RMNI - NASDAQ

Good afternoon, ladies and gentlemen, and welcome to the Rimini Street Q4 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. This call is being recorded today, Thursday, February 27, 2025. I would now like to turn the conference over to Dean Pohl, Vice President, Treasurer and Investor Relations. Please go ahead.

Thank you, operator. I'd like to welcome everyone to Rimini Street's fourth quarter and fiscal year 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 fourth quarter and fiscal year ended December 31, 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-K filed today, for a 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. Today, more than 2,000 Rimini Street employees in 21 countries help clients support and optimize their current enterprise software portfolio and transform their business to achieve significant IT operating cost savings, improve profitability, enhance competitive advantage and accelerate growth. Our clients have already realized billions of U.S. dollars in operational savings. Clients leverage our unique proven Rimini SmartPath methodology to achieve better business outcomes such as more comprehensive hyper-responsive software support and the ability to fund flexible infrastructure, AI, workflow, automation and other innovation investments without the need for additional IT budget. We are the leading global third-party support provider for Oracle, SAP and VMware software, and we run, manage, support, customize, configure, connect, protect, monitor, optimize and transform enterprise application, database and technology software landscapes. The company has signed and successfully delivered on thousands of contracts with Fortune Global 100, Fortune 500, mid-market, public sector and government organizations who select Rimini Street as their trusted, proven and mission-critical enterprise software solutions provider. Fourth quarter results. We achieved positive momentum in billings, new clients and client renewals during the fourth quarter. Sales included a mix of our products, services and solutions, including the continued sales acceleration of our new support for VMware across a broad set of industries and geographies. We also achieved improved new logo acquisition sales, including major brands, and delivered 22 new client sales transactions in the quarter with TCV over $1 million. We believe our focus on offering the right solutions, organizing around the right go-to-market strategy and maturing global sales and marketing execution was reflected in the 7.1% year-over-year improvement in quarterly billings. The billings improvement included solid results for both ARR contract renewals and extensions and project-based professional services. The billings improvement was led by LatAm, EMEA and Asia-Pacific regions. With respect to global service delivery, we achieved a support client case satisfaction average rating over 4.9, out of 5.0, where 5.0 is excellent. We continued to see strong client satisfaction and a broad interest in purchasing additional products, services and solutions from Rimini Street beyond our core industry-leading support offering. Growth drivers. In the fourth quarter, we continued to make investments and improvements to our business that we believe will provide additional growth drivers and positively impact future financial and operating results. For example, we have implemented a new go-to-market strategy in the Americas, adopting the hunter-farmer sales model to assure growth in sales to both new logos and cross-sales to existing clients. The structural farmer change involved replacing most of the existing Americas client success team with proven sellers in a particular industry, reorganizing the Americas' existing client base by industry and assigning the industry-proven sellers to a portfolio of aligned clients. The new farmer sellers carry full sales quotas while also having client management responsibilities. We have also expanded the capabilities and streamlined our global sales support organization. We've hired regional CTOs and industry leaders across key industries and have combined these resources with our solution architects and global proposal team into a one-stop sales support organization, the global solution engineering team. These experts will help sellers better communicate Rimini Street's messages, improve C-suite engagement, drive more thought leadership, develop industry use cases, lead client road-mapping workshops and provide more comprehensive support for large complex deals. We have also expanded our services to more software products. For example, we see a strong opportunity to grow our sales of our new support for VMware. In a recent survey we published in December 2024, 79% of respondents stated that perpetually licensed VMware software meets their current business needs, and 99% say they would consider continuing to utilize their current VMware software if they could acquire support. We also recently announced our bundled advanced hypervisor security for VMware and other leading virtualization products with hypervisors, such as Nutanix, providing a unique security solution that is already in use by the U.S. military. And last, but not least, we are expanding our sales reach with strategic alliances, partnerships and channels. For example, our exciting new partnership with ServiceNow offers SAP, Oracle, Infor and Microsoft ERP licensees an exclusive enterprise application modernization, AI, workflow and automation solution that does not require any costly upgrades, migrations or re-platforming, such as SAP ECC 6 or S/4HANA cloud on-premise migration to S/4HANA RISE. We believe this will help clients achieve significant savings, derive immediate business transformation value and ROI. Oracle litigation update. Rimini Street and Oracle have been in litigation for more than 15 years, including cases known as Rimini I and Rimini II. With respect to 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 to Rimini I. However, there is a Rimini I permanent injunction that remains in effect. With respect to Rimini II, on December 16, 2024, the U.S. Ninth Circuit Court of Appeals issued a very positive decision for Rimini Street, vacating much of the U.S. District Court's trial rulings. On January 29, 2025, Oracle filed a petition for rehearing by the Appeals Court, arguing that the Appeals Court had erred in its Rimini II rulings. On February 25, 2025, the Appeals Court denied Oracle's petition. With respect to the District Court's award to Oracle of $58.5 million in attorney's fees and costs related to the Rimini II findings that we paid in the fourth quarter, the U.S. District Court issued the order prior to the Appeals Court's December 16, 2024 decision. We have filed a notice of appeal with the Appeals Court and are seeking the return of the amounts paid. As of the date of this report, the company's appeal remains pending. For additional information and disclosures regarding the company's litigation with Oracle, please see our disclosures in the company's annual report on Form 10-K filed today, February 27, 2025, 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 related to the pending Oracle litigation. Summary. We remain focused on driving more leads, building more pipeline and closing more business through detailed methodical sales discipline and execution. We remain confident that we are continuing to take the right actions and making the right investments to reaccelerate growth and improve profitability, enhance shareholder value and bring our litigation with Oracle to a successful conclusion. Further, we expect to return to providing guidance in 2025. Now over to you, Michael.

Thank you, Seth, and thank you for joining us, everyone. Q4 and Fiscal 2024 results. Revenue for the fourth quarter and the full-year 2024 was $114.2 million and $428.8 million, a year-over-year increase of 1.9% for the quarter and a decrease of 0.6% for the full-year. Client revenue for the fourth quarter and full-year 2024 within the United States represented 47% and 49%, while international clients represented 53% and 51%, respectively. Our fourth quarter revenue was positively impacted by slightly over $5 million due to a onetime client event that brought forward the remaining revenue into the quarter. Annualized recurring revenue was $414.8 million for the fourth quarter, a year-over-year decrease of 4.1%. Revenue retention rate for service subscriptions, which makes up 96% of our revenue, was 88%, with approximately 88% of subscription revenue noncancelable for at least 12 months. We note that for the full-year 2024, FX movements negatively impacted our total revenues by 1.3%, compared to a negative impact of 0.6% for 2023. Billings for the fourth quarter were $172.1 million, up 7.1% year-over-year, and full-year 2024 billings were $423 million, an increase of 1.1%. In the fourth quarter, billings, excluding PeopleSoft-associated billings, increased 12% on a year-over-year basis. Gross margin was 63.7% of revenue for the fourth quarter and 60.9% for full-year 2024, compared to 61% of revenue for the prior year fourth quarter and 62.3% for prior year 2023. On a non-GAAP basis, which excludes stock-based compensation expense, gross margin was 64% of revenue for the fourth quarter and 61.3% for full-year 2024, compared to 61.5% of revenue for the prior year fourth quarter and 62.8% for prior year 2023. We do note, however, that the aforementioned onetime revenue benefit did contribute to our strong gross margin during the quarter. Nonetheless, excluding this onetime favorable event, we are pleased with this result of our continued focus on driving operational leverage through improved systems, processes and global staffing models, while continuing to deliver best-in-class support for a wider array of support, optimization and transformational offerings. Despite our methodical focus on gross margin improvement opportunities through efficiency, we will continue to balance gross margin improvement against investment needs to take advantage of new revenue growth opportunities and initiatives such as our nascent services for VMware and ServiceNow. Operating expenses. As noted in our previous earnings calls, we initiated a cost optimization plan to reduce our net operating costs by $35 million on an annual basis, measured from Q1 quarter-end 2024 to Q1 quarter-end 2025. As of Q4, the net cost reduction on an annualized basis was $18 million. The variance to the reported trend is associated with onetime project-related spend in the second half of the year. At the midpoint of the current quarter, Q1 of 2025, our net annualized cost reductions totaled $22 million. While this plan was appropriate at the time it was initiated, we are evaluating this broader initiative in the current quarter to ensure we are properly investing in the growth opportunities as Seth outlined earlier. Reorganization charges associated with the cost optimization plan for the fourth quarter was $1.1 million and for 2024 was $5.7 million. We do expect to incur additional reorganization costs during 2025 as we continue to optimize our cost structure in areas where opportunities to streamline our operations exist. Sales and marketing expenses as a percentage of revenue was 32.8% of revenue for the fourth quarter and 34.9% for the full-year 2024, compared to 31.2% of revenue for the prior year fourth quarter and 33% for prior year 2023. On a non-GAAP basis, which excludes stock-based compensation expense, sales and marketing expenses as a percentage of revenue was 32.2% of revenue for the fourth quarter and 34.4% for the full-year 2024, compared to 30.5% of revenue for the prior year fourth quarter and 32.3% for prior year 2023. General and administrative expenses as a percentage of revenue, excluding outside litigation costs, was 16.3% of revenue for the fourth quarter and 17% for full-year 2024, compared to 15.7% of revenue for the prior year fourth quarter and 16.9% for prior year 2023. On a non-GAAP basis, which excludes stock-based compensation expense and litigation costs, G&A was 15.1% of revenue for the fourth quarter and 15.7% for full-year 2024, compared to 13.8% of revenue for the prior year fourth quarter and 15.1% for prior year 2023. Outside litigation cost was $675,000 for the fourth quarter and $6.1 million for the full-year 2024, compared to $1.6 million for the prior year fourth quarter and $7 million for prior year 2023. Litigation settlement expense was $58.5 million for full-year 2024, compared to $2.7 million for prior year 2023. As Seth addressed earlier, there was a litigation payment of $58.5 million in the fourth quarter that represented the court-ordered reimbursement to Oracle for their attorney's fees and costs related to the Rimini II case. This expense, however, was accrued during the third fiscal quarter of 2024. For full-year 2025, we expect outside litigation expense to remain consistent with non-trial periods, where full-year spend approaches $10 million. Net income attributable to shareholders for the fourth quarter was $6.7 million, or $0.07 per diluted share, compared to the prior year fourth quarter net income of $0.10 per diluted share. Full-year 2024 net loss was $0.40 per diluted share, compared to net income of $0.29 per diluted share for prior year 2023. On a non-GAAP basis, net income for the fourth quarter was $10.8 million, or $0.12 per diluted share, compared to the prior year fourth quarter of $0.19 per diluted share. Full-year 2024 non-GAAP net income was $0.48 per diluted share, compared to net income of $0.54 per diluted share for prior year 2023. Our non-GAAP operating margin, which excludes outside litigation spend and stock-based compensation expense, was 16.7% of revenue for the fourth quarter and 11.1% for full-year 2024, compared to 17.2% for the prior year fourth quarter and 15.3% for prior year 2023. Adjusted EBITDA, defined in our press release, was $20 million for the fourth quarter, or 17.5% of revenue, compared to the prior year fourth quarter of $21.3 million, or 19% of revenue. Full-year 2024 adjusted EBITDA was $53.1 million, or 12.4% of revenue, compared to adjusted EBITDA of $71.9 million, or 16.7% of revenue, for prior year 2023. Balance sheet. We ended the fourth quarter, December 31, 2024, with a cash balance and short-term investments of $88.8 million, compared to $125.3 million of cash and short-term investments for the prior year fourth quarter 2023. On a cash flow basis, for full-year 2024, operating cash flow decreased $38.8 million, compared to the prior year 2023 increase of $12.5 million. The results include litigation settlement expenses of $58.5 million and $2.7 million for full-year 2024 and 2023, respectively. Additionally, the effect of foreign currency translation was unfavorable by $8.2 million and $2.2 million for full-year 2024 and 2023, respectively. Deferred revenue as of December 31, 2024, was $281.2 million, compared to deferred revenue of $287 million for prior year 2023. Backlog, which includes the sum of billed deferred revenue and noncancelable future revenue, was $587.9 million as of December 31, 2024, compared to $606.8 million for prior year 2023. PeopleSoft update. As noted in our previous earnings call, we announced the wind-down of services for Oracle PeopleSoft products. We are now reassessing our exit from the PeopleSoft business in light of the recent litigation rulings and the continued demand in the market for our best-in-class offerings that extends beyond support. PeopleSoft revenue was $8 million and $32.9 million for the fourth quarter and full-year 2024, or 7% and 7.7% of total revenue, respectfully, while prior year revenue was $8.5 million and $36 million in the fourth quarter and full-year 2023, or 7.6% and 8.4%, 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 in 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 annual report on Form 10-K filed on February 27, 2025, with the U.S. Securities and Exchange Commission. This concludes our prepared remarks. Operator, we'll now take questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. Your first question comes from the line of Brian Kinstlinger, from AGP. Please go ahead.

Great. Thanks so much. Nice results for the fourth quarter. My question is, if I exclude the $5 million non-recurring benefit and I adjusted for currency, revenue is down a very small percent, maybe 1%. Seth, can you talk about the changes you've made in sales, the restructuring that's gone on, sales execution and the pipeline and how you think about the return to revenue growth, both in North America as well as international, as we look forward? Is that something you think, excluding PeopleSoft, whatever the decisions you make there, you can produce in 2025?

Sure, Brian. Thanks for joining us. The question of whether or not we've come up on the other side of the U, and I think of course that's everybody's question, have we seen the bottom and are we on our way back up, I think the metrics show that we are indeed on that U-turn up. I think we saw that in the third quarter with the underlying strength there. That continued to grow in the fourth quarter. I don't think it's going to be a straight-up U. I think, like most things, we'll have our ups and downs along the way, but we will maintain the general direction of returning to growth and higher profitability. And I think that the changes that we've made to sales, the restructurings, all of those, remember, were all about bringing a multi-product bag to bear in terms of the sales environment into a solution sell from a single product. And it's taken us several years to develop those products, deploy our capability on a global basis. So yes, I actually am very much feeling positive that we're on the upper side of that U.

One more quick question related to that, and then I have one last question. If you think about the pipeline, there's been a lot of noise in terms of litigation in the last 18 to 24 months that could have impacted the pipeline. Can you kind of compare either quantitatively or qualitatively where we are today versus maybe 18 to 24 months ago?

I do think we had impact certainly in the pipeline from the Rimini II ruling in July of 2023. I don't think we realize the impact until you get several quarters down the road, but I think we definitely felt that. And of course, feeling very, very good about the appellate court's decision in December, which, of course, was too late in the quarter to really measure any sense of impact at all, given how late in the quarter it was, in December. So I do hope that that will provide some additional uplift to our continuing business growth as we again attempt to reaccelerate sales.

Great. Thank you. One last question, probably for Michael. On the cost savings, you mentioned in the fourth quarter you were on pace, or I'm not sure the words, for a decline of $22 million in OpEx. But the fourth quarter, excluding litigation, you had OpEx of $56 million, versus just $57 million in the baseline quarter of the first quarter, which is hardly down. So maybe talk about what I'm missing in that math there?

Sure, Brian. Just clarification, the $22 million of net annualized savings is as of the midpoint of Q1 2025. As of the end of the year, December 31, 2024, we were net $18 million down. The variance to the reported figures that you're noting and seeing is associated with, and it's in the G&A line, onetime project-related nonrecurring spend, and that's the variance to the reported figure. But net, again, Q4, $18 million; midpoint Q1 '25, $22 million.

What was this -- what were the nonrecurring -- I think it would be helpful to understand those non-recurring charges. It sounds like a big number. Maybe help us what that number was.

Unfortunately, we can't comment any further, other than saying it's non-recurring.

Okay. And the size of that?

If you annualize that figure relative to the reported difference to the $18 million would get you there.

Okay. Thanks so much.

Thank you.

Thanks, Brian.

Thank you. Your next question comes from the line of Derrick Wood, from TD Cowen. Please go ahead.

Hi, Seth and Michael. This is Jared Jungjohann on for Derrick Wood. Good to see billings strength in the quarter. I was just curious if you could characterize some of the areas where that strength is coming from, whether it's POs or product-wise? Thank you.

Sure, and thanks for joining us. The strength really, I think, again, comes more from the execution globally. We saw some strength return on the global stage outside of the U.S. That, of course, you watched come down a little bit in the prior quarters, but we did see strength returning due to some leadership changes, due to some execution improvements. And I think that that was broad-based across the international community. And even on the U.S. side, the bookings were higher year-over-year on a quarterly basis. So that's hidden a little bit by the revenue downside from the earlier quarters in terms of the revenue flow-through. But the bookings themselves, the sales bookings, were up. So I think, again, just general overall strength in the fourth quarter.

Awesome. That's good to hear. And then on the Army deal, could you provide a little more context around that? And then just zooming out, maybe a comment on federal exposure and then any dynamics you expect to see from the new Dodge administration? Thank you.

Yes, there wasn't a discussion in the prepared remarks about the Army deal. There was a discussion about the security package being in use by the Army, and that's all we can say about that. But in general, we see the U.S. side, the Dodge, the cost reductions on the federal side as being something that we want to pursue. It's something that we are actively pursuing. We've bulked up our sales capabilities on the federal side of the house. And in fact, the entire government sector for the U.S. and the North American region, we continue to add additional personnel, part of the investments that we said we were making in the current environment. And we think that we have a lot to offer with our particular approach and the way that we come at it with the Rimini SmartPath, where we can come in, drop costs rather quickly, drive longer-term return on the assets without any required upgrades or migrations. And we think that's an extremely attractive government type of offering, and we're making sure to get ourselves positioned for that.

Awesome. Good to hear about those investments on the go-to-market side. And just to double-click on that, is there any more fine-tuning we should expect in this coming year? Or do you feel like you're in a good spot there?

Well, I think this is the year that we focus on reacceleration, which again means execution. We have all of the building blocks now that we want. The newer areas are these partnerships and alliances where we are extending our leverage beyond our own sales team, and we think that is a critical next step. This is something that we weren't able to do in prior years because a lot of people weren't really interested in partnering with Rimini Street. And now what we're seeing is that the company logos across the world that want to partner with us are reaching out to us. We're entering a new phase of our growth as we come into this $0.5 billion a year of revenue and people recognizing that our customer base represents some of the biggest governments and private sector organizations out there, and they want access to them. So that is driving a lot more engagement at the partner and alliances level, and we've built a new team. We've made those investments as well. And that is still a fairly nascent area for us, but it will, we believe, add accretive opportunities to growth on the other side during '25 and beyond.

Thank you for the color. I'll pass it on.

Thank you.

Your next question comes from the line of Jeff Van Rhee, from Craig-Hallum. Please go ahead.

Hey, guys. Thanks for taking the questions. And congrats on the progress in the courts. It was just a pretty outstanding decision there, a lot of good stuff to come from that. A couple of questions, just one that's an immediate offshoot of that. You had commented that you're going to withhold guidance until something clarifies on the litigation front. Can you just expand on that? What's going to be go-time in terms of starting to give guidance again? What has to happen in the courts to do that?

Well, that's one reason, Jeff, I wanted to make sure I mentioned that we plan to return to guidance in '25, because we knew that, that was going to be a question of when. When we stopped providing guidance, it was because we had significant questions around the court's orders, what might become of injunctions, how it might impact existing product lines. There were a lot of pieces in there that we felt impacted our ability to give real solid management guidance, both at the revenue line and at the cost line. And we still feel that in our recent evaluation, despite the big win in the courts, the appellate courts, in December, there are still many pieces that have been remanded, there's still pieces that are not known. It's going back to the court. Even though Oracle lost its appeal, there are still options for them in terms of going to the Supreme Court. There are still things that were remanded back to Judge Du's court. And so we need to wait to hear from her and understand how things are going to progress. But we believe that the answers will come in the next quarter or two. I truly believe we're sort of beginning the end of this litigation. I think that the way the court narrowed the laws, the way that the court made decisions, the way that this is being remanded back on certain points and others were already vacated. So I think that this is sort of the beginning of the final stage, in my opinion. And so we're going to have to let this play out a little bit longer, but I think it was relevant to say I do believe that in the coming quarters we should have an opportunity to return to that guidance.

That's helpful. Thanks. And as it relates to 2025, I mean, without getting precise on guidance, are you at least comfortable it should be a growth year? I mean, the billings are suggesting it. You commented on a lot of things going on in the pipeline. Just thoughts on what it would take to be a growth year for '25.

Well, without guidance, but I think you could take my general direction is I believe we're on the upside of the U. I believe we will continue on that side. Some of the unknowns around the impacts of litigation and how those could affect us and a few other things, of course, that are happening in the world, including the economics and the overall globalization challenges with everything from tariffs on down, there's a lot in the mix. So I would say that, yes, do I believe that we will continue down our path of moving towards accelerated growth and improved profitability? I believe so.

Okay. And then on ServiceNow, just catch us up. I mean, obviously, the relationship, you talked about it a lot. Initially, it could be game changing for both of you actually in terms of it gives them a lot of leverage versus people they'd like to displace and gives you huge potential distribution. But I know there were some technical developments you had to put in place and some go-to-market. Where are we now?

Yes, it's a pretty complicated set of packages and offerings that we set out on with ServiceNow. We're the first quarter in, and we're still getting our teams aligned on a global basis. There is significant pipeline that's been built up on both sides. They've got 6,000 sellers who have been told that Rimini Street is a very critical part of their plan going forward for growth outside of their traditional product areas of ITSM and into the area of ERP modernization. We both believe, Bill McDermott and myself, in significant opportunity in this area, and we're making the investments necessary. But it is fairly complicated. It involves new consulting offerings on our side, involves deployment capabilities and working relationships with ServiceNow across the world. And we're continuing to work it every single week and put those in place. And we expect it to bear fruit with accretive sales opportunities and driving into our bottom line in 2025. So we're still very optimistic, very excited by this partnership. And once we get this off and running and the machine running, we expect it to bring real positive things to both sides.

And while we're on that, just maybe spend a minute also on VMware. I mean, obviously, a lot of disruptions. They pushed through some fairly massive price increases. How has that progressed? Are you able to quantify at all what that's doing in terms of percent of revenue, percent of pipeline? Any scope of how big VMware is and is going to be for you as well.

I think VMware will be a substantive part of our sales in 2025. I have been extremely excited watching the early months as we built this thing out from the ground up, launched it, became #1 in this space very early. We built a security solution that is bundled with our offering. We're the only people out there with this combination, which gives us tremendous competitive advantage. We have sold it to dozens of companies and organizations already, and that's just in the early stages of getting it out the door, getting our sales teams trained up. We are covering customers in five different continents already. We're covering everything from banks and financial institutions across just about every major industry already. So I think that's a wonderful start to the early months of getting this out there and getting the word out. People like Gartner and other of the analysts have been very bullish writing about us. We've gotten a lot of very good publicity and press around it. So I think that will contribute, again substantially avoiding the "materiality" word because we all know that has an important component in terms of size and scope, but it really is something that we do believe will contribute this year.

Helpful. Maybe one last quick one then on the $58.5 million. I mean, obviously court is incredibly unpredictable, but any norms, industry norms, or ways to give kind of an over/under on when you might have answers on getting some or all of that $58 million that you paid for those legal expenses back?

Well, I think that it has to go through the Appellate Court process. And generally, that is something that's done within a calendar year. I would think that based on our calendar, we've got our first briefings due to the Appellate Court on March 11. So I think there's a very good chance that we'll have a decision by the Appellate Court sometimes later this year.

Okay, great. Congrats. Thanks guys.

Thank you.

Thank you. Your next question comes from the line of Richard Baldry from ROTH Capital. Please go ahead.

Thanks. I wanted to see if you could dive a little bit more into the new logo strength, because obviously that will have a pretty big impact on the outlook for growth. Is that geographically at all concentrated? Product or service line concentrated? Was it related to sort of the newer partnership offerings? How do we think about that strength and how durable, extensible it is?

Well, Rich, I think the answer came last year when we started to see the results of all of our new products coming to market. The great news was that our sellers were enthusiastically moving and starting to sell them into our existing client base. The problem was they weren't spending enough time generating new logos, and we saw that happen in the first half of the year. And the course correction we made was to take it first in the Americas, to break apart into a hunter-farmer model, where we created the hunter team that just focuses on acquisition of new logos, and we created a farmer sales team, replacing the account managers with an actual sales team, dedicated to the existing clients and cross-selling and growing our footprint in those clients. And we've already started to see results from that. We made other changes in terms of compensation plans to really drive new logo acquisition, reward new logo acquisition. But more and more, we had to split the teams up in order to maintain the growth of sales in both categories. And I know this is not an uncommon problem for companies with larger portfolios of product. And so that's the changes we made, because we saw the opportunity for the new logo growth, but salespeople will tend to go to where it's easier. And of course, it's generally easier to sell to an existing happy client more services, but you've got to get those new logos, as you said.

Got it. Then when we think about the base business, macro uncertainties seem to be pretty persistent out there. Are you seeing that impact sort of, say duration or retention rates, either how long average clients are staying with you? Are those extending now? And how do you view that as likely to change over the year ahead?

Well, I think -- we've always said Rimini Street is not a contrarian business, because a contrarian business means you do well in bad times, but you may not do well in good. We've always said we do well in good times, and we can do really well in bad times, volatile times. Regardless of where anyone is on a political spectrum, the reality is the world is in quite an upheaval, both in globalization and moving things around supply chains and where factories are located, taxation and tariffs. I mean, we've got so much going on right now that it is definitely to Rimini Street's benefit from a sales perspective that we have so much uncertainty. Uncertainty means people don't know what to do. And in many cases, they're going to look for ways to hunker down on their existing spend, on their existing investments. They're going to avoid doing new things that are highly costly or controversial, or they're just not sure what the right moves are to make. And I think we play very well in this environment. We can be the right advisers at the right time, providing the right kind of services that allow companies to lower their current operating spend, which is critical because everybody is under pressure for profits. And at the same time, they can take some of that savings, invest it in new technologies like enterprise AI, which we're offering now through the ServiceNow platform, without having to do any of those major upgrades. So we really do have an offering that is dead-on with where most of the markets need around the world. So I see this as a significant opportunity for us in the years ahead.

Last for me would be, I think you obviously would have some pretty good data to support a revisit of the concept of cutting costs, and there's a lot of ways to think about what might drive that. Can you maybe just broadly talk to us about what you're really seeing? Is it pipeline growth, win rates improving, sales cycles speeding up, ARPU or contract sizes growing? What are some of the pieces that have given you a pause on the concept to continue cutting on the cost side?

Well, I think that you look at market demand is, we think, very strong. We think our ability to execute against that has gotten better. I think the fact that we see improved pipelines, we see our ability to forecast getting better, all of these things maturing under our new go-to-market model and the changes we're making. We've also changed out a lot of the sales force for more, how can I put this, more aggressive sellers that we believe will go out and help deliver the business better than maybe some other groups before. We brought in a new CRO, who's doing a fantastic job, Steve Hershkowitz, who's driving a very aggressive sales program on a global basis, a very accountable program in terms of commits and delivery. I think if you look at our execution even on the finance side, with DSOs running in the 70, 71 days, consistent cash generation. All of the execution of the business is moving along in the direction we wanted to go. And because of that, we felt that continuing to make cuts at this particular time would not be to the benefit of shareholders and our ability to make the investments that are upon us now, such as the ServiceNow, such as the new partners and alliances that are coming to bear. These things take investment, and we felt that it would be counterproductive to push further in a big way. It doesn't mean we're not making small changes here and there. We're always going to optimize. And that's why Michael indicated that we expect to continue to optimize, and we will have restructuring charges likely through the rest of this year. But that is because we have to continue to not only drive for profitability and continued streamlined operations, but we also have to take out certain older skill sets and cycle them to be able to replace them with new ones. AI, there's a complete amount of hiring, as people are doing, in that area. We have a lot of other skill sets that go with data analytics, data modeling, et cetera, that we have to bring in. New ServiceNow skills and capabilities. So we have to clear the decks for that. So I think that, in general, you're watching us make the right decisions about not going too deep in trying to cut costs to where it's counterproductive.

Great. Congrats on starting to make the term.

Thank you so much, Rich.

Thank you. There are no further questions at this time. I'll turn the call over to Seth Ravin for closing remarks.