Good day, and thank you for standing by. Welcome to the Rimini Street First Quarter 2024 Earnings Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, Dean Pohl, Vice President, Treasurer and Investor Relations. Please go ahead. .
Thank you, operator. I'd like to welcome everyone to Rimini Street's First 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 first quarter and fiscal year-ended March 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-Q 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. 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 achieved these goals by significantly lowering the cost, resources and time needed to support and manage mission-critical transaction systems such as ERP, financials, HCM and CRM while also assisting clients with innovative projects that include cloud, open source, automation, workflow, data, analytics, AI, reporting, application modernization, migrations, integration, 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 growing client base with global operations across 21 countries and more than 2,100 employees.
Our award-winning software support delivers an average engineer response time of less than 2 minutes, 24/7 by 365 days and earns an average client satisfaction score of 4.9 out of 5 or 5 is excellent. .
2024 Q1 activity and results. Although recurring revenue renewal and extension sales were in line with the first quarter plan, new client sales were more challenging. A number of new client sales deals failed to develop and close in the quarter, resulting in some deals slipping into future periods.
In fact, several of the deals have already closed in the second quarter. Significant wins in the first quarter include sales from Rimini Street's entire portfolio of solutions to leading global and regional brands across a variety of industries and geographies.
To address the challenges, we continue to focus on hiring, training and building out new solution sales capabilities globally. This includes sellers, sales management, sales support, regional marketing and senior revenue executives.
In January, we held a comprehensive sales kickoff to further develop the skills of more than 400 global revenue team members.
The event was a week of rigorous training on the full Rimini Street portfolio solutions and how to successfully sell Rimini Street solutions to diverse industries and help clients achieve their strategic, financial and operational goals. .
During the quarter, we continued the launch and rollout of our full portfolio of solutions globally, including our end-to-end ERP outsourcing solution, Rimini One, for Oracle and SAP products and our managed service solutions for Salesforce.
Subsequent to the quarter, we announced the hiring of a new general manager for the EMEA Theater, Martin Hoogakker, who joined us from Adobe with a successful career in sales and regional management and the hiring of our new Chief Revenue Officer, Steven Hershkowitz, who joined us following extensive and successful sales strategy and leadership experience with HP, Cisco and other companies.
The biography of both executives can be found on our leadership web page and in press releases that can also be found on our website..
Demand environment and competitive advantage.
We continue to see strong demand for a proven, reliable, trusted partner for mission-critical transaction system services that could 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.
Rimini Street has the broader portfolio of solutions needed to be recognized as a key IT service partner and Rimini Street has a strong win rate on proposals. .
Oracle litigation update. Rimini Street in Oracle have been in litigation for more than 14 years, including cases known as Rimini One and Rimini Two. In 2010, Oracle filed the Rimini One case against Rimini Street in U.S. District Court. As a result of the Rimini One case, the trial completed in 2015 and subsequent appeals, the U.S.
courts have affirmed the third-party software support is legal. The U.S. court issued a permanent injunction known as the Rimini One injunction enjoining certain activities related to the manner in which Rimini provides support on certain Oracle product lines.
The Rimini One injunction does not prohibit Rimini from providing support to any Oracle product line. There are no current litigation activities related to Rimini One. Subsequent to the Rimini One trial, Oracle filed and prevailed on certain claims that a contempt proceeding related to the Rimini One injunction.
Rimini paid certain fines and settled with Oracle on reimbursement of a portion of its legal fees. In 2014, Rimini filed the Rimini Two case against Oracle in the U.S. District Court. Trial occurred in 2022.
While Oracle prevailed on liability for its DMCA [indiscernible] Act, Oracle abandoned its $1.4 billion of damages claim and all non-equitable claims of prejudice on the eve of a jury trial and lost its copyright claims for a majority of product lines that issued the case, EBS, JDE and [indiscernible]. .
On the Rimini product lines, PeopleSoft Database, Oracle prevailed on certain claims but Rimini prevailed on central crosscutting legal theories that record to Oracle's broad infringement claims spanning all Oracle product lines.
In July 2023, concurrent with the District Court's trial rulings for Rimini Two, the District Court issued a permanent injunction known as the Rimini Two injunction which amongst other things, further enjoying certain Rimini activities related solely to the manner in which Rimini provides support on certain Oracle product lines.
Rimini is appealing the injunction to the Court of Appeals. As of this date, an administrative stay of the Rimini Two injunction remains effective, and the Court of Appeals has not yet issued a decision on Rimini's motion to stay the Rimini Two injunction pending the resolution of Rimini's appeal.
On November 6, 2023, Oracle filed the motion for attorney's fees a taxable cost with the U.S. District Court, requested to recover returns fees and taxable costs totaling approximately $70.6 million related to the Rimini Two litigation.
Rimini filed its opposition to Oracle's motion and argues that the District Court should deny Oracle's motion in its entirety. Rimini further argues that, should the District Court award recovery of any attorney's fees to Oracle, such fees should not exceed $14.47 million. The matter is now under consideration for determination by the District Court.
Rimini reserves all rights, including appellate rights with respect to the Rimini Two litigation, including any award of attorney fees and taxable cost to Oracle. .
So in summary, today, there are currently 3 Rimini Two post-trial litigation matters still before court. One, a deal of the Rimini Two findings known as the merits appeal and the Rimini Two injunction before the Court of Appeals.
Two, a motion to further stay the Rimini Two injunction pending a decision under Rimini's appeal of the injunction, which is also before the Court of Appeals, and 3, litigation before the District Court over Oracle's requested recovery of certain of their attorneys' fees and costs related to the Rimini Two case that is on appeal.
With respect to the Rimini Two merits appeal and appeal of the Rimini Two injunction, all briefs have been filed and the Court of Appeals has currently set the date of June 5, 2024 to hear oral arguments.
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, May 2, 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 Two injunction because the matters are still before various cohorts and the outcomes cannot be predicted.
Summary, we remain confident that we are continuing to take the right actions and making the right investments to accelerate growth, increase profitability, enhance shareholder value and bring our litigation with Oracle to a successful conclusion.
However, if Rimini Street does not ultimately prevail in the litigation matters described above and 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. Q1 2024 results. Revenue for the first quarter of 2024 was $106.7 million, a year-over-year increase of 1.2%. Clients within the United States represented 50.4% while international clients represented 49.6% of total revenue for the first quarter 2024.
We note that for the first quarter of 2024, our total revenue measures on a constant currency basis was negatively impacted by 0.8% due to FX movements. Annualized recurring revenue was $415.8 million for the first quarter, a year-over-year increase of 1.8%.
Revenue retention rate for service subscriptions, which makes up 97.4% of our revenue, was 89%, with more than 76% of subscription revenue noncancelable for at least 12 months. Billings for the first quarter were $74.1 million compared to $93 million for the prior year first quarter, a decrease of 20%.
Unfavorable FX movements reduced first quarter 2024 calculated billings by $3.1 million. Gross margin was 59.8% of revenue for the first quarter compared to 62.7% of revenue for the prior year first quarter. .
On a non-GAAP basis, which excludes stock-based compensation expense, gross margin was 60.3% of revenue for the first quarter compared to 63.1% of revenue for the prior year first quarter.
Gross margin declined during the back half of 2023 and Q1 2024 as a result of continued investment 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 also working to improve gross margin by driving efficiencies and leveraging the benefits of growing global scale. .
Operating expenses. While inflationary pressures in 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 36.7% of revenue for the first quarter compared to 32.7% of revenue for the prior year first quarter.
On a non-GAAP basis, which excludes stock-based compensation expense, sales and marketing expenses as a percentage of revenue was 36.3% of revenue for the first quarter compared to 32.2% of revenue for the prior year first quarter.
This year's first quarter included the cost for the 2024 sales kickoff training conference where there is not a prior year comparable, the event was held last October 2022.
General and administrative expenses as a percentage of revenue, excluding outside litigation costs, was 17.2% of revenue for the first quarter compared to 17.3% of revenue for the prior year first quarter. .
On a non-GAAP basis, which excludes stock-based compensation expense and litigation costs, G&A was 15.7% of revenue for the first quarter compared to 16.2% of revenue for the prior year first quarter.
We are seeing a good year-over-year improvement in G&A spend due to some restructuring measures and the initial substantial investments that were required to develop and launch our expanded portfolio of solutions are largely completed.
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 cost 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 $2.9 million for the first quarter compared to $2.7 million for the prior year first quarter. .
Our non-GAAP operating margin, which excludes outside litigation spend and stock-based compensation, was 8.3% of revenue for the first quarter compared to 14.6% for the prior year first quarter.
Net income attributable to shareholders for the first quarter was $1.3 million or $0.01 per diluted share compared to the prior year first quarter of $0.06 per diluted share. On a non-GAAP basis, net income for the first quarter was $6.8 million or $0.08 per diluted share compared to the prior year first quarter of $0.12 per diluted share.
Adjusted EBITDA, defined in our press release, was $10.7 million for the first quarter or 10% of revenue compared to the prior year first quarter of 15.7% of revenue. .
Balance sheet. We ended the first quarter March 31, 2024, with a cash balance of $129 million compared to $135 million of cash and investments for the prior year first quarter. On a cash flow basis, for the first quarter, operating cash flow increased $11.1 million compared to the prior year first quarter of $8.6 million.
FX headwinds reduced operating cash flow by $4.4 million. Deferred revenue as of March 31, 2024, was $254.3 million compared to deferred revenue of $287.4 million from the prior year first quarter.
Backlog, which includes the sum of billed deferred revenue and noncancelable future revenue, was $556.9 million as of March 31, 2024 compared to $556.1 million for the prior year first quarter.
Subsequent event on April 30, 2024, Rimini Street refinanced its outstanding term loan, of which $70.9 million was outstanding with a new 5-year senior secured credit facility comprised of a $75 million term loan and a $35 million revolving line of credit at rates of SOFR plus a rate in the range of 2.75% to 3.5%.
The revolving line of credit was undrawn at closing. Capital One led to financing that includes Lenders, U.S. Bank and TD Bank. Effective April 30, 2024, the interest rate swap agreement was amended in connection with the 2024 credit facility to match the new 5-year term. .
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 quarterly report on Form 10-Q filed on May 2, 2024, with the U.S. Securities and Exchange Commission. This concludes our prepared remarks. Operator, we'll now take questions. .
[Operator Instructions] Your first question comes from the line of Brian Kinstlinger of Alliance Global Partners. .
I'm going to start with a few on expenses. I looked at the Q and the text describe cost of goods or services being increased as a result of a 20% increase in the head count.
With the 1% year-over-year revenue growth, I know you're investing in business offerings, but why a 20% increase in the head count on cost of services? I'm just not quite sure why we're hiring so aggressively. .
Sure, Brian, it's Seth. First of all, the investments that we're making are global. Getting a managed service business plus our security business, our interoperability business, our observability business, our consulting business, infrastructure up and running globally means that as we bring on new customers, you're not getting scale yet.
Every new customer in the managed service side and a lot of those particular products I mentioned, require the addition of a new staff. So we're not yet at a scale where we start to see returns from a single staff member generating multiple customers worth of revenue. So it's going to be a while.
And it's -- again, because every time you add a new country, we have to add new people with different languages. It's a costly structure. .
Yes. Look, I would just say there's no answer to it, but your new countries, I guess, or new regions, but your customer counts up 40%, which is 1% year-over-year. So to me, there's a little bit of disconnect there. .
Well, but remember, Brian, a lot of that is we're doing a lot of cross-selling of those services into the existing customers. So you're not going to see increased client count.
And as we mentioned in prior calls, part of the challenge we have to do now is pivot back to more new logo growth as we added these new products and services, our sales team were anxious to get this back into customers who wanted to buy these services, which, of course, lowers your growth in the new logos, and that's what you're seeing. .
Okay. Thanks for the clarification on the sales of the inflated sales and marketing for the quarter.
Are there any other quarters where you expect there's going to be outsized expenses related to sales events, I guess calling out anything you know would be helpful as you see the year seasonally on expenses?.
Well, the SKO, which, of course, is common for most companies to go through because we're global and we're bringing people from 21 countries, they're pretty expensive events. As we said, this one was somewhere in the $4.5 million range or so. We expect that going forward, we're going to be having one of these events probably every 18 months.
We're not sure we need them every 12 months. That's why you had a compare issue, we didn't have this last Q1. As Michael had mentioned in his prepared remarks, we had one towards the end of '22.
And so that did create a compared difference between the years and if you look at the difference of that $4.5 million plus what we had in the FX losses, especially big with Japan, the combination of those pretty much make up a lot of what you're seeing in the difference in the numbers. .
Great. Last question I've got is the retention rate was 89%, which was the lowest since I've been covering the stock. The customer count growth, we've talked about hasn't been strong, and you talked about billings being soft because closing deals became difficult in the quarter at the end.
I guess I'm just curious, is the value proposition not resonating right now as it did 2 or 3 or 4 years ago with prospective customers? To me to just makes so much sense -- again, to me, the message makes similar sense, OEM maintenance agreements are much higher cost. You're getting better service and we're in a super high inflationary period.
So I guess I'm trying to understand how it all ties together. .
No, Brian, I don't see any change in demand, as I mentioned in my remarks. The demand market is strong. What we're watching here is really with the rollout of an entire suite of products. This is a process. It is a journey, and it's taking us a while to get all these products out there.
We had some distraction away from selling the core product, and I think you've seen this in many other companies, when you add in a whole bunch of new products to sell, you get 'the shiny object problem' as we say, where the sellers go off and sell a lot of the new products, but they slowdown in selling the core product because they lose focus.
We're in the process of refocusing everyone back to the core product, our support replacement for Oracle and SAP and getting them refocused there and getting it back out in the market. At the same time, we had the largest number of sellers we've ever had in Q1. We had 84, 85 sellers on the ground and that's 20% more than prior plus turnover.
So we had quite a few sellers who have never sold our core product at all, which is the most complicated of all of our products.
So I think a combination of those pieces pulled together led to what we saw in Q1, those deals not developing as well as we had hoped they would and planned and had forecasted for Q1 was one problem and then not getting them over the line by the time we got to the end of the quarter. So we had a bunch of slip deal issues.
Now some of those deals were lost, some of those deals were pushed to the next quarter, some of them were pushed to the next fiscal year for another Q1 run. So again, the combination of all of that led us to where we were in the quarter. .
Your next question comes from the line of Daniel Hibshman from Craig-Hallum Capital Group. .
This is Daniel on for Jeff. Maybe just on the bookings billings and the weakness there, down 20% year-over-year.
Just any thoughts on were there any common themes in terms of where that was concentrated to weakness either by platform, by geography, et cetera?.
Sure. I think you've got some weakness that came out of Japan, some weakness that came out of Australia and the biggest area of weakness was in the United States. And so the combination, again, of those 3 is really where we wound up with the challenges. There were certainly bright spots across the world.
We did some fantastic deals in the quarter, some great brands that came in. We just didn't have the volume because of those slipped deals. We also didn't see the ASPs were down a little bit on the quarter. And I think a combination of the ASPs, the deal slippage, those really led to where we were in that negative 20%. .
Okay. That's helpful.
And then in terms of the trends with retention and the slight dip there as well, is that -- are the challenges there sort of the same as in bookings that is like you were talking about out of Japan, Australia, U.S., et cetera or is that sort of a separate set of challenges? Just anything different you'd call out there again in terms of platform or geography.
.
I think we've seen some of the -- we had some large deals that rotated out. And certainly, when you look at a revenue retention rate because you're looking in arrears 24 months, it will take 12 months to cycle through.
So a lot of what you saw in the reduction in the revenue retention rate was really old news, it was rearview mirror from Q4, where we had a few larger losses of clients. Actually, it was really more contracts as clients continue on with other contracts, but the total losses were starting to show up, and they'll be with us for a few more quarters. .
Okay. And then just last of all on the gross margins and how we should think about those in the hiring and buildout for Rimini One and the other product suites.
Should we view gross margins from this quarter as sort of a good baseline or I think the build out there is going to be continuing over the next few quarters? Maybe just any sizing, Michael, of how we should build that model, what kind of level of headwind we're talking about?.
Unfortunately, we're getting into the realm of guidance there, and we can't speak going forward. But I would just highlight my comments, prepared remarks from the script, where the pressures in these issues we expect to continue.
However, this is mainly mix associated, I will add that, and we do have our new solutions that are ramping, and we are certainly very deep into continuous improvement, and we're making improvements each and every day, and we watch this and work very hard at these new solutions. .
I'll just add to that, that the overall guidance that we had given in the past, not current guidance since we're not giving it. But our overall historic guidance has been to a long-term gross margins in the 60% range. So again, just take that for what it's worth. .
And actually, maybe I'll just slip one last one in. This is a new CRO.
Just any thoughts you can share for us in terms of his mandate and what any focus would be in terms of any changes or any particular new direction contemplated with the hire?.
Sure. I think as we've all talked about on these calls and, of course, in other forums as well. North America, especially in the United States, is 50% of our revenue pool. We want to focus on getting that 50% performing much better than it has over the last few years. That is his #1 mandate.
You get North America, you get the United States performing up to the kind of plan that we expect, that would really lift the boat quite a bit to give us the accelerated growth and move us towards back into the higher growth numbers that we're looking to achieve.
So clearly, United States first, then looking at Australia, looking, of course, then at Japan, making sure that we understand the changes in those markets that we continue to evolve as we grow and introduce those new product lines into those economies.
And then, of course, again, time permitting, will be to focus in on the EMEA region, where we just brought in Martin, who's heading it up as the new GM and he's off and running, and they're doing a nice job in the EMEA region. .
Your next question comes from the line of Derrick Wood from TD Cowen. .
This is Garrett on for Derek. I'm curious how initial reception has been for Rimini custom. It seems like a great way to get customers into the door, but curious, especially on how your service team has been handling all these inbounds. .
It's an interestingly complex launch. I think those who are in the business understand when you open the door and say, we are the best at providing a support platform of any company out there, challenging the vendors themselves in what we believe is a better platform.
When we take a look at that and say, we're going to open the door, you bring us what you want us to support you, and we're going to take a look at it, see if we can build a program and then come back to you with a custom bid to manage that, it is complicated. And we have had strong reception.
We've certainly had a lot of customers bringing us their software, other companies by vendors, even other products within the Oracle and SAP world, bringing them to us and saying, "Can you give me a bid and find a way to keep this software for another 3, 5, 10 years while they think what their next platform might be because companies are moving to expire.
I'll give you one example. Probably one of the largest apps that we've had so far is VMware because of the moves that happened over there with Broadcom's acquisition. A lot of customers looking for a solution to their VMware challenge now. And of course, we'll keep the market apprised if we do indeed launch something in that area.
But I think this is an example where we can come in, in a marketplace where there is a sudden demand or a sudden surge and bring our expertise to the table and a solution potentially. .
It's great color. I appreciate that. I'll just finish up one last question for you guys.
But can you just highlight some of the key drivers for what's driving customers into the door and maybe some of the drivers as to why some customers are churning off?.
I think you're watching customers come to the table as soon as they really have awareness and understanding of what we can do for them. Rimini Street's challenge even over its entire 19 years of history has always been one of awareness, especially more today with CFOs and even CIOs. And we've switched our marketing mix.
We used to be about 80% CIO focus in terms of the selling motions and 20% into the procurement or the IT procurement side. Today, we have a different mix.
We have a 40% focus on the CFO, 40% on the CIO and 20% on the procurement function and that really represents the fact that there's so much financial pressure within organizations and the CFOs are where those return on investment decisions are often landing.
And let's not forget, 50% of CIOs report to CFOs and so I think you're watching a sea change even within Rimini Street, the clients, we're doing more and more deals at the CFO level than the CIO level. So there is some transition of buyer taking place within the organization that we're doing work with.
And then, of course, the CIO, combined with the CFO. And I think our messaging is resonating very, very strongly in the CFO suite on that ROI modeling because everything we do is about ROI.
And of course, the world of CIO, they have different considerations where they're looking at different packages and point releases, that's not the world of the CFO. And so I think that's one key thing you're watching. .
In terms of customers coming and going, there are some natural generational changes. Of course, you have the natural generational changes in the HCM world, what sort of the workdays as well as the success factor side.
So you've got a little bit of a SaaS movement in that area as next generation and I think we're also watching interestingly enough, a reversal of the cloud movement. Of course, as we all know, new technology, whether that's now AI, everyone rushes out the gate, then there's rethinking, there's regrouping, we've gone too far in one direction.
There's even companies repatriating back from the cloud into data centers and saving millions, and so there's a lot of movement back and forth.
So I wouldn't point to any one single trend that's driving business in or out but I really do think that this economic situation, look at retail alone, look at how many retailers are going bankrupt, how much pressure there is on the lower end of the market, not just what we used to see in the midrange.
So I do think that there is a lot of financial pressure that will drive and build even more demand for us going forward. .
Your next question comes from the line of Brian Kinstlinger of Alliance Global Partners. .
First of all, you suspended guidance, do you think there's been an impact to deal closings or retention related to litigation?.
It's hard to say, Brian. I don't think we have data that would really give you a solid support one way or the other. I think it would be natural to assume that some level of impact happens in the sales side related to just the back-and-forth litigation with Oracle, especially on the Oracle side.
I'm not sure as much on the SAP side is affected by the back and forth with Oracle but it is something we've had for 14 years. Of course, it ebbs and flows depending on what's happening with the court.
We're in a pretty -- we'd consider it to be a high litigation point right now because we do have multiple things happening at the appellate courts, at the district court, there's an injunction in the mix, this is exactly why we suspended guidance.
Because some of them are very significant issues before the court and how the court decides can have a varying impact to us and so we felt that we really couldn't give reliable guidance ranges given all that's a pending before the court. And so yes, I would have to say that I am confident just reality that there's some impact to sales. .
Okay.
My last question, maybe for Michael, is, how much do you expect to save in annual interest from the refinance?.
So Brian, as we disclosed, we do have our spread that increases by 100 basis points. So in that regard, it's slightly higher cost, but we're resetting the amortization. So slight movement there in the overall debt service.
Nonetheless, we have the availability -- overnight availability for working capital purposes, the revolver but we have attractively swapped $40 million in fixed. As we have noted in our Q filing wasn't in the press release, $40 million of the $75 million term piece. So we have that fixed in the mid-6% range.
Again, also noting your interest line, we do have the nice offset with our surplus that we have at attractive rates. So given that we have this fixed portion right and depending on the movement of rates, what you can see where we have our cash surplus, how we manage that is how you could think about that line going forward. .
Maybe clear, just so I understand, it was a lot, is you're taking on 100 basis points more of interest in order to have it be more floating given ultimately the world thinks that interest rates are coming down and see all benefit over time.
Is that right?.
Yes, that's a component as well. And I also want to note that we have extended 5 more years. We were in 3 or 5 years previously. So there is a commitment through these institutions for an incremental 5 years under these terms. That's a key element as well. .
And there are no further questions at this time. I will now hand the call back to Seth Ravin for the closing remarks. .
Thank you very much, operator. And again, I want to thank everyone for joining us for the call. I want to thank all our Rimini Street colleagues for their efforts in the first quarter as we roll out all these new products on a global basis and continue to serve our customers with such great client satisfaction rates.
I look forward to having you join our next earnings call, we'll discuss the second quarter of and with some third quarter 4 performance to date commentary. Until then, again, wishing you and yours a continued good health and thoughts and continued charitable support, again, for those in need and suffering in harm's way.
Thank you all very much, and have a great day. .
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect..