in their own organizations with respect to support of their licensed enterprise software products and may choose to self-support with their own internal resources instead of purchasing support services. Competition could significantly impede our ability to sell our enterprise support, products and services on terms favorable to us, and we may need to decrease our prices to remain competitive. If we are unable to maintain our current pricing due to competitive pressures, our margins will be reduced and our results of operations will be negatively affected.
We also compete with respect to certain of our support services with several smaller support services vendors in the independent enterprise software support services market. Certain providers of independent enterprise software support, products and services may have or may develop more strategic relationships with enterprise software vendors, which may allow them to compete more effectively than us over the long term. To the extent any of our competitors have existing relationships with potential clients for any component of our Solutions Portfolio, those potential clients may be unwilling to purchase our services because of those existing relationships, which could cause the demand for our services to be substantially impacted. Further, our competitors may attempt to use our Wind Down of support and services for Oracle’s PeopleSoft products described below to dissuade certain of our prospective or existing clients from purchasing or continuing to purchase any or all of the components of our Solutions Portfolio, including our enterprise software support services. We expect competition to continue to increase in the future, which could harm our ability to increase sales, maintain or increase renewals and maintain our prices.
We may need to change our pricing models to compete successfully.
We generally offer our clients support services for a fee that is equal to a percentage of the annual fees charged by the enterprise software vendor; therefore, changes in such vendors’ fee structures would impact the fees we would receive from our clients. If the enterprise software vendors offer deep discounts on certain services or lower prices generally, we may need to change our pricing models, which could have an adverse effect on our results of operations. In addition, our other product and service offerings under our Solutions Portfolio have pricing models that use a variety of different metrics and formulas as compared to our support solutions. We may need to adjust our pricing models for our new products and services over time to ensure that we remain competitive and realize a return on our investment in these new products and services. If we do not adapt our pricing models as necessary or appropriate, our revenue could decrease and adversely affect our results of operations.
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We may experience fluctuations in our results of operations due to the sales cycles for our products and services and from the efforts of enterprise software vendors to sell upgrades or migrations to cloud-based versions of their enterprise software, which could make our future results difficult to predict and could cause our results of operations to fall below expectations.
Our results of operations have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control, including seasonality linked to certain of the sales cycles for our products and services and the efforts of enterprise software vendors to convince our clients and potential clients to upgrade or migrate to cloud-based versions of their enterprise software. Historically, our sales cycle has been tied to the renewal dates for our clients’ existing and prior vendor support agreements for the products that we support. Because our clients make support vendor selection decisions in conjunction with the renewal of their existing support agreements with Oracle and SAP, among other enterprise software vendors, we have experienced an increase in business activity during the quarterly periods in which those agreements are up for renewal. However, because we have introduced and intend to continue to introduce products and services for additional software products that do not follow the same renewal timeline or pattern, our past results may not be indicative of our future performance, and comparing our results of operations on a period-to-period basis may not be meaningful. Our existing clients often renew their agreements with us at or near the end of each calendar year, so we have also experienced and expect to continue to experience heavier renewal rates in the fourth quarter. Finally, major enterprise software vendors, including Oracle, SAP, Infor and Microsoft, routinely promote upgrades and cloud migrations as strategic imperatives. If a client or potential client migrates or upgrades their enterprise software, this may limit or restrict our ability to provide our enterprise software support, services and solutions, including our Agentic AI ERP solutions.
We may not be able to accurately forecast the amount or mix of future product and service subscriptions, revenue and expenses, and as a result, our results of operations may fall below our estimates or the expectations of securities analysts and investors. If our revenue or results of operations fall below the guidance we provide or the expectations of investors or securities analysts, the price of our Common Stock could decline.
We may not be able to scale our operations quickly enough to meet our clients’ changing needs or decrease our costs adequately in response to changing client demand, and if we are not able to manage these changes efficiently, our results of operations could be harmed.
As enterprise software products become more advanced and complex, we will need to devote additional resources to innovating, improving and expanding our offerings to provide products and services to our clients using these more advanced and complex products. In addition, we will need to appropriately scale our internal business systems and our global operations and client engagement teams to serve the changing needs of our client base, particularly as our client demographics expand. Any such expansion may be expensive and complex, requiring financial investments, and management time and attention. Any failure of or delay in these efforts could adversely affect the quality or success of our services and negatively impact client satisfaction, potentially decreasing sales to new clients and lowering renewal rates by existing clients. The commercial success of new or enhanced product and services offerings depends on a number of factors, including timely and successful development; effective distribution and marketing; market acceptance; compatibility with existing and emerging standards, platforms, software delivery methods and technologies; maintaining strategic partnerships; accurately predicting and anticipating customer needs and expectations and the direction of technological change; identifying and innovating in the right technologies; and differentiation from other solutions. If we fail to anticipate or identify technological, creative, productivity or marketing trends or fail to devote appropriate resources to adapt to such trends, our business could be harmed. Furthermore, changes in client demand or changes in our product offerings resulting from external events outside of our control, as well as from our Wind Down of support and services for Oracle’s PeopleSoft products, could require us to alter the scale of our business, including implementing additional workforce reductions.
We could face inefficiencies or operational failures as a result of our efforts to scale our operations for any such changes needed for our clients’ changing needs or changes in our business. There can be no assurance that any expansion and improvements to our infrastructure and systems will be fully or effectively implemented within budgets or on a timely basis, if at all. Any failure to efficiently scale our operations could result in reduced revenue and increased expenditures and adversely impact our operating margins and results of operations.
We may not be successful in implementing our Agentic AI ERP and other product development initiatives. Further, incorporating AI technologies into our products and services or using AI technologies in our operations may result in operational, legal, regulatory, ethical and other challenges, which could adversely affect our business, reputation or financial results.
We have recently made and expect to continue to make investments, in collaboration with our strategic partners, to integrate agentic AI into our products and services and to update our Solutions Portfolio to enable our clients to leverage
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agentic AI and other product development initiatives across their ERP software suites for insights, digital experiences and applications. Agentic AI may become a more prominent component of our Solutions Portfolio over time. Our ongoing efforts to promote our Agentic AI ERP and other product development initiatives may not be successful, and our competitors or other third parties may incorporate agentic and other AI technologies into their offerings more successfully than we do and achieve greater and faster adoption, which could impair our ability to compete effectively and adversely affect our business and financial results. AI technology is evolving quickly. To remain competitive, we must make significant investments to continue to successfully incorporate and leverage this technology into our products and services. Our ability to incorporate AI technology into our products depends on the availability, performance and pricing of third-party hardware and software equipment and technical infrastructure, as well as maintaining strategic partnerships with multiple third-party service providers and platforms. Our competitors or other third parties may incorporate AI into their products more quickly or successfully than us. They may also have or in the future obtain rights that would prevent, limit or interfere with our ability to incorporate AI into our products and services. For these reasons, among others, we may not be able to compete effectively in the evolving market for AI solutions, including the evolving market for Agentic AI ERP.
Our Agentic AI ERP solutions are designed to be deployed and used in large-scale computing environments with different operating systems, systems management software and equipment and networking configurations, which may cause errors in, or failures of, such solutions or other aspects of the computing environments into which they are deployed. In addition, deployment of such solutions into complicated, large-scale computing environments may expose undetected errors, failures, defects, or vulnerabilities in our solutions. Our Agentic AI ERP solutions may not work as we anticipate or they may produce unexpected results or outcomes. Despite testing by us, errors, failures, defects, or vulnerabilities may not be found in our Agentic AI ERP solutions until they are released to our clients or thereafter. Real or perceived errors, failures, defects, or vulnerabilities in our Agentic AI ERP solutions could result in, among other things, negative publicity and damage to our reputation, lower renewal rates, loss of or delay in market acceptance of our Agentic AI ERP solutions, loss of competitive position, or claims by clients for losses sustained by them or expose us to breach of contract claims, regulatory fines and related liabilities. If vulnerabilities in our Agentic AI ERP solutions are exploited by adversaries, our clients could experience damages or losses for which our clients may seek to hold us accountable. In the case of claims by clients, we may be required, or may choose, for regulatory, contractual, client relations or other reasons, to expend additional resources to help correct the problem.
The introduction of AI technologies, particularly agentic AI, into our internal corporate operations and into our offerings may result in new or expanded risks and liabilities, due to enhanced regulatory scrutiny, litigation, ethical concerns, confidentiality, data privacy or security risks, as well as other factors that could adversely affect our business, reputation, and financial results. For example, employing AI technologies can cause unintended consequences and errors, which could harm our reputation and expose us to liability. If the content, analyses, or recommendations that AI technologies assist in producing are, or are alleged to be, inaccurate, misleading, biased or otherwise flawed, any of which may not be detectable by us, our business and reputation may be adversely affected. Use of AI technologies, and the evolving legal and regulatory framework for AI, could impact our ability to protect our data and intellectual property, as well as client information, and could expose us to intellectual property or other claims by third parties and increased cybersecurity risks or failure to protect confidential information, which may expose us to risks associated with data rights.
The highly complex and rapidly developing nature of AI technology makes it impossible to predict all of the legal, operational or technological risks that may arise relating to our use of AI. Any of these risks could materially adversely affect our business, financial condition or results of operations.
If we fail to enhance and protect our brand, our ability to expand our client base will be impaired and our financial condition may suffer.
We believe that our development and protection of the Rimini Street brand is critical to achieving widespread awareness of our products and services, and as a result, is important to attracting new clients and maintaining existing clients. We also believe that the importance of brand recognition will increase as competition in our market increases. Successful promotion of our brand will depend largely on the effectiveness of our marketing efforts and on our ability to provide reliable products and services at competitive prices. Brand promotional activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incurred in building our brand. If we fail to successfully promote, maintain and protect our brand, our business could be adversely impacted.
If there is a widespread shift by clients or potential clients to enterprise software vendors, products and releases for which we do not provide products or services, or if our efforts to enhance and expand our current product and services offerings or develop new offerings that will appeal to clients and potential clients are not successful, our business, financial condition and results of operations would be adversely impacted.
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Our current revenue is primarily derived from the provision of support services for Oracle and SAP enterprise software products. If other enterprise software vendors, products and releases emerge to take substantial market share from current Oracle and SAP products and releases we support, and we are unable to, or do not, offer products or services for such vendors, products or releases, demand for our products and services may decline or our products and services may become obsolete. Developing new products and services to address different emerging enterprise software vendors, products and releases, as well as continuing to develop our Agentic AI ERP solutions, could take a substantial investment of time and financial resources, and we cannot guarantee that we will be successful. If fewer clients use enterprise software products for which we provide products and services, or we are not able to provide services for new vendors, products and releases, our business would be adversely impacted.
We continue to invest resources in research and development to enhance our current product and service offerings, and develop new offerings, such as our Agentic AI ERP solutions, that we hope will appeal to clients and potential clients. The development of new product and service offerings may not generate sufficient revenue to offset the increased research and development expenses and may not generate gross profit margins consistent with our current margins.
If our new or modified products, services or technology do not work as intended, are not responsive to client needs or industry or regulatory changes, are not appropriately timed with market opportunity or are not effectively brought to market, we may lose existing and prospective clients or related opportunities, in which case our financial condition and results of operations may be adversely impacted, and if we are not successful in implementing any new product and service offerings, we may need to write off the value of our investment in such offerings.
Risks Related to the Operation of Our Business
We rely on our management team and other key employees, including our President, Chief Executive Officer and Chairman of the Board, and the loss or disability of one or more key employees could harm our business. Additionally, the failure to attract and retain qualified technical, sales and marketing personnel, or to expand our marketing and sales capabilities could prevent us from executing our business strategy.
The loss of or a disability that would prevent our President, Chief Executive Officer and Chairman of the Board or any of our key members of management from substantially performing their duties could have a material adverse effect on our business, operating results and financial condition, particularly if we are unable to hire and integrate suitable replacements on a timely basis. Mr. Ravin has been under long-standing medical care for kidney disease, which includes ongoing treatment. Although Mr. Ravin’s condition has not adversely impacted his performance as President, Chief Executive Officer and Chairman of the Board or on the overall management of the Company, we can provide no assurance that his condition will not affect his ability to perform these roles in the future. Further, as we continue to grow our business, we will continue to adjust our management team to best address our growth opportunities. If we are unable to attract or retain the right individuals for the team, it could hinder our ability to grow our business and could disrupt our operations or otherwise have a material adverse effect on our business. We do not maintain key man life insurance on any of our employees.
Furthermore, to execute our business strategy, we must attract and retain highly qualified technical, sales and marketing personnel. Our ability to increase our client base and achieve broader market acceptance of our services will depend to a significant extent on our ability to expand our marketing and sales operations as well as to identify, hire, onboard, train, develop, motivate and retain highly skilled personal, including key technical, sales and marketing personnel. We plan to continue expanding our sales force globally. We are experiencing a very competitive recruiting environment, creating difficulty in hiring and retaining sufficient numbers of highly skilled sales personnel and other employees, such as engineers and support services personnel, with appropriate qualifications, particularly as we integrate new AI technologies into our Service Portfolio that require new or additional skill sets. In particular, we have experienced extreme hiring competition in the San Francisco Bay Area, where we have a significant amount of operations, but also face extremely competitive hiring environments across the United States and other countries in which we operate, including India, Brazil and Malaysia, where we operate or plan to operate our global capability centers. Our efforts to attract, develop, integrate and retain highly skilled employees with appropriate qualifications may be compounded by intensified restrictions on travel, immigration, or the availability of work visas. Many companies with which we compete for experienced personnel have greater resources and less stock price volatility than we do. In making employment decisions, job candidates often consider the value of the equity incentives they are to receive in connection with their employment. If the price of our stock continues to experience significant volatility, our ability to attract or retain qualified employees will be adversely affected. In addition, as we continue to expand into new geographic markets, there can be no assurance that we will be able to attract and retain the required personnel to profitably grow our business. If we fail to attract highly qualified new sales and other personnel or fail to retain and motivate our current personnel, our growth prospects could be severely harmed.
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Moreover, it generally takes our new sales personnel an average of nine to twelve months to operate at the capacity typically expected of experienced sales personnel. This ramp cycle, combined with our typical six- to twelve-month sales cycle for engaged prospects, means that we will not immediately recognize a return on this investment in our sales results. The cost to acquire clients is high due to the cost of these marketing and sales efforts and is expected to increase as we continue to offer new products and services, as our sales personnel will need specialized training on our new offerings. Our business may be materially harmed if our efforts do not generate a corresponding increase in revenue. We may not achieve anticipated revenue growth from expanding our sales force if we are unable to hire, develop and retain talented sales personnel, if our new sales personnel are unable to achieve desired productivity levels in a reasonable period of time or if our sales and marketing programs are not effective.
Interruptions to, or degraded performance of, our service could result in client dissatisfaction, damage to our reputation, loss of clients, limited growth and reduction in revenue.
Our software support agreements with our clients generally guarantee a 10-minute response time with respect to certain high-priority issues. If we do not meet the 10-minute guarantee, our clients may in some instances be entitled to liquidated damages, service credits or refunds. To date, no such payments have been made.
We also deliver tax, legal and regulatory updates to our clients. If there are inaccuracies in these updates, or if we are not able to deliver them on a timely basis to our clients, our reputation may be damaged, and we could be found liable for damages to our clients and potentially lose clients.
Certain offerings under our Solutions Portfolio, including our Agentic AI ERP solutions, rely upon strategic partnerships with channel partners, solution partners and third-party platform providers. If any critical channel partner, solution partner or third-party platform provider experiences business or service interruptions or becomes unavailable to us for any reason, we may not be able to deliver the corresponding offering to our clients.
Any interruptions or delays in our service, whether as a result of third-party error, our own error, natural disasters or other catastrophic events, security breaches or a result of any other issues, whether accidental or willful, could harm our relationships with clients and cause our revenue to decrease and our expenses to increase. Our insurance policies may not adequately compensate us for any losses that we may incur. These factors, in turn, could further reduce our revenue, subject us to liability, cause us to pay liquidated damages, issue credits or cause clients not to renew their agreements with us, any of which could materially adversely affect our business.
If our products and services fail due to defects or similar problems, and if we fail to correct any defect or other software problems, we could lose clients, become subject to service performance or warranty claims or incur significant costs.
Our products and services and the systems infrastructure necessary for the successful delivery of our products and services to clients are inherently complex and may contain material defects or errors unknown to us. We have from time to time found defects in our products and services after delivery and may discover additional defects in the future. In particular, we have developed our own tools and processes to deliver comprehensive tax, legal and regulatory updates tailored for each client, which we endeavor to deliver to our clients in a shorter timeframe than our competitors, which may result in an increased risk of material defects or errors occurring. We may not be able to detect and correct all defects or errors before clients use our products and services, as some may be unknown. These defects or errors could also cause inaccuracies in the data we collect and process for our clients and/or or clients’ data, or even the loss, damage or inadvertent release of such data. Even if we are able to implement fixes or corrections to our tax, legal and regulatory updates in a timely manner, any history of defects or inaccuracies in the data we collect and process for our clients, or the loss, damage or inadvertent release of such data could cause our reputation to be harmed, and clients may elect not to renew, extend or expand their agreements with us and subject us to service performance credits, warranty or other claims or increased insurance costs. The costs associated with any material defects or errors in our products and services or other performance problems may be substantial and could materially adversely affect our financial condition and results of operations.
Interruptions or performance problems with technologies and services from third parties that we use to operate critical functions of our business, including any deficiencies associated with AI technologies incorporated by us in our services offerings or used by us, could harm our business.
We depend and rely on software-as-a-service, or SaaS, technologies and related services from third parties to operate critical functions of our business, including our Agentic AI ERP solutions, billing and order management, financial accounting services, and client relationship management services. If these services become unavailable due to extended outages or interruptions, security vulnerabilities, or cyber-attacks, lack of availability on commercially reasonable terms or prices, or due
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to other unforeseen circumstances, our expenses could increase, our ability to manage these critical functions could be interrupted, and our processes for and ability to manage sales of our products, recognize revenue, and support our clients could be impaired, all of which could adversely affect our business and operating results. We have integrated, and plan to further integrate, AI capabilities and technologies into our and service offerings, and the continued use and/or development of AI technologies or services by some of our third-party vendors and service providers, as well as any ineffective or inadequate AI development or deployment practices by us or such third-party vendors and service providers, could result in unintended consequences such as reputational damage, legal liabilities or loss of user confidence or business. The algorithms and models used in AI technologies and systems may have limitations, including biases, errors, or inability to handle certain data types or scenarios. In addition, there is a risk of system failures, disruptions or vulnerabilities that could compromise the integrity, security or privacy of the generated content, including the use of cyberattacks against emerging technologies, such as generative and agentic AI.
Cybersecurity threats continue to increase in frequency and sophistication; if our data security measures are compromised or unauthorized access to or misuse of client data occurs, our services may be perceived as not being secure, clients may curtail or cease use of our services, our reputation and our business may be harmed, and we may incur significant liabilities.
We rely on certain key information technology systems, some of which are dependent on services provided by third parties, to provide critical data and services for our internal and external users. Our services sometimes involve accessing, processing, sharing, using, storing and transmitting proprietary information and protected data of our clients. We rely on proprietary and commercially available systems, software, tools and monitoring, as well as other processes, to provide security for accessing, processing, sharing, using, storing and transmitting such information and data. If our security measures are compromised as a result of third-party action, employee, service provider or client error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation could be damaged, our business and our clients may be harmed, and we could incur significant liabilities. Cyberattacks continue to increase in frequency and in magnitude generally, and these threats are being driven by a variety of sources, including nation-state sponsored espionage and hacking activities, industrial espionage, organized crime, sophisticated organizations and hacking groups and individuals. Furthermore, due to tensions related to ongoing geopolitical conflicts, the risk of cyber-attacks may be elevated. We have been the subject of cybersecurity threats and expect such threats to continue in the future. In addition, if the security measures of our clients are compromised, even without any actual compromise of our own systems or security measures, we may face negative publicity or reputational harm if anyone incorrectly attributes the blame for such security incidents to us, our products and services, or our systems. We may also be responsible for repairing damage caused to our clients’ systems that we support, and we may not be able to make such repairs in a timely manner or at all.
We may be unable to fully anticipate or prevent techniques used to obtain unauthorized access or to sabotage systems because the methodologies to do so change frequently, including increased usage of emerging technologies such as advanced automation or AI, and generally are not detected until after an incident has occurred. As we increase our client base and our brand becomes more widely known and recognized, we may become more of a target for third parties seeking to compromise our systems or security measures or gain unauthorized access to our clients’ proprietary information and protected data as was the case in a 2021 successful phishing incident, which resulted in some unauthorized sharing of our client addresses and billing information, but did not significantly impact our business or client relationships.
Although we attempt to identify, mitigate and manage these risks through employing a number of measures, including security controls, insurance, monitoring of our systems and networks, employee training and maintenance of backup and protective systems, our systems, networks, products and services remain potentially vulnerable to increasingly sophisticated advanced persistent threats that may have a material effect on our business. The need to devote additional resources to the security of our information technology systems in the future could significantly increase the cost of doing business or otherwise adversely impact our financial results.
Furthermore, information systems management requires constant updates to their security policies, networks, software and hardware systems to reduce the risk of unauthorized access, malicious destruction of data or information theft. We rely on third-party service providers’ systems and software to provide our software support, products and services. The failure of any third-party service providers to efficiently and correctly update their software and hardware systems or maintain appropriate cybersecurity measures could result in operational inefficiencies and subject us to expend additional resources and costs which could have a material adverse effect on our operations and profitability.
In addition, many governments have enacted laws requiring companies to notify individuals of data security incidents involving certain types of personal data, and some of our clients contractually require notification of any data security compromise. In the event of a data security compromise, we may have difficulty timely complying with notification requirements that are unreasonably short or burdensome. SEC rules, multiple privacy regulations such as the European Union’s
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(“EU”) General Data Protection Regulation (“GDPR”) and California’s Consumer Privacy Act (“CCPA”) and potential other applicable legislative action, will require public disclosure of material security compromises experienced by our clients, by our competitors or by us, which may lead to widespread negative publicity. Any data security compromise in our industry, whether actual or perceived, could harm our reputation, erode client confidence in the effectiveness of our security measures, negatively impact our ability to attract new clients, cause existing clients to elect not to renew their agreements with us, or subject us to third-party lawsuits, government investigations, regulatory fines or other action or liability, all or any of which could materially and adversely affect our business, financial condition and results of operations.
We cannot provide assurances that any limitations of liability provisions in our contracts for a security breach would be enforceable or adequate or would otherwise protect us from any such liabilities or damages with respect to any particular claim. Further, certain of our contracts do not contain limitations of liability specific to security breaches, which could expose us to significant liabilities or damages, which could materially and adversely affect our business, financial condition and results of operations. We also cannot be sure that our existing general liability insurance coverage and coverage for errors or omissions will continue to be available on acceptable terms or in sufficient amounts to cover one or more claims, or that the insurer will not deny coverage as to any future claim. The successful assertion of one or more claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of substantial deductible or co-insurance requirements, could have a material adverse effect on our business, financial condition and results of operations.
Our client engagements are becoming more complex with the expansion of our Solutions Portfolio, leading to longer, more expensive sales cycles, increased pricing pressure and implementation and configuration challenges.
As we continue to expand our Solutions Portfolio beyond traditional third-party enterprise software support services, the complexity of our client arrangements increases as we engage with increasingly larger enterprise customers with multiple ERP software products that span their enterprise. These clients often require a lengthy evaluation and testing of our products and services prior to making a purchasing decision, require multiple levels of review and approval from a broader set of stakeholders, and demand more configuration, integration services and features. As a result, these sales opportunities may require us to devote significant sales support and professional services to a smaller number of transactions, diverting those resources from other sales opportunities. If we fail to effectively manage these risks with larger successful client engagements, our business may be negatively affected.
Because our strategy involves further expansion of our sales to clients outside the United States, our business will be susceptible to risks associated with global operations, including currency exchange rate fluctuations and taxes, trade and data regulations.
A significant component of our strategy involves the further expansion of our operations and client base outside the United States. We currently have subsidiaries outside of the United States in Australia, Brazil, Canada, UAE (Dubai), France, Germany, Hong Kong, India, Indonesia (Foreign Trade Representative Office), Israel, Japan, Korea, Malaysia, Mexico, Netherlands, New Zealand, Poland, Singapore, Sweden, Taiwan and the United Kingdom, which focus primarily on selling our services in those regions.
In the future, we may expand to other locations outside of the United States. Our current global operations and future initiatives will involve a variety of risks, including among others:
•changes in a specific country’s or region’s political or economic conditions;
•the occurrence of catastrophic events, including natural disasters, that may disrupt our business;
•changes in regulatory requirements, taxes or trade laws, including changes in diplomatic and trade relationships, such as new tariffs, trade protection measures, import or export licensing requirements, trade embargoes and sanctions and other trade barriers;
•currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into currency exchange rate hedging transactions;
•more stringent regulations relating to the incorporation of AI into our products and services, cybersecurity and data security and privacy, such as where and how data can be housed, accessed and used, and the unauthorized use of, or access to, commercial and personal information;
•differing labor regulations, especially in countries and geographies where labor laws are more advantageous to employees as compared to the United States;
•challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs as well as hire and
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retain local management, sales, marketing and support personnel, along with the ability to recapture costs incurred to open up new geographies;
•difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems;
•increased logistics, travel, real estate, infrastructure and legal compliance costs associated with global operations;
•adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash and limitations on our ability to reinvest earnings from operations in one country to fund our operations in other countries;
•laws and business practices favoring local competitors or general preferences for local vendors;
•limited or insufficient intellectual property protection;
•war, political instability or terrorist activities;
•U.S. foreign policy in Latin America, regarding the Arctic regions and the Middle East;
•The perception of potential conflicts between the United States and other nations; and
•exposure to liabilities under anti-corruption and anti-money laundering laws, including the United States Foreign Corrupt Practices Act and similar laws and regulations in other jurisdictions.
Our exposure in operating our business globally with the risks noted above and the unique challenges of each new geography increase the risk that any potential future expansion efforts that we may undertake will not be successful. If we invest substantial time and resources to expand our global operations and are unable to do so successfully and in a timely manner, our business and results of operations will be adversely affected.
Consolidation in our target sales markets is continuing at a rapid pace, which could harm our business when our clients are acquired and their agreements are terminated, or not renewed or extended.
Consolidation among companies in our target sales markets has been robust in recent years, and this continuing trend poses a risk for us. If such consolidation rates continue, we expect that some of the acquiring companies will terminate, renegotiate and elect not to renew our agreements with the clients they acquire, which may have an adverse effect on our business and results of operations.
Our 2025 Settlement Agreement with Oracle requires us to complete the Wind Down within a certain time period, and we are unable to guarantee the outcome of our efforts to comply with such requirements or the timing of the associated expected significant reductions in revenue. Nor can we predict the total anticipated costs associated with the Wind Down, which, if significant, could have a material adverse effect on our business and financial condition.
In July 2024, we initially announced that we had unilaterally decided to wind down our offering of support and services for Oracle PeopleSoft software. At the time of our initial announcement, the annual revenue associated with our provision of services for Oracle’s PeopleSoft products was approximately $30 million.
Our 2025 Settlement Agreement with Oracle requires us to complete the Wind Down of our provision of support and services for Oracle PeopleSoft software no later than July 31, 2028 (the “Wind Down Period”). The Wind Down includes, but is not limited to, our Rimini Support, Rimini Manage and Rimini Consult services for Oracle PeopleSoft products. As we provide services for Oracle PeopleSoft products to clients globally, both the pace of revenue reduction during the Wind Down process and the final date that we will receive revenue from the discontinued services are unknown as of the date of this Report. The percentage of revenue derived from support and services the Company provides solely for Oracle PeopleSoft products was approximately 3% and 7% of total revenue for the three months ended March 31, 2026 and 2025, respectively. We expect continued reductions in revenue related to services for Oracle PeopleSoft products over the course of the Wind Down Period.
As part of the Wind Down, depending upon the terms of individual client service contracts and our clients’ willingness to negotiate with us, we may be required to pay refunds of a portion of subscription revenue attributable to services that had not been performed as of the date of contract termination and/or pay buy-out or similar inducement fees to facilitate the early termination of certain of our existing contracts to provide services for Oracle PeopleSoft products. We may also offer to assist our clients with transitioning from PeopleSoft to other enterprise software providers with which we maintain a strategic partnership at no or reduced cost to such clients. Further, as a result of the Wind Down, clients for which we provide support and/or services in addition to support and services for Oracle PeopleSoft products may choose not to renew the contracts for these unrelated support and/or services. Finally, as a result of the Wind Down, certain of our prospective and existing clients may be subject to additional negative communications from software vendors and other third-party providers of enterprise software support services, both in regard to the past and inactive litigation and the Wind Down process, which may result in a failure to renew the support and/or services performed by us or to engage us.
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In response to our actions to discontinue this business, one or more of our current PeopleSoft support clients may claim a breach of contract related to early termination and/or non-performance of contractually guaranteed services. While no litigation relating to the Wind Down has been filed against us as of the date of this Report, no assurance is or can be given that our current PeopleSoft support clients will not pursue litigation against us. Such litigation could distract our management team from running our business, reduce our sales revenue and negatively impact our ability to successfully sell other services to such clients or prospective clients. We could be required to pay substantial damages, attorneys’ fees and/or costs in connection with any such litigation, which could result in a material adverse effect on our business and financial condition.
Our efforts to complete the Wind Down by the end of the Wind Down Period may be costlier than we expect, and we may not be able to increase our total revenue enough to offset not only the reductions in revenue resulting from the Wind Down but also the total costs associated with the Wind Down process.
While we currently believe our cash on hand, accounts receivable, contractually committed backlog and borrowing capacity under our Credit Facility provide us with liquidity to cover the costs related to the Wind Down, we cannot assure our liquidity will be sufficient.
Any uncured, material breach by us of our 2025 Settlement Agreement with Oracle could result in future adverse outcomes in litigation currently subject to a judicial stay and/or litigation standstill, which could have a material adverse effect on our business and financial results.
Our July 2025 Settlement Agreement with Oracle requires us to complete the Wind Down of our provision of support and services for Oracle PeopleSoft software no later than by the end of the Wind Down Period, as well as to comply with other customary covenants, as further described in Note 8 to the Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report. If there is an uncured material breach of any term of the Settlement Agreement on the part of us and/or Mr. Ravin, Oracle may terminate the Settlement Agreement and seek leave of the District Court to lift the current stay of the Rimini II litigation. If this occurs, no assurance is or can be given that the District Court will rule in a manner that is favorable to us on any issues related to the Rimini II litigation that may be reconsidered in the remand proceeding following the lifting of the stay, including any future award of attorneys’ fees and costs to Oracle. Further, no assurance is or can be given that the District Court will not award attorneys’ fees to Oracle following the conclusion of any such remand proceedings and, if so awarded, that the attorneys’ fees awarded are not in excess of the amount previously awarded to Oracle by the District Court following the issuance of its initial findings of fact and conclusions of law in the Rimini II litigation.
During the Wind Down Period, for any Oracle product or service other than PeopleSoft that was the subject of the Rimini I litigation or the Rimini II litigation, Oracle may initiate contempt proceedings against us for conduct prohibited by the Rimini I Injunction and/or the Rimini II Injunction. Additionally, following termination of the Settlement Agreement or the Litigation Standstill, Oracle may initiate contempt proceedings against us at any time for conduct prohibited by the Rimini I Injunction and/or the Rimini II Injunction. Such contempt proceedings or any judicial finding of contempt could result in a material adverse effect on our business and financial condition. Sanctions from any finding of contempt could reduce the amount of cash flows available to pay principal, interest, fees and other amounts due under our Credit Facility, which could result in an event of default, in which case the lenders could demand accelerated payment of principal, accrued and unpaid interest, and other fees. We cannot provide assurances that we will have sufficient assets which would allow us to repay such indebtedness in full at such time.
We are self-insured for any costs related to any current or future intellectual property litigation, although we maintain and have tendered our errors and omissions insurance coverage for the wrongful acts alleged in Oracle’s Rimini I Injunction contempt proceeding to seek determinations of a duty to defend. We obtained a determination of a duty to defend with respect to our primary errors and omission insurance carrier. We cannot provide assurances that we will prevail on any similar claims that we may tender in the future.
Our history of litigation with Oracle may continue to present challenges to our business for the unforeseeable future.
We have experienced challenges to our business as a result of our history of litigation with Oracle. Many existing and prospective clients previously expressed concerns regarding the litigation and, in some cases, received various negative communications by Oracle in connection with the litigation. We have experienced, and may continue to experience in the future, volatility and slowness in acquiring new clients, as well as clients not renewing their agreements with us, due to the history of litigation or as a result of the Wind Down process described above. Certain of our prospective and existing clients may be subject to additional negative communications from software vendors or from other third-party providers of enterprise software support services, both in regard to the history of litigation and the Wind Down process, which may result in a failure to renew agreements for our services or to engage us. We have taken steps in the past to minimize disruptions to our existing and
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prospective clients regarding the litigation. In certain cases, we have agreed to pay damages to our clients if we are no longer able to provide services to these clients, and/or provide certain termination rights if any outcome of litigation (including settlement) results in our inability to continue providing any of the paid-for services, which, in certain cases, includes clients subject to the Wind Down process. We cannot provide assurances that we will continue to overcome the challenges we faced as a result of the history of litigation with Oracle and potentially will face as a result of the Wind Down process and continue to renew existing clients or secure new clients.
Oracle could pursue new litigation against us.
We can provide no assurance that Oracle will not pursue new litigation against us. Such litigation could be costly, distract our management team from running our business and reduce client interest and our sales revenue.
Risks Related to General Economic Conditions and Our Financial Performance
Economic uncertainties and adverse changes in the general economy or in the industries in which our clients operate may result in increased costs of operations, disproportionately affect the demand for our products and services and could negatively impact our results of operations.
General worldwide economic conditions and markets continue to experience volatility, and uncertainty remains widespread. An uncertain economic environment, as well as shifts in immigration regulation and access to work visas, may increase our and our clients’ cost of labor due to higher wages, as well as result in higher financing costs and/or higher supplier prices for both us and our clients. We and our clients may find it difficult to accurately forecast and plan future business activities. In addition, these conditions could cause our clients or prospective clients to further reduce their IT budgets. Although we are generally a lower cost provider of such services than enterprise software vendors, this trend could decrease corporate spending on our products and services, resulting in delayed and lengthened sales cycles, a decrease in new client acquisition and loss of clients. Furthermore, our clients may face cash flow constraints, gaining timely access to sufficient credit or obtaining credit on reasonable terms, which could impair their ability to make timely payments to us, impact client renewal rates and adversely affect our revenue. If such conditions occur, we may be required to increase our reserves, allowances for doubtful accounts and write-offs of accounts receivable, and our results of operations would be harmed. We cannot predict the timing, strength or duration of any economic slowdown or recovery, whether global, regional or within specific markets. If the conditions of the general economy or markets in which we operate worsen, our business could be harmed. In addition, even if the overall economy improves, the market for our products and services may not experience growth. Moreover, multiple events, including tariffs, changes in U.S. trade policies and responsive changes in policy by foreign jurisdictions, geopolitical developments, including the conflict between the U.S. and Iran, the economic disruption caused by continued political instability in the Middle East, related international tensions or the perception of potential conflicts between the U.S. and other nations, tensions regarding U.S. foreign policy in Latin America, the Russian invasion of Ukraine and recent political and trade turmoil with China and other nations, have increased levels of political and economic unpredictability globally, and may continue to increase the volatility of global financial markets and global and regional economies.
Our failure to generate significant capital through our operations or raise additional capital necessary to fund and expand our operations, invest in new services and products and service our debt could reduce our ability to compete and could harm our business.
We may need to incur additional debt under our Credit Facility and/or raise additional capital beyond what is available under our Credit Facility if we cannot fund future growth or service our debt through our operating cash flows. Should this occur, we may not be able to obtain additional debt or additional equity financing on favorable terms, if at all, which could harm our business, results of operations and financial condition. We are also subject to certain restrictions for future financings as discussed in the risk factor “The terms of our Credit Facility impose operating and financial restrictions on us.” If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests and the value of our Common Stock could decline. If we engage in additional debt financings, the holders of the debt securities or lenders would have priority over the holders of our Common Stock. We may also be required to accept terms that further restrict our ability to incur additional indebtedness, take other actions that would adversely impact the short-term price of our Common Stock, or force us to maintain specified liquidity or other ratios, any of which could harm our business, results of operations and financial condition and reduce the value of our Common Stock.
If our retention rates continue to decrease, or we do not accurately forecast retention rates, our future revenue and results of operations may be harmed.
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Our clients have no obligation to renew their product or service subscription agreements with us after the expiration of a non-cancelable agreement term. In addition, the majority of our multi-year, non-cancelable client agreements are not pre-paid other than the first year of the non-cancelable service period. We may not accurately forecast retention rates for our clients. Our retention rates may decline or fluctuate as a result of a number of factors, including our clients’ decision to license a new product or release from an enterprise software vendor, our clients’ decision to move to another enterprise software vendor, product or release for which we do not offer products or services, global economic conditions, including rising inflation and interest rates on our clients’ businesses, client satisfaction with our products and services, the acquisition of our clients by other companies and clients going out of business. If our clients do not renew their agreements or decrease the amount they spend with us, our revenue will decline and our business will suffer. Certain of our existing clients may choose to license a new or different version of enterprise software from an enterprise software vendor, and such clients’ license agreements with the enterprise software vendor will typically include a minimum one-year mandatory maintenance and support services agreement. In such cases, it is unlikely that these clients would renew their maintenance and support services agreements with us, at least during the early term of the license agreement. In addition, such existing clients could move to another enterprise software vendor, product or release for which we do not offer any products or services.
Because we recognize revenue from subscriptions over the term of the relevant contract, downturns or upturns in sales are not immediately reflected in full in our results of operations.
As a subscription-based business, we recognize revenue over the service period of our contracts. As a result, much of our reported revenue each quarter results from contracts entered into during previous quarters. Consequently, while a shortfall in demand for our products and services or a decline in new or renewed contracts in any one quarter may not significantly reduce our revenue for that quarter, it could negatively affect our revenue in future periods. Accordingly, the effect of significant downturns in new sales, renewals or extensions of our service agreements for a quarter will not be reflected in full in our results of operations until future periods. Our revenue recognition model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new clients must be recognized over the applicable service contract term.
Due to the variability of timing in our sales cycle, if we fail to forecast our revenue accurately, or if we fail to match our expenditures with corresponding revenue, our results of operations and liquidity could be adversely affected.
The variability of the sales cycle for the evaluation and implementation of our products and services, which typically has been six to twelve months once a client is engaged, may cause us to experience a delay between increasing operating expenses for such sales efforts, and the generation of corresponding revenue. Accordingly, we may be unable to prepare accurate internal financial forecasts or replace anticipated revenue that we do not receive as a result of delays arising from these factors. As a result, our results of operations and liquidity in future reporting periods may be below the expectations of the public market, securities analysts or investors, which could negatively impact the price of our Common Stock.
Our future liquidity and results of operations may be adversely affected by the timing of new orders, client renewals and cash receipts from clients.
Due to the collection of cash from our clients before services are provided, our revenue is recognized over future periods when there are no corresponding cash receipts from such clients. Accordingly, our future liquidity depends upon our ability to continue to attract new clients and to enter into renewal arrangements with existing clients. If we experience a decline in orders from new clients or renewals from existing clients, our recognized revenue may continue to increase while our liquidity and cash levels decline. Any such decline, however, will negatively affect our revenues in future quarters. Accordingly, the effect of declines in orders from new clients or renewals from existing clients may not be fully reflected in our results of operations and cash flows until future periods. Comparing our revenues and operating results on a period-to-period basis may not be meaningful, as it may not be an indicator of the future sufficiency of our cash and cash equivalents to meet our liquidity requirements. You should not rely on our past results as an indication of our future performance or liquidity.
Risks Related to Laws, Regulations and Policies
Our business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others.
The software industry is characterized by the existence of a large number of patents, copyrights, trademarks, trade secrets as well as other intellectual and proprietary rights. Companies in the software industry are often required to defend against claims and litigation alleging infringement or other violations of intellectual property rights. Our past and inactive litigation with Oracle relates in part to copyright infringement claims and, from time to time, we may receive threatening letters or notices alleging infringement or may be the subject of claims that our services and underlying technology infringe or violate
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the intellectual property rights of others. Further, while we prohibit the use of certain emerging technologies by our employees unless incorporated into one of our product or service offerings or approved in accordance with internal policies, incorporating AI technologies, in our product and service offerings or the authorized or unauthorized use of AI technologies by our employees may result in allegations or claims against us related to violations of third-party intellectual property rights, unauthorized access to or use of proprietary information and/or failure to comply with the terms of third-party licensing agreements. Any such allegation, whether innocent or intentional, can adversely impact marketing, sales and our reputation.
Any actual or perceived failure by us to comply with data protection requirements or other legal or contractual obligations related to privacy and security could harm our business and operations and/or result in proceedings, actions or penalties against us.
As an expanding global company, we are subject to the laws and regulations of numerous jurisdictions worldwide regarding accessing, processing, sharing, using, storing, transmitting, disclosure and protection of personal data, the scope of which are constantly changing, subject to differing interpretation and related to jurisdictions where we have operations, clients, or where we conduct marketing, and such laws may be inconsistent between countries or in conflict with other laws, legal obligations or industry standards.
•In the United States, states continue to propose and pass comprehensive privacy legislation, including data breach notification laws, personal data privacy laws, and consumer protection laws, without harmonization. For example, the CCPA, as amended by the California Privacy Rights Act, gives California residents rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA also provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The CCPA has prompted a number of proposals for new federal and state-level privacy legislation, and in some states, efforts to pass comprehensive privacy laws have been successful. A growing number of other states have enacted or are expected to pass laws that impose privacy obligations. The existence of comprehensive privacy laws in different states adds additional complexity, variation in requirements, restrictions, and potential legal risk, requires additional investment of resources in compliance programs, impacts strategies and availability of previously useful data, and has resulted in and will result in increased compliance costs and/or changes in business practices and policies.
•Outside of the United States, virtually every jurisdiction in which we provide our products and services has established its own data protection requirements with which we or our clients must comply.
◦In the EU, data protection laws, such as GDPR, are stringent and continue to evolve, resulting in possible significant operational costs for internal compliance and risk to our business. GDPR imposes robust obligations upon covered companies, including heightened notice and consent requirements, greater rights of data subjects (e.g., the “right to be forgotten”), increased accountability measures, additional data breach notification and data security requirements, requirements for engaging third-party processors, and increased fines for non-compliance. Serious breaches of GDPR (and similar data protection regulations in the United Kingdom) may result in monetary penalties of up to €20 million (or £17.5 million in the UK) or 4% of worldwide annual revenue, whichever is greater, for violations. In addition to GDPR, other European legislative proposals and current laws and regulations apply to cookies and similar tracking technologies, electronic communications, and marketing, with an increased focus on online behavioral advertising.
•Many jurisdictions outside of Europe where we currently or plan to do business or have employees are also considering or have enacted comprehensive data protection legislation, cybersecurity legislation, or both. These include Australia, Brazil, China, India, Japan, Mexico, Singapore, and United Arab Emirates.
•Various data transfer rules related to our ability to transfer data from one country to another may limit our ability to transfer certain data or require us to guarantee a certain level of protection when transferring data from one country to another.
•We are also subject to data localization laws in certain countries that may, for example, require personal information of citizens to be collected, stored, and modified only within that country. These and similar regulations may interfere with our intended business activities, inhibit our ability to expand into those markets, require modifications to our offerings or services, or prohibit us from continuing to offer services in those markets without significant additional costs.
The regulatory frameworks governing the collection, processing, storage, use and sharing of certain information, particularly financial and other personal information, are rapidly evolving and, therefore, are subject to uncertainty and varying
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interpretations. These laws may be interpreted and applied in a manner that is inconsistent with laws in other jurisdictions or which our existing data management practices or the features of our services. We therefore cannot yet fully determine the impact these or future laws, regulations, and resulting industry standards may have on our business or operations.
In addition to regulations regarding the collection, processing, storage, use, and sharing of certain information, our contracts with clients include specific obligations regarding the protection of confidentiality and the permitted uses of personally identifiable and other proprietary information. Although we endeavor to comply with our published privacy policies and documentation and the laws and regulations that we are subject to, we may at times fail to do so or be alleged to have failed to do so. Any failure or perceived failure by us, or any third parties with which we do business, to comply with our posted privacy policies and product documentation or evolving privacy laws or regulations, changing consumer expectations, industry standards, or contractual obligations to which we or such third parties are or may become subject, may result in actions or other claims against us by governmental entities or private actors, the expenditure of substantial costs, time and other resources or the imposition of significant fines, penalties or other liabilities, which could, individually or in the aggregate, materially and adversely affect our business, financial condition, and results of operations. In addition, any such action, particularly to the extent we were found to be in violation or otherwise liable for damages, would damage our reputation and adversely affect our business, financial condition, and results of operations.
As our clients may be subject to differing privacy laws, rules, and legislation, which may mean that they require us to be bound by varying contractual requirements applicable to certain other jurisdictions. Adherence to such contractual requirements may mean we become bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters that may further change as laws, rules, and regulations evolve. Complying with these requirements and changing our policies and practices may be onerous and costly, and we may not be able to respond quickly or effectively to regulatory, legislative, and other developments. These changes may in turn impair our ability to offer our existing or planned features, products, and services and/or increase our cost of doing business. As we expand our client base, these requirements may vary from client to client, further increasing the cost of compliance and doing business.
Any failure or perceived failure by us to comply with these laws, policies or other obligations may result in governmental enforcement actions or litigation against us, with potential consequences such as fines and other expenses related to such governmental actions, an order requiring that we change our data practices or business practices, and could cause our clients to lose trust in us, any of which could have an adverse effect on our business. Further, the unauthorized use of any AI technology by our workforce may pose potential risks relating to the protection of data, including cybersecurity risk, exposure of our and our clients’ proprietary confidential information to unauthorized recipients and the misuse of our or third-party intellectual property.
If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, experience reduced revenue and incur costly litigation to protect our rights.
Our success depends, in part, upon protecting our proprietary products, services, knowledge, software tools and processes. We rely on a combination of copyrights, trademarks, service marks, patents, trade secret laws and contractual restrictions to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Any of our intellectual property rights may be challenged by others or invalidated through administrative process or litigation. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain. Despite our precautions, unauthorized third parties may copy or use information that we regard as proprietary to create products and services that compete with ours. In addition, the laws of some countries do not protect proprietary rights to the same extent as the laws of the United States. To the extent we expand our global activities, our exposure to unauthorized copying and use of our brand, processes and software tools may increase.
We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances. No assurance can be given that these agreements will be effective in controlling access to and distribution of our proprietary intellectual property. Further, these agreements may not prevent our competitors from independently developing products and services that are substantially equivalent or superior to our products and services.
Although we have been successful in the past, there can be no assurance that we will receive any additional patent protection for our proprietary software tools and processes. Even if we were to receive patent protection, those patent rights could be invalidated at a later date. Furthermore, any such patent rights may not adequately protect our processes, our software tools or prevent others from designing around our patent claims.
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To protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights. Litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our products, processes and software tools against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our products and services, impair the functionality of our products and services, delay introductions of new products and services, result in our substituting inferior or more costly technologies into our products and services, or injure our reputation.
If we are not able to maintain an effective system of internal control over financial reporting, current and potential investors could lose confidence in our financial reporting, which could harm our business and have an adverse effect on our Common Stock price.
We have had material weaknesses in our internal control over financial reporting in the past as described in our historical periodic reports filed with the SEC. We remediated the material weaknesses; however, we cannot provide assurance that material weaknesses in our internal control over financial reporting will not be identified in the future.
We are required to have our independent registered public accounting firm attest to and report on management’s assessment of the effectiveness of our internal control over financial reporting. If we are unable to conclude that we have effective internal control over financial reporting, or if our independent registered public accounting firm is unable to provide us with an attestation and an unqualified report as to the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our securities. For further information regarding our controls and procedures, see “Controls and Procedures” in Part II, Item 9A of this Report.
We may be subject to additional obligations to collect and remit sales tax, VAT and other taxes, and we may be subject to tax liability, interest and/or penalties for past sales, which could adversely harm our business.
State, local and foreign jurisdictions have differing and complex rules and regulations governing sales, use, value-added and other taxes, and these rules and regulations can be subject to varying interpretations that may change over time. In particular, the applicability of such taxes to our products and services in various jurisdictions is unclear. Further, these jurisdictions’ rules regarding tax nexus are complex and can vary significantly. Currently, we are under audit in some of our jurisdictions. We have previously faced and could face the possibility again of tax assessments and additional audits, and our liability for these taxes and associated interest and penalties could exceed our original estimates.
Our realization of the benefits from our net operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, our future earnings, and other future events, the effects of which cannot be determined; if we are not able to use a significant portion of our net operating loss carryforwards, our profitability could be adversely affected.
We have United States federal and state net operating loss carryforwards due to prior period losses, which could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our profitability. Reference is made to Note 8 to our Consolidated Financial Statements for the year ended December 31, 2025 included in Part II, Item 8 of the 2025 Form 10-K for a discussion of income taxes.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, our ability to utilize net operating loss carryforwards or other tax attributes in any taxable year may be limited if we experience an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws in the United States. While our ownership changes to date have not triggered any limitations under Section 382, it is possible that any future ownership changes or issuances of our capital stock could have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our profitability.
We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes in various jurisdictions.
As a multinational organization, we may be subject to taxation in several jurisdictions worldwide with increasingly complex tax laws, the application of which can be uncertain. Significant judgment is required in determining our worldwide
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provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. As such, our results may differ from previous estimates and may materially affect our financial position.
The amount of taxes we pay in jurisdictions in which we operate could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have a material adverse effect on our liquidity and results of operations. In addition, the authorities in these jurisdictions could review our tax returns and impose additional tax, interest and penalties, and the authorities could claim that various withholding requirements apply to us or assert that benefits of tax treaties are not available to us, any of which could have a material impact on our business and results of operations.
Our reputation and/or business could be negatively impacted by ESG matters and/or our reporting of such matters and expose us to additional costs and risks.
Our implementation of selected ESG activities and our reporting on ESG matters presents numerous operational, financial, legal, reputational and other risks, many of which are outside of our control, and all of which could have a material negative impact on our business. Companies have recently faced attention from various stakeholders and regulators, both in the U.S. and internationally, relating to ESG matters, including environmental stewardship, social responsibility and inclusion. Failure to satisfy our stakeholders with regard to ESG matters could negatively impact our reputation, our ability to attract or retain employees, and our attractiveness as an investment and business partner. Unfavorable ESG ratings may lead to negative investor sentiment towards us, which could have a negative impact on our stock price. Further, evolving U.S. federal laws regarding ESG matters may be inconsistent with stakeholder positions on such matters, and we may experience conflicts between actual or proposed governmental regulations and stakeholder expectations.
Risks Related to Our Indebtedness, Securities and Corporate Governance
Our level of indebtedness and any future indebtedness we may incur may limit our operational and financing flexibility and negatively impact our business.
On March 31, 2026, our outstanding indebtedness under our Credit Facility totaled $57.6 million. We may incur substantial additional indebtedness in the future. Our Credit Facility and other debt instruments we may enter into in the future may significantly impact our business, including the following among others:
•our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;
•our requirement to use a significant portion of our cash flows from operations to pay principal and interest on our indebtedness, which will reduce the funds available to us for operations and other purposes;
•our level of indebtedness could disadvantage us compared to our competitors that have proportionately less debt;
•our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited; and
•our level of indebtedness may make us more vulnerable to economic downturns and adverse developments in our business.
We expect to depend primarily on cash generated by our operations for funds to pay our expenses and any amounts due under our Credit Facility and any other indebtedness we may incur. Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control, including inflation and global economic conditions. Our business may not generate sufficient cash flows from operations in the future, and we may not be able to achieve and maintain profitability in future periods, either or both of which could result in our being unable to repay indebtedness or to fund other liquidity needs. If we do not generate adequate resources, we may be required to refinance all or part of our debt, sell assets or borrow more money, in each case on terms that may not be acceptable to us. In addition, the terms of existing or future debt agreements, including our existing Credit Facility, may restrict us from adopting some or any of these alternatives. Our inability to incur additional debt in the future could also delay or prevent a change in control of our Company, make some transactions more difficult and impose additional financial or other covenants on us. Our current indebtedness and any inability to pay our debt obligations as they come due or an inability to incur additional debt could adversely affect our business and results of operations.
Our Credit Facility imposes operating and financial restrictions on us.
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Our Credit Facility contains certain restrictions and covenants that limit our ability to, among other things, create liens on assets, sell assets, engage in mergers or consolidations, make loans or investments, incur additional indebtedness, engage in certain transactions with affiliates, incur certain material ERISA or pension liabilities and pay dividends or repurchase capital stock and in each case, subject to certain exceptions set forth in our Credit Facility. Our Credit Facility may limit our ability to engage in these transactions even if we believe that a specific transaction would contribute to our future growth or improve our operating results. Further, we are required under our Credit Facility to achieve specified financial and operating results and maintain compliance with specified financial ratios, including as a condition to accessing additional amounts available for borrowing. As of March 31, 2026 and on the date of filing this Report, we were in compliance with these financial covenants. Our ability to comply with these provisions may be affected by events beyond our control. A breach of any of these financial covenants or our inability to comply with required financial ratios in our Credit Facility could result in a default under the Credit Facility in which case the lenders would have the right to declare all borrowings, which includes any principal amount outstanding, together with all accrued, unpaid interest and other amounts owing in respect thereof, to be immediately due and payable. If we are unable to repay all borrowings when due, whether at maturity or if declared due and payable following a default, the lenders would have the right to proceed against the collateral securing the indebtedness. If we breach these covenants or fail to comply with other terms of the Credit Facility and the lenders accelerate the amounts outstanding under the Credit Facility, our business and results of operations would be adversely affected. Additionally, we may need to refinance our Credit Facility at maturity or upon default, and future financing may not be available on acceptable terms, or at all.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.
As a result of market interest rate fluctuations, interest rates under our Credit Facility or other variable rate indebtedness we may incur in the future could be higher or lower than current levels. As interest rates increase, our debt service obligations under our Credit Facility may increase even though the amounts borrowed remain the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease. We have entered into an interest rate swap agreement that involves the exchange of floating for fixed rate interest payments to partially reduce interest rate volatility under our Credit Facility. However, we currently do not maintain interest rate swap agreements with respect to our variable rate indebtedness, and any interest rate swap agreements we enter into in the future may not fully mitigate our interest rate risk.
Our Credit Facility gives us a choice of interest rates between (a) SOFR and (b) a Base Rate, in each case plus an applicable margin and as further defined in the Credit Facility. The applicable margin is based on our Consolidated Total Leverage Ratio (as defined in the Credit Facility) and whether we elect SOFR (ranging from 2.75 to 3.50%) or Base Rate (ranging from 1.75 to 2.50%). SOFR is calculated based on short-term repurchase agreements, backed by Treasury securities. As such, SOFR is observed and backward looking. In the long term, transitioning to SOFR could result in an increase in the cost of our variable rate indebtedness, which could have a material adverse impact on our business, financial condition and results of operations.
The price of our Common Stock may be volatile, any issuance of Common Stock upon the exercise of outstanding warrants will dilute existing stockholders, and such issuances and/or any sales of Common Stock by large stockholders may depress the market price of our Common Stock.
The price of our Common Stock may fluctuate due to various factors enumerated in this Risk Factors section and elsewhere in this Report. Additional factors impacting the price of our Common Stock could include:
•the failure of securities analysts to publish research about us, or shortfalls in our results of operations compared to levels forecast by securities analysts;
•any delisting of our Common Stock from Nasdaq Global Market due to any failure to meet listing requirements; and
•the general state of securities markets.
These factors may materially reduce the market price of our Common Stock, regardless of our operating performance. Additionally, we have registered for resale the shares of Common Stock of certain of our significant holders of our Common Stock, including our largest stockholder, Adams Street Partners, LLC. A sale of large amounts of our Common Stock could have the effect of increasing volatility and putting significant downward pressure on the price of our Common Stock. Also, the issuance of Common Stock upon exercise of warrants that remain outstanding and exercisable until June 2026 may result in immediate dilution of the equity interests of our existing common stockholders and might result in dilution in the tangible net book value of a share of Common Stock, depending upon the price at which the shares are issued. We may also seek to engage in further capital optimization transactions in the future, the result of which could trigger some dilution or have other impacts on the market price of our Common Stock and not achieve an improved capital structure. Any issuance of equity in the future to
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raise additional capital could cause the price of our Common Stock to decline or require us to issue shares at a price that is lower than that paid by holders of our Common Stock in the past, which would result in those newly issued shares being dilutive.
Certain of our common stockholders can exercise significant control, which could limit our stockholders’ ability to influence the outcome of key transactions, including a change of control.
Based on the number of shares of Common Stock outstanding as of March 31, 2026, two of our stockholders have aggregate voting power of approximately 37.7% of our outstanding capital stock. As of March 31, 2026, (i) approximately 25.6% of our outstanding stock is held by entities affiliated with Adams Street Partners LLC and (ii) approximately 12.1% of our outstanding stock is beneficially owned by our President, Chief Executive Officer and Chairman of the Board. Our directors and officers or persons affiliated with our directors and officers have aggregate voting power of approximately 40.0% as of March 31, 2026. As other institutional investors hold more than 5% of outstanding stock as of March 31, 2026, a small number of stockholders comprise a majority of our outstanding stock.
As a result, these stockholders have significant influence over all matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions. Corporate action might be taken even if other stockholders oppose the action being taken. This concentration of ownership might also have the effect of delaying or preventing a change of control of our Company that other stockholders may view as beneficial.
Our stock repurchase program could affect the price of our Common Stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our Common Stock.
Our Board of Directors has authorized a $50.0 million stock repurchase program through June 2029. During the three months ended March 31, 2026, we did not acquire any shares of Common Stock. Repurchases pursuant to our stock repurchase program could affect our Common Stock price and increase its volatility. The existence of a stock repurchase program could also cause our Common Stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our Common Stock. Such repurchase program will not obligate us to repurchase any further specific dollar amount or number of shares of Common Stock within that authorization and may be suspended or discontinued at any time, which could cause the market price of our Common Stock to decline. The timing and actual number of shares repurchased depends on a variety of factors including the timing of open trading windows, price, corporate and regulatory requirements, and other market conditions. Further, the provisions of the Inflation Reduction Act of 2022 impose an excise tax of 1% tax on the fair market value of stock repurchases made after December 31, 2022, net of certain adjustments for issuances of incentive and other equity. The impact of this provision will depend on the extent of share repurchases and qualified reductions for issuances made in future periods. There can be no assurance that any stock repurchases will enhance stockholder value because the market price of our Common Stock may decline below the levels at which we repurchased shares of Common Stock. Although our stock repurchase program is intended to enhance stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness.
There can be no assurance that we will pay dividends on our Common Stock; if we do not pay cash dividends, the ability to achieve a return on investment in our Common Stock will depend on appreciation in the price of our Common Stock.
We have not paid any cash dividends on our Common Stock to date. The payment of any dividends is at the discretion of our Board of Directors and is also limited under the terms of our Credit Facility. The payment of any cash dividends will depend upon our revenue, earnings, cash flow and financial condition from time to time. Our ability to declare dividends on our Common Stock may also be limited by the terms of future financing agreements entered into by us from time to time. There can be no assurance that our Board of Directors will declare any dividends on our Common Stock in the foreseeable future. Therefore, the success of an investment in shares of our Common Stock will depend upon any future appreciation in its value. There is no guarantee that shares of our Common Stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.
The DGCL and our certificate of incorporation, bylaws and corporate governance policies contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
Our certificate of incorporation, bylaws, and the Delaware General Corporation Law (the “DGCL”), contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our Board of Directors and therefore depress the trading price of our Common Stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of our Board of
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Directors or taking other corporate actions, including effecting changes in our management and corporate governance policies and practices. Among other things, our certificate of incorporation and bylaws include provisions regarding:
•a classified Board of Directors with three-year staggered terms, which could delay the ability of stockholders to change a majority of our Board of Directors;
•the ability of our Board of Directors to issue “blank check” preferred stock, and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
•the limitation of the liability of, and the indemnification of our directors and officers;
•the exclusive right of our Board of Directors to elect a director to fill a vacancy created by the expansion of the Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors;
•the requirement that directors may only be removed from our Board of Directors for cause;
•a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors;
•the requirement that a special meeting of stockholders may be called only by our Board of Directors, the chairperson of our Board of Directors, our chief executive officer or our president (in the absence of a chief executive officer), which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors;
•controlling the procedures for the conduct and scheduling of Board of Directors and stockholder meetings;
•the requirement for the affirmative vote of holders of at least 66 2/3% of the voting power of the then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal any provision of our certificate of incorporation or our bylaws, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board of Directors and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;
•the ability of our Board of Directors to amend the bylaws, which may allow our Board of Directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and
•advance notice procedures with which stockholders must comply to nominate candidates to our Board of Directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board of Directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our Company.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our Board of Directors or management and corporate governance policies.
In addition, as a Delaware corporation, we are subject to provisions of Delaware law, including Section 203 of the DGCL, which may prohibit certain stockholders holding 15% or more of our outstanding capital stock from engaging in certain business combinations with us for a specified period of time.
Any provision of our certificate of incorporation, bylaws or DGCL that has the effect of delaying or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Common Stock and could also affect the price that some investors are willing to pay for our Common Stock.
Our bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, stockholders or employees.
Our bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for:
•any derivative action or proceeding brought on behalf of us;
•any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers or other employees;
•any action asserting a claim against us or any of our directors, officers or employees arising out of or relating to any provision of the DGCL, our certificate of incorporation or our bylaws; or
•any action asserting a claim against us or any of our directors, officers, stockholders or employees that is governed by the internal affairs doctrine of the Court of Chancery.
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This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.
General Risks
Catastrophic events may disrupt our business.
We rely heavily on our network infrastructure and information technology systems for our business operations. A disruption or failure of these systems in the event of an online attack, earthquake, fire, terrorist attack, geopolitical instability, war, power loss, telecommunications failure, extreme weather conditions (such as hurricanes, wildfires or floods) or other catastrophic event could cause system interruptions, delays in accessing our service, reputational harm, loss of critical data or could prevent us from providing our products and services to our clients. In addition, several of our employee groups reside in areas particularly susceptible to earthquakes, such as the San Francisco Bay Area and Japan, and a major earthquake or other catastrophic event could affect our employees, who may not be able to access our systems, or otherwise continue to provide our services to our clients. A catastrophic event that results in the destruction or disruption of our data centers, or our network infrastructure or information technology systems, or access to our systems could affect our ability to conduct normal business operations and adversely affect our business, financial condition and results of operations. Additionally, the emergence or spread of a pandemic or other widespread health emergency (or response to the possibility of such an emergency) could adversely affect our business, financial condition and results of operations.
Future acquisitions, strategic investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value and adversely affect our financial condition and results of operations.
We may in the future seek to acquire or invest in businesses, products or technologies that we believe could complement or expand our services, enhance our technical capabilities or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not the acquisitions are completed. If we acquire businesses, we may not be able to integrate successfully the acquired personnel, operations and technologies, or effectively manage the combined business following the acquisition. We may not be able to find and identify desirable acquisition targets or be successful in entering into an agreement with any particular target or obtain adequate financing to complete such acquisitions. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our results of operations. In addition, if an acquired business fails to meet our expectations, our business, financial condition and results of operations may be adversely affected.
The commercial insurance market is changing rapidly in response to rising insurance losses and claims, changes in available insurance capacity and adverse worldwide economic conditions, uncertainties, and risks, which may lead to higher premium costs, higher policy deductibles, self-insured retentions, and/or lower coverage limits, potentially impacting our ability to continue our present limits of insurance coverage, obtain sufficient insurance capacity to adequately insure our risks or maintain adequate insurance at a reasonable cost.
Commercial insurance availability and coverage terms, including deductibles, self-insured retentions and pricing, vary with market conditions. While we believe our insurance coverage addresses material risks to which we are exposed and is adequate and customary for our current global operations, we have observed rapidly changing conditions in the insurance markets relating to nearly all areas of traditional corporate insurance, resulting in higher premium costs, rising policy deductibles/self-insured retentions and lower coverage limits. If these changes continue, we may not be able to continue our present limits of insurance coverage, obtain sufficient insurance capacity to adequately insure our risks and/or obtain and maintain adequate insurance at a reasonable cost. Our insurance policies cover a number of risks and potential liabilities, such as general liability, property coverage, errors and omissions liability, employment liability, business interruptions, cybersecurity liability, crime, and directors’ and officers’ liability. We cannot be certain that our insurance coverage will be adequate to cover liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim or become insolvent. The successful assertion of one or more claims against us that exceed available insurance coverage, the occurrence of changes in our insurance policies, including premium increases, decreases in coverage and the imposition of large deductible, self-insured retentions, or co-insurance requirements, or
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the insolvency of any of our insurers, could have a material adverse effect on our business, results of operations and financial condition.
Failure to comply with laws and regulations applicable to our operations could harm our business.
Our business is subject to regulation by various global governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, environmental laws, consumer protection laws, anti-bribery laws, import/export controls, securities laws and tax laws and regulations. For example, transfer of certain software outside of the United States or to certain persons is regulated by export controls.
In certain jurisdictions, these regulatory requirements may be more stringent than those in the United States. Noncompliance with applicable requirements could subject us to investigations, sanctions, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions and may result in our inability to provide certain products and services. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, or if clients make claims against us for compensation for such non-compliance, our business, financial condition and results of operations could be harmed, and responding to any such type of action will likely result in a significant diversion of management’s attention and resources.
Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our Common Stock.
Securities research analysts may establish and publish their own periodic projections for us. These projections may vary widely and may not accurately predict the results we actually achieve. Our share price may decline if our actual results do not meet the projections of these securities research analysts. Similarly, if one or more of the analysts who write reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our share price or trading volume could decline. If no additional analysts commence coverage of us, the market price and volume for our common shares could be adversely affected.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There were no repurchases of Common Stock that occurred during the three months ended March 31, 2026.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Mine Safety Disclosures.
Not applicable.
ITEM 5. Other Information.
During the quarter ended March 31, 2026, none of our directors or officers informed us of the adoption termination
The Company’s RSU and PSU notice and award agreements provide that, upon the settlement of awards subject to such agreements, such number of shares of Company Common Stock as the Company determines appropriate to satisfy associated minimum statutory tax withholding obligations shall automatically be sold on the awardee’s behalf, with the sale proceeds remitted to the appropriate taxing authorities. This provision may constitute a “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K). Certain of our executive officers have also elected to automatically sell such number of shares of Company Common Stock as to generate cash proceeds in excess of the amount needed to satisfy associated minimum statutory tax withholding obligations (at an identified rate) upon settlement of future RSU and/or PSU awards, with all sale proceeds remitted to appropriate taxing authorities.
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ITEM 6. Exhibits.
| Incorporated by Reference | ||||||||||||||||||||||||||||||||
| Exhibit Number | Description | Form | File No. | Exhibit | Filing Date | |||||||||||||||||||||||||||
3.1* | Amended and Restated Certificate of Incorporation of the Registrant | 8-K | 001-37397 | 3.1 | October 16, 2017 | |||||||||||||||||||||||||||
3.2* | Certificate of Amendment Dated June 6, 2024 to the Amended and Restated Certificate of Incorporation of the Registrant | 8-K | 001-37397 | 3.1 | June 7, 2024 | |||||||||||||||||||||||||||
3.3* | Amended and Restated Bylaws of the Registrant | 10-Q | 001-37397 | 3.2 | November 1, 2023 | |||||||||||||||||||||||||||
10.1* | Amendment No. 1 dated March 27, 2026 to that certain Amended and Restated Credit Agreement dated as of April 30, 2024, by and among Rimini Street, Inc., as borrower, the lenders party thereto and Capital One, National Association, as a lender, swing lender and agent for all lenders | 8-K | 001-37397 | 10.1 | April 1, 2026 | |||||||||||||||||||||||||||
31.1† | Certification of Seth A. Ravin, Chief Executive Officer and President, Pursuant to Rule 13a-14(a) | |||||||||||||||||||||||||||||||
31.2† | Certification of Michael L. Perica, Chief Financial Officer, Pursuant to Rule 13a-14(a) | |||||||||||||||||||||||||||||||
32.1** | Certification of Seth A. Ravin, Chief Executive Officer and President, Pursuant to 18 U.S.C. Section 1350 | |||||||||||||||||||||||||||||||
32.2** | Certification of Michael L. Perica, Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350 | |||||||||||||||||||||||||||||||
101.INS† | Inline XBRL Instance Document | |||||||||||||||||||||||||||||||
101.SCH† | Inline XBRL Taxonomy Extension Schema | |||||||||||||||||||||||||||||||
101.CAL† | Inline XBRL Taxonomy Extension Calculation Linkbase | |||||||||||||||||||||||||||||||
101.DEF† | Inline XBRL Taxonomy Extension Definition Linkbase | |||||||||||||||||||||||||||||||
101.LAB† | Inline XBRL Taxonomy Extension Label Linkbase | |||||||||||||||||||||||||||||||
101.PRE† | Inline XBRL Taxonomy Extension Presentation Linkbase | |||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||||||||||||||||||||||||||
____________________
† Filed herewith.
* Previously filed and incorporated herein by reference.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| RIMINI STREET, INC. | |||||
Date: April 30, 2026 | /s/ Seth A. Ravin | ||||
| Name: Seth A. Ravin | |||||
| Title: President, Chief Executive Officer and Chairman of the Board | |||||
| (Principal Executive Officer) | |||||
Date: April 30, 2026 | /s/ Michael L. Perica | ||||
| Name: Michael L. Perica | |||||
| Title: Executive Vice President and Chief Financial Officer | |||||
| (Principal Financial Officer) | |||||
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FAQ
How did Rimini Street (RMNI) perform financially in Q1 2026?
Rimini Street generated $105.5 million in revenue in Q1 2026, up slightly from $104.2 million a year earlier. Net income was $1.4 million versus $3.4 million, as gross margin slipped to 59.0% from 61.0% due to higher operating costs.
What were Rimini Street (RMNI)’s key profitability metrics for Q1 2026?
Rimini Street reported Q1 2026 gross profit of $62.3 million on $105.5 million of revenue, a 59.0% gross margin. Net income was $1.4 million, down from $3.4 million in Q1 2025, as engineering consulting and sales and marketing expenses grew faster than revenue.
What is Rimini Street (RMNI)’s liquidity and debt position as of March 31, 2026?
As of March 31, 2026, Rimini Street held $133.3 million in cash, cash equivalents and restricted cash. It had $56.4 million outstanding on its term loan under the credit facility and $277.3 million of deferred revenue, providing visibility into future subscription revenue streams.
How important are recurring revenues for Rimini Street (RMNI)?
Recurring subscriptions are central to Rimini Street’s model, contributing about 95% of Q1 2026 revenue. Annualized recurring revenue reached $401 million, with a 12‑month revenue retention rate of 88%, underscoring the stability of its support and managed services client base.
How is Rimini Street (RMNI) affected by the Oracle PeopleSoft service wind down?
Rimini Street is winding down Oracle PeopleSoft services under a settlement agreement and must complete this by July 31, 2028. PeopleSoft‑only services produced about 3% of Q1 2026 revenue, down from roughly 7% a year earlier, indicating a gradual reduction in that revenue stream.
What growth initiatives is Rimini Street (RMNI) pursuing beyond legacy support?
Rimini Street is expanding its Rimini Smart Path portfolio, adding managed services, security and interoperability offerings, and Agentic AI ERP innovation solutions. It launched Rimini Agentic UX in late 2025 to layer AI-driven automation and visibility across clients’ existing enterprise software systems.