Executive Summary / Key Takeaways

• Fifteen-Year Litigation Overhang Removed: Rimini Street's confidential settlement with Oracle (ORCL) in July 2025 eliminates a primary blocker that management estimates kept numerous prospective clients and partners on the sidelines, potentially unlocking a materially expanded addressable market for its third-party support services.

• Strategic Pivot to Agentic AI ERP: The company is reinventing itself from a pure-play support provider to an "agentic AI ERP company" through its ServiceNow (NOW) partnership, with over two dozen client engagements in Q3 2025 and meaningful revenue expected in 2026, offering a path to self-funded innovation for cost-constrained enterprises.

• PeopleSoft Wind-Down Creates Near-Term Headwinds: The mandatory wind-down of Oracle PeopleSoft support by July 2028 eliminates approximately 5-6% of current revenue, with calculated billings dropping 53% year-over-year in Q3 2025, requiring the company to outgrow this drag through new logo acquisition and cross-sales.

• Cost Structure Transformation Underway: Litigation costs that historically reached $10 million annually are expected to decline substantially, while a cost optimization plan initiated in 2024 and headcount reductions are streamlining operations, contributing to a return to profitability with $2.8 million net income in Q3 2025 versus a $43.1 million loss in the prior year.

• Valuation Reflects Turnaround Opportunity: Trading at 0.87x enterprise value to revenue with $109.9 million in cash and no meaningful debt, Rimini Street's market capitalization of $385.8 million appears to discount both the litigation resolution and the potential for its AI-driven innovation pillar to reaccelerate growth, though execution risk remains elevated.

Setting the Scene: The Third-Party Support Specialist Emerges from Legal Limbo

Rimini Street, founded in Nevada in 2005 and publicly listed since 2017, occupies a specialized niche in the enterprise software ecosystem as a leading global provider of third-party support for Oracle, SAP (SAP), and VMware (VMW) platforms. The company's core value proposition has always been straightforward: deliver equivalent or superior support services at a fraction of vendor pricing while eliminating forced upgrades and extending the useful life of clients' existing ERP investments. This positioning resonates particularly strongly in an environment where enterprise software support represents one of the largest categories of IT spending, and where organizations increasingly seek to maximize ROI from legacy systems rather than undertake costly migrations.

For over fifteen years, however, Rimini Street's business development efforts operated under the shadow of protracted litigation with Oracle. The "Rimini I" case, initiated in 2010, concluded with a permanent injunction in 2018 that defined support parameters for certain Oracle products. The "Rimini II" litigation, launched by Rimini Street in 2014, saw a district court ruling in 2023 that management acknowledges created pipeline friction, with legal departments at prospective clients explicitly deferring engagement until resolution. As CEO Seth Ravin noted, the 2023 district court findings of infringement—spanning several hundred pages—undoubtedly impacted the business, making it difficult to quantify specific deal losses but clear that the litigation presented a structural headwind to new client acquisition and retention.

The July 2025 confidential settlement, which included a $37.9 million payment to Rimini Street for previously paid attorneys' fees and formalized the PeopleSoft wind-down timeline, fundamentally alters this competitive dynamic. For the first time in the company's public history, sales teams can engage prospects without the litigation overhang, while the formalized requirement to exit PeopleSoft by July 2028 provides clarity on a key revenue stream's sunset. This resolution transforms Rimini Street's strategic options, enabling it to pursue partnerships and client conversations that were previously off-limits.

The company's three-pillar strategy—Support, Optimize, and Innovate—provides the framework for this next chapter. The Support pillar, representing 94.5% of Q3 2025 revenue, delivers ultra-responsive third-party maintenance that reduces client costs by up to 90% while extending ERP lifespan. The Optimize pillar leverages these savings to fund system improvements, security enhancements, and interoperability solutions. The Innovate pillar, launched in partnership with ServiceNow, layers agentic AI capabilities over existing ERP infrastructure, enabling workflow automation and user experience enhancements without costly upgrades. This Smart Path methodology creates a self-funding cycle where cost savings from support directly finance innovation initiatives, keeping total IT spend within existing budgets.

Industry dynamics favor this approach. Survey data indicates 79% of VMware users find their perpetually licensed software meets current needs, while analyst reports show increasing enterprise interest in extending ERP lifespans to improve ROI. Macroeconomic uncertainty, deglobalization trends, and tariff pressures are causing organizations to "hunker down" on existing investments, avoiding costly or controversial new initiatives. Rimini Street positions itself as the advisor that helps companies lower operating spend while simultaneously investing in AI-driven innovation—a compelling value proposition in a constrained budget environment.

Technology, Products, and Strategic Differentiation: Building the Agentic AI ERP Layer

Rimini Street's competitive moat extends beyond cost savings into proprietary delivery methodologies and deepening technology partnerships. The Support pillar's strength lies in its engineer-led model, offering guaranteed response times and tax and regulatory updates without vendor-mandated upgrades. This approach yields an 89% revenue retention rate, with 85% of subscription revenue non-cancelable for at least 12 months, providing predictable cash flows that fund growth initiatives.

The Optimize pillar addresses operational complexity through packaged service offerings designed for repeatable delivery and higher gross margins. Partnerships with American Digital and T-Systems North America create full-stack solutions combining Rimini Street's support expertise with infrastructure managed services, helping clients fund modernization without increasing total spend. The company's appointment as a Workday (WDAY) application management services provider and its Dayforce (CDAY) community partnership expand its addressable market beyond traditional Oracle and SAP ecosystems.

The Innovate pillar represents the most significant strategic evolution. Powered by ServiceNow's AI platform, Rimini Street's agentic AI ERP solution delivers workflow automation, user interface enhancements, and single-pane-of-glass data views without requiring ERP upgrades or migrations. Over two dozen client engagements in Q3 2025 demonstrate early market traction, though management candidly acknowledges the P&L impact remains negligible until monetization begins in 2026. The December 2025 launch of Rimini Agentic UX™, an AI-driven user engagement layer, extends this capability further, with implementation across dozens of client projects.

This technology strategy directly counters competitive threats from Oracle and SAP, who use high support fees and upgrade pressure to drive cloud migration. Rimini Street's model preserves client choice, allowing enterprises to maintain stable core transaction systems while layering innovation externally. The company's declaration that "ERP software is officially dead" as a platform for future changes reflects this belief that all meaningful innovation will occur via AI layers rather than within monolithic ERP systems.

Partnerships amplify this differentiation. The ServiceNow collaboration involves training approximately 6,000 global sellers on the joint solution, with a successful first project for a Brazilian pharmaceutical company demonstrating combined capabilities. The Vali Cyber partnership integrates hypervisor security into VMware support, creating a bundled offering the company claims provides "tremendous competitive advantage" and is already deployed by the U.S. military. The August 2025 GSA Multiple Award Schedule approval positions Rimini Street as an approved supplier for federal, state, and tribal agencies, opening a procurement channel that was previously difficult to access due to litigation concerns.

Financial Performance & Segment Dynamics: Profitable Despite Headwinds

Rimini Street's Q3 2025 results illustrate a company navigating a complex transition. Revenue of $103.4 million declined 1.2% year-over-year, but this top-line figure masks important underlying dynamics. Excluding the PeopleSoft wind-down, revenue actually grew 2.5%, suggesting the core business remains resilient. The PeopleSoft revenue stream, which represented approximately 5% of total revenue in Q3 2025 versus 8% in the prior year, saw calculated billings plummet 53% to $2.5 million, demonstrating the rapid pace of the mandated exit.

Subscription revenue of $97.8 million, while down from $100.4 million in the prior year, continues to provide the foundation of the business model at 94.5% of total revenue. This decline in subscription revenue occurred even as professional services revenue increased by $1.4 million, reflecting success in the Optimize pillar's project-based engagements. For the nine-month period, professional services revenue increased $6.1 million, indicating growing client demand for implementation and consulting services.

Geographic performance reveals a tale of two markets. United States revenue declined $5.3 million (10%) to $46.3 million, while international revenue grew $4.1 million (8%) to $57.2 million. This divergence reflects both the maturity of the U.S. market and the company's expanding sales capabilities in EMEA, Southeast Asia, and Greater China, where upgraded sales leadership has materially expanded opportunity pipelines.

Profitability metrics show meaningful improvement despite revenue pressure. Gross profit margin compressed 80 basis points to 59.9% due to the revenue mix shift away from higher-margin subscription revenue toward professional services, but net income swung to $2.8 million from a $43.1 million loss in the prior year. The prior year loss included a $58.5 million litigation settlement expense; excluding this one-time item, the prior year's net income would have been $15.4 million. The current quarter's $2.8 million net income still represents a significant improvement from the reported $43.1 million loss in the prior year. For the nine-month period, litigation settlement proceeds of $36.2 million contributed to net income of $36.4 million, though this compares to $42.9 million in the prior year that also included settlement impacts.

Annualized recurring revenue of $391 million declined 2.6% year-over-year, but increased 1.0% excluding PeopleSoft, demonstrating the core business's ability to generate modest growth despite headwinds. The record remaining performance obligation backlog of $611.2 million, up 6.4% year-over-year (9.3% excluding PeopleSoft), provides visibility into future revenue recognition and suggests building sales momentum.

Cost management initiatives are delivering results. The cost optimization plan launched in Q2 2024 included headcount reductions that contributed to a $1.1 million decline in employee compensation and benefits within cost of revenue. Sales and marketing expenses increased $2.2 million in Q3 2025 as the company invested in growth, but decreased $2.1 million for the nine-month period due to reduced travel and marketing costs. General and administrative expenses rose $1.7 million in Q3, driven by a $0.8 million foreign tax audit settlement, but management expects litigation costs to decline substantially from historical $10 million annual levels.

The balance sheet provides adequate liquidity for the transition. Cash, cash equivalents, and restricted cash totaled $109.9 million as of September 30, 2025, against $70.3 million outstanding on the term loan and $35 million available on the revolving credit facility. Current liabilities exceeded current assets by $41.4 million, primarily due to $206.9 million in deferred revenue, but the company estimates fulfillment costs at approximately 40% of this liability. The company repurchased 0.9 million shares for $3.8 million during the nine-month period, with $40.5 million remaining under an extended authorization through June 2029.

Outlook, Management Guidance, and Execution Risk

Management plans to reinitiate forward guidance at its Analyst and Investor Day on December 3, 2025, marking the first formal guidance since suspending it due to litigation uncertainty. This milestone reflects confidence that the settlement provides sufficient clarity on product lines and business operations to forecast with reasonable accuracy. The guidance will likely incorporate several key assumptions that investors should scrutinize carefully.

First, the PeopleSoft wind-down timeline assumes revenue from this segment will decline significantly through July 2028, with the pace of reduction dependent on client transition speeds and potential contract termination negotiations. While this creates a known headwind, management believes growth in other areas will eventually enable overall positive revenue growth, having previously stated confidence in "crossing over" to positive growth despite PeopleSoft headwinds.

Second, the ServiceNow partnership's revenue contribution is expected to become "meaningful" in 2026, with 2025 focused on building use cases and training joint sales teams. The success of this assumption depends on converting the current two dozen engagements into scalable, repeatable offerings that can be sold through ServiceNow's 6,000 global sellers. The negligible current P&L impact means any revenue acceleration in 2026 would represent pure upside, but also creates execution risk if monetization proves slower than anticipated.

Third, VMware support is positioned as a substantive growth driver, with over 100 contracts signed and a market survey indicating 99% of respondents would consider continuing their perpetually licensed software if support remains available. This suggests a durable revenue stream as clients resist VMware's acquisition-driven changes and seek stable third-party alternatives.

Fourth, the GSA schedule approval opens federal procurement channels that were previously blocked. Management has launched a dedicated U.S. federal and state sales team to capitalize on this opportunity, which could drive new logo acquisition in a market segment with typically higher contract values and longer durations.

Execution risks center on scaling the new AI solution while managing the PeopleSoft decline. The company is expanding its sales force from 73 to 82 quota-carrying sellers and upgrading leadership in key regions, but the 6-12 month sales cycle typical for enterprise software means increased operating expenses may precede revenue generation. The shift to a hunter-farmer model in the Americas, reorganizing the client base by industry, requires sales teams to develop deeper domain expertise while maintaining high retention rates.

Macroeconomic uncertainty presents an additional variable. Management acknowledges that deglobalization trends, tariffs, and geopolitical instability cause organizations to reassess IT spending, which could either accelerate demand for Rimini Street's cost-saving support model or delay new innovation investments. The company's positioning as a "safe advisor" during uncertain times may prove advantageous, but budget freezes could still lengthen sales cycles.

Risks and Asymmetries: What Could Break the Thesis

Several material risks could derail Rimini Street's turnaround narrative. The PeopleSoft wind-down represents the most immediate challenge. The settlement requires completion by July 31, 2028, but the pace of revenue decline remains uncertain. If clients transition faster than expected or demand refunds for early termination, the revenue impact could exceed the current 5-6% of total revenue. More concerning, existing clients receiving other Rimini Street services may choose not to renew due to the PeopleSoft exit, creating contagion risk beyond the direct revenue loss. Breach of contract claims from PeopleSoft clients could result in substantial damages and legal costs, though management has not indicated this is likely.

The Oracle settlement, while favorable, contains risks. An uncured material breach of the confidential agreement could lead to adverse litigation outcomes, including lifting the judicial stay and reopening legal hostilities. Given the decade-plus history of conflict, investors must monitor compliance closely, though the structured wind-down suggests both parties seek final resolution.

Competitive pressure from Oracle and SAP remains intense. Both vendors have offered discounts to Rimini Street prospects and maintain policies that penalize customers choosing independent support. Oracle's prohibition on Rimini Street accessing support websites since 2017 creates operational friction, while SAP's RISE program bundles support with cloud migration incentives. If either vendor accelerates aggressive retention tactics, Rimini Street's new client acquisition could suffer, particularly in the U.S. market where revenue declined 10% in Q3 2025.

The AI innovation pillar, while promising, carries execution risk. Current P&L impact is negligible, and monetization depends on successfully scaling the ServiceNow partnership and delivering measurable client ROI. If the agentic AI solution fails to generate meaningful revenue in 2026, the company's growth narrative weakens considerably. Additionally, reliance on third-party SaaS technologies like ServiceNow creates dependency risk—interruptions or performance issues could affect Rimini Street's service delivery and reputation.

Customer retention rates, currently at 89%, could deteriorate if clients license new software versions, shift to unsupported vendors, or face financial distress. The subscription-based revenue model means downturns in new sales are not immediately visible, creating a lagging indicator risk. Sales cycle variability between 6-12 months also makes financial forecasting inherently uncertain, potentially leading to missed expectations.

Macroeconomic factors compound these risks. Rising interest rates, geopolitical conflicts, and supply chain disruptions could increase operational costs while reducing client IT budgets. The company's global expansion into Brazil, India, and Kuala Lumpur exposes it to currency fluctuations, regulatory changes, and data sovereignty requirements that could increase compliance costs.

On the positive side, meaningful asymmetries exist. If the ServiceNow partnership accelerates faster than expected, Rimini Street could capture a first-mover advantage in the agentic AI ERP space. The GSA schedule could unlock substantial government contracts with higher margins and longer terms. Litigation cost savings of potentially $5-8 million annually would flow directly to operating income, providing a margin tailwind even without revenue growth.

Valuation Context: Pricing a Turnaround in Progress

At $4.18 per share, Rimini Street trades at a market capitalization of $385.8 million and an enterprise value of $369.57 million, representing 0.87 times trailing twelve-month revenue of $428.75 million. This multiple stands at a substantial discount to enterprise software peers: Oracle trades at 6.72x revenue, SAP at 6.74x, IBM (IBM) at 5.23x, and Accenture (ACN) at 2.37x. Even within the narrower third-party support niche, the valuation implies minimal growth expectations.

The company's gross margin of 61.28% is competitive with Oracle's 68.54% and SAP's 73.83%, demonstrating that the support business model can sustain healthy unit economics. However, the operating margin of 5.57% significantly trails Oracle's 32.12% and SAP's 28.27%, reflecting Rimini Street's smaller scale, ongoing litigation costs, and investments in growth initiatives. The path to margin expansion depends on realizing litigation cost savings and scaling the higher-margin AI innovation revenue stream.

Balance sheet strength provides a valuation floor. With $109.9 million in cash and $70.3 million in term debt, net cash of approximately $40 million represents more than 10% of market capitalization. The company generated $24.7 million in operating cash flow in Q3 2025, though this included $37.9 million in litigation settlement proceeds. Excluding this one-time benefit, underlying cash generation remains positive but modest. The $40.5 million remaining on the share repurchase authorization, extended through 2029, suggests management believes the stock is undervalued at current levels.

Key valuation metrics require context. The price-to-earnings ratio of 8.87 reflects the recent quarterly profit but is not meaningful for a business with historically volatile earnings. The price-to-operating cash flow ratio of 129.51 appears elevated due to the settlement-inflated Q3 cash flow. More relevant is the enterprise value to revenue multiple of 0.87x, which prices the company as a no-growth asset despite the potential for litigation removal and AI innovation to reaccelerate growth.

Comparing Rimini Street to peers requires acknowledging scale differences. Oracle's $16.1 billion quarterly revenue and SAP's €9.08 billion dwarf Rimini Street's $103 million, giving the larger vendors massive R&D and sales resources. However, Rimini Street's niche focus and third-party independence create a differentiated value proposition that commands premium pricing within its target segment. The company's claim of over 86% market share in third-party support for Oracle and SAP suggests dominant positioning in its addressable market.

The valuation implies a binary outcome: either the company successfully executes its AI pivot and returns to sustainable growth, justifying a higher multiple, or it remains a declining legacy support business worth little more than its current revenue multiple. With the PeopleSoft headwind representing a known 5-6% revenue decline and the core business growing low-single-digits ex-PeopleSoft, the ServiceNow partnership and VMware expansion must generate incremental growth to drive overall revenue acceleration.

Conclusion: A Transitional Inflection Point with Asymmetric Risk-Reward

Rimini Street stands at a critical juncture where a decade-plus litigation anchor has been lifted, clearing the way for strategic initiatives that could redefine its growth trajectory. The confidential Oracle settlement removes the primary objection that legal departments raised, potentially unlocking a pipeline of prospects who previously refused to engage. Simultaneously, the company's pivot toward agentic AI ERP solutions through ServiceNow creates a new revenue pillar that leverages existing client relationships while addressing enterprises' urgent need for innovation within budget constraints.

The investment thesis hinges on execution velocity. The PeopleSoft wind-down creates a known three-year revenue headwind that the company must outgrow through VMware support expansion, GSA schedule penetration, and AI solution monetization. Early indicators are mixed: core subscription revenue remains under pressure, but RPO backlog growth of 6.4% suggests building sales momentum. The sales force expansion and leadership upgrades in high-growth regions provide the capacity to capture this pipeline, but the 6-12 month enterprise sales cycle means results will lag investment.

Valuation at 0.87x revenue appears to discount minimal growth prospects, creating asymmetric upside if any of the strategic initiatives gain traction. The company's strong cash position, improving margins, and elimination of litigation costs provide downside protection, while the ServiceNow partnership and GSA approval offer multiple shots at revenue reacceleration. For investors, the critical variables to monitor are the pace of ServiceNow revenue ramp in 2026, the trajectory of PeopleSoft revenue decline, and the company's ability to maintain high retention rates while scaling new offerings. If Rimini Street can demonstrate even modest growth reacceleration, the current valuation multiple should expand meaningfully, rewarding patient investors who recognize that removing a fifteen-year litigation overhang is not an overnight fix but a foundational step toward sustainable growth.