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Why Rimini Street Stock Tumbled Today

By Jeremy Bowman - May 11, 2021 at 8:44PM

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Shares of the enterprise software company fell on a disappointing earnings report.

What happened

Shares of Rimini Street (RMNI 0.47%) took a dive today after the enterprise software company posted underwhelming results in its first-quarter earnings report. 

The stock finished the day down 20.4%.

A digital image featuring gears and pipes.

Image source: Getty Images.

So what

Rimini Street said revenue increased 12.6% to $87.9 million, which was slightly below analyst estimates at $88.2 million. Other metrics were more impressive as active customers increased 22.8% to 2,550, and quarterly billings rose 24.2% to $81 million.

On the bottom line, the company posted an adjusted EBITDA of $10.7 million, and a per-share loss of $0.13 on a generally accepted accounting principles (GAAP) basis, compared to a per-share loss of $0.06 in the quarter a year ago and estimates of a $0.04 per-share loss.

CEO Seth Ravin said, "For the first quarter, we remain on track to achieve our strategic growth plan to achieve $1 billion in annual revenue by 2026," and also noted that the company has $153 million in cash on the balance sheet, or more than a quarter of its market cap after today's sell-off. It also has no debt.

The lone analyst to remark on the report was Richard Baldry of Roth Capital, who slashed his rating on the stock from buy to neutral and lowered his price target from $15 to $8. Baldry noted that the quarter was the company's slowest growth rate since the pandemic began and that revenue growth was essentially flat on a sequential basis.

Now what

Looking to the second quarter, Rimini Street expects revenue of $88.5 million to $90.5 million, representing 15% growth at the midpoint, but slightly below the consensus at $90.5 million. For the full year, it called for $370 million to $380 million in revenue, in line with expectations at $375 million.

Given the weak results and middling guidance, today's sell-off in the tech stock isn't surprising.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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