Rimini Street (RMNI) Q4 2025 earnings review
Transition Pain: Profits Evaporate, but Backlog Hits Record
Rimini Street is in the middle of a painful pivot. Q4 Revenue fell 3.9% and Net Income collapsed nearly 90% to just $0.7M as the company absorbs the wind-down of its PeopleSoft business and ramps up spending for its new 'Agentic AI' strategy. However, forward-looking metrics signal a potential turn: Remaining Performance Obligations (RPO) surged 11% to a record $653M, and cash balances grew significantly. Management forecasts a return to growth in FY26 (+4-6%), but Q1 guidance implies continued contraction (-1.6%), suggesting the recovery is back-half weighted.
🐂 Bull Case
RPO growth accelerated to 11.1% YoY, reaching a record $652.9M. Even excluding the PeopleSoft noise, Adjusted RPO grew 11.7%. This double-digit backlog accumulation is the strongest leading indicator that revenue growth will eventually follow.
Despite earnings pressure, the balance sheet strengthened considerably. Cash and equivalents jumped to $120M from $89M a year ago, providing a buffer for the transition and funding for buybacks ($3.8M in Q4).
🐻 Bear Case
The P&L is under severe stress. Operating Income fell from $14.9M in 24Q4 to just $5.0M in 25Q4. Adjusted EBITDA margins compressed from 17.5% to 10.5%. The cost of the pivot is currently outweighing the revenue benefits.
The 'growth' story relies heavily on excluding PeopleSoft. Even with that adjustment, Adjusted Calculated Billings grew only 0.7% YoY. The core business is barely treading water while waiting for the AI narrative to monetize.
⚖️ Verdict: ⚪
Neutral. The collapse in profitability is alarming, and the 'Agentic AI' revenue stream is unproven. However, the double-digit acceleration in RPO prevents a Bearish rating, as it validates retention and future demand. Invest only if you believe the FY26 back-half recovery story.
Key Themes
Margin Compression
Profitability has deteriorated significantly. Gross margin fell 330bps YoY to 60.4%. More concerning is the operating leverage profile: Revenue fell ~4%, but Operating Expenses (Sales, Marketing, G&A) grew, crushing Operating Income by 66%. Management's FY26 Adjusted EBITDA guidance (12.5-15.5%) suggests margins will remain below historic levels (24Q4 was 17.5%).
Agentic AI Pivot
Rimini Street is aggressively rebranding as an 'Agentic AI' provider, launching 20 new 'Rimini Agentic UX' solutions. This is the central thesis for the FY26 growth guide. Early traction is anecdotal (Ypê in Brazil cited), but RPO growth suggests customers are signing longer or larger contracts based on this roadmap.
PeopleSoft Drag Continues
The planned wind-down of PeopleSoft support continues to distort headline numbers. While management highlights 'Ex-PeopleSoft' metrics, the reality is that total Revenue (-3.9%) and total Billings (-0.4%) are negative. This drag will persist, and the 'Ex-PeopleSoft' growth of +0.7% in billings is hardly inspiring.
US vs International Divergence
The U.S. market remains a weak spot. Q4 U.S. revenue dropped 10.6% YoY (or -4.3% excluding PeopleSoft). Meanwhile, International revenue grew 2.0%. The company needs to stabilize the U.S. business to achieve its FY26 targets.
Partner Ecosystem Expansion
Partnerships are gaining traction. The company announced expansions with Silicon Labs (5-year deal) and Tidewater. The 'Rimini Smart Path' methodology and new SAP configurations are helping win clients who want to avoid forced vendor upgrades. This validates the shift from pure 'support' to 'managed services.'
Other KPIs
Reversing. Down sharply from $20.0M in 24Q4. The margin compressed to 10.5%, significantly below the 17.5% seen a year ago. Full year Adjusted EBITDA was $49.8M, down from $53.1M in FY24.
Stable/Improving. Up from $88.8M in 24Q4 and $108.7M in 25Q3. The company has fully repaid its revolving credit line and holds net cash, significantly reducing financial risk.
Stable. Up slightly (+0.7%) YoY from 3,081. While positive, the slow pace of new logo addition puts pressure on cross-selling to drive the guided 4-6% revenue growth.
Guidance
Decelerating/Negative. The midpoint ($102.5M) implies a -1.6% YoY decline vs 25Q1 ($104.2M). This contradicts the full-year growth narrative, indicating the turnaround is delayed to H2 2026.
Accelerating. Implies a sharp reversal from FY25's -1.7% decline. Given the weak Q1 guide, this implies double-digit growth rates in Q3/Q4 2026, which carries significant execution risk.
Stable. The midpoint (14.0%) is roughly in line with the FY25 average (~11.8%) and Q4 actual (10.5%), but remains well below the ~17% levels seen in late 2024. Profitability is being sacrificed for growth.
Key Questions
The Growth Bridge
FY26 guidance calls for 4-6% growth, yet Q1 is guided to shrink. What specifically gives you confidence in a massive H2 acceleration? Is this contract timing or dependent on new AI product uptake?
US Market Weakness
US revenue is declining at double-digit rates (-10.6%). Is this purely PeopleSoft churn, or are you losing market share to competitors in your home market?
Expense Control
With margins compressing significantly in Q4, how do you plan to achieve the high end of FY26 EBITDA guidance (15.5%) while investing in the new Agentic AI product rollout?
AI Monetization
You mention 'Agentic AI' repeatedly. Are these separate SKUs with distinct pricing, or is this value-add to retain support contracts? When will we see a material revenue contribution line item for AI?