Good afternoon, ladies and gentlemen, and welcome to the Rimini Street Q2 2024 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, July 31st, 2024. I would now like to turn the conference over to Dean Pohl, VP, Treasurer, and Investor Relations. Please go ahead. Thank you, Operator. I'd like to welcome everyone to Rimini Street's second quarter 2024 earnings conference call. On the call with me today is Seth Ravin, our CEO and President, and Michael Perica, our CFO. Today, we issued our earnings press release for the second quarter ended June 30th, 2024, a copy of which can be found on our website under Investor Relations. A reconciliation of GAAP to Non-GAAP financial measures has been provided in the tables following the financial statements in the press release. An explanation of these measures and why we believe they are meaningful is also included in the press release under the heading "About Non-GAAP Financial Measures and Certain Key Metrics." As a reminder, today's discussion will include forward-looking statements that reflect our current outlook. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. We encourage you to review our most recent SEC filings, including our Form 10-Q filed today, for discussion of risks that may affect our future results or stock price. Now, before taking questions, we'll begin with prepared remarks. With that, I'd like to turn the call over to Seth. Thank you, Dean, and thank you, everyone, for joining us today. Rimini Street helps our clients achieve better business outcomes, such as significant IT operating cost savings, improved profitability, new competitive advantages, and accelerated growth. We achieve these goals by significantly lowering the costs, resources, and time needed to support and manage mission-critical transaction systems such as ERP, financials, HCM, and CRM, while also assisting clients with innovation projects that include cloud, open source, automation, workflow, data, analytics, AI reporting, application modernization, migrations, integrations, security, license management, and global IT governance. To date, we believe we have already delivered over $8 billion of savings and reinvestment opportunity to thousands of clients operating in nearly 150 countries. Rimini Street serves its clients with more than 2,100 employees working in 21 countries and two large lab operations in India and Brazil. Our award-winning software support delivers an average engineer response time of less than 2 minutes, 24 by 7 by 365, and earns an average client satisfaction score of 4.9 out of 5, where 5 is excellent. Demand environment and competitive advantage. We continue to see strong demand for a proven, reliable, trusted partner for mission-critical transaction system services that can significantly reduce IT spending and allow organizations to consolidate their preferred IT service providers for streamlined vendor management, increased aggregated purchasing power, and better business outcomes. Competitively, we have the broad portfolio of solutions, top engineering talent, proven systems, methodologies, service models, and patented technology needed to win as a key IT service partner globally. We have won deals competing against major technology players such as Oracle, SAP, IBM, and DXC. 2024 Q2 activity and results. The second quarter was a mixed quarter of successes and shortfalls in sales. While we achieved strong contract volumes, including $8 million or greater transactions in the quarter, we had many smaller transactions that ultimately reduced our ASP for the quarter. The sales challenges were geographically centered around North America, Northern Europe, Japan, and Australia. In the second quarter, we responded to the unique and timely opportunity to deliver a comprehensive service offering for VMware. We launched the general availability of Rimini Support, Rimini Protect, and Rimini Consult for VMware products. We were able to leverage our existing proven enterprise software support model and have already signed VMware service contracts and have begun providing mission-critical service to clients. We made several changes to executive management and revenue generation, including the hiring of Steve Hershkowitz as Chief Revenue Officer, Martyn Hoogakker as Theater GM for EMEA, and Andrew Manners as Regional GM for ANZ. We are continuing to hire globally as needed across marketing, lead generation, pre-sales, sales, and client success teams to get the right team fielded to meet our sales growth targets. Billings for the second quarter increased 6.9% year-over-year. The positive billings result was achieved primarily with deals that closed across our portfolio of solutions, various industries, and geographies. However, the year-over-year decrease in quarterly revenue, annual recurring revenue, and revenue retention rate are primarily due to flow-through from the non-renewal of certain large client contracts that were previously noted in a prior quarterly report and related to specific client services delivered and projects completed specifically. In order to drive increased profitability, streamline operations, and assure we have the right skill sets required to sell and service our larger product portfolio globally, we began a reorganization and cost reduction program in the second quarter targeting $35 million in aggregate savings. We continue to aggressively hire for needed skill sets and capabilities that enable our business and growth plan. Additionally, after careful consideration, we've decided to wind down our offering of services for Oracle PeopleSoft products. This includes our Rimini Support, Rimini Manage, and Rimini Consult services. As we provide services for Oracle PeopleSoft products to clients globally, the wind-down process is expected to take place over several phases and will likely take a year or longer before we're able to cease providing all PeopleSoft services. Oracle litigation update. Rimini Street and Oracle have been in litigation for more than 14 years, including cases known Rimini I and Rimini II. With respect Rimini I, which was filed by Oracle against Rimini Street in 2010, the litigation has run its course, and there are no current litigation activities related Rimini I. however, there is Rimini I permanent injunction that remains in effect. With respect to Rimini II, which was filed by Rimini Street against Oracle in 2014, there are currently three post-trial litigation matters still before a court: one, appeal of the Rimini II findings, otherwise known as the merits appeal, and the Rimini II injunction before the Court of Appeals; two, a motion to further stay the Rimini II injunction pending a decision on Rimini's appeal of the injunction, which is also before the Court of Appeals; and three, litigation before the district court over Oracle's request to recovery of certain of their attorney's fees and costs related to the Rimini II case that is on appeal. With respect to the Rimini II merits appeal and appeal of the Rimini II injunction, briefings were submitted prior to oral arguments, and oral arguments were made before the Court of Appeals on June 5th, 2024. The court's decision is pending. For additional information and disclosures regarding the company's litigation with Oracle, please see our disclosures in the company's quarterly report on Form 10-Q filed today, July 31st, 2024, with the U.S. Securities and Exchange Commission. Please also note that at this time, we are still unable to provide material additional information beyond the disclosures and statements in our press releases, filings with the SEC, and court filings, nor provide guidance with respect to future financial results, nor are we able to provide additional commentary related to the pending Oracle litigation and potential impacts of the Rimini II injunction because the matters are still before various courts and the outcomes cannot be predicted. Summary. While the quarter delivered mixed results, we remain confident that we are continuing to take the right actions and making the right investments to accelerate a return to growth and profitability, enhance shareholder value, and bring our litigation with Oracle to a successful conclusion. However, if Rimini Street does not adequately reorganize its operations to reduce costs or does not ultimately prevail in the post-trial litigation matters summarized above and detailed in our SEC filings, it could have a material adverse impact on our business and financial results. Now, over to you, Michael. Thank you, Seth, and thank you for joining us, everyone. Q2 2024 results. Revenue for the second quarter 2024 was $103.1 million, a year-over-year decrease of 3.1%. Clients within the United States represented 50%, while international clients represented 50% of total revenue for the second quarter of 2024. We note that for the second quarter of 2024, our total revenue measures on a constant currency basis was negatively impacted by 1.3% due to FX movements. Annualized recurring revenue was $399.4 million for the second quarter, a year-over-year decrease of 2.6%. Revenue retention rate for service subscriptions, which makes up 96.8% of our revenue, was 88%, with approximately 74% of subscription revenue non-cancelable for at least 12 months. Billings for the second quarter were $111.6 million compared to $104.4 million for the prior year's second quarter, an increase of 6.9%. Unfavorable FX movements reduced second quarter 2024 calculated billings by $2.9 million. Gross margin was 59.1% of revenue for the second quarter compared to 63.0% of revenue for the prior year's second quarter. On a Non-GAAP basis, which excludes stock-based compensation expense, gross margin was 59.5% of revenue for the second quarter compared to 63.5% of revenue for the prior year's second quarter. Gross margin declined during the second half of 2023 and the first half of 2024 in part as a result of continued investments in and expansion of our global engineering team needed to serve new client engagements in advance of related ratable contract revenue recognition. As noted in previous earnings calls, we are expecting continued gross margin pressure as we scale to meet new client engagements. Simultaneously, we are working to improve gross margin by driving efficiencies and leveraging the benefits of growing global scale. Operating expenses. As Seth noted, we implemented a reorganization plan to reduce the net operating costs by $35 million on an annualized basis, of which approximately $15 million occurred during the second quarter, with another $20 million targeted for the third quarter. For the second quarter, we incurred a reorganization charge of $3.2 million. While inflationary pressures and high costs are still persistent for skilled labor across all theaters, we continue to attract and retain key talent. Moreover, our margin performance, in light of the pressures highlighted previously, underscores the advantage of our global footprint with centers of excellence in geographies where both the talent and value remain attractive compared to higher-priced talent markets. Sales and marketing expenses, as a percentage of revenue, was 36.2% of revenue for the second quarter compared to 35% of revenue for the prior year's second quarter. On a Non-GAAP basis, which excludes stock-based compensation expense, sales and marketing expenses, as a percentage of revenue, was 35.7% for the second quarter compared to 34.3% of revenue for the prior year's second quarter. General administrative expenses, as a percentage of revenue, excluding outside litigation costs, was 18.9% of revenue for the second quarter compared to 17.7% of revenue for the prior year's second quarter. On a Non-GAAP basis, which excludes stock-based compensation expense and litigation costs, G&A was 17.6% of revenue for the second quarter compared to 15.2% of revenue for the prior year's second quarter. We are addressing the year-over-year increase as part of the restructuring program mentioned earlier. However, G&A expenses, as a percentage of revenue, are expected to remain elevated compared to our peers due in large part to the ongoing costs for in-house legal and compliance teams and other costs made necessary by our ongoing Oracle litigation and compliance activities. Net outside litigation expense was $1.6 million for the second quarter compared to $0.6 million for the prior year's second quarter. Our non-GAAP operating margin, which excludes outside litigation spend and stock-based compensation expense, was 6.2% of revenue for the second quarter compared to 14.0% for the prior year's second quarter. The net loss attributable to shareholders for the second quarter was $1.1 million, or negative $0.01 per diluted share, compared to the prior year's second quarter net income of $0.05 per diluted share. On a Non-GAAP basis, net income for the second quarter was $6.1 million, or $0.07 per diluted share, compared to the prior year's second quarter of $0.10 per diluted share. Adjusted EBITDA, defined in our press release, was $8.8 million for the second quarter, or 8.5% of revenue, compared to the prior year's second quarter of 14.8% of revenue. Balance sheet. We ended the second quarter June 30th, 2024, with a cash balance and short-term investments of $134.2 million compared to $140.7 million of cash and short-term investments for the prior year's second quarter. On a cash flow basis, for the second quarter, operating cash flow increased $6.3 million compared to the prior year's second quarter increase of $13.1 million. FX headwinds reduced operating cash flow by $3.1 million. Deferred revenue, as of June 30th, 2024, was $262.8 million compared to deferred revenue of $285.3 million from the prior year's second quarter. Backlog, which includes the sum of billed deferred revenue and non-cancelable future revenue, was $556.7 million as of June 30th, 2024, compared to $565.1 million for the prior year's second quarter. As Seth noted, we have decided to wind down our offering of services for Oracle PeopleSoft products. Revenue related to providing services for PeopleSoft products accounted for approximately $36.1 million, or 8% of fiscal year 2023 revenue, and $16.6 million, or 8% of first half 2024 revenue, respectively. Business outlook. The company is continuing to suspend guidance as to future financial results until there is more clarity around impacts from current litigation activity before the U.S. federal courts and the company's ongoing litigation with Oracle. For additional information and disclosures regarding the company's litigation with Oracle, please see our disclosures in the company's quarterly report on Form 10-Q filed on July 31st, 2024, with the U.S. Securities and Exchange Commission. This concludes our prepared remarks. Operator will now take questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Brian Kinstlinger with Alliance Global Partners. Please go ahead. Great. Thanks so much for taking my questions. My first question is if you could talk about what was behind the decision to exit the PeopleSoft support business? Sure, Brian. As we noted in the statement, we did look at several factors. We looked at financial factors. We looked at legal factors. And as you know, this product line over time has reduced in size dramatically for us. It used to be the majority of our business, and today it's 8%. And when you look at the 8% and you look at the revenue and you look at the margins associated with it, you look at legal costs associated and around the product line, at the end of the day, we took a look at those factors and decided that we would be better winding down the business and focusing our efforts elsewhere and our capital elsewhere. So while I know you can't comment on legal, you did mention the legal related to it. I think it's clear the PeopleSoft piece is the one place Oracle has been successful. So are there any thoughts to changes in legal expense going forward related to this? Well, I think you could probably take a look and say that if you look over the last Rimini II case, look Rimini I, you look over the last 14 years of litigation, the majority focus, including injunctions and compliance challenges, have been related to PeopleSoft. And just for clarity, the battle over PeopleSoft has primarily been related to the original PeopleSoft license agreements that were written before Oracle acquired PeopleSoft back in 2005. And we had been challenging back and forth with Oracle and the courts over language in those agreements, which specifically stated, according to Oracle and the courts, that the product had to be run and used on Oracle - I'm sorry, on the client's own computer systems. And so that was a difference between that and all the other license agreements that you've seen in the Oracle world, especially their native products. And so that has been a continuing battle for 14 years. And again, you get down to 8% of revenue. Those equations start to change about what's it mean and what's the value of continuing the product line versus, again, focusing our efforts elsewhere. In terms of expectations of reduced legal and compliance costs, I think those are potentially fair assumptions that could come with that. Great. The retention rate has dropped in each of the last few quarters. We hit, I think, a low since I've looked back many years of 88%. What are the factors that you attribute this to? Well, I think you had a couple of things. One, we talked in previous conference calls about some reduction and rotation of some of the product lines that we are supporting today. You're starting to see more revenue that is outside of subscription in our consulting business as that continues to grow. And I also think, again, we have this flow-through from Q4 and Q1 where we had some large contracts come to an end. And some of those coming to an end was not just because a customer rolled off a product that was unexpected. Some of it was that they were short-term contracts that were very large, and we completed them successfully. But the net result was still that they rolled off of what you saw, the recurring revenue streams. And we're watching that flow through from Q4, Q1, and naturally into Q2. Those take several quarters to flow through. I believe that's a primary component you're seeing there. Great. Last question I have is you began your script set with you continue to see strong demand for proven and trusted partners, and I assume you're talking about third-party support services. Can you reconcile that with the bookings over the last few years that have led to decelerated growth, and the first quarter we've seen year-over-year declines for Rimini? Sure. Well, as I noted, the billings number had increased for Q2 year-over-year. The numbers that you saw flowing through on the revenue, the quarterly revenue, again, related to those larger contracts that we saw, which shouldn't be confused with the overall health of the business. We have had, as you well know, several years of transformation from being a third-party support provider of replacement services just for Oracle and SAP to expanding that service dramatically in terms of the products covered, even VMware in the last quarter. On top of that, we added in our AMS service, an entirely large new business line. We added in expansions to the security product line, to our Connect product line of interoperability tools. We added new observability capabilities, and we've built out an entire consulting business over the last few years. And we're talking on a global basis serving customers in over 150 countries. So I would tell you that we probably underestimated the amount of time and efforts it would take to bring all of that to market, bring that all to market across the world in all these different countries, the personnel and the time it takes to get them trained up, to change the way we sell from just selling a replacement of maintenance at 50% off to being out there selling large projects that go beyond just that maintenance. And that required a different skill set, even amongst the sellers. So it has been a transformational project over the last few years. And of course, the numbers still aren't bearing out yet all the green shoots that we see from this business. But we are closing excellent contracts from a qualitative standpoint around the world. Again, we have too many small deals, as I mentioned in the prepared remarks. We need to see those ASPs crawl back up again. We also need to see that customers are buying in larger and larger contract volumes where we're seeing more products in those mixes. And we're already starting to see that more and more around the world. And we would expect that that will show up in future financials. Okay. Thank you. Sure. Thank you. Your next question comes from Derrick Wood with TD Cowen. Please go ahead. Great. Thanks, guys. This is Cole on for Derrick. I'll just start with on PeopleSoft again. So if 8% of revenue is going to kind of bleed out of the model, is part of this headcount restructuring that you're doing, is this due to kind of cutting costs along the PeopleSoft business, either in support or sales teams and G&A? I mean, just some more info there would be helpful. Sure. We would expect that this 8% would transition over time. As we mentioned, we do have quite a few clients all around the world that are under contract. And so it's going to take a while to work through all of that just from an organizational perspective. But the cost reductions that we're trying to do, very much in line with what you're seeing around the world, I think you're watching another wave of 10% cuts. We're looking at similar types of numbers. Most of it is to streamline operations and take cost out of the equation, which makes sense when you're focused on profit. And I think we've been very clear that while we're waiting for the top line to turn and to begin the growth cycle back up, we are very focused on delivering bottom-line results for shareholders. We believe in the Rule of 40, as you well know. We do have a ways to go to get there, but we do see that as a guiding light for us. And if we're going to be light on top-line growth, then we expect that we should be pushing that to the bottom line. And cost reductions are a clear way to get there. Got it. And then you kind of mentioned that you're going to focus capital elsewhere. What other areas of the business do you think can kind of show dividends if you shift resources from PeopleSoft into other spots in Rimini? Well, we have other product lines which are generating, even on the support side of the house. We have other product lines, whether they're Oracle product lines, SAP product lines, VMware, others that are showing higher gross margins return than we're seeing on the PeopleSoft side, which has a very heavy fixed cost component to it due to the tax, legal, and regulatory costs and the way that those have to be developed. And so when you look at those numbers, it tells you that if we were spending that money instead of marketing and selling PeopleSoft, we were selling other products with higher gross margins. Obviously, we would lift the overall blended gross margin rate as well as drive additional profits to the bottom line. Yeah, sure. And then just one more here. Some of the flow-through on larger contracts that came to an end that are weighing down on revenue growth and then retention as well. So this is the third quarter in a row that you've called it out. I mean, do you have any visibility into when these are going to kind of dry up, or is this something that can kind of go on for a while? Just a little more clarity on what we can expect going forward through the rest of the year would be helpful. Sure, Cole. So the deals that we keep pointing out from Q4 and Q1, because they are flow-through, we're not seeing, and you noticed we didn't say that there were big deals that were lost in renewals in the second quarter. That is because those were Q4, Q1 deals that we're noting causing the biggest impact there. So we're not seeing this as a systemic issue. These were specific contracts that had specific end dates or were specific projects that were completed. And I would say of those deals, I think very little of them were really surprises. They were really understood to be rolling-off contracts that we had visibility to. So again, from that point of view, we were a little bit hampered over the last few quarters. As you know, we haven't provided guidance since the court ruling in Rimini II last July. That had left us in a position where we weren't going to provide guidance on some of the things that we may have seen for that very reason. So that's why they seemed to be surprises, but they weren't necessarily surprises to us. Great. I'll see the floor. Thanks. Thank you. Your next question comes from Brian Kinstlinger with Alliance Global Partners. Please go ahead. Great. Thanks. A follow-up. In the December quarter, you peaked at $112 million of quarterly revenue. We're down about $9 million on a quarterly basis from that peak. So that implies about $36 million of annual revenue. So maybe you could quantify how much the contracts that ended represented on an annual run rate. I think that will help us understand the health of the underlying business if we excluded that. Yeah. Brian, I think that you're talking about the number you're speaking to, if you look at it, my guess is somewhere in the $20 million-$25 million of those big contracts combined in Q4 and Q1. So a good substantial amount of that number on an annualized basis would have been related to those larger contracts that had rolled off. Got it. Was it, not to beat a dead horse here, but is it a couple of contracts, like two or three, or are we talking like 10 or 11? I'm just trying to understand. Oh, no. No, we're talking a handful at most. Yeah. We're talking 4 or 5. Okay. Then you highlighted a $35 million number you're targeting, I think, in cost cuts. First, is that right? Second, will that be offset? Whatever you are able to achieve, will that be offset by hiring? As you said, you have some key positions you're looking to hire still. Well, I think like most people in their 10% cuts, I think you're watching on an industry-wide basis. My guess is 7%-8% is going to be direct to the bottom line, cost cutting and streamlining. But everybody's overcutting 2% or 3% because they're doing skills rotation. As you know, there's a massive amount of AI hiring, for example, in skill sets where people are rotating out older skill sets that are more in the rearview mirror, replacing them and reskilling. We saw this with cloud. We've seen this with other technologies when they come real hot into the market. And we're seeing the same on AI. Rimini Street's no different. We are overshooting what we'd like to do in terms of cost cutting for streamlining to make room for some new skill sets that we need in order to grow the business. For example, we found that the level of requirement for enterprise architects in our business is extremely high. We do very well when we bring enterprise architects in with customers to help them not only solve the immediate issues of maintenance cost or overall cost within their IT organization, but helping them figure out the roadmap going forward, part of a "we'll get you there" program. And so we're deploying regional CTOs around the world. Those are expensive heads, so you have to pay for them somehow. So you're watching us reduce sales and marketing costs, reducing number of sellers, replacing them with CTOs, changing the mix of people on the field in order to give us a better sales capability for larger, more complex contracts. That's the kind of work we're doing. Okay. The last question I have is the $3.2 million in restructuring charges. How much does that represent in cuts that you've already made on an annualized expense basis? Michael, you want to take that one? Sure can. Brian, how are you this afternoon? Hey, Michael. The answer is you have not experienced those in Q2 on the P&L. More of the effect will be felt starting in Q3. As we noted, the remaining components will occur enlarged in Q3, with the greater effect overall to the P&L starting in Q4 this year, just as a matter of timing. No, right. Sorry. I'm not asking on timing. You already did some restructuring for the $3.2 million. I assume that's severance or some other charges. Those actions, how much did those, before we go forward looking, I mean, you'll announce it next quarter too, but those $3.2 million in restructuring charges, how much does that already take out of the business on an annualized basis whenever it starts? Well, I understand. Apologies, Brian. That is on a $15 million annualized run rate of cost reductions, such that our target is remaining $20 million in the current quarter. Got it. Okay. Thank you so much. Thank you. Thank you. There are no further questions at this time. I would like to turn the call back over to Seth Ravin for closing remarks. Great. Thank you very much. Again, I want to thank everyone for joining us on the quarterly call. We, of course, will look forward to seeing you again as we move to the third quarter call coming in the next few months. And until then, again, please be safe about those in harm's way. We live in a complex world. Rimini is a global company doing business in every continent and very aware of the challenges that even some of our own people face today. Our thoughts are with them, of course, and wishing everybody well. Thank you very much and be healthy. Thanks all. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.