Rimini Street (RMNI) Q1 2026 earnings review
Top-Line Returns to Growth, but AI Pivot Crushes Near-Term Margins
Rimini Street broke a streak of revenue contraction, posting 1.2% YoY growth in Q1 2026. The real story, however, is a massive divergence between forward-looking indicators and current profitability. Driven by the new 'Agentic AI' narrative and post-litigation momentum, Adjusted Calculated Billings surged 22.9% and RPO jumped 16.4%. Yet, funding this growth required heavy investment: Sales & Marketing expenses spiked to 36.6% of revenue, and Adjusted EBITDA margins compressed aggressively to 8.4%. Management is betting that a short-term margin hit will fund a lucrative, AI-driven second act, and Q2 guidance implies revenue growth will continue to accelerate.
🐂 Bull Case
Adjusted Calculated Billings grew 22.9% YoY (up from 4.2% in the prior quarter), and RPO hit $643.6 million (+16.4% YoY). The overhang of the 15-year Oracle litigation is gone, and the sales pipeline is finally converting into tangible, committed contracts.
The strategic pivot from pure cost-saving support to funding 'Agentic AI ERP' solutions with partners like ServiceNow is resonating. Management notes close rates exceeding 30% as clients seek to modernize existing systems rather than fund risky, expensive ERP migrations.
🐻 Bear Case
The cost of pivoting is high. Adjusted EBITDA fell 43% YoY to $8.9 million, dragging margins from 15.1% a year ago to just 8.4%. Gross margins also stepped down to 59.0% (from 61.0%), showing significant operational deleverage.
Despite overall growth, the core U.S. segment (44% of revenue) declined 6.4% YoY. Even excluding the PeopleSoft wind-down, U.S. revenue shrank 0.3%, placing a heavy burden on international markets to carry the company's growth.
⚖️ Verdict: ⚪
Neutral. The robust 22.9% growth in adjusted billings proves that demand is returning post-litigation, validating the bull thesis. However, the steep cost of acquiring this growth leaves the company with a massive margin recovery hill to climb to hit its FY26 targets.
Key Themes
Forward-Looking Metrics Signal Acceleration
The most critical data points in this report are not on the income statement. Remaining Performance Obligations (RPO) grew 16.4% to $643.6 million, and Adjusted Calculated Billings (excluding PeopleSoft) surged 22.9% to $92.2 million. This is a sharp acceleration from FY25 and indicates that the expanded sales force and the resolution of the Oracle litigation are unlocking stalled IT budgets.
Go-to-Market Investments Crush Near-Term Profitability
Management's aggressive push into 'Agentic AI' required heavy front-loaded investments. Sales and Marketing expenses increased to $38.6 million (36.6% of revenue, up from 32.9% a year ago). Combined with a drop in gross margin to 59.0%, this drove Adjusted EBITDA down to $8.9 million from $15.7 million a year ago. The company must prove these investments will scale quickly, or the 'Rule of 20' target will be at risk.
The 'Agentic AI ERP' Pivot
Rimini Street is aggressively rebranding from a legacy ERP support provider to an AI innovator. By partnering with ServiceNow, the company is launching over 20 new 'Rimini Agentic UX' solutions that sit on top of legacy SAP and Oracle systems. The core sales pitch—save 90% on support to self-fund AI modernization—is a compelling way to bypass expensive vendor-forced cloud migrations.
Divergence: U.S. Contraction vs International Growth
A worrying geographic split persists. International revenue grew 8.3% to $58.6 million, but U.S. revenue fell 6.4% to $46.9 million. While management blamed some of the U.S. weakness on the PeopleSoft wind-down, U.S. revenue still shrank 0.3% even when adjusted. Retaining North American clients remains a primary hurdle to holistic growth.
The PeopleSoft Wind-Down Drag Continues
As part of its Oracle settlement, Rimini Street must fully wind down its PeopleSoft support business by July 2028. This deliberate revenue destruction continues to mask the core business performance. Total revenue grew 1.2%, but excluding PeopleSoft, it would have grown 5.2%. Investors must continue tracking two separate sets of books for the next two years.
Other KPIs
Up 1.2% YoY from 3,092 in 25Q1. Client growth has stabilized, and combined with an 88% revenue retention rate, points to a solidifying base after previous quarters of churn pressure.
The balance sheet is strengthening. The company voluntarily prepaid $10 million of debt in Q1, reducing the outstanding term loan to $58.4 million. Cash and cash equivalents stand at $132.2 million, providing ample liquidity to fund AI growth initiatives without immediate need for external capital.
Guidance
Accelerating. The midpoint of $107.0 million implies YoY growth of approximately 2.8% (compared to $104.1 million in 25Q2). This shows a sequential improvement in the growth rate from the 1.2% posted in Q1, reflecting the conversion of recent high billings into recognized revenue.
Accelerating. Reiterated from Investor Day. Achieving this requires substantial back-half acceleration to overcome the slow 1.2% start in Q1 and the sub-3% implied growth in Q2. It requires heavy reliance on the newly expanded sales force and Agentic AI adoption materializing in late 2026.
Accelerating. Reiterated target to achieve the 'Rule of 20'. However, with Q1 Adjusted EBITDA margin coming in at just 8.4%, management is implying a massive margin recovery in the second half of the year. This suggests current S&M investments are highly front-loaded.
Key Questions
Bridging the Margin Gap
You reiterated FY26 Adjusted EBITDA margin guidance of 12.5% to 15.5%, yet Q1 came in at 8.4% due to sales and AI investments. What specific cost levers or revenue inflection points provide confidence in this steep back-half margin ramp?
U.S. Market Dynamics
U.S. revenue declined 6.4% YoY and remained slightly negative even when adjusting for PeopleSoft. What is the timeline for the U.S. direct sales force to match the success of your international teams?
Agentic AI Monetization
With the 22.9% growth in adjusted billings, how much of that is driven by traditional core support versus early adoption of the new Agentic AI and ServiceNow integrated solutions?