10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from                               to                             

Commission File Number: 001-37397

Rimini Street, Inc.

(Exact name of registrant as specified in its charter)

Delaware	36-4880301
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1700 S. Pavilion Center Drive, Suite 330, Las Vegas, NV	89135
(Address of principal executive offices)	(Zip Code)
Registrant's telephone number, including area code:	(702) 839-9671

Not Applicable

(Former name, former address and former fiscal year, if changed since last report) 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common Stock, par value $0.0001 per share	RMNI	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.         Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer þ Non-accelerated filer ¨

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).        

Yes ☐ No þ

The registrant had approximately 89,389,000 shares of its $0.0001 par value common stock outstanding as of October 30, 2023. 

RIMINI STREET, INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION		2
ITEM 1.	Financial Statements	2
	Unaudited Condensed Consolidated Balance Sheets	2
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income	3
	Unaudited Condensed Consolidated Statements of Stockholders' Deficit	4
	Unaudited Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	34
ITEM 4.	Controls and Procedures	35
PART II. OTHER INFORMATION		36
ITEM 1.	Legal Proceedings	36
ITEM 1A.	Risk Factors	36
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
ITEM 3.	Defaults Upon Senior Securities	59
ITEM 4.	Mine Safety Disclosures	60
ITEM 5.	Other Information	61
ITEM 6.	Exhibits	62
SIGNATURES		63

1

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements. 

RIMINI STREET, INC. 

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

	September 30,		December 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	108,233	$	109,008
Restricted cash	427		426
Accounts receivable, net of allowance of $860 and $723, respectively	61,191		116,093
Deferred contract costs, current	17,641		17,218
Short-term investments	19,914		20,115
Prepaid expenses and other	24,678		18,846
Total current assets	232,084		281,706
Long-term assets:
Property and equipment, net of accumulated depreciation and amortization of $17,320 and $15,441, respectively	8,488		6,113
Operating lease right-of-use assets	6,339		7,142
Deferred contract costs, noncurrent	22,412		23,508
Deposits and other	6,643		7,057
Deferred income taxes, net	59,009		65,515
Total assets	$	334,975	$	391,041
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current maturities of long-term debt	$	5,912	$	4,789
Accounts payable	6,139		8,040
Accrued compensation, benefits and commissions	35,782		37,459
Other accrued liabilities	22,718		32,676
Operating lease liabilities, current	4,175		4,223
Deferred revenue, current	214,073		265,840
Total current liabilities	288,799		353,027
Long-term liabilities:
Long-term debt, net of current maturities	65,671		70,003
Deferred revenue, noncurrent	24,326		34,081
Operating lease liabilities, noncurrent	7,511		9,094
Other long-term liabilities	1,718		2,006
Total liabilities	388,025		468,211
Commitments and contingencies (Note 8)
Stockholders’ deficit:
Preferred stock; $0.0001 par value. Authorized 99,820 (excluding 180 shares of Series A Preferred Stock) no other series has been designated	—		—
Common stock; $0.0001 par value. Authorized 1,000,000 shares; issued and outstanding 89,323 and 88,517 shares, respectively	9		9
Additional paid-in capital	164,522		156,401
Accumulated other comprehensive loss	(4,904)		(4,195)
Accumulated deficit	(211,561)		(228,269)
Treasury stock, at cost	(1,116)		(1,116)
Total stockholders' deficit	(53,050)		(77,170)
Total liabilities and stockholders' deficit	$	334,975	$	391,041

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

RIMINI STREET, INC. 

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue	$	107,453	$	101,931	$	319,386	$	301,041
Cost of revenue	40,110		39,271		118,802		113,822
Gross profit	67,343		62,660		200,584		187,219
Operating expenses:
Sales and marketing	35,593		35,934		107,356		103,840
General and administrative	18,384		18,454		55,475		57,267
Reorganization costs	—		—		59		—
Litigation costs and related recoveries:
Professional fees and other costs of litigation	2,127		6,145		5,475		12,837
Insurance costs and recoveries, net	—		92		—		(389)
Litigation costs and related recoveries, net	2,127		6,237		5,475		12,448
Total operating expenses	56,104		60,625		168,365		173,555
Operating income	11,239		2,035		32,219		13,664
Non-operating income and (expenses):
Interest expense	(1,413)		(1,167)		(4,139)		(2,974)
Other income (expenses), net	990		(1,329)		1,799		(2,696)
Income (loss) before income taxes	10,816		(461)		29,879		7,994
Income taxes	(4,015)		56		(13,171)		(5,202)
Net income (loss)	6,801		(405)		16,708		2,792
Other comprehensive income
Foreign currency translation loss	(1,061)		(1,667)		(1,011)		(3,878)
Derivative instrument and other adjustments, net of tax	140		1,220		302		1,220
Comprehensive income (loss)	$	5,880	$	(852)	$	15,999	$	134
Net income (loss) attributable to common stockholders	$	6,801	$	(405)	$	16,708	$	2,792
Net income (loss) per share attributable to common stockholders:
Basic	$	0.08	$	—	$	0.19	$	0.03
Diluted	$	0.08	$	—	$	0.19	$	0.03
Weighted average number of shares of Common Stock outstanding:
Basic	89,228		87,965		88,942		87,441
Diluted	89,357		87,965		89,322		89,054

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

RIMINI STREET, INC.

Unaudited Condensed Consolidated Statements of Stockholders' Deficit

(In thousands) 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Common Stock, Shares
Beginning of period	89,085		87,529		88,517		87,107
Exercise of stock options for cash	—		193		57		518
Restricted stock units vested	238		701		922		1,391
Issuance of Common Stock	—		—		75		60
Retired shares of Common Stock	—		(200)		(248)		(853)
End of period	89,323		88,223		89,323		88,223
Total Stockholders' Deficit, beginning of period	$	(62,061)	$	(76,487)	$	(77,170)	$	(80,386)
Common Stock, Amount
Beginning of period	9		9		9		9
Exercise of stock options for cash	—		—		—		—
Restricted stock units vested	—		—		—		—
Retired shares of Common Stock	—		—		—		—
End of period	9		9		9		9
Additional Paid-in Capital
Beginning of period	161,391		152,147		156,401		149,234
Stock based compensation expense	3,131		2,443		9,056		8,653
Exercise of stock options for cash	—		513		79		964
Restricted stock units vested	—		—		—		—
Retired shares of Common Stock	—		(992)		(1,014)		(4,740)
End of period	164,522		154,111		164,522		154,111
Accumulated Other Comprehensive Loss
Beginning of period	(3,983)		(4,935)		(4,195)		(2,724)
Other comprehensive loss	(921)		(447)		(709)		(2,658)
End of period	(4,904)		(5,382)		(4,904)		(5,382)
Accumulated Deficit
Beginning of period	(218,362)		(222,592)		(228,269)		(225,789)
Net income (loss)	6,801		(405)		16,708		2,792
End of period	(211,561)		(222,997)		(211,561)		(222,997)
Treasury Stock	(1,116)		(1,116)		(1,116)		(1,116)
Total Stockholders' Deficit, end of period	$	(53,050)	$	(75,375)	$	(53,050)	$	(75,375)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

RIMINI STREET, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

	Nine Months Ended September 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	16,708	$	2,792
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense	9,056		8,653
Depreciation and amortization	2,001		1,871
Accretion and amortization of debt discount and issuance costs	728		728
Deferred income taxes	6,263		327
Amortization and accretion related to operating right of use assets	3,347		4,140
Changes in operating assets and liabilities:
Accounts receivable	54,112		75,068
Prepaid expenses, deposits and other	(4,339)		(6,417)
Deferred contract costs	674		(2,412)
Accounts payable	(2,551)		2,710
Accrued compensation, benefits, commissions and other liabilities	(14,702)		(3,842)
Deferred revenue	(57,684)		(46,861)
Net cash provided by operating activities	13,613		36,757
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital expenditures	(3,654)		(3,144)
Payment for purchases of investments	(24,118)		(11,148)
Proceeds from sale of investments	23,614		—
Net cash used in investing activities	(4,158)		(14,292)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of professional fees related to March 2021 Common Stock offering	—		(27)
Principal payments on the Credit Facility	(3,938)		(8,375)
Payments to repurchase and retire Common Stock	(1,014)		(4,740)
Principal payments on capital leases	(247)		(235)
Proceeds from exercise of employee stock options	79		965
Net cash used in financing activities	(5,120)		(12,412)
Effect of foreign currency translation changes	(5,109)		(11,050)
Net change in cash, cash equivalents and restricted cash	(774)		(997)
Cash, cash equivalents and restricted cash at beginning of period	109,434		119,990
Cash, cash equivalents and restricted cash at end of period	$	108,660	$	118,993

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

RIMINI STREET, INC. 

Unaudited Condensed Consolidated Statements of Cash Flows, Continued

(In thousands)

	Nine Months Ended September 30,
	2023		2022
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	3,409	$	2,195
Cash paid for income taxes	4,164		1,886
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Increase (decrease) in payables for capital expenditures	$	669	$	(2)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — NATURE OF BUSINESS AND BASIS OF PRESENTATION

Nature of Business

Rimini Street, Inc. (the “Company”) is a global provider of end-to-end enterprise software support, products and services. The Company offers a comprehensive family of unified solutions to run, manage, support, customize, configure, connect, protect, monitor, and optimize clients’ enterprise application, database, and technology software platforms.

Basis of Presentation and Consolidation

The Unaudited Condensed Consolidated Financial Statements, which include the accounts of the Company and its wholly-owned subsidiaries, are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by U.S. GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Unaudited Condensed Consolidated Financial Statements have been included. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Audited Consolidated Financial Statements for the year ended December 31, 2022, included in the Company’s 2022 Annual Report on Form 10-K as filed with the SEC on March 1, 2023 (the “2022 Form 10-K”).

The accompanying Unaudited Condensed Consolidated Balance Sheet and related disclosures as of December 31, 2022 have been derived from the Company’s audited financial statements. The Company’s financial condition as of September 30, 2023, and operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the year ending December 31, 2023.

NOTE 2 — LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES

Liquidity

As of September 30, 2023, the Company’s current liabilities exceeded its current assets by $56.7 million, and the Company recorded net income of $6.8 million for the three months ended September 30, 2023. As of September 30, 2023, the Company had available cash, cash equivalents and restricted cash of $108.7 million and short-term investments of $19.9 million. As of September 30, 2023, the Company’s current liabilities included $214.1 million of deferred revenue whereby the historical costs of fulfilling the Company's commitments to provide services to its clients was approximately 37% of the related deferred revenue for the three months ended September 30, 2023.

On July 20, 2021, the Company entered into a five-year term loan of $90 million (the “Credit Facility”). Annual minimum principal payments over the five-year term for the Credit Facility are 5%, 5%, 7.5%, 7.5% and 10%, respectively, with the remaining balance due at the end of the term. See Note 5 for further information regarding the Company's Credit Facility.

Additionally, the Company is obligated to make operating and financing lease payments that are due within the next 12 months in the aggregate amount of $5.6 million. During the third quarter of 2023, the global economy continued to experience interest rate and inflationary pressures, geopolitical conflicts, global supply chain issues, a rise in energy prices and the continuing effects of fiscal and monetary policies adopted by governments in response to and following the global outbreak of the coronavirus (“COVID-19”). Assuming the Company’s ability to operate continues not to be significantly adversely impacted by the related changes in the macroeconomic environment, geopolitical pressures, or the litigation matters described in Note 8, the Company believes that current cash, cash equivalents, restricted cash, and future cash flow from operating activities will be sufficient to meet the Company’s anticipated cash needs, including Credit Facility repayments, working capital needs, capital expenditures and other contractual obligations for at least 12 months from the issuance date of these financial statements.

Use of Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and

7

RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances to determine the carrying values of assets and liabilities that are not readily apparent from other sources. The Company’s accounting estimates include, but are not necessarily limited to, valuation of accounts receivable, valuation assumptions for stock options and leases, deferred income taxes and the related valuation allowances, and the evaluation and measurement of contingencies. To the extent there are material differences between the Company’s estimates and actual results, the Company’s future consolidated results of operations may be affected.

Recent Accounting Pronouncements

Recently Adopted Standards. The following accounting standards were adopted during fiscal year 2023:

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and amended in December 2022 with ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. ASU 2020-04 provides guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying U.S. GAAP to contracts, hedging relationships and other transactions impacted by reference rate reform. The provisions apply only to those transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. Adoption of the provisions of ASU 2020-04 are optional and are effective from March 12, 2020 through December 31, 2024, as amended by ASU 2022-06. During the three months ended March 31, 2023, the Company adopted the optional relief guidance provided under ASU 2020-04 after modifying its interest rate swap agreement in connection with the amendment of the Credit Facility to implement certain changes in the reference rate from LIBOR to the Secured Overnight Financing Rate (“SOFR”). The application of this expedient preserves the presentation of the derivative consistent with past presentation and did not have a material impact on our Unaudited Condensed Consolidated Financial Statements.

NOTE 3 - DEFERRED CONTRACT COSTS AND DEFERRED REVENUE

Activity for deferred contract costs consisted of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Deferred contract costs, current and noncurrent, as of the beginning of period	$	40,106	$	39,709	$	40,726	$	36,509
Capitalized commissions during the period	4,913		3,817		13,630		15,620
Amortized deferred contract costs during the period	(4,966)		(4,606)		(14,303)		(13,209)
Deferred contract costs, current and noncurrent, as of the end of period	$	40,053	$	38,920	$	40,053	$	38,920

Deferred revenue activity consisted of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Deferred revenue, current and noncurrent, as of the beginning of period	$	285,324	$	300,387	$	299,921	$	300,268
Billings, net	60,528		49,731		257,864		248,960
Revenue recognized	(107,453)		(101,931)		(319,386)		(301,041)
Deferred revenue, current and noncurrent, as of the end of period	$	238,399	$	248,187	$	238,399	$	248,187

The Company’s remaining performance obligations represent all future non-cancellable revenue under contract that has not yet been recognized as revenue and includes deferred revenue and unbilled amounts. As of September 30, 2023, remaining performance obligations amounted to $550.1 million, of which $238.4 million was billed and recorded as deferred revenue. As of September 30, 2022, remaining performance obligations amounted to $532.3 million, of which $248.2 million was billed and recorded as deferred revenue.

8

RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Deferred revenue is a contract liability that consists of billings issued that are non-cancellable and payments received in advance of revenue recognition. The Company typically invoices its customers at the beginning of the contract term, in annual and multi-year installments. Deferred revenue is recognized as the Company satisfies its performance obligations over the term of the contracted service period. The Company expects to recognize revenue on approximately $214.1 million of the billed remaining performance obligations over the next 12 months, with the remaining deferred revenue balance recognized thereafter.

NOTE 4 — OTHER FINANCIAL INFORMATION

Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands): 

	September 30,		December 31,
	2023		2022
Accrued sales and other taxes	$	5,760	$	6,878
Accrued professional fees	4,078		9,184
Accrued reorganization costs	—		2,526
Current maturities of capital lease obligations	353		333
Income taxes payable	1,285		2,229
Accrued litigation settlement costs	6,982		6,979
Other accrued expenses	4,260		4,547
Total other accrued liabilities	$	22,718	$	32,676

NOTE 5 — DEBT

Debt is presented net of debt discounts and issuance costs in the Company's balance sheets and consisted of the following (in thousands):

	September 30,		December 31,
	2023		2022
Credit Facility	$	71,583	$	74,792
Less current maturities	5,912		4,789
Long-term debt, net of current maturities	$	65,671	$	70,003

On February 22, 2023, the Company amended its Credit Facility. The amendment implemented, among other things, certain changes in the reference rate from LIBOR to the SOFR. Effective February 28, 2023, the Company has a choice of interest rates between (a) Adjusted Term SOFR and (b) Base Rate (as defined in the Credit Facility), in each case plus an applicable margin. The applicable margin remains the same as the existing Credit Agreement and is based on the Company’s Consolidated Leverage Ratio (as defined in the Credit Agreement) and whether the Company elects Adjusted Term SOFR (ranging from 1.75 to 2.50%) or Base Rate (ranging from 0.75 to 1.50%).

In addition, the amendment adjusted the definition of Consolidated EBITDA to provide an addback solely for the fourth fiscal quarter of 2022, and any period including such quarter, that costs and legal fees and expenses incurred by the Company in connection with its ongoing litigation with Oracle up to $10.0 million can be added back and included in the applicable calculation of Consolidated EBITDA.

Based on voluntary prepayments made to date under the Credit Facility, the Company currently has available $40.0 million in incremental borrowings available for future use, subject to the terms of the Credit Facility.

On May 31, 2022, the Company amended the Credit Facility to increase the aggregate value of the shares of Common Stock that can be repurchased by the Company to $50 million during the term of the Credit Facility.

On September 30, 2023, June 30, 2023 and March 31, 2023, the Company made its required principal payments under the Credit Facility of $1.7 million, $1.1 million, and $1.1 million, respectively. On September 30, 2022, June 30, 2022 and March

9

RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2022, the Company also made its required three principal payments of $1.1 million, respectively. On May 31, 2022, the Company prepaid $5.0 million of indebtedness outstanding under its Credit Facility with no prepayment penalty.

Effective July 20, 2021, the Company received $89.3 million of net proceeds pursuant to the Credit Facility. The borrowings under the Credit Facility were incurred with an original discount of 0.375%. As part of the transaction, the Company incurred issuance costs of $4.2 million, which were capitalized and are being amortized over the term of the Credit Facility.

The Credit Facility originally bore interest at LIBOR, plus a margin ranging from 1.75% to 2.50% through February 28, 2023. Subsequently, the Credit Facility was amended to bear interest at SOFR as noted above. For the three months ended September 30, 2023 and 2022, the average interest rate on the Credit Facility was 7.12% and 3.94%, respectively. For the nine months ended September 30, 2023 and 2022, the average interest rate on the Credit Facility was 6.76% and 3.06%, respectively.

On May 18, 2022, the Company entered into an interest rate swap agreement with a notional value of $40.0 million, with a fixed payer LIBOR rate of 2.9935% and an initial floating LIBOR rate of 0.93557%. The floating rate is reset at each month end and had an embedded floor rate of 0.0%. The term of the interest rate swap agreement coincides with that of the Credit Facility. See Note 11 for further information regarding the fair value accounting for the interest rate swap agreement. Effective February 28, 2023, the interest rate swap agreement was amended in connection with the amendment of the Credit Facility to implement certain changes in the reference rate from LIBOR to SOFR.

The fair value of the Credit Facility was $74.9 million (Level 2 inputs) as of September 30, 2023 compared to the carrying value of $73.9 million as of September 30, 2023. The fair value of the Credit Facility was $78.8 million (Level 2 inputs) as of December 31, 2022 compared to the carrying value of $77.8 million as of December 31, 2022.

The Credit Facility contains certain financial covenants, including a minimum fixed charge coverage ratio greater than 1.25, a total leverage ratio less than 3.75, and a minimum liquidity balance of at least $20 million in U.S. cash. Annual minimum principal payments over the five-year term for the Credit Facility are 5%, 5%, 7.5%, 7.5%, and 10%, respectively, with the remaining balance due at the end of the term.

Pursuant to a Guaranty and Security Agreement, dated July 2, 2021 (the “Guaranty and Security Agreement”), among the Credit Parties and Capital One, National Association, as agent, the obligations under the Credit Facility are guaranteed by certain of the Company’s subsidiaries (the Company and the guarantors, collectively, the “Credit Parties”) and are secured, subject to customary permitted liens and exceptions, by a lien on substantially all assets of the Credit Parties.

The components of interest expense are presented below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Credit Facility:
Interest expense	$	1,147	$	897	$	3,351	$	2,174
Accretion expense related to discount and issuance costs	245		245		728		728
Interest on finance leases	21		25		60		72
	$	1,413	$	1,167	$	4,139	$	2,974

For the three and nine months ended September 30, 2023, interest expense included a reduction related to interest rate swap payments received of $0.2 million and $0.6 million, respectively.

NOTE 6 — COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS 

Common Stock Retired

On May 28, 2022, the Board of Directors authorized an increase to the Company’s previously announced Common Stock repurchase program to increase the value of the shares that could be acquired by the Company from up to $15.0 million over two years to up to $50.0 million over four years, subject to compliance with the Company’s Credit Facility, provided that all other applicable conditions and legal requirements are satisfied.

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On February 27, 2022, the Board of Directors approved the adoption of a stock repurchase program to acquire up to $15.0 million of the Company’s Common Stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, through March 4, 2024, subject to compliance with the Company's Credit Facility, which was amended effective January 14, 2022 to increase the aggregate value of the shares of Common Stock that could be acquired by the Company to no greater than $15.0 million during the term of the Credit Facility, provided that all other applicable conditions and legal requirements are satisfied.

During the three months ended September 30, 2023, the Company did not acquire any shares of its Common Stock on the open market. For the nine months ended September 30, 2023, the Company acquired 0.2 million shares of its Common Stock on the open market at a cost of $1.0 million. For the three months ended September 30, 2022, the Company acquired 0.2 million shares of its Common Stock on the open market at a cost of $1.0 million. For the nine months ended September 30, 2022, the Company acquired an aggregate 0.9 million shares of Common Stock on the open market at a total cost of $4.7 million. Upon completion of all repurchase transactions, the associated shares of Common Stock were retired.

Stock Plans

The Company’s stock plans consist of the 2007 Stock Plan (the “2007 Plan”) and the 2013 Equity Incentive Plan, as amended and restated in July 2017 (the “2013 Plan”). The 2007 Plan and the 2013 Plan are collectively referred to as the “Stock Plans”. On February 23, 2023, pursuant to the “evergreen” provisions of the 2013 Plan, the Board of Directors authorized an increase of approximately 3.5 million shares available for grant under the 2013 Plan. For additional information about the Stock Plans, please refer to Note 8 to the Company’s Consolidated Financial Statements for the year ended December 31, 2022, included in Part II, Item 8 of the 2022 Form 10-K. The information presented below provides an update for activity under the Stock Plans for the three and nine months ended September 30, 2023.

On March 31, 2023, the Company’s Board of Directors, approved the Company’s 2023 Long-Term Incentive Plan (the “2023 LTI Plan”), consisting of awards of performance units (“PSUs”), restricted stock units (“RSUs”) and stock options to purchase shares of the Company’s Common Stock under the terms of the Company’s 2013 Equity Incentive Plan (the “2013 Equity Plan”), as amended, effective as of April 3, 2023.

Performance Units

The PSUs awarded under the 2023 LTI Plan (the “Target PSUs”) will be measured over a performance period beginning on January 1, 2023 and ending on December 31, 2023 (the “Performance Period”), but will remain subject to a continued service-based vesting requirement. Half of the PSUs awarded will be eligible to vest based on the Company’s achievement against a target adjusted EBITDA goal for fiscal year 2023, and the remaining half of the PSUs awarded will be eligible to vest based on the Company’s achievement against a target total revenue goal for fiscal year 2023. The ultimate number of PSUs that may vest (as calculated, the “Earned PSUs”) range from zero to 200% of the Target PSUs. Under the terms of the 2023 LTI Plan, the Earned PSUs will vest in equal annual installments on the first, second and third anniversaries of the Date of Grant, generally subject to the awardee continuing to be a Service Provider through the applicable vesting date.

The Company granted 0.6 million PSUs on April 3, 2023 at a grant price of $3.93. The Company recognized compensation expense related to PSUs of $0.4 million and $0.7 million for the three and nine ended September 30, 2023, respectively.

Restricted Stock Units

For the nine months ended September 30, 2023, the Board of Directors granted RSUs under the 2013 Plan to employees and to non-employee members of the Board of Directors for an aggregate of approximately 1.4 million shares of Common Stock. RSU grants vest over periods generally ranging from 12 to 36 months from the respective grant dates and the awards are subject to forfeiture upon termination of employment or service on the Board of Directors, as applicable. Based on the weighted average fair market value of the Common Stock on the date of grant of $4.16 per share, the aggregate fair value for the shares underlying the RSUs amounted to $5.6 million as of the grant date that will be recognized as compensation cost over the vesting period. For the three months ended September 30, 2023 and 2022, the Company recognized compensation expense related to RSUs of approximately $1.8 million and $1.8 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company recognized expense of $5.7 million and $6.6 million, respectively. As of September 30, 2023, the unrecognized expense of $7.0 million net of forfeitures is expected to be charged to expense on a straight-line basis as the RSUs vest over a weighted-average period of approximately 1.6 years.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock Options

For the nine months ended September 30, 2023, the Board of Directors granted stock options for the purchase of an aggregate of approximately 1.9 million shares of Common Stock at exercise prices that were equal to the fair market value of the Common Stock on the date of grant. Options granted to employees generally vest as to one-third of the shares subject to the award on each anniversary of the designated vesting commencement date, which may precede the grant date of such award, and expire ten years after the grant date.

The following table sets forth a summary of stock option activity under the Stock Plans for the nine months ended September 30, 2023 (shares in thousands): 

	Shares	Price (1)		Term (2)
Outstanding, December 31, 2022	6,994	$	6.17	5.5
Granted	1,912	4.20
Forfeited	(288)	5.95
Expired	(213)	6.64
Exercised	(57)	1.38
Outstanding, September 30, 2023 (3)(4)	8,348	5.75		5.8
Vested, September 30, 2023 (3)	5,106	6.22		3.8

(1)Represents the weighted average exercise price.

(2)Represents the weighted average remaining contractual term until the stock options expire in years.

(3)As of September 30, 2023, there was no aggregate intrinsic value of all stock options outstanding. As of September 30, 2023, there was no aggregate intrinsic value of vested stock options.

(4)The number of outstanding stock options that are not expected to ultimately vest due to forfeiture amounted to 0.4 million shares as of September 30, 2023.

The following table presents activity affecting the total number of shares available for grant under the Stock Plans for the nine months ended September 30, 2023 (in thousands):

 

Available, December 31, 2022	7,543
Newly authorized by Board of Directors	3,541
Stock options granted	(1,912)
RSUs and PSUs granted	(1,960)
Expired options under Stock Plans	213
Forfeited options under Stock Plans	288
Forfeited RSUs under Stock Plans	177
Repurchased shares of Common Stock	248
Issuance of Common Stock	(75)
Available, September 30, 2023	8,063

The aggregate fair value of approximately 1.9 million stock options granted for the nine months ended September 30, 2023 amounted to $4.5 million, or $2.33 per stock option as of the grant date utilizing the Black-Scholes-Merton (“BSM”) method. The fair valued derived under the BSM method will result in the recognition of compensation cost over the vesting period of the stock options. For the nine months ended September 30, 2023, the fair value of each stock option grant under the Stock Plans was estimated on the date of grant using the BSM option-pricing model, with the following weighted-average assumptions:

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RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Expected life (in years)	6.0
Volatility	55%
Dividend yield	0%
Risk-free interest rate	3.75%
Fair value per share of Common Stock on date of grant	$4.20

As of September 30, 2023 and December 31, 2022, total unrecognized compensation costs related to unvested stock options, net of estimated forfeitures, was $5.3 million and $4.1 million, respectively. As of September 30, 2023, the unrecognized costs are expected to be charged to expense on a straight-line basis over a weighted-average vesting period of approximately 2.0 years.

Stock-Based Compensation Expense

Stock-based compensation expense attributable to RSUs and stock options is classified as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	503	$	535	$	1,423	$	1,616
Sales and marketing	817		787		2,067		2,467
General and administrative	1,811		1,121		5,566		4,570
Total	$	3,131	$	2,443	$	9,056	$	8,653

Warrants

As of September 30, 2023, warrants were outstanding for an aggregate of 3.4 million shares of Common Stock exercisable at $5.64 per share. For additional information about these warrants, please refer to Note 8 to the Company’s Consolidated Financial Statements for the year ended December 31, 2022, included in Part II, Item 8 of the 2022 Form 10-K.

NOTE 7 — INCOME TAXES

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into law. The IRA includes a 15% corporate alternative minimum tax for companies that report over $1 billion in U.S. profits to shareholders and a 1% excise tax on stock buy backs. The Company does not expect the IRA to have a material tax impact.

For the three months ended September 30, 2023 and 2022, the Company’s effective tax rate was 37.1% and 12.1%, respectively. For the nine months ended September 30, 2023 and 2022, the Company’s effective tax rate was 44.1% and 65.1%, respectively. The Company’s income tax expense was primarily attributable to earnings in the United States and foreign jurisdictions subject to income taxes and foreign withholding taxes. The Company did not have any material changes to its conclusions regarding valuation allowances for deferred income tax assets or uncertain tax positions for the three and nine months ended September 30, 2023 and 2022.

For additional information about income taxes, please refer to Note 9 to the Company’s Consolidated Financial Statements for the year ended December 31, 2022, included in Part II, Item 8 of the 2022 Form 10-K.

NOTE 8 — COMMITMENTS AND CONTINGENCIES

Retirement Plan

The Company has defined contribution plans for both its U.S. and foreign employees. For certain of these plans, employees may contribute up to the statutory maximum, which is set by law each year. The plans also provide for employer contributions. For the three months ended September 30, 2023 and 2022, the Company’s matching contributions to these plans totaled $1.0 million and $0.8 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company’s matching contributions to these plans totaled $2.6 million and $2.7 million, respectively.

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RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Rimini I Litigation

In January 2010, certain subsidiaries of Oracle Corporation (together with its subsidiaries individually and collectively, “Oracle”) filed a lawsuit, Oracle USA, Inc. et al. v. Rimini Street, Inc. et al. (United States District Court for the District of Nevada) (the “District Court”) (“Rimini I”), against the Company and its Chief Executive Officer, Chairman of the Board and President, Seth Ravin, alleging that certain of the Company’s processes (Process 1.0) violated Oracle’s license agreements with its customers and that the Company committed acts of copyright infringement and violated other federal and state laws. The litigation involved the Company’s business processes and the manner in which the Company provided services to its clients.

After completion of a jury trial in 2015 and subsequent appeals, the final outcome of Rimini I was that Mr. Ravin was found not liable for any claims and the Company was found liable for only one claim: “innocent infringement,” a jury finding that the Company did not know and had no reason to know that its former support processes were infringing. The jury also found that the infringement did not cause Oracle to suffer lost profits. The Company was ordered to pay a judgment of $124.4 million in 2016, which the Company promptly paid and then pursued appeals. With interest, attorneys’ fees and costs, the total judgment paid by the Company to Oracle after the completion of all appeals was approximately $89.9 million. A portion of such judgment was paid by the Company’s insurance carriers.

Rimini I Injunction Proceedings

Since November 2018, the Company has been subject to a permanent injunction (the “Rimini I Injunction”) prohibiting it from using certain support processes that had been found in Rimini I to “innocently” infringe certain Oracle copyrights. The Rimini I Injunction does not prohibit the Company’s provision of support services for any Oracle product lines, but rather defines the manner in which the Company can provide support services for certain Oracle product lines.

In July 2020, Oracle filed a motion to show cause contending that the Company was in violation of the Rimini I Injunction, and the Company opposed this motion, disputing Oracle’s claims. In January 2022, the District Court issued its findings and order following an evidentiary hearing held in September 2021 regarding whether the Company (i) violated the Rimini I Injunction for certain accused conduct and (ii) should be held in contempt in those instances where the District Court found a violation of the Rimini I Injunction, and what sanctions, if any, were appropriate.

In the order, the District Court ruled in favor of the Company with respect to five of the items. With respect to the other five items, the District Court found the Company violated the Rimini I Injunction, awarded sanctions to Oracle of $0.6 million and ordered that certain computer files be quarantined from use and notice and proof of such quarantining be provided to Oracle. The District Court also ruled that Oracle may recover its reasonable attorneys’ fees and costs. The Company reserved all rights, including appellate rights, with respect to the District Court rulings.

In February 2022, the Company filed a notice of appeal in the District Court, commencing an appeal of the District Court’s January 2022 decision to the Ninth Circuit Court of Appeals (“Court of Appeals”). Shortly thereafter, the District Court stayed the briefing on Oracle’s bill of attorneys’ fees and costs until the Company’s appeal was resolved.

Following oral argument on the appeal held in February 2023, on August 24, 2023, the Court of Appeals issued its decision on the Company’s appeal of the five items for which the District Court held the Company in contempt. The Court of Appeals affirmed the District Court’s contempt findings on four of the five items and reversed the District Court’s finding of contempt on the fifth item, holding that the District Court had abused its discretion in holding the Company in contempt. In addition, the Court of Appeals vacated the District Court’s order to the extent that it read the Rimini I Injunction to prohibit “de minimis” copying, as well as vacated and remanded the sanctions award to the District Court for recalculation in light of its reversal of the contempt finding on the fifth item.

On September 6, 2023, the Company filed a petition for panel rehearing and rehearing en banc of the Court of Appeals’ ruling that the District Court was permitted to use the Copyright Act’s damages framework to measure the original award of $0.6 million in sanctions to Oracle. On October 12, 2023, the Court of Appeals denied the Company’s petition. On October 25, 2023, the District Court filed an order imposing a recalculated award against the Company, reducing the sanctions originally awarded to Oracle by $0.1 million and reimposing the remaining $0.5 million sanctions award, which amount was previously paid by the Company to Oracle, as described below.

At this time, the Company believes that it is in substantial compliance with the Rimini I Injunction and has complied with the order regarding the quarantining of certain computer files. As of September 30, 2023 and December 31, 2022, the Company

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RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

had accrued $6.9 million, respectively, as an estimate related to Oracle’s reasonable attorneys’ fees and costs relating to this matter. During the nine months ended September 30, 2022, the Company paid $0.6 million to Oracle for the sanctions award. Regarding the Company’s estimate for reasonable attorneys’ fees and costs, significant judgment is required to determine the amount of loss related to this matter as the outcome is inherently unpredictable and subject to uncertainties. Per order of the District Court, the deadline for Oracle to file its proposed bill of reasonable fees and costs is November 24, 2023. The Company’s response is due sixty (60) days after Oracle’s filing, and Oracle’s reply is due twenty (20) days after the Company’s response. The Company reserves all rights, including appellate rights, with respect to the District Court’s rulings in the contempt matter, including any award of attorneys’ fees and costs. An adverse outcome regarding Oracle’s motion for attorneys’ fees and costs could have a material adverse impact on the Company’s financial position, results of operations and cash flows.

Rimini II Litigation

In October 2014, the Company filed a separate lawsuit, Rimini Street Inc. v. Oracle Int’l Corp., in the District Court against Oracle seeking a declaratory judgment that the Company’s revised “Process 2.0” support practices, in use since at least July 2014, did not infringe certain Oracle copyrights (“Rimini II”). The Company’s operative complaint asserted declaratory judgment, tort, and statutory claims, including a request for injunctive relief against Oracle for unfair competition in violation of the California Unfair Competition Law. Oracle asserted counterclaims including copyright infringement claims, violations of the Digital Millennium Copyright Act (“DMCA”) and Lanham Act, breach of contract and business tort violations with respect to PeopleSoft and other Oracle-branded products, including J.D. Edwards, Siebel, Oracle Database and Oracle E-Business Suite (“EBS”).

In mid-October 2022, on the eve of the Rimini II jury trial, Oracle withdrew all of its monetary damages claims against the Company and the Company’s Chief Executive Officer, Chairman of the Board and President, Mr. Ravin in Rimini II and moved to proceed with a bench trial instead of a jury trial for its claims for equitable relief.

The District Court entered an order on October 24, 2022, dismissing with prejudice Oracle’s claims in Rimini II “for monetary relief of any kind under any legal theory[,] including but not limited to claims for damages, restitution, unjust enrichment, and engorgement. . . .” In addition, Oracle’s claims for breach of contract, inducing breach of contract and an accounting, were dismissed with prejudice, meaning that the claims (including for monetary damages) have been dismissed on their merits and that the judgment rendered is final. Prior to the date of the District Court’s order dismissing with prejudice all of Oracle’s claims for monetary relief, no damages of any kind were awarded by the District Court in Rimini II. The parties each reserved the right to seek or object to any attorneys’ fees and/or costs to the extent permissible by law.

The Rimini II bench trial began in Las Vegas on November 29, 2022 and concluded on December 15, 2022. The parties submitted their proposed findings of fact and conclusions of law to the District Court in February 2023.

On July 24, 2023, the District Court issued its findings of fact and conclusions of law in Rimini II, accompanied by a permanent injunction against the Company (the “Rimini II Injunction”) which, as set forth in detail below, is subject to an administrative stay and is not currently effective. The District Court found infringement as to Oracle’s PeopleSoft and Oracle Database products but did not find infringement as to Oracle’s EBS, Siebel and J.D. Edwards products, further ordering that the Company was entitled to a declaration of non-infringement for Oracle’s EBS product. The District Court also found in favor of Oracle on its DMCA and Lanham Act claims, enjoining the Company from making certain statements and prohibiting certain actions in connection with the manner of marketing, selling and providing services to clients of the Oracle products in question as further described below, and on indirect and vicarious copyright infringement claims against the Company’s Chief Executive Officer, Chairman of the Board and President, Mr. Ravin. The District Court denied the Company’s California Unfair Competition Law claim and other declaratory judgment claims.

On July 25, 2023, the Company filed a notice of appeal in the District Court, commencing an appeal of the District Court’s July 24, 2023 Rimini II judgment and Injunction.

On July 28, 2023, the Company filed an emergency motion with the District Court to stay enforcement of the Rimini II Injunction pending the Company’s appeal of the Rimini II judgment and Injunction.

On August 15, 2023, the District Court issued an order denying the Company’s emergency motion to stay the Rimini II Injunction pending the Company’s appeal with the Court of Appeals, but it granted an administrative stay of the Rimini II Injunction pending the outcome of a motion to stay to be filed by the Company with the Court of Appeals.

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RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On August 22, 2023, the Company filed the separate motion to stay the Rimini II Injunction with the Court of Appeals, asserting that certain provisions of the Rimini II Injunction are vague and overbroad, that the District Court committed legal error, that certain provisions would require the Company to commit criminal acts to comply with its terms, and that the Rimini II Injunction would cause the Company and third parties “irreparable harm,” among other grounds. As of the date of this Report, the Court of Appeals has not issued a decision on the Company’s motion to stay the Rimini II Injunction.

As of the date of this Report, the Rimini II Injunction, as issued by the District Court, is currently stayed by the District Court, meaning that it is not currently effective. The Rimini II Injunction is primarily directed at Oracle’s PeopleSoft software product and, if effective, would limit, but not fully prohibit, the support services the Company can provide its clients using Oracle’s PeopleSoft software product.

Among other things, the Rimini II Injunction requires the Company to immediately and permanently delete certain PeopleSoft software environments, files and updates identified in the Rimini II Injunction, as well as to delete and immediately and permanently discontinue use of certain Company-created automated tools. The Rimini II Injunction also prohibits using, distributing, copying, or making derivative works from certain files, and it prohibits the transfer or copying of PeopleSoft files, updates, and modifications, and portions of PeopleSoft software that are developed, tested, or exist in one client’s systems to the Company’s systems or another client’s systems.

The Rimini II Injunction also specifies that the Company shall not remove, alter or omit any Oracle copyright notices or other Oracle copyright management information from any file that contains an Oracle copyright notice and prohibits the Company from publicly making statements or statements substantially similar to those the District Court found to be “false and misleading,” which are listed in the Rimini II Injunction.

On August 21, 2023, Oracle filed a motion to amend the District Court’s judgment in Rimini II regarding an update, technical specification and tool related to Oracle’s EBS software product. As of the date of this Report, the District Court has not issued a decision on Oracle’s motion to amend.

On September 12, 2023, the Court of Appeals issued an order holding the Company’s appeal of the District Court’s decision in Rimini II in abeyance pending the District Court’s resolution of Oracle’s above-described motion to amend the Rimini II judgment. Accordingly, as of the date of this Report, the briefing schedule for the Company’s appeal of the Rimini II decision has been stayed.

While the Company plans to continue to vigorously pursue a stay of the Rimini II Injunction pending appeal and its appeal of the Rimini II judgment and Injunction, it is unable to predict the timing or outcome of these matters. No assurance is or can be given that the Company will succeed in its efforts to stay the Rimini II Injunction in full or in part pending appeal or prevail in all or part of its Rimini II appeal.

There were no monetary damages included in the District Court’s judgment in Rimini II. The deadline for the parties to file motions for attorneys’ fees and costs is November 6, 2023, and oppositions to such motions are due February 20, 2024. As of the date of this Report, no party has filed such a motion with the District Court. A decision about whether to award any attorneys’ fees and/or costs, and if so, the amounts, will be made by the District Court. Accordingly, at this time the Company does not believe that any award of attorneys’ fees and costs are probable or estimatable. An adverse outcome regarding any Oracle motion for attorneys’ fees and costs could have a material adverse impact on the Company’s financial position, results of operations and cash flows.

The Rimini II Injunction, if reinstated, would affect certain support services delivered by the Company to clients receiving support for Oracle’s PeopleSoft products and is expected to result in additional future period costs, among other potential impacts. However, these costs are not currently estimatable and are not required to be recorded as of September 30, 2023. Accordingly, the Company has made no associated accrual as of September 30, 2023. Any required changes to how support services are delivered to the Company’s PeopleSoft clients could have a material adverse impact on the Company’s financial position, results of operations and cash flows. The percentage of revenue derived from services the Company provides solely for Oracle’s PeopleSoft software product was approximately 8% and 9% of the Company’s total revenue for the three and nine months ended September 30, 2023, respectively.

The Company reserves all rights, including appellate rights, with respect to the District Court’s rulings in Rimini II and the Rimini II Injunction, including any award of attorneys’ fees and costs to Oracle.

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RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other Litigation

From time to time, the Company may be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business. Regardless of the outcome, litigation can have an adverse impact on the Company because of judgment, defense and settlement costs, diversion of management resources and other factors. At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimatable under ASC 450, Contingencies. Legal fees are expensed as incurred.

Liquidated Damages

The Company enters into agreements with clients that contain provisions related to liquidated damages that would be triggered in the event that the Company is no longer able to provide services to these clients. The maximum cash payments related to these liquidated damages is approximately $12.6 million and $8.1 million as of September 30, 2023 and December 31, 2022, respectively. To date, the Company has not incurred any costs as a result of such provisions and has not accrued any liabilities related to such provisions in these Unaudited Condensed Consolidated Financial Statements.

NOTE 9 — RELATED PARTY TRANSACTIONS

An affiliate of Adams Street Partners and its affiliates (collectively referred to as “ASP”) is a member of the Company’s Board of Directors. As of September 30, 2023, ASP owned approximately 26.4% of the Company’s issued and outstanding shares of Common Stock.

NOTE 10 —EARNINGS PER SHARE

The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share of Common Stock is computed by dividing net income attributable to common stockholders by the weighted average number of shares of basic Common Stock outstanding. Diluted earnings per share of Common Stock is calculated by adjusting the basic earnings per share of Common Stock for the effects of potential dilutive Common Stock shares outstanding such as stock options, restricted stock units and warrants.

For both the three and nine months ended September 30, 2023 and 2022, basic and diluted net earnings per share of Common Stock were computed by dividing the net income attributable to common stockholders by the weighted average number of common shares outstanding during the respective periods. The following tables set forth the computation of basic and diluted net income attributable to common stockholders (in thousands, except per share amounts):

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RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Income (loss) attributable to common stockholders:
Net income (loss)	$	6,801	$	(405)	$	16,708	$	2,792
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Weighted average number of shares of Common Stock outstanding:
Basic	89,228		87,965		88,942		87,441
Warrants	—		—		—		—
Stock options	—		—		18		543
RSUs	129		—		362		1,070
Diluted	89,357		87,965		89,322		89,054
Net income (loss) per share attributable to common stockholders:
Basic	$	0.08	$	—	$	0.19	$	0.03
Diluted	$	0.08	$	—	$	0.19	$	0.03

The following potential Common Stock equivalents were excluded from the computation of diluted net income per share for the respective periods ending on these dates, since the impact of inclusion was anti-dilutive (in thousands): 

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
RSUs and PSUs	2,767	1,243	1,270	460
Stock options	8,358	4,914	7,830	4,161
Warrants	3,440	18,128	3,440	18,128
Total	14,565	24,285	12,540	22,749

NOTE 11 — FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS

Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. Additional information on fair value measurements is included in Note 13 to the Company’s Consolidated Financial Statements for the year ended December 31, 2022, included in Part II, Item 8 of the 2022 Form 10-K. The Company’s policy is to recognize asset or liability transfers among Level 1, Level 2 and Level 3 as of the actual date of the events or change in circumstances that caused the transfer.

Investments

During September 2022, the Company invested $20 million of its cash and cash equivalents into U.S. Federal agency bonds, U.S. government bonds, U.S. treasury notes and other securities. We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values.

In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Debt investments are classified as available-for-sale and gains and losses are recorded using the specific identification method. Changes in fair value are recorded in the operating statement. Fair value is calculated based on publicly available market information.

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RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Listed below are the cash equivalent and investment balances as of September 30, 2023 (in thousands):

	Fair Value Level	Cost Basis		Unrealized Gains (Losses)		Recorded Basis		Cash Equivalents		Short-term Investments		Long-term Investments
Federal Agency Bonds	Level 2	$	14,895	$	165	$	15,060	$	195	$	14,160	$	705
US Treasury notes	Level 2	5,716		38		5,754		—		5,754		—
		$	20,611	$	203	$	20,814	$	195	$	19,914	$	705

Derivatives

On May 18, 2022, the Company entered into an interest rate swap agreement for a notional value of $40.0 million. The derivative was recognized in the accompanying Unaudited Condensed Consolidated Balance Sheets at its estimated fair value as of September 30, 2023. The Company uses derivatives to manage the risk associated with changes in interest rates. The Company does not enter into derivatives for speculative purposes.

To estimate fair value for the Company's interest rate swap agreement as of September 30, 2023, the Company utilized a present value of future cash flows, leveraging a model-derived valuation that uses Level 2 observable inputs such as interest rate yield curves. The Company estimated the fair value of the interest rate swap agreement to be $1.8 million as of September 30, 2023.

Changes in the fair value of the derivatives that qualify as cash flow hedges are recorded in Accumulated other comprehensive loss in the accompanying Unaudited Condensed Consolidated Balance Sheets until earnings are affected by the variability of the cash flows.

The Company received interest swap payments of $0.2 million and $0.6 million during the three and nine months ended September 30, 2023, respectively, which were recorded as a reduction to interest expense. The Company incurred interest payments of $0.1 million and $0.2 million during the three and nine months ended September 30, 2022, respectively, which were recorded as interest expense.

The amounts recorded for the interest rate swap agreement are described below (in thousands):

Derivative Instrument	Balance Sheet Classification					September 30, 2023		December 31, 2022
Interest rate swap	Deposits and other					$	1,797	$	1,402
	Accumulated other comprehensive loss					1,408		1,107
		Three Months Ended September 30,				Nine Months Ended September 30,
Derivative Instrument	Income Statement Classification	2023		2022		2023		2022
Interest rate swap	Interest expense (benefit)	$	(235)	$	81	$	(600)	$	224

Significant Concentrations

The Company attributes revenues to geographic regions based on the location of its clients’ contracting entities. The following table shows revenues by geographic region (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States of America	$	55,740	$	53,423	$	163,146	$	159,616
International	51,713		48,508		156,240		141,425
Total	$	107,453	$	101,931	$	319,386	$	301,041

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RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

No clients represented more than 10% of revenue for both the three and nine months ended September 30, 2023 and 2022. As of September 30, 2023 and December 31, 2022, no clients accounted for more than 10% of total net accounts receivable. The Company tracks its assets by physical location. As of September 30, 2023 and December 31, 2022, the net carrying value of the Company’s property and equipment located outside of the United States amounted to approximately $2.5 million and $1.8 million respectively. As of September 30, 2023, the Company had operating lease right-of-use assets of $3.3 million, $2.4 million and $0.7 million in the United States, India and the rest of the world, respectively. As of December 31, 2022, the Company had operating lease right-of-use assets of $2.6 million, $3.4 million and $1.2 million in the United States, India and the rest of the world, respectively.

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable. The Company maintains its cash, cash equivalents and restricted cash at high-quality financial institutions, primarily in the United States. Deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. As of September 30, 2023 and December 31, 2022, the Company had cash, cash equivalents and restricted cash with a single financial institution for an aggregate of $32.5 million and $44.9 million, respectively. In addition, as of September 30, 2023, the Company had cash and cash equivalents with three other single financial institutions of $61.2 million. As of September 30, 2023 and December 31, 2022, the Company had restricted cash of $0.4 million. The Company has never experienced any losses related to these balances.

Generally, credit risk with respect to accounts receivable is diversified due to the number of entities comprising the Company’s client base and their dispersion across different geographies and industries. The Company performs ongoing credit evaluations on certain clients and generally does not require collateral on accounts receivable. The Company maintains reserves for potential bad debts and historically such losses are generally not significant.

NOTE 12 - LEASES

Effective at the start of fiscal 2020, the Company adopted the provisions and expanded disclosure requirements described in Accounting Standards Codification (ASC) Topic 842, Leases. The Company adopted the standard using the prospective method. The Company has operating leases for real estate and equipment with an option to renew the leases for up to one month to five years. Some of the leases include the option to terminate the leases upon 30-days’ notice with a penalty. The Company’s leases have various remaining lease terms ranging from July 2023 to December 2028. The Company’s lease agreements may include renewal or termination options for varying periods that are generally at the Company's discretion. The Company’s lease terms only include those periods related to renewal options the Company believes are reasonably certain to exercise. The Company generally does not include these renewal options as it is not reasonably certain to renew at the lease commencement date. This determination is based on consideration of certain economic, strategic and other factors that the Company evaluates at lease commencement date and reevaluates throughout the lease term. Some leases also include options to terminate the leases and the Company only includes those periods beyond the termination date if it is reasonably certain not to exercise the termination option.

The Company uses a discount rate to calculate the right of use (“ROU”) asset and lease liability. When the implicit rate is known or provided in the lease documents, the Company is required to use this rate. In cases in which the implicit rate is not known, the Company uses an estimated incremental borrowing rate.

Some leasing arrangements require variable payments that are dependent on usage or may vary for other reasons, such as payments for insurance and tax payments. The variable portion of lease payments is not included in the Company’s ROU assets or lease liabilities. Rather, variable payments, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred and are included in lease expenses recorded in selling and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.

The Company has lease agreements with both lease and non-lease components that are treated as a single lease component for all underlying asset classes. Accordingly, all expenses associated with a lease contract are accounted for as lease expenses.

The Company has elected to apply the short-term lease exception for all underlying asset classes. That is, leases with a term of 12 months or less are not recognized on the balance sheet, but rather expensed on a straight-line basis over the lease term. The Company’s leases do not include significant restrictions or covenants, and residual value guarantees are generally not included within its operating leases. As of September 30, 2023, the Company has one additional operating lease with a net present value of $0.5 million in Tokyo, Japan that will commence on October 1, 2023.

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RIMINI STREET, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The components of lease expense and supplemental balance sheet information were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease expense related to ROU assets and liabilities	$	1,109	$	1,360	$	3,347	$	4,140
Other lease expense	318		229		491		633
Total lease expense	$	1,427	$	1,589	$	3,838	$	4,773

Other information related to leases was as follows (in thousands):

Supplemental Balance Sheet Information	September 30, 2023		December 31, 2022
Operating lease right-of-use assets, noncurrent	$	6,339	$	7,142
	September 30, 2023		December 31, 2022
Operating lease liabilities, current	$	4,175	$	4,223
Operating lease liabilities, noncurrent	7,511		9,094
Total operating lease liabilities	$	11,686	$	13,317

Weighted Average Remaining Lease Term	Years
Operating leases	3
Weighted Average Discount Rate
Operating leases	10.0	%

Maturities of operating lease liabilities as of September 30, 2023 were as follows (in thousands):

Year Ending September 30,
2024	$	5,078
2025	3,956
2026	2,806
2027	1,187
2028	366
Thereafter	94
Total future undiscounted lease payments	13,487
Less imputed interest	(1,801)
Total	$	11,686

For the three months ended September 30, 2023 and 2022, the Company paid $1.3 million and $1.4 million, respectively, for operating lease liabilities. For the nine months ended September 30, 2023 and 2022, the Company paid $4.2 million and $4.1 million, respectively, for operating lease liabilities.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

    This Quarterly Report on Form 10-Q (this “Report”) includes forward-looking statements. All statements other than statements of historical facts contained in this Report, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “currently,” “estimate,” “expect,” “future,” “intend,” “may,” “might,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “seem,” “seek,” “should,” “will,” “would” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements include, but are not limited to, information concerning:

•the evolution of the enterprise software management and support landscape facing our clients and prospects;

•our ability to educate the market regarding the advantages of our enterprise software management and support services and products;

•costs, including attorneys’ fees, associated with defending intellectual property infringement and other claims, such as those claims discussed under “Legal Proceedings” in Part II, Item 1 of this Report, and our expectations with respect to such litigation, including the disposition of pending motions to appeal, and any new claims;

•any additional expenses to be incurred in order to comply with the Rimini II Injunction and the impact on future period revenue and costs;

•estimates of our total addressable market;

•expectations of client savings relative to use of other providers;

•the occurrence of catastrophic events, including terrorism and geopolitical actions specific to an international region, that may disrupt our business or that of our current and prospective clients;

•our ability to maintain an adequate rate of revenue growth;

•our ability to maintain sufficient cash flow and capital or raise additional capital necessary to fund our operations and invest in new services and products;

•the impact of our Credit Facility’s debt service obligations and financial and operational covenants on our business and related interest rate risk;

•our business plan and our ability to effectively manage our growth and associated investments;

•the impact of any recessionary economic trends, including inflation, rising interest rates and changes in foreign exchange rates;

•beliefs and objectives for future operations;

•our ability to expand our leadership position in independent enterprise software support and to sell our application management services (“AMS”) and Rimini ONE™ integrated services;

•our ability to attract and retain clients and our ability to further penetrate our existing client base;

•our ability to maintain our competitive technological advantages against new entrants in our industry;

•our ability to timely and effectively scale and adapt our existing technology;

•our ability to innovate new products and bring them to market in a timely manner;

•our ability to maintain, protect, and enhance our brand and intellectual property;

•our ability to capitalize on changing market conditions including a market shift to hybrid and cloud/SaaS offerings for information technology environments and retirement of certain software releases by software vendors;

•our ability to develop strategic partnerships;

•benefits associated with the use of our services;

•our ability to expand internationally;

•our need and ability to raise equity or debt financing on favorable terms and our ability to generate cash flows from operations to help fund increased investment in our growth initiatives;

•the effects of increased competition in our market and our ability to compete effectively;

•our intentions with respect to our pricing model;

•cost of revenue, including changes in costs associated with production and client support;

•changes in laws or regulations, including tax laws or unfavorable outcomes of tax positions we take, or a failure by us to establish adequate reserves for tax events;

•our ability to maintain our good standing with the United States and international governments and capture new contracts;

•economic and industry trends or trend analysis;

•our ability to prevent unauthorized access to our information technology systems and other cybersecurity threats, protect the confidential information of our employees and clients and comply with privacy and data protection regulations;

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•the amount and timing of repurchases, if any, under our stock repurchase program and our ability to enhance stockholder value through such program or any other actions to provide value to stockholders;

•the attraction and retention of additional qualified personnel, including sales personnel, and the retention of key personnel;

•future acquisitions of or investments in complementary companies, products, subscriptions or technologies;

•uncertainty from the discontinuance of LIBOR and the transition to SOFR or other interest rate benchmarks;

•the effects of seasonal trends on our results of operations, including the contract renewal cycles for vendor-supplied software support and managed services;

•our ability to maintain an effective system of internal control over financial reporting and our ability to remediate any identified material weaknesses in our internal controls; and

•other risks and uncertainties, including those discussed under “Risk Factors” in Part II, Item 1A of this Report.

    We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those referred to under “Risk Factors” in Part II, Item 1A of this Report. Moreover, we operate in very competitive and rapidly changing markets. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

    You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements in this Report are made as of the date of the filing, and except as required by law, we disclaim and do not undertake any obligation to update or revise publicly any forward-looking statements in this Report. You should read this Report and the documents that we reference in this Report and have filed with the SEC as exhibits with the understanding that our actual future results, levels of activity and performance, as well as other events and circumstances, may be materially different from what we expect.

Overview

    The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the related notes to those statements included in Part I, Item 1 of this Report, and our Audited Consolidated Financial Statements for the year ended December 31, 2022, included in Part II, Item 8 of our 2022 Form 10-K.

    Certain figures, such as interest rates and other percentages included in this section have been rounded for ease of presentation. Percentage figures included in this section have not in all cases been calculated based on such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our Unaudited Condensed Consolidated Financial Statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding.

Rimini Street, Inc. was formed in the State of Nevada in 2005 and, through a merger in 2017 with a public company, became Rimini Street, Inc., a Delaware corporation, trading on the Nasdaq Global Market under the ticker symbol “RMNI.”

Rimini Street, Inc. and its subsidiaries (referred to as “Rimini Street”, the “Company”, “we” and “us”) are global providers of end-to-end enterprise software support, products and services. The Company offers a comprehensive family of unified solutions to run, manage, support, customize, configure, connect, protect, monitor, and optimize clients’ enterprise application, database, and technology software platforms.

Over the years, as our reputation for technical capability, value, innovation, responsiveness and trusted reliability grew, clients and prospects began asking us to expand the scope of our support, product and service offerings to meet other current and evolving needs and opportunities related to their enterprise software. We also heard from prospects and clients that their goals include reducing the number of IT vendors to more manageable numbers from a governance perspective, with a desire to select vendors who can provide a wider scope of IT services and become true trusted partners.

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To meet the needs of our clients and prospects and to service what we believe is a significantly expanded addressable market opportunity, we designed, developed and are now delivering a new, expanded solutions portfolio (our “Solutions Portfolio”) for a wider array of enterprise software – including an expanded list of supported software; managed services for Oracle, SAP, IBM, Salesforce and open-source database software; and new solutions for security, interoperability, observability and consulting. We also now offer an integrated package of our services as Rimini ONE™, a unique end-to-end, “turnkey” outsourcing option for Oracle and SAP landscapes designed to optimize our clients’ existing technologies with a minimum of 15 extended years of operating lifespan and enable our clients to focus their IT talent and budget on potentially higher-value, innovative projects that will support competitive advantage and growth.

Enterprise software support, products and services is one of the largest categories of overall global information technology (“IT”) spending. We believe enterprise resource planning (“ERP”), customer relationship management (“CRM”), product lifecycle management (“PLM”) database and technology software systems have become increasingly important in the operation of mission-critical business processes over the last 30 years. Also the costs associated with running and supporting these systems, system failure and downtime, security exposure, system integration and monitoring, and maintaining the tax, legal and regulatory compliance of these software systems have each contributed to increases in both actual spend and as a percentage of the typical full IT budget. As a result, we believe that licensees often view enterprise software support, products and services as a mandatory cost of doing business. The majority of our revenue through September 30, 2023, was generated from our support solutions.

In a traditional licensing model, the customer typically procures a perpetual software license and pays for the license in a single upfront fee (“perpetual license”), and base software support services can be optionally procured from the software vendor for an annual fee that is typically 20-23% of the total cost of the software license. In a newer subscription-based licensing model, such as software as a service (“SaaS”), the customer generally pays for the usage of the software on a monthly or annual basis (“subscription license”). Under a subscription license, the product license and a base level of software support are generally bundled together as a single purchase, and the base level of software support is not procured separately nor is it an optional purchase.

When we provide our support solutions for a perpetual software license, we generally offer our clients service for a fee that is equal to approximately 50% of the annual fees charged by the software vendor for their base support. When providing supplemental software support for a perpetual license, where the client procures our support service in addition to retaining the software vendor’s base support, we generally offer our clients service for a fee that is equal to approximately 25% of the annual fees charged by the software vendor for their base support. We also offer a special support service, Rimini Street Extra Secure Support, available to clients that require a more rigorous level of security background checks and/or government security clearance for engineers accessing a client’s system than our standard employment security background check and requirements. Clients may incur an additional fee for Rimini Street Extra Secure Support.

In addition to our support services, we also offer a breadth of enterprise software support, products and services through our full portfolio of solutions at an additional fee that is calculated based on a variety of factors and metrics. Our solutions are designed to meet specific client needs and are designed to provide what we believe is exceptional value and return for the fees charged. For more details about our Solutions Portfolio, please see Item 1 “Business” included in Part I of our 2022 Form 10-K.    

    As of September 30, 2023, we employed over 2,050 professionals and supported over 3,090 active clients globally, including 66 Fortune 500 companies and 15 Fortune Global 100 companies across a broad range of industries. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active clients instances where we provide support for two different products to the same entity.

    Our subscription-based revenue provides a strong foundation for, and visibility into, future period results. For the three months ended September 30, 2023 and 2022, we generated revenue of $107.5 million and $101.9 million, respectively, representing an increase of 5%. During the three months ended September 30, 2023, we recorded net income of $6.8 million, and as of September 30, 2023, we had an accumulated deficit of $211.6 million. Approximately 52% of our revenue was generated in the United States for both the three months ended September 30, 2023 and 2022, respectively. Approximately 48% of our revenue was generated in foreign jurisdictions for both the three months ended September 30, 2023 and 2022, respectively.

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    Since our inception, we have financed our operations through cash collected from clients and net proceeds from equity financings and borrowings.

Global Economic Uncertainty

We have experienced some clients not renewing our services due to the adverse impact on their businesses from current global economic uncertainty, as well as by the economic disruption continuing to be caused by the Israel-Hamas conflict, the Russian invasion of Ukraine in early fiscal 2022 and recent political and trade turmoil with China, amongst other global challenges. While we do not physically operate in Russia, the Ukraine or in mainland China, we do have operations in Israel. These global events, together with fiscal and monetary policy adopted during and after the COVID-19 pandemic, have had adverse macroeconomic impacts and increased inflationary cost pressures, causing the U.S. Federal Reserve to repeatedly raise rates. We expect additional rate increases in the future. Despite these macroeconomic and geopolitical pressures, we expect to continue to be able to market, sell and provide our current and future products and services to clients globally. We also expect to continue investing in the development and improvement of new and existing products and services to address client needs. Further, although our operations are influenced by general economic conditions, we do not believe the impacts of economic disruptions described above had a significant net impact on our revenue or results of operations during the three and nine months ended September 30, 2023.

The extent to which rising inflation, interest rate increases, continuing global economic and geopolitical uncertainty, and any lingering impacts of the COVID-19 pandemic impact our business going forward, however, will depend on numerous evolving factors we cannot reliably predict, including continued governmental and business actions in response to increasing global economic uncertainty, including the possibility of recession or financial market instability. As such, the effects of rising inflation, interest rate increases and other negative impacts on the global economy may not be fully reflected in our financial results until future periods. Refer to “Risk Factors” (Part II, Item 1A of this Report) for a discussion of these factors and other risks.

Recent Developments

Reference is made to Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for a discussion of recent developments in our litigation with Oracle.

Key Business Metrics

Number of clients

    Since we founded our company, we have made the expansion of our client base a priority. We believe that our ability to expand our client base is an indicator of the growth of our business, the success of our sales and marketing activities, and the value that our services bring to our clients. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active clients when support for two different products is being provided to the same entity. As of September 30, 2023 and 2022, we had over 3,090 and 3,000 active clients, respectively.

    We define a unique client as a distinct entity, such as a company, an educational or government institution or a subsidiary, division or business unit of a company that purchases one or more of our products or services. We count as two separate unique clients when two separate subsidiaries, divisions or business units of an entity purchase our products or services. As of September 30, 2023 and 2022, we had over 1,540 and 1,510 unique clients, respectively.

    The increases in both our active and unique client counts have been almost exclusively from new unique clients and not from sales of new products and services to existing unique clients. However, as noted previously, we intend to focus future growth on both new and existing clients. We believe that the growth in our number of clients is an indication of the increased adoption of our enterprise software products and services.

Annualized recurring revenue

    We recognize subscription revenue on a daily basis. We define annualized recurring revenue as the amount of subscription revenue recognized during a quarter and multiplied by four. This gives us an indication of the revenue that can be earned in the following 12-month period from our existing client base assuming no cancellations or price changes occur during that period. Subscription revenue excludes any non-recurring revenue, which has been insignificant to date. 

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    Our annualized recurring revenue was $416 million and $400 million as of September 30, 2023 and 2022, respectively. We believe the sequential increase in annualized recurring revenue demonstrates a growing client base, which is an indicator of stability in future subscription revenue.

Revenue retention rate

    A key part of our business model is the recurring nature of our revenue. As a result, it is important that we retain clients after the completion of the non-cancellable portion of the support period. We believe that our revenue retention rate provides insight into the quality of our products and services and the value that our products and services provide our clients.

    We define revenue retention rate as the actual subscription revenue (dollar-based) recognized in a 12-month period from clients that existed on the day prior to the start of the 12-month period divided by our annualized recurring revenue as of the day prior to the start of the 12-month period. Our revenue retention rate was 94% for both the 12 months ended September 30, 2023 and 2022, respectively.

Gross profit margin

    We derive revenue through the provision of our enterprise software products and services. All the costs incurred in providing these products and services are recognized as part of the cost of revenue. The cost of revenue includes all direct product line expenses, as well as the expenses incurred by our shared services organization which supports all product lines.

    We define gross profit as the difference between revenue and the costs incurred in providing the software products and services. Gross profit margin is the ratio of gross profit divided by revenue. Our gross profit margin was approximately 62.7% and 61.5% for the three months ended September 30, 2023 and 2022, respectively. We believe the gross profit margin provides an indication of how efficiently and effectively we are operating our business and serving our clients.

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Results of Operations

Comparison of Three Months Ended September 30, 2023 and 2022

Our consolidated statements of operations for the three months ended September 30, 2023 and 2022, are presented below (in thousands): 

	Three Months Ended September 30,						Variance
	2023			2022			Amount		Percent
Revenue	$	107,453		$	101,931		$	5,522	5.4%
Cost of revenue:
Employee compensation and benefits	25,904			25,493			411		1.6%
Engineering consulting costs	6,192			6,252			(60)		(1.0)%
Administrative allocations (1)	3,520			3,970			(450)		(11.3)%
All other costs	4,494			3,556			938		26.4%
Total cost of revenue	40,110			39,271			839		2.1%
Gross profit	67,343			62,660			4,683		7.5%
Gross profit margin	62.7		%	61.5		%
Operating expenses:
Sales and marketing	35,593			35,934			(341)		(0.9)%
General and administrative	18,384			18,454			(70)		(0.4)%
Litigation costs and related recoveries, net	2,127			6,237			(4,110)		(65.9)%
Total operating expenses	56,104			60,625			(4,521)		(7.5)%
Operating income	11,239			2,035			9,204		452.3%
Non-operating income and (expenses):
Interest expense	(1,413)			(1,167)			(246)		21.1%
Other income (expenses), net	990			(1,329)			2,319		(174.5)%
Income (loss) before income taxes	10,816			(461)			11,277		(2,446.2)%
Income taxes	(4,015)			56			(4,071)		(7,269.6)%
Net income (loss)	$	6,801		$	(405)		$	7,206	(1,779.3)%

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(1)Includes the portion of costs for IT, security services and facilities costs that are allocated to cost of revenue. In our Unaudited Condensed Consolidated Financial Statements, the total of such costs is allocated between cost of revenue, sales and marketing, and general and administrative expenses, based primarily on relative headcount, except for facilities which is based on occupancy.

    Revenue. Revenue increased from $101.9 million for the three months ended September 30, 2022 to $107.5 million for the three months ended September 30, 2023, an increase of $5.5 million or 5%. The increase was driven by an 3% increase in the average number of unique clients from 1,491 for the three months ended September 30, 2022 to 1,532 for the three months ended September 30, 2023. On a geographic basis, United States revenue grew from $53.4 million for the three months ended September 30, 2022 to $55.7 million for the three months ended September 30, 2023, an increase of $2.3 million or 4%. Our international revenue grew from $48.5 million for the three months ended September 30, 2022 to $51.7 million for the three months ended September 30, 2023, an increase of $3.2 million or 7%.

    Cost of revenue. Cost of revenue increased from $39.3 million for the three months ended September 30, 2022 to $40.1 million for the three months ended September 30, 2023, an increase of $0.8 million or 2%. The key drivers related to the cost of revenue increase were a $0.4 million increase in employee compensation and benefits and a $0.9 million increase in all other costs, which was driven primarily by a $0.9 million increase in outside services. These increases were offset, in part, by a decrease in administrative allocations.

As discussed in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report, the District Court issued its findings of fact and conclusions of law in Rimini II, accompanied by the “Rimini II Injunction” on July 24, 2023. The District Court found infringement as to Oracle’s PeopleSoft and Oracle Database products.

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As a result of the findings, we are likely to incur additional expenses for incremental labor costs in order to comply with the District Court’s Rimini II Injunction. At this time, we have yet to determine the impact on future period costs. Any adverse outcome in our ongoing judicial proceedings could have a material adverse effect on our results of operations.

    Gross profit. Gross profit increased from $62.7 million for the three months ended September 30, 2022 compared to $67.3 million for the three months ended September 30, 2023, an increase of $4.7 million or 7%. Gross profit margin for the three months ended September 30, 2022 was 61.5% compared to 62.7% for the three months ended September 30, 2023. For the three months ended September 30, 2023, the total cost of revenue increased by 2% compared to an increase in revenue of 5% for the three months ended September 30, 2023. As a result, our gross profit margin improved by 120 basis points period over period.

    Sales and marketing expenses. As a percentage of our revenue, sales and marketing expenses were 33% and 35% for the three months ended September 30, 2023 and 2022, respectively. In dollar terms, sales and marketing expenses decreased from $35.9 million for the three months ended September 30, 2022 to $35.6 million for the three months ended September 30, 2023, a decrease of $0.3 million or 1%. This decrease was primarily due to a decrease in employee compensation and benefits of $0.5 million and a decrease in recruitment costs of $0.3 million offset by an increase in marketing and advertising of $0.5 million. We will continue to seek to accelerate our future revenue growth by investing in more resources.

The $0.5 million decrease in sales and marketing expense attributable to employee compensation and benefits for the three months ended September 30, 2023 was primarily due to a decrease in salaries, wages and benefits of $0.9 million offset by an increase in commissions of $0.3 million and bonuses of $0.1 million.

    General and administrative expenses. General and administrative expenses decreased from $18.5 million for the three months ended September 30, 2022 to $18.4 million for the three months ended September 30, 2023, a decrease of $0.1 million. This decrease was comprised of several items, which included a decrease in professional fees of $0.6 million, a decrease in computer supplies and licenses of $0.6 million, a decrease in contract labor of $0.5 million. and a decrease in rent and facilities costs of $0.4 million. These decreases were offset, in part, by an increase bonus expense of $1.5 million, and we allocated $0.8 million less expense related to administrative costs.

Looking forward on a quarter-over-quarter basis, we are monitoring the demand for our services in light of current global economic conditions and will adjust our expenditures accordingly. However, we expect to incur higher expenses associated with supporting the growth of our business, both in terms of size and geographical diversity. Our company costs that are expected to increase in the future include costs relating to additional information systems costs, costs for additional personnel in our accounting, human resources, IT and legal functions, SEC and Nasdaq fees, and incremental professional, legal, audit and insurance costs. As a result, not taking into account temporary reductions in certain expenses resulting from the COVID-19 pandemic in prior periods, we expect our general and administrative expenses related to public company costs will continue to increase in future periods.

    Litigation costs, net of related insurance recoveries. Litigation costs, net of related insurance recoveries, consist of the following (in thousands):

	Three Months Ended September 30,
	2023		2022		Change
Professional fees and other costs of litigation	$	2,127	$	6,145	$	(4,018)
Insurance costs and recoveries, net	—		92		(92)
Litigation costs and related recoveries, net	$	2,127	$	6,237	$	(4,110)

    Professional fees and other costs associated with litigation decreased from $6.1 million for the three months ended September 30, 2022 to $2.1 million for the three months ended September 30, 2023, a decrease of $4.0 million. This decrease was primarily due to the timing of trial costs that occurred during the three months ended September 30, 2022.

Insurance costs and related recoveries, net decreased from $0.1 million for the three months ended September 30, 2022 compared to no activity for the three months ended September 30, 2023. We are self-insured for any costs related to any current or future intellectual property litigation. We currently believe our cash on hand, accounts receivable and contractually committed backlog provides us with sufficient liquidity to cover our ongoing attorneys’ fees and related costs, such as travel, hotels and consultants, associated with ongoing litigation, including Rimini II. However, please refer to the litigation matters as disclosed in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for further information.

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    Interest expense. Interest expense increased from $1.2 million for the three months ended September 30, 2022 to $1.4 million for the three months ended September 30, 2023, an increase of $0.2 million. Interest expense increased primarily due to rising interest rates on our five-year Credit Facility. These rising interest rates were offset, in part, by a reduction of interest costs of $0.2 million related to payments associated with our interest rate swap, which was entered into on May 18, 2022.

    Other income (expenses), net. Other income (expenses), net is primarily comprised of interest income, foreign exchange gains and losses, and other non-operating income and expenses. For the three months ended September 30, 2023, net other income of approximately $1.0 million was comprised of gains from cash equivalents and investments of $1.1 million which were offset by foreign exchange losses of approximately $0.1 million. For the three months ended September 30, 2022, net other expenses of approximately $1.3 million was comprised primarily of foreign exchange losses of approximately $1.4 million. For the three months ended September 30, 2022, we experienced a significant change in foreign currency exchange rates as the U.S. dollar strengthened against the majority of foreign currencies where our foreign entities operate.

    Income tax expense. We had an income tax benefit of $0.1 million for the three months ended September 30, 2022 compared to an income tax expense of $4.0 million for the three months ended September 30, 2023. For the three months ended September 30, 2023, the primary reason for the increase in income tax expense was due to an increase of income before taxes of $11.3 million in the current year period compared to the prior year period as well as an increase in foreign withholding taxes.

Comparison of Nine Months Ended September 30, 2023 and 2022

Our consolidated statements of operations for the nine months ended September 30, 2023 and 2022, are presented below (in thousands): 

	Nine Months Ended September 30,						Variance
	2023			2022			Amount		Percent
Revenue	$	319,386		$	301,041		$	18,345	6.1%
Cost of revenue:
Employee compensation and benefits	76,478			77,562			(1,084)		(1.4)%
Engineering consulting costs	19,269			16,397			2,872		17.5%
Administrative allocations (1)	10,659			11,693			(1,034)		(8.8)%
All other costs	12,396			8,170			4,226		51.7%
Total cost of revenue	118,802			113,822			4,980		4.4%
Gross profit	200,584			187,219			13,365		7.1%
Gross profit margin	62.8		%	62.2		%
Operating expenses:
Sales and marketing	107,356			103,840			3,516		3.4%
General and administrative	55,475			57,267			(1,792)		(3.1)%
Reorganization costs	59			—			59		100.0%
Litigation costs and related recoveries, net	5,475			12,448			(6,973)		(56.0)%
Total operating expenses	168,365			173,555			(5,190)		(3.0)%
Operating income	32,219			13,664			18,555		135.8%
Non-operating income and (expenses):
Interest expense	(4,139)			(2,974)			(1,165)		39.2%
Other income (expenses), net	1,799			(2,696)			4,495		(166.7)%
Income before income taxes	29,879			7,994			21,885		273.8%
Income taxes	(13,171)			(5,202)			(7,969)		153.2%
Net income	$	16,708		$	2,792		$	13,916	498.4%

(1)Includes the portion of costs for IT, security services and facilities costs that are allocated to cost of revenue. In our Unaudited Condensed Consolidated Financial Statements, the total of such costs is allocated between cost of revenue, sales and marketing, and general and administrative expenses, based primarily on relative headcount, except for facilities which is based on occupancy.

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    Revenue. Revenue increased from $301.0 million for the nine months ended September 30, 2022 to $319.4 million for the nine months ended September 30, 2023, an increase of $18.3 million or 6%. The increase was driven by an 2% increase in the average number of unique clients from 1,483 for the nine months ended September 30, 2022 to 1,520 for the nine months ended September 30, 2023. On a geographic basis, United States revenue grew from $159.6 million for the nine months ended September 30, 2022 to $163.1 million for the nine months ended September 30, 2023, an increase of $3.5 million or 2%. Our international revenue grew from $141.4 million for the nine months ended September 30, 2022 to $156.2 million for the nine months ended September 30, 2023, an increase of $14.8 million or 10%, driven primarily by Japan and Australia, with increases of $5.5 million and $2.4 million, respectively.

    Cost of revenue. Cost of revenue increased from $113.8 million for the nine months ended September 30, 2022 to $118.8 million for the nine months ended September 30, 2023, an increase of $5.0 million or 4%. The key drivers related to the cost of revenue increase were a $2.9 million increase in engineering consulting costs and a $4.2 million increase in all other costs driven primarily by a $3.3 million increase in outside services and a $1.0 million increase in computer software and licenses. These cost increases were offset, in part, by a reduction of administrative allocations of $1.0 million and a decrease of employee compensation and benefits of $1.0 million.

    Gross profit. Gross profit increased from $187.2 million for the nine months ended September 30, 2022 to $200.6 million for the nine months ended September 30, 2023, an increase of $13.4 million or 7%. Gross profit margin for the nine months ended September 30, 2022 was 62.2% compared to 62.8% for the nine months ended September 30, 2023. For the nine months ended September 30, 2023, the total cost of revenue increased by 4% compared to an increase in revenue of 6% for the nine months ended September 30, 2023. As a result, our gross profit margin improved by 60 basis points period over period.

    Sales and marketing expenses. As a percentage of our revenue, sales and marketing expenses were 34% for both the nine months ended September 30, 2023 and 2022, respectively. In dollar terms, sales and marketing expenses increased from $103.8 million for the nine months ended September 30, 2022 to $107.4 million for the nine months ended September 30, 2023, an increase of $3.5 million or 3%. This increase was primarily due to an increase in employee compensation and benefits of $0.9 million, an increase in advertising, trade show expenses and marketing costs of $3.8 million, an increase in travel and entertainment costs of $0.6 million and an increase in contract labor of $0.3 million. These increases were offset, in part, by a decrease in administrative allocations and all other costs of $1.3 million and a decrease in recruitment costs of $0.8 million. We will continue to seek to accelerate our future revenue growth by investing in more resources.

    The $0.9 million increase in sales and marketing expense attributable to employee compensation and benefits for the nine months ended September 30, 2023 was primarily due to an increase in commissions of $1.3 million and bonuses of $0.4 million offset by a decrease in salaries, wages, and benefits of $0.8 million.

    General and administrative expenses. General and administrative expenses decreased from $57.3 million for the nine months ended September 30, 2022 to $55.5 million for the nine months ended September 30, 2023, a decline of $1.8 million or 3%. This was primarily due to a decrease in computer software and licenses of $1.8 million, a decrease of contract labor of $1.5 million, a decrease in rent and facilities costs of $0.8 million and a reduction of professional services fees of $0.3 million. These decreases were offset by lower administrative costs being allocated of $2.0 million, an increase in employee compensation and benefits of $0.3 million, and an increase of travel and entertainment expenses of $0.3 million.

Litigation costs, net of related insurance recoveries. Litigation costs, net of related insurance recoveries, consist of the following (in thousands):

	Nine Months Ended September 30,
	2023		2022		Change
Professional fees and other costs of litigation	$	5,475	$	12,837	$	(7,362)
Insurance costs and recoveries, net	—		(389)		389
Litigation costs and related recoveries, net	$	5,475	$	12,448	$	(6,973)

    Professional fees and other costs associated with litigation decreased from $12.8 million for the nine months ended September 30, 2022 to $5.5 million for the nine months ended September 30, 2023, a decrease of $7.4 million. This decrease was primarily due to the timing of trial costs during the nine months ended September 30, 2022.

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Insurance costs and related recoveries, net increased from a net benefit of $0.4 million for the nine months ended September 30, 2022 compared to no activity for the nine months ended September 30, 2023. We are self-insured for any costs related to any current or future intellectual property litigation. We currently believe our cash on hand, accounts receivable and contractually committed backlog provides us with sufficient liquidity to cover our ongoing attorneys’ fees and related costs, such as travel, hotels and consultants, associated with ongoing litigation, including Rimini II. However, please refer to the litigation matters as disclosed in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for further information.

    Interest expense. Interest expense increased from $3.0 million for the nine months ended September 30, 2022 to $4.1 million for the nine months ended September 30, 2023, an increase of $1.2 million. Interest expense increased primarily due to rising interest rates on our five-year Credit Facility. These rising interest rates were offset, in part, by a reduction of interest costs of $0.6 million related to payments associated with our interest rate swap, which was entered into on May 18, 2022.

    Other income (expenses), net. Other income (expenses), net is primarily comprised of interest income, foreign exchange gains and losses, and other non-operating income and expenses. For the nine months ended September 30, 2023, net other income of approximately $1.8 million was comprised of gains from cash equivalents and investments of $2.8 million which were offset, in part, by foreign exchange losses of approximately $0.7 million and other costs of $0.3 million. For the nine months ended September 30, 2022, net other expenses of approximately $2.7 million was comprised primarily of foreign exchange losses of approximately $2.4 million.

    Income tax expense. We had income tax expense of $5.2 million for the nine months ended September 30, 2022 compared to an income tax expense of $13.2 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2023, the primary reason for the increase in income tax expense was due to an increase of income before taxes of $21.9 million in the current year period compared to the prior year period as well as an increase in foreign withholding taxes.

Liquidity and Capital Resources

Overview

    As of September 30, 2023, we had a working capital deficit of $56.7 million and an accumulated deficit of $211.6 million. For the three months ended September 30, 2023, we recorded net income of $6.8 million. As of September 30, 2023, we had available cash, cash equivalents and restricted cash of $108.7 million and short-term investments of $19.9 million.

Effective July 20, 2021, we received $89.3 million of net proceeds from our Credit Facility, which previously bore interest at LIBOR plus a margin ranging from 1.75% to 2.50%. On February 22, 2023, we amended our Credit Facility to implement certain changes in the reference rate from LIBOR to SOFR. As of February 28, 2023, we have a choice of interest rates between (a) Adjusted Term SOFR and (b) Base Rate, in each case plus an applicable margin. The applicable margin remains the same as the existing Credit Agreement and is based on our Consolidated Leverage Ratio (as defined in the Credit Agreement) and whether we elect an Adjusted Term SOFR (ranging from 1.75 to 2.50%) or a Base Rate (ranging from 0.75 to 1.50%). Annual minimum principal payments over the five-year term for the Credit Facility are 5%, 5%, 7.5%, 7.5%, and 10%, respectively, with the remaining balance due at the end of the term.

Please refer to Note 5 to the Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for information regarding our Credit Facility.

    A key component of our business model requires that substantially all clients prepay us annually for the services we will provide over the following year or longer. As a result, we typically collect cash from our clients in advance of when the related service costs are incurred, which resulted in deferred revenue of $214.1 million that is included in current liabilities as of September 30, 2023. Therefore, we believe that working capital deficit is not as meaningful in evaluating our liquidity since the historical costs of fulfilling our commitments to provide services to clients are currently limited to approximately 37% of the related deferred revenue based on our gross profit percentage of 63% for the three months ended September 30, 2023.

    For the next year, assuming that our operations are not significantly impacted by rising inflation, interest rate increases, other global economic or geopolitical uncertainties, or the litigation matters as disclosed in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report, we believe that cash, cash equivalents and restricted cash of $108.7 million as of September 30, 2023, plus future cash flows from operating activities will be sufficient to meet our anticipated cash needs including working capital requirements, planned capital expenditures and our contractual obligations. Our future capital requirements depend on many factors, including client growth, number of employees,

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expansion of sales and marketing activities, and the introduction of new and enhanced services offerings. We may also enter into arrangements to acquire or invest in complementary businesses, services, technologies, or intellectual property rights in the future. We may choose to seek additional debt or equity financing to support these long-term capital requirements. Alternatively, we may also consider reducing amounts outstanding under our Credit Facility to minimize our exposure to rising interest rates. If interest rates continue to increase as expected and adverse economic changes occur, we may not be able to access credit on terms favorable to us, impacting our ability to support these long-term capital requirements. In an economic downturn, we may also be unable to raise capital through debt or equity financings on terms acceptable to us or at all. Covenants in our Credit Facility could also have consequences on our operations, including restricting or delaying our ability to obtain additional financing, potentially limiting our ability to adjust to rapidly changing market conditions or respond to business opportunities. Additionally, in challenging and uncertain economic environments, we cannot predict when macroeconomic uncertainty may arise, whether or when such circumstances may improve or worsen or what impact such circumstances could have on our business and our liquidity requirements.

    For the nine months ended September 30, 2023, we generated cash flows from our operating activities of approximately $13.6 million, which was derived from net income of $16.7 million as well as adjustments to reconcile net income to net cash of approximately $21.4 million and an unfavorable change in operating assets and liabilities of approximately $24.5 million. We believe that our operating cash flows for the year ending December 31, 2023 will be sufficient to fund the portion of our contractual obligations that is not funded with existing capital resources.

Cash Flows Summary

    Presented below is a summary of our operating, investing and financing cash flows (in thousands): 

	Nine Months Ended September 30,
	2023		2022
Net cash provided by (used in):
Operating activities	$	13,613	$	36,757
Investing activities	(4,158)		(14,292)
Financing activities	(5,120)		(12,412)

The effect of foreign currency translation was unfavorable by $5.1 million and $11.1 million for the nine months ended September 30, 2023 and 2022, respectively, due to unfavorable foreign exchange impacts related to foreign cash. For the nine months ended September 30, 2023, the unfavorable foreign currency impact was primarily related to our foreign cash held in Japan as the Japanese yen weakened significantly against the U.S. dollar during the nine months ended September 30, 2023. For the nine months ended September 30, 2022, we experienced a significant change in foreign currency exchange rates as the U.S. dollar strengthened against the majority of foreign currencies where our foreign entities operate. The strengthening of the U.S. dollar reduced the reported amount of our foreign-denominated cash and cash equivalents which are translated into U.S. dollars and reported in our Unaudited Condensed Consolidated Financial Statements for the nine months ended and as of September 30, 2022.

Cash Flows Provided by Operating Activities

    As clients typically prepay us annually for the services which we will provide over the following year or longer, we typically collect cash in advance of the date when the vast majority of the related services are provided.

    For the nine months ended September 30, 2023, cash flows provided by operating activities amounted to approximately $13.6 million. The key drivers resulting in our cash provided by operating activities for the nine months ended September 30, 2023, included net income of $16.7 million and adjustments to reconcile net income to net cash totaling $21.4 million, as well as unfavorable changes in operating assets and liabilities of $24.5 million, resulting in net cash provided by operating activities of $13.6 million.

For the nine months ended September 30, 2023, adjustments to reconcile net income to net cash consisted primarily of stock-based compensation expense of $9.1 million, amortization and accretion related to operating lease ROU assets of $3.3 million, depreciation and amortization expense of $2.0 million and accretion, amortization of debt discount and issuance costs of $0.7 million and deferred income taxes of $6.3 million. For the nine months ended September 30, 2023, the changes in operating assets and liabilities, net consisted of favorable changes to accounts receivable of $54.1 million and deferred contract costs of $0.7 million. The favorable change to accounts receivable was a result of collecting $314.2 million during the nine

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months ended September 30, 2023 which was offset by billings, net of $257.9 million during the nine months ended September 30, 2023. As a result, our days sales outstanding for accounts receivable was 101 days as of September 30, 2023. The favorable change in deferred contract costs was due to capitalizing $13.6 million of commissions and amortizing $14.3 million of deferred contract costs during the nine months ended September 30, 2023.

Offsetting these favorable changes were unfavorable changes to accrued liabilities of $14.7 million, deferred revenue of $57.7 million, accounts payable of $2.6 million and prepaid expenses, deposits and other assets of $4.3 million. The unfavorable use of cash for accrued liabilities was due to payments of $2.5 million related to our reorganization plan, incremental professional fee payments of $5.1 million and incremental compensation related primarily to bonuses and commissions of $1.7 million during the current period. Regarding the use of cash for deferred revenue, it was due to recognizing $319.4 million in revenue for the current period, which was offset by recording billings, net of $257.9 million during the current period.

For the nine months ended September 30, 2022, cash flows provided by operating activities amounted to approximately $36.8 million. The key drivers resulting in our cash provided by operating activities for the nine months ended September 30, 2022 included net income of $2.8 million, as well as adjustments to reconcile net income to net cash totaling $15.7 million and favorable changes in operating assets and liabilities of $18.2 million. These items resulted in net cash provided by operating activities of $36.8 million.

For the nine months ended September 30, 2022, adjustments to reconcile net income to net cash consisted primarily of stock-based compensation expense of $8.7 million, amortization and accretion related to operating lease ROU assets of $4.1 million, depreciation and amortization expense of $1.9 million, accretion and amortization of debt discount and issuance costs of $0.7 million and deferred income taxes of $0.3 million. For the nine months ended September 30, 2022, the changes in operating assets and liabilities, net primarily consisted of favorable changes to accounts receivable of $75.1 million and accounts payable of $2.7 million. The favorable change to accounts receivable was a result of collecting $328.1 million during the nine months ended September 30, 2022 compared to billings, net of $249.0 million during the nine months ended September 30, 2022. As a result, our days sales outstanding for accounts receivable was 120 days as of September 30, 2022.

The favorable cash sources noted above were offset by unfavorable uses of cash related to deferred revenue of $46.9 million, prepaid expenses, deposits and other assets of $6.4 million, accrued liabilities of $3.8 million, and deferred contract costs of $2.4 million. The unfavorable use of cash related deferred revenue was because we recognized $301.0 million of revenue during the period, which was offset by recording billings, net of $249.0 million during the nine months ended September 30, 2022.

Cash Flows Used in Investing Activities

    Cash used in investing activities was primarily driven by investment purchases and capital expenditures for leasehold improvements, software development costs, and computer equipment. Cash used in investing activities totaled $4.2 million and $14.3 million for the nine months ended September 30, 2023 and 2022, respectively.

    For the nine months ended September 30, 2023, cash used in investing activities of $4.2 million consisted of investment purchases of $24.1 million and capital expenditures of $3.7 million, which were both offset by proceeds from sales of investments of $23.6 million. The capital expenditures consisted of $2.3 million primarily for capitalized software development costs, new computer equipment, and furniture and fixtures in our U.S. entity and $1.4 million for computer equipment at our foreign locations, primarily in Brazil of $0.3 million and in India of $0.9 million.

For the nine months ended September 30, 2022, cash used in investing activities of $14.3 million consisted of investment purchases of $11.1 million and capital expenditures of $3.1 million. The capital expenditures consisted of $2.1 million primarily for new computer equipment and capitalized development costs for a new payroll system in our U.S. facilities and $1.0 million for computer equipment at our foreign locations, primarily in India of $0.5 million and Brazil of $0.3 million.

Cash Flows from Financing Activities

    For the nine months ended September 30, 2023, cash utilized in financing activities of $5.1 million was attributable to principal payments related to the Credit Facility of $3.9 million, payments to repurchase shares of Common Stock totaling $1.0 million and capital lease payments of $0.2 million. These cash uses were offset by proceeds of $0.1 million received from stock option exercises.

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For the nine months ended September 30, 2022, cash utilized in financing activities of $12.4 million was attributable to principal payment related to the Credit Facility of $8.4 million, payments to repurchase shares of Common Stock totaling $4.7 million, and capital lease payments of $0.2 million. These cash uses were offset by proceeds of $1.0 million received from stock option exercises.

Foreign Subsidiaries

    Our foreign subsidiaries and branches are dependent on our U.S.-based parent for continued funding. We currently do not intend to repatriate any amounts that have been invested overseas back to the U.S.-based parent. However, we may still be liable for withholding taxes, state taxes, or other income taxes that might be incurred upon the repatriation of foreign earnings. We have not made any provision for additional income taxes on undistributed earnings of our foreign subsidiaries. As of September 30, 2023, we had cash and cash equivalents of $41.6 million held by our foreign subsidiaries.

Critical Accounting Estimates

    Our management’s discussion and analysis of financial condition and results of operations is based on our Unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, as well as the reported revenue and expenses during the reporting periods. These items are monitored and analyzed for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ from these estimates under different assumptions or conditions. We describe our significant accounting policies in Note 2 to our Consolidated Financial Statements for the year ended December 31, 2022, included in Part II, Item 8 of our 2022 Form 10-K, and we discuss our critical accounting policies and estimates in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included in Part II, Item 7 of our 2022 Form 10-K. Since the filing of our 2022 Form 10-K, there have been no material changes in our critical accounting policies and estimates from those disclosed therein.

Recent Accounting Pronouncements

    From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by us as of the specified effective date. For additional information on recently issued accounting standards and our plans for adoption of those standards, please refer to the section titled Recent Accounting Pronouncements under Note 2 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report.

Recently Issued Accounting Standards

The Company believes that no recently issued accounting standards will have a material impact on its Unaudited Condensed Consolidated Financial Statements or apply to its operations.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

Foreign Currency Exchange Risk

    We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. Dollar, primarily the Euro, British Pound Sterling, Brazilian Real, Australian Dollar, Indian Rupee and Japanese Yen. For each of the three months ended September 30, 2023 and 2022, we generated approximately 48% of our revenue from our international business, respectively. Increases in the relative value of the U.S. Dollar to other currencies may negatively affect our revenue, partially offset by a positive impact to operating expenses in other currencies as expressed in U.S. Dollars. We have experienced and will continue to experience fluctuations in our net income (loss) as a result of transaction gains or losses related to revaluing certain current asset and current liability balances, including intercompany receivables and payables, which are denominated in currencies other than the functional currency of the entities in which they are recorded. While we have not engaged in the hedging of our foreign currency transactions to date, we are evaluating the costs and benefits of initiating such a program and we may in the future hedge selected significant transactions denominated in currencies other than the U.S. Dollar.

As of September 30, 2023, the effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would have impacted our income before income taxes by a plus or minus of $2.0 million in our Consolidated

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Statements of Operations and Comprehensive Income and would have impacted the effect of foreign currency changes on cash by a plus or minus $4.2 million in our Consolidated Statement of Cash Flows.

Interest Rate Risk

Risk with Respect to Investments

    We hold cash and cash equivalents for working capital purposes. We do not have material exposure to market risk with respect to investments, as any investments we enter into are primarily highly liquid investments.

Variable Rate Debt

In July 2021, we entered into the Credit Facility, which originally bore interest at LIBOR plus a margin. ranging from 1.75% to 2.50% and now bears interest at SOFR plus a margin ranging from 1.75% to 2.50% as a result of the amendment to our Credit Facility described above. Accordingly, we are exposed to market risk due to variable interest rates based on SOFR. As of September 30, 2023, we had $74.3 million outstanding debt under the Credit Facility. As of this date, a hypothetical adverse change of 100 basis points in SOFR would have resulted in an increase of approximately $0.7 million in annual interest expense. On May 18, 2022, we entered into an interest rate swap for a notional value of $40.0 million. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 as well as Note 5 and Note 11 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for more information related to the Credit Facility.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

    We maintain a system of disclosure controls and procedures that are designed to reasonably ensure that information required to be disclosed in our SEC reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and to reasonably ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

    Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) (“Disclosure Controls”) will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We monitor our Disclosure Controls and make modifications as necessary; our intent in this regard is that the Disclosure Controls will be modified as systems change and conditions warrant.

    In connection with the preparation of this Report, as of September 30, 2023, an evaluation of the effectiveness of the design and operation of our Disclosure Controls was performed. This evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on this evaluation, we concluded that our disclosure controls and procedures were effective to provide reasonable assurance that

information required to be disclosed in our SEC reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and to reasonably ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

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There were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings.

    The legal proceedings described in Note 8 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report are incorporated herein by reference. In addition, from time to time, we may be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of judgment, defense and settlement costs, diversion of management resources and other factors.

ITEM 1A. Risk Factors.

    Factors that could cause our actual results to differ materially from those in this Report are any of the risks described in this Item 1A. Any of these factors could result in a significant or material adverse effect on our business, financial condition, results of operations and cash flows. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. In addition, risk factors relating to economic uncertainties and downturns in the general economy or the industries in which our clients operate should be interpreted as heightened risks in the current macroeconomic global environment.

    Our business operations are subject to a number of risk factors that may adversely affect our business, financial condition, results of operations or cash flows. If any significant adverse developments resulting from these risk factors should occur, the trading price of our securities could decline, and moreover, investors in our securities could lose all or part of their investment in our securities.

    You should refer to the explanation of the qualifications and limitations on forward-looking statements under the section titled “Cautionary Note About Forward-Looking Statements” set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this Report. All forward-looking statements made by us are qualified by the risk factors described below.

The following is a summary of some of the principal risk factors which are more fully described below.

Risks Related to Our Business, Operations and Industry

•Since 2010, we and our Chief Executive Officer, Chairman of the Board and President have been involved in continuing litigation with Oracle. Adverse outcomes and future adverse outcomes in the litigation could result in the payment of substantial attorneys’ fees and/or costs and/or injunctions against certain of our business practices.

•The Oracle software products that are part of our ongoing Rimini I Injunction compliance and that are the subject of the Rimini II litigation with Oracle and the Rimini II Injunction represent a significant portion of our revenue.

•Our ongoing litigation with Oracle presents challenges for growing our business.

•Oracle has a history of litigation against companies offering alternative support programs for Oracle products.

•Economic uncertainties, changes in economic conditions, including rising inflation, or downturns in the general economy or the industries in which our clients operate could disproportionately affect the demand for our products and services and may have a material adverse effect on our business.

•The market for independent software support services is relatively undeveloped and may not grow.

•We face significant competition for all components of our Solutions Portfolio.

•We have had a history of losses and may not achieve or sustain revenue growth or profitability in the future.

•If our retention rates decrease or we fail to accurately predict retention rates, our future revenue and results of operations may be harmed.

•If we are unable to attract new clients or retain and sell additional products or services to existing clients, our revenue growth will be adversely affected.

•Because we recognize revenue from subscriptions over the term of the relevant contract, downturns or upturns in sales are not immediately reflected in full in our results of operations.

•The variability of timing in our sales cycle or our failure to accurately forecast revenue could affect our results of operations and liquidity

•Our future liquidity and results of operations may be adversely affected by the timing of new orders, the level of client renewals and cash receipts from clients.

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•The loss of one or more key employees could harm our business.

•The failure to attract and retain additional qualified personnel, including sales personnel, or to expand our marketing and sales capacities could prevent us from executing our business strategy.

•Our past growth is not indicative of future growth, and, if we grow rapidly, we may not be able to manage our growth effectively.

•Our failure to generate significant capital or raise additional capital necessary to fund our operations and invest in new services and products could reduce our ability to compete and could harm our business.

•Our business may suffer if it is alleged or determined that our technology infringes others’ intellectual property rights.

•Interruptions to or degraded performance of our services, including as a result of interruptions or performance problems with technologies provided by third parties, could result in client dissatisfaction, damage to our reputation, loss of clients, limited growth and reduction in revenue.

•We may experience fluctuations in our results of operations due to the sales cycles for our products and services, which makes our future results difficult to predict and could cause our results of operations to fall below expectations or our guidance.

•Our reputation and/or business could be negatively impacted by ESG matters and/or our reporting of such matters.

•We may need to change our pricing to compete successfully.

•If we are not able to scale our business quickly and grow efficiently, our results of operations could be harmed.

•Our business will be susceptible to risks associated with global operations as our growth strategy involves further expansion of our sales to clients outside the United States.

•Consolidation in our target sales markets is continuing at a rapid pace, which could harm our business.

•If there is a widespread shift by clients or potential clients to enterprise software vendors, products and releases for which we do not provide software products or services, our business would be adversely impacted.

•Cybersecurity threats continue to increase in frequency and sophistication; if our data security measures are compromised or our services are perceived as not being secure, clients may curtail or cease their use of our services, our reputation may be harmed, and we may incur significant liabilities.

•We are subject to governmental and other legal obligations related to privacy, and our actual or perceived failure to comply with such obligations could harm our business.

•If our products and services fail due to defects or other similar problems, and if we fail to correct any defect or other software problems, we could lose clients, become subject to service performance or warranty claims or incur significant costs.

•If we are not able to maintain an effective system of internal control over financial reporting, investors could lose confidence in our financial reporting, which could harm our business and have an adverse effect on our stock price.

•If we fail to enhance our brand, our ability to expand our client base will be impaired.

•If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, experience reduced revenue and incur costly litigation to protect our rights.

•We may be subject to additional obligations to collect and remit sales tax and other taxes, and we may be subject to tax liability, interest and/or penalties for past sales, which could adversely harm our business.

•The amount of and ultimate realization of the benefits from the net operating loss carryforwards for income tax purposes is dependent, in part, upon future events, the effects of which cannot be determined; if we are not able to use a significant portion of our net operating loss carryforwards, our profitability could be adversely affected.

•We are a multinational organization, and we could be obligated to pay additional taxes in various jurisdictions.

Risks Related to our Indebtedness, Capitalization Matters and Corporate Governance

•Our level of indebtedness and any future indebtedness we may incur may limit our operational and financing flexibility.

•The terms of our Credit Facility impose operating and financial restrictions on us.

•Our variable rate indebtedness subjects us to interest rate risk, which, along with the phase-out of LIBOR and transition to SOFR, could cause our indebtedness service obligations to increase significantly.

•Our stock repurchase program could affect the price of our Common Stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our Common Stock.

•We do not currently intend to pay dividends on our Common Stock.

•The price of our Common Stock may be volatile.

•Any issuance of Common Stock upon the exercise of remaining warrants will cause dilution to existing stockholders and may depress the market price of our Common Stock.

•Certain of our common stockholders can exercise significant control, which could limit our stockholders’ ability to influence the outcome of key transactions, including a change of control.

•Future resales of our Common Stock held by significant stockholders may cause the market price of our Common Stock to drop significantly.

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•The DGCL and our organizational documents contain provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.

•Our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, stockholders or employees could be limited by our choice of forum in our bylaws.

Risks Related to Our Business, Operations and Industry

Risks Related to Litigation

We and our Chief Executive Officer, Chairman of Board and President have been involved in continuing litigation with Oracle since 2010. Adverse outcomes and future adverse outcomes in the ongoing litigation could result in the payment of substantial attorneys’ fees and/or costs and/or injunctions against certain of our business practices, which could have a material adverse effect on our business and financial results.

In January 2010, certain subsidiaries of Oracle Corporation (together with its subsidiaries individually and collectively, “Oracle”) filed a lawsuit, Oracle USA, Inc. et al v. Rimini Street, Inc. et al (United States District Court for the District of Nevada) (the “District Court”) (“Rimini I”), against us and our Chief Executive Officer, Chairman of the Board and President, Seth Ravin, alleging that certain of our processes (Process 1.0) violated Oracle’s license agreements with its customers and that we committed acts of copyright infringement and violated other federal and state laws. The litigation involved our business processes and the manner in which we provided our services to our clients.

After completion of a jury trial in 2015 and subsequent appeals, the final outcome of Rimini I was that Mr. Ravin was found not liable for any claims and we were found liable for only one claim: “innocent infringement,” a jury finding that we did not know and had no reason to know that our former support processes were infringing. The jury also found that the infringement did not cause Oracle to suffer lost profits. We were ordered to pay a judgment of $124.4 million in 2016, which we promptly paid and then pursued appeals. With interest, attorneys’ fees and costs, the total judgment paid by us to Oracle after the completion of all appeals was approximately $89.9 million. A portion of such judgment was paid by our insurance carriers (for additional information on this topic, see Note 8 to our Consolidated Financial Statements included in Part I, Item 1 of this Report).

Since November 2018, we have been subject to a permanent injunction (the “Rimini I Injunction”) prohibiting us from using certain support processes that had been found in Rimini I to “innocently” infringe certain Oracle copyrights. The Rimini I Injunction does not prohibit our provision of support services for any Oracle product lines, but rather defines the manner in which we can provide support services for certain Oracle product lines.

In July 2020, Oracle filed a motion to show cause contending that we were in violation of the Rimini I Injunction, and we opposed this motion, disputing Oracle’s claims. In January 2022, the District Court issued its findings and order following an evidentiary hearing held in September 2021 regarding whether we (i) violated the Rimini I Injunction for certain accused conduct and (ii) should be held in contempt in those instances where the District Court found a violation of the Rimini I Injunction, and what sanctions, if any, were appropriate.

In the order, the District Court ruled in favor of us with respect to five out of ten items. With respect to the other five items, the District Court found that we violated the Rimini I Injunction, awarded sanctions to Oracle of $0.6 million and ordered that certain computer files be quarantined from use and notice and proof of such quarantining be provided to Oracle. The District Court also ruled that Oracle may recover its reasonable attorneys’ fees and costs. We reserved all rights, including appellate rights, with respect to the District Court rulings.

In February 2022, we filed a notice of appeal in the District Court, commencing an appeal of the District Court’s January 2022 decision to the Ninth Circuit Court of Appeals (“Court of Appeals”). Shortly thereafter, the District Court stayed the briefing on Oracle’s bill of attorneys’ fees and costs until our appeal was resolved.

Following oral argument on the appeal held in February 2023, on August 24, 2023, the Court of Appeals issued its decision on our appeal of the five items for which the District Court held us in contempt. The Court of Appeals affirmed the District Court’s contempt findings on four of the five items and reversed the District Court’s finding of contempt on the fifth item, holding that the District Court had abused its discretion in holding us in contempt. In addition, the Court of Appeals vacated the District Court’s order to the extent that it read the Rimini I Injunction to prohibit “de minimis” copying, as well as vacated and remanded the sanctions award to the District Court for recalculation in light of its reversal of the contempt finding on the fifth item.

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On September 6, 2023, we filed a petition for panel rehearing and rehearing en banc of the Court of Appeals’ ruling that the District Court was permitted to use the Copyright Act’s damages framework to measure the original award of $0.6 million in sanctions to Oracle. On October 12, 2023, the Court of Appeals denied our petition. On October 25, 2023, the District Court filed an order imposing a recalculated award against us, reducing the sanctions originally awarded to Oracle by $0.1 million and reimposing the remaining $0.5 million sanctions award, which amount was previously paid by us to Oracle, as described below.

At this time, we believe that we are in substantial compliance with the Rimini I Injunction and have complied with the order regarding the quarantining of certain computer files. As of September 30, 2023 and December 31, 2022, we have accrued $6.9 million for an estimate related to Oracle’s reasonable attorneys’ fees and costs for this matter. During the nine months ended September 30, 2022, we paid $0.6 million to Oracle for the sanctions award. Regarding our estimate for reasonable attorneys’ fees and costs, significant judgment is required to determine the amount of loss related to this matter as the outcome is inherently unpredictable and subject to uncertainties. Per order of the District Court, the deadline for Oracle to file its proposed bill of reasonable fees and costs is November 24, 2023. Our response is due sixty (60) days after Oracle’s filing, and Oracle’s reply is due twenty (20) days after our response. We reserve all rights, including appellate rights, with respect to the District Court’s rulings in the contempt matter, including any award of attorneys’ fees and costs. An adverse outcome regarding Oracle’s motion for attorneys’ fees and costs could have a material adverse impact on our financial position, results of operations and cash flows.

In October 2014, we filed a separate lawsuit, Rimini Street Inc. v. Oracle Int’l Corp., in the District Court against Oracle seeking a declaratory judgment that our revised “Process 2.0” support practices, in use since at least July 2014, did not infringe certain Oracle copyrights (“Rimini II”). Our operative complaint asserted declaratory judgment, tort, and statutory claims, including a request for injunctive relief against Oracle for unfair competition in violation of the California Unfair Competition Law. Oracle asserted counterclaims including copyright infringement claims, violations of the Digital Millennium Copyright Act (“DMCA”) and Lanham Act, breach of contract and business tort violations with respect to PeopleSoft and other Oracle-branded products, including J.D. Edwards, Siebel, Oracle Database and Oracle E-Business Suite (“EBS”).

In mid-October 2022, on the eve of the Rimini II jury trial, Oracle withdrew all of its monetary damages claims against us and our Chief Executive Officer, Chairman of the Board and President, Mr. Ravin in Rimini II and moved to proceed with a bench trial instead of a jury trial for its claims for equitable relief.

The District Court entered an order on October 24, 2022, dismissing with prejudice Oracle’s claims in Rimini II “for monetary relief of any kind under any legal theory[,] including but not limited to claims for damages, restitution, unjust enrichment, and engorgement. . . .” In addition, Oracle’s claims for breach of contract, inducing breach of contract and an accounting were dismissed with prejudice, meaning that the claims (including for monetary damages) have been dismissed on their merits and that the judgment rendered is final. Prior to the date of the District Court’s order dismissing with prejudice all of Oracle’s claims for monetary relief, no damages of any kind were awarded by the District Court in Rimini II. The parties each reserved the right to seek or object to any attorneys’ fees and/or costs to the extent permissible by law.

The Rimini II bench trial began in Las Vegas on November 29, 2022 and concluded on December 15, 2022. The parties submitted their proposed findings of fact and conclusions of law to the District Court in February 2023.

On July 24, 2023, the District Court issued its findings of fact and conclusions of law in Rimini II, accompanied by a permanent injunction against us (the “Rimini II Injunction”) which, as set forth in detail below, is subject to an administrative stay and is not currently effective. The District Court found infringement as to Oracle’s PeopleSoft and Oracle Database products but did not find infringement as to Oracle’s EBS, Siebel and J.D. Edwards products, further ordering that we were entitled to a declaration of non-infringement for Oracle’s EBS product. The District Court also found in favor of Oracle on its DMCA and Lanham Act claims, enjoining us from making certain statements and prohibiting certain actions in connection with the manner of marketing, selling and providing services to clients of the Oracle products in question as further described below, and on indirect and vicarious copyright infringement claims against our Chief Executive Officer, Chairman of the Board and President, Mr. Ravin. The District Court denied our California Unfair Competition Law claim and other declaratory judgment claims.

On July 25, 2023, we filed a notice of appeal in the District Court, commencing an appeal of the District Court’s July 24, 2023 Rimini II judgment and Injunction.

On July 28, 2023, we filed an emergency motion with the District Court to stay enforcement of the Rimini II Injunction pending our appeal of the Rimini II judgment and Injunction.

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On August 15, 2023, the District Court issued an order denying our emergency motion to stay the Rimini II Injunction pending our appeal with the Court of Appeals, but it granted an administrative stay of the Rimini II Injunction pending the outcome of a motion to stay to be filed by us with the Court of Appeals.

On August 22, 2023, we filed the separate motion to stay the Rimini II Injunction with the Court of Appeals, asserting that certain provisions of the Rimini II Injunction are vague and overbroad, that the District Court committed legal error, that certain provisions would require us to commit criminal acts to comply with its terms, and that the Rimini II Injunction would cause us and third parties “irreparable harm,” among other grounds. As of the date of this Report, the Court of Appeals has not issued a decision on our motion to stay the Rimini II Injunction.

As of the date of this Report, the Rimini II Injunction, as issued by the District Court, is currently stayed by the District Court, meaning that it is not currently effective. The Rimini II Injunction is primarily directed at Oracle’s PeopleSoft software product and, if effective, would limit, but not fully prohibit, the support services we can provide our clients using Oracle’s PeopleSoft software product.

Among other things, the Rimini II Injunction requires us to immediately and permanently delete certain PeopleSoft software environments, files and updates identified in the Rimini II Injunction, as well as to delete and immediately and permanently discontinue use of certain Company-created automated tools. The Rimini II Injunction also prohibits using, distributing, copying, or making derivative works from certain files, and it prohibits the transfer or copying of PeopleSoft files, updates, and modifications, and portions of PeopleSoft software that are developed, tested, or exist in one client’s systems to our systems or another client’s systems.

The Rimini II Injunction also specifies that we shall not remove, alter or omit any Oracle copyright notices or other Oracle copyright management information from any file that contains an Oracle copyright notice and prohibits us from publicly making statements or statements substantially similar to those the District Court found to be “false and misleading,” which are listed in the Rimini II Injunction.

On August 21, 2023, Oracle filed a motion to amend the District Court’s judgment in Rimini II regarding an update, technical specification and tool related to Oracle’s EBS software product. As of the date of this Report, the District Court has not issued a decision on Oracle’s motion to amend.

On September 12, 2023, the Court of Appeals issued an order holding our appeal of the District Court’s decision in Rimini II in abeyance pending the District Court’s resolution of Oracle’s above-described motion to amend the Rimini II judgment. Accordingly, as of the date of this Report, the briefing schedule for our appeal of the Rimini II decision has been stayed.

While we plan to continue to vigorously pursue a stay of the Rimini II Injunction pending appeal and our appeal of the Rimini II judgment and Injunction, we are unable to predict the timing or outcome of these matters. No assurance is or can be given that we will succeed in our efforts to stay the Rimini II Injunction in full or in part pending appeal or that we will prevail in all or part of our Rimini II appeal.

There were no monetary damages included in the District Court’s judgment in Rimini II. The deadline for the parties to file motions for attorneys’ fees and costs is November 6, 2023, and oppositions to such motions are due February 20, 2024. As of the date of this Report, no party has filed such a motion with the District Court. A decision about whether to award any attorneys’ fees and/or costs, and if so, the amounts, will be made by the District Court. Accordingly, at this time we do not believe that any award of attorneys’ fees and costs are probable or estimatable. An adverse outcome regarding any Oracle motion for attorneys’ fees and costs could have a material adverse impact on our financial position, results of operations and cash flows.

The Rimini II Injunction, if reinstated, would affect certain support services delivered by us to clients receiving support for Oracle’s PeopleSoft products and is expected to result in additional future period costs, among other potential impacts. However, these costs are not currently estimatable and are not required to be recorded as of September 30, 2023. Accordingly, we have made no associated accrual as of September 30, 2023. Any required changes to how support services are delivered to our PeopleSoft clients could have a material adverse impact on our financial position, results of operations and cash flows. The percentage of revenue derived from services we provide solely for Oracle’s PeopleSoft software product was approximately 8% and 9% of our total revenue for the three and nine months ended September 30, 2023, respectively.

We reserve all rights, including appellate rights, with respect to the District Court’s rulings in Rimini II and the Rimini II Injunction, including any award of attorneys’ fees and costs to Oracle.

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Oracle may file additional contempt motions against us at any time to attempt to enforce its interpretation of the Rimini I Injunction and/or the Rimini II Injunction or if it has reason to believe we are not in compliance with the express terms of the Rimini I Injunction and/or the Rimini II Injunction. Such contempt proceedings or any judicial finding of contempt could result in a material adverse effect on our business and financial condition. In addition, the existence of the Rimini I Injunction, the Rimini II Injunction, the District Court’s January 2022 order and/or the District Court’s July 2023 order could dissuade clients from purchasing or continuing to purchase our services. If we are obligated to pay substantial civil assessments arising from any finding of contempt, this could reduce the amount of cash flows available to pay principal, interest, fees and other amounts due under our Credit Facility, which could result in an event of default, in which case the lenders could demand accelerated payment of principal, accrued and unpaid interest, and other fees. We cannot provide assurances that we will have sufficient assets which would allow us to repay such indebtedness in full at such time. As a result, we could be forced into bankruptcy or liquidation.

We could be required to pay substantial attorneys’ fees and/or costs in connection with litigation relating to our current or past business activities and/or be enjoined from certain business practices. Any of these outcomes could result in a material adverse effect on our business and financial condition, and the pendency of the litigation alone could dissuade clients from purchasing or continuing to purchase our services. If we are obligated to pay substantial attorneys’ fees and/or costs to Oracle, including as a result of the District Court’s rulings in Rimini II, or are enjoined from certain business practices, this could reduce the amount of cash flows available to pay principal, interest, fees and other amounts due under our Credit Facility, which could result in an event of default, in which case the lenders could demand accelerated payment of principal, accrued and unpaid interest, and other fees. If we default in our payment obligations under the Credit Facility and the indebtedness under the Credit Facility were to be accelerated, there can be no assurance that our assets would be sufficient to repay such indebtedness in full, and we could be forced into bankruptcy or liquidation.

Our business has been and may continue to be materially harmed by this litigation and Oracle’s conduct. During the course of these cases, we anticipate there will be additional rulings by the District Court in Rimini II with respect to attorneys’ fees and costs and our support processes relating to EBS, the District Court in the contempt proceedings, and the Court of Appeals in both the contempt proceedings and in Rimini II in connection with hearings, motions, decisions, and other matters, as well as other interim developments related to the litigation. If securities analysts or investors regard these rulings as negative, the market price of our Common Stock may continue to decline, which stock price volatility may result in other legal claims against us. If current or prospective clients regard these rulings as negative, it could negatively impact our new client sales or renewal sales.

While we plan to continue to vigorously litigate the pending matters in the contempt proceedings and in our Rimini II appeal, we are unable to predict the timing or outcome of these matters. No assurance is or can be given that we will prevail on any appeal, contempt proceeding, claim, or counterclaim.

See the section titled “Legal Proceedings” in Part II, Item 1 and Note 8 to our Unaudited, Condensed Consolidated Financial Statements included in Part I, Item 1 of this Report for more information related to this litigation.

The Oracle software products that are part of our ongoing Rimini I Injunction compliance and that are the subject of the Rimini II litigation with Oracle and the Rimini II Injunction represent a significant portion of our current revenue.

In addition to the ongoing litigation with Oracle over compliance with the Rimini I Injunction, Oracle filed counterclaims in Rimini II relating to our support services for Oracle’s PeopleSoft, J.D. Edwards, Siebel, E-Business Suite, and Database software products, prevailing only on its copyright infringement claims relating to PeopleSoft and Oracle Database and only obtaining injunctive relief relating to its PeopleSoft product line. The Rimini II Injunction currently limits, but does not fully prohibit, the support services we can provide clients using Oracle’s PeopleSoft software product. The percentage of revenue derived from services we provide solely for Oracle’s PeopleSoft software product was approximately 9% of our total revenue for the nine months ended September 30, 2023. For the nine months ended September 30, 2023, approximately 64% of our total revenue was derived from services provided to our clients using Oracle software products. Although we provide support services for additional Oracle product lines that are not subject to the Rimini I Injunction or the Rimini II Injunction, as well as for software products provided by companies other than Oracle, our current revenue depends significantly on the product lines that are the subject of the Rimini I Injunction and Rimini II Injunction. Should we not obtain a stay of the Rimini II Injunction pending our appeal of the District Court’s ruling, should our appeal in Rimini II fail or should a contempt proceeding on the Rimini I Injunction result in a final order holding us in contempt, implicating processes for which we have not previously modified the way we provide our support services, we could be required to change the way we provide support services to some of our clients, which could result in the loss of clients and revenue, and may also give rise to claims for

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compensation from our clients, and require us to incur additional costs in order to comply with a final Rimini II injunction, any of which could have a material adverse effect on our business, financial condition and results of operations.

Our ongoing litigation with Oracle presents challenges for growing our business.

We have experienced challenges growing our business as a result of our ongoing litigation with Oracle. Many of our existing and prospective clients have expressed concerns regarding our ongoing litigation and, in some cases, have been subjected to various negative communications by Oracle in connection with the litigation. We have experienced in the past, and may continue to experience in the future, volatility and slowness in acquiring new clients, as well as clients not renewing their agreements with us, due to these challenges relating to our ongoing litigation with Oracle. Further, certain of our prospective and existing clients may be subject to additional negative communications from software vendors. We have taken steps to minimize disruptions to our existing and prospective clients regarding the litigation, but we continue to face challenges growing our business while the litigation remains ongoing. In certain cases, we have agreed to pay certain liquidated damages to our clients if we are no longer able to provide services to these clients, and/or reimburse our clients and our former lenders for their reasonable legal fees incurred in connection with any litigation-related subpoenas and depositions or to provide certain client indemnification or termination rights if any outcome of litigation results in our inability to continue providing any of the paid-for services. In addition, we believe the length of our sales cycle is longer than it otherwise would be due to prospective client diligence on possible effects of the Oracle litigation on our business. We cannot provide assurances that we will continue to overcome the challenges we face as a result of the litigation and continue to renew existing clients or secure new clients.

Additionally, the existence of this ongoing litigation, including the January 2022 District Court order and the July 2023 District Court order, could negatively impact the value of our equity securities, and could negatively impact our ability to raise additional equity or debt financing, as well as resulting in other legal claims against us.

We are self-insured for any costs related to any current or future intellectual property litigation, although we maintain and have tendered our errors and omissions insurance coverage for the wrongful acts alleged in Oracle’s Rimini I Injunction contempt proceeding in order to seek determinations of a duty to defend. We obtained a determination of a duty to defend with respect to our primary errors and omission insurance carrier and are seeking a determination of a duty to defend by one of our excess errors and omissions insurance carriers. We cannot provide assurances that we will prevail on this claim or any other similar claims that we may tender in the future.

While we currently believe our cash on hand, accounts receivable and contractually committed backlog provides us with liquidity to cover attorneys’ fees and related costs, such as travel, hotels, and consultants, associated with the ongoing litigation with Oracle, we cannot assure our liquidity will be sufficient.

Oracle has a history of litigation against companies offering alternative support programs for Oracle products, and Oracle could pursue additional litigation with us.

Oracle has been active in litigating against companies that have offered competing maintenance and support services for their products. For example, in March 2007, Oracle filed a lawsuit against SAP and its wholly-owned subsidiary, TomorrowNow, Inc. After a jury verdict awarding Oracle $1.3 billion, the parties stipulated to a final judgment of $306 million subject to appeal. After the appeal, the parties settled the case in November 2014 for $356.7 million. In February 2012, Oracle filed suit against ServiceKey, Inc. and settled the case in October 2013 after the District Court issued an injunction against ServiceKey and its CEO. Oracle also filed suit against CedarCrestone Corporation in September 2012 and settled the case in July 2013. TomorrowNow and CedarCrestone offered maintenance and support for Oracle software products, and Service Key offered maintenance and support for Oracle technology products. Given Oracle’s history of litigation against companies offering alternative support programs for Oracle products, we can provide no assurance, regardless of the outcome of our current litigations with Oracle, that Oracle will not pursue additional litigation against us. Such additional litigation could be costly, distract our management team from running our business and reduce client interest and our sales revenue.

Other Risks Related to Our Business, Operations and Industry

Economic uncertainties, changes in economic conditions, including rising inflation, or downturns in the general economy or the industries in which our clients operate, may result in increased costs of operations, could disproportionately affect the demand for our products and services and could negatively impact our results of operations.

General worldwide economic conditions have experienced significant fluctuations in recent years, and market volatility and uncertainty remain widespread, with the expectation that inflation, other economic challenges and possible recession will be exacerbated for an extended period. Inflation has accelerated in the U.S. and globally due in part to global

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supply chain issues, a rise in energy prices, fiscal and monetary policies adopted during and since the COVID-19 pandemic and continued strong consumer demand. An inflationary environment may increase our and our clients’ cost of labor due to higher wages, as well as result in higher financing costs and/or higher supplier prices for both us and our clients. As a result, we and our clients may find it difficult to accurately forecast and plan future business activities. In addition, these conditions could cause our clients or prospective clients to reduce their IT budgets, which could decrease corporate spending on our products and services, resulting in delayed and lengthened sales cycles, a decrease in new client acquisition and loss of clients. Furthermore, during challenging economic times, our clients may face issues with their cash flows and in gaining timely access to sufficient credit or obtaining credit on reasonable terms, which could impair their ability to make timely payments to us, impact client renewal rates and adversely affect our revenue. In addition, continued disruptions in the U.S. banking sector could impact certain of our clients’ ability to access their existing cash, which could also impair their ability to make timely payments to us, adversely affecting our revenue. If such conditions occur, we may be required to increase our reserves, allowances for doubtful accounts and write-offs of accounts receivable, and our results of operations would be harmed. We cannot predict the timing, strength or duration of any economic slowdown or recovery, whether global, regional or within specific markets. If the conditions of the general economy or markets in which we operate worsen, our business could be harmed. In addition, even if the overall economy improves, the market for our products and services may not experience growth. Moreover, multiple events, including changes in U.S. trade policies and responsive changes in policy by foreign jurisdictions, geopolitical developments and uncertainty in the European Union, China and elsewhere, and governmental and multinational organizations’ responses to the COVID-19 pandemic have increased levels of political and economic unpredictability globally, and may increase the volatility of global financial markets and the global and regional economies.

The market for independent software support services is relatively undeveloped and may not grow.

The market for independent enterprise software support services is still relatively undeveloped, has not yet achieved widespread acceptance and may not grow quickly or at all. Our success will depend to a substantial extent on the willingness of companies to engage a third party such as us to provide software support services for their enterprise software. Many enterprise software licensees remain hesitant to use a third party to provide such support services, choosing instead to rely on support services provided by the enterprise software vendor. Other enterprise software licensees have invested substantial personnel, infrastructure and financial resources in their own organizations with respect to support of their licensed enterprise software products and may choose to self-support with their own internal resources instead of purchasing services from the enterprise software vendor or an independent provider such as ourselves. Particularly because our market is relatively undeveloped, we must address any potential clients’ concerns and explain the benefits of our approach to convince them of the value of our services. If companies are not sufficiently convinced that we can address their concerns and that the benefits of our services are compelling, then the market for our services may not develop as we anticipate, and our business will not grow.

We face significant competition for the services comprising each component of our Solutions Portfolio, from both enterprise software vendors and other companies offering independent enterprise software support, products and services, as well as from software licensees that attempt to self-support, which may harm our ability to add new clients, retain existing clients and grow our client base across all of our Solutions Portfolio offerings.

Our current and potential competitors across each component of our Solutions Portfolio, which include enterprise software vendors, may have significantly more financial, technical, sales and marketing teams and other resources than we have, may be able to devote greater resources to the development, promotion, sale and support of their products and services, may have more extensive customer bases and broader customer relationships than we have and may have longer operating histories and greater name recognition than we have. Specifically, we face intense competition from enterprise software vendors, such as Oracle and SAP, who provide software support for their own products, as well as from other competitors who provide independent enterprise software support, products and services. Competitors, including enterprise software vendors, have offered, and may continue to offer, discounts to companies to whom we have marketed our services. In addition, competitors, including enterprise software vendors, may take other actions in an attempt to maintain their business, including changing the terms of their customer agreements, the functionality of their support, products or services, or their pricing terms. For example, starting in the second quarter of 2017 Oracle has prohibited us from accessing its support websites to download software updates on behalf of our clients who are authorized to do so and permitted to authorize a third party to do so on their behalf. In addition, the support, license or other contractual policies of our future and current competitors, including Oracle and SAP, may include clauses that penalize customers that choose to use our or any independent provider’s services or products. Further, the contractual policies of enterprise software vendors, such as Oracle and SAP, may contain clauses that penalize customers that seek to return to the software vendor to purchase new licenses following a departure from the software vendor’s support program. In addition, our current and potential competitors may develop and market new technologies that render our existing or future enterprise software support, products or services less competitive or obsolete. Finally, we also face competition from software licensees that choose to self-support. Competition could significantly impede our ability to sell our enterprise support, products and services on terms favorable to us, and we may need to decrease the prices for our support,

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products or services to remain competitive. If we are unable to maintain our current pricing due to competitive pressures, our margins will be reduced and our results of operations will be negatively affected.

There are also several smaller support services vendors in the independent enterprise software support services market with whom we compete with respect to certain of our support services. We expect competition to continue to increase in the future, particularly if we prevail in our appeal of the District Court’s order and injunction in Rimini II, which could harm our ability to increase sales, maintain or increase renewals and maintain our prices. In addition, certain providers of independent enterprise software support, products and services may have or may develop more strategic relationships with enterprise software vendors, which may allow them to compete more effectively than us over the long term. To the extent any of our competitors have existing relationships with potential clients for any component of our Solutions Portfolio, those potential clients may be unwilling to purchase our services because of those existing relationships, which could cause the demand for our services to be substantially impacted. Further, our competitors may attempt to use the Oracle litigation and the existence of the Rimini I Injunction and the Rimini II Injunction described above under the section titled “Risks Related to Litigation,” to dissuade certain of our prospective or existing clients from purchasing or continuing to purchase any or all of the components of our Solutions Portfolio, including our enterprise software support services.

We have had a history of losses and may not achieve or sustain revenue growth or profitability in the future. Further, if we are unable to attract new clients or retain and/or sell additional products or services to our existing clients, our revenue growth could be adversely affected.

We recorded a net income of $6.8 million for the three months ended September 30, 2023, and we had an accumulated deficit of $211.6 million as of September 30, 2023. We will need to generate and sustain increased revenue levels in future periods while managing our costs to be profitable, and, even if we do, we may not be able to maintain or increase our level of profitability. To increase our revenue, we must add new clients, secure renewals or service extensions by existing clients on terms favorable to us and sell additional products and services to existing clients. As competitors introduce low-cost and/or differentiated services that are perceived to compete with ours, or as enterprise software vendors introduce competitive pricing or additional products and services or implement other sales strategies to compete with us, our ability to sell to new clients and renew agreements with existing clients based on pricing, service levels, technology and functionality could be impaired. In addition, certain of our existing clients may choose to license a new or different version of enterprise software from an enterprise software vendor, and such clients’ license agreements with the enterprise software vendor will typically include a minimum one-year mandatory maintenance and support services agreement. In such cases, it is unlikely that these clients would renew their maintenance and support services agreements with us, at least during the early term of the license agreement. In addition, such existing clients could move to another enterprise software vendor, product or release for which we do not offer any products or services. As a result, we may be unable to renew or extend our agreements with existing clients or attract new clients or new business from existing clients on terms that would be favorable or comparable to prior periods, which could have an adverse effect on our revenue and growth.

Additionally, we intend to continue to expend significant funds to expand our sales and marketing operations, enhance our service offerings, expand into new markets, launch new product offerings and meet the increased compliance requirements associated with our operations as a public company. Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses. Further, many companies with which we compete have larger and longer-tenured sales and marketing teams, which may impact the ability to grow our business, which could have an adverse effect on our revenue and growth. If we are unable to achieve and sustain revenue growth or profitability, the market price of our securities may significantly decrease.

If our retention rates decrease, or we do not accurately predict retention rates, our future revenue and results of operations may be harmed.

Our clients have no obligation to renew their product or service subscription agreements with us after the expiration of a non-cancelable agreement term. In addition, the majority of our multi-year, non-cancelable client agreements are not pre-paid other than the first year of the non-cancelable service period. We may not accurately predict retention rates for our clients. Our retention rates may decline or fluctuate as a result of a number of factors, including our clients’ decision to license a new product or release from an enterprise software vendor, our clients’ decision to move to another enterprise software vendor, product or release for which we do not offer products or services, global economic conditions, including rising inflation and interest rates on our clients’ businesses, client satisfaction with our products and services, the acquisition of our clients by other companies and clients going out of business. If our clients do not renew their agreements for our products and services or if our clients decrease the amount they spend with us, our revenue will decline and our business will suffer. In addition, certain of our existing clients may choose to license a new or different version of enterprise software from an enterprise software vendor, and such clients’ license agreements with the enterprise software vendor will typically include a minimum one-year mandatory

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maintenance and support services agreement. In such cases, it is unlikely that these clients would renew their maintenance and support services agreements with us, at least during the early term of the license agreement. In addition, such existing clients could move to another enterprise software vendor, product or release for which we do not offer any products or services.

Because we recognize revenue from subscriptions over the term of the relevant contract, downturns or upturns in sales are not immediately reflected in full in our results of operations.

As a subscription-based business, we recognize revenue over the service period of our contracts. As a result, much of our reported revenue each quarter results from contracts entered into during previous quarters. Consequently, while a shortfall in demand for our products and services or a decline in new or renewed contracts in any one quarter may not significantly reduce our revenue for that quarter, it could negatively affect our revenue in future quarters and full year periods. Accordingly, the effect of significant downturns in new sales, renewals or extensions of our service agreements for a quarter will not be reflected in full in our results of operations until future periods. Our revenue recognition model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new clients must be recognized over the applicable service contract term.

Due to the variability of timing in our sales cycle, if we fail to forecast our revenue accurately, or if we fail to match our expenditures with corresponding revenue, our results of operations and liquidity could be adversely affected.

The variability of the sales cycle for the evaluation and implementation of our products and services, which typically has been six to twelve months once a client is engaged, may cause us to experience a delay between increasing operating expenses for such sales efforts, and the generation of corresponding revenue. Accordingly, we may be unable to prepare accurate internal financial forecasts or replace anticipated revenue that we do not receive as a result of delays arising from these factors. As a result, our results of operations and liquidity in future reporting periods may be significantly below the expectations of the public market, securities analysts or investors, which could negatively impact the price of our Common Stock.

Our future liquidity and results of operations may be adversely affected by the timing of new orders, the level of client renewals and cash receipts from clients.

Due to the collection of cash from our clients before services are provided, our revenue is recognized over future periods when there are no corresponding cash receipts from such clients. Accordingly, our future liquidity depends upon the ability to continue to attract new clients and to enter into renewal arrangements with existing clients. If we experience a decline in orders from new clients or renewals from existing clients, our revenue may continue to increase while our liquidity and cash levels decline. Any such decline, however, will negatively affect our revenues in future quarters. Accordingly, the effect of declines in orders from new clients or renewals from existing clients may not be fully reflected in our results of operations and cash flows until future periods. Comparing our revenues and operating results on a period-to-period basis may not be meaningful, as it may not be an indicator of the future sufficiency of our cash and cash equivalents to meet our liquidity requirements. You should not rely on our past results as an indication of our future performance or liquidity.

We rely on our management team and other key employees, including our Chief Executive Officer, Chairman of the Board and President, and the loss or disability of one or more key employees could harm our business. Additionally, the failure to attract and retain additional qualified personnel, including sales personnel, or to expand our marketing and sales capabilities could prevent us from executing our business strategy.

The loss of or a disability that would prevent our Chief Executive Officer, Chairman of the Board and President or any of our key senior members of management from substantially performing their duties could have a material adverse effect on our business, operating results and financial condition, particularly if we are unable to hire and integrate suitable replacements on a timely basis. Mr. Ravin has been under long-standing medical care for kidney disease, which includes ongoing treatment. Although Mr. Ravin’s condition has not adversely impacted his performance as Chief Executive Officer, Chairman of the Board and President or on the overall management of the Company, we can provide no assurance that his condition will not affect his ability to perform the role of Chief Executive Officer, Chairman of the Board and President in the future. Further, as we continue to grow our business, we will continue to adjust our senior management team to best address our growth opportunities. If we are unable to attract or retain the right individuals for the team, it could hinder our ability to grow our business and could disrupt our operations or otherwise have a material adverse effect on our business. We do not maintain key man life insurance on any of our employees.

Furthermore, to execute our business strategy, we must attract and retain highly qualified personnel, including sales personnel. Our ability to increase our client base and achieve broader market acceptance of our services will depend to a

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significant extent on our ability to expand our marketing and sales operations. We plan to continue expanding our sales force globally. We are experiencing a very competitive recruiting environment, creating difficulty in hiring and retaining sufficient numbers of highly skilled sales personnel and other employees with appropriate qualifications. In particular, we have experienced extreme hiring competition in the San Francisco Bay Area, where we have a significant amount of operations, but also face extremely competitive hiring environments across the United States and the other countries in which we operate. Our efforts to attract, develop, integrate and retain highly skilled employees with appropriate qualifications may be compounded by intensified restrictions on travel, immigration, or the availability of work visas. Many companies with which we compete for experienced personnel have greater resources and less stock price volatility than we do. In making employment decisions, job candidates often consider the value of the equity incentives they are to receive in connection with their employment. If the price of our stock continues to experience significant volatility, our ability to attract or retain qualified employees will be adversely affected. In addition, as we continue to expand into new geographic markets, there can be no assurance that we will be able to attract and retain the required management, sales, marketing and support services personnel to profitably grow our business. If we fail to attract highly qualified new sales and other personnel or fail to retain and motivate our current personnel, our growth prospects could be severely harmed.

Moreover, our sales personnel typically take an average of between nine to twelve months before any new sales personnel can operate at the capacity typically expected of experienced sales personnel. This ramp cycle, combined with our typical six- to twelve-month sales cycle for engaged prospects, means that we will not immediately recognize a return on this investment in our sales results. In addition, the cost to acquire clients is high due to the cost of these marketing and sales efforts. Further, the cost of marketing and sales efforts will likely increase as we continue to offer new products and services, as even our experienced sales personnel will need to receive specialized training on our new offerings. Our business may be materially harmed if our efforts do not generate a corresponding increase in revenue. We may not achieve anticipated revenue growth from expanding our sales force if we are unable to hire, develop and retain talented sales personnel, if our new sales personnel are unable to achieve desired productivity levels in a reasonable period of time or if our sales and marketing programs are not effective.

Our past growth is not indicative of our future growth, and if we grow rapidly, we may not be able to manage our growth effectively.

Our revenue grew from $101.9 million for the three months ended September 30, 2022 to $107.5 million for the three months ended September 30, 2023, representing a period over period increase of 5%. You should not consider our past growth as indicative of our future performance. We believe growth of our revenue depends on a number of factors, including our ability to:

•price our products and services effectively so that we are able to attract new clients and retain existing clients without compromising our profitability;

•introduce our products and services to new geographic markets;

•introduce new enterprise software products and services supporting additional enterprise software vendors, products and releases;

•satisfactorily conclude any Oracle-related litigation and any other litigation or governmental inquiry that may occur; and

•increase awareness of our company, products and services on a global basis.

We may not successfully accomplish all or any of these objectives.

In addition, our historical growth has placed and may continue to place significant demands on our management and our operational and financial resources. Our organizational structure is becoming more complex as we add additional staff, and we will need to improve our operational, financial and management controls, as well as our reporting systems and procedures. Further, we believe that our corporate culture has been a critical component of our success. We have invested substantial time and resources in building our team and nurturing our culture. As we continue to expand our business and operate as a public company, we may find it difficult to maintain our corporate culture while managing our employee growth. We will require significant capital expenditures and the allocation of valuable management resources to grow and change in these areas without undermining our corporate culture of rapid innovation, teamwork and attention to client service that has been central to our growth. Any failure to manage our anticipated growth and related organizational changes in a manner that preserves our culture could negatively impact future growth and achievement of our business objectives.

Our failure to generate significant capital through our operations or raise additional capital necessary to fund and expand our operations, invest in new services and products, and service our debt could reduce our ability to compete and could harm our business.

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We may need to incur additional debt under our Credit Facility and/or raise additional capital beyond what is available under our Credit Facility if we cannot fund our growth or service our debt through our operating cash flows. Should this occur, we may not be able to obtain additional debt or additional equity financing on favorable terms, if at all, which could harm our business, results of operations and financial condition. We are also subject to certain restrictions for future financings as discussed in the risk factor “The terms of our Credit Facility impose operating and financial restrictions on us.” If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests and the value of our Common Stock could decline. If we engage in additional debt financings, the holders of the debt securities or lenders would have priority over the holders of our Common Stock. We may also be required to accept terms that further restrict our ability to incur additional indebtedness, take other actions that would adversely impact the short-term price of our Common Stock, or force us to maintain specified liquidity or other ratios, any of which could harm our business, results of operations and financial condition and reduce the value of our Common Stock.

Our business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others.

The software industry is characterized by the existence of a large number of patents, copyrights, trademarks, trade secrets and other intellectual and proprietary rights. Companies in the software industry are often required to defend against claims and litigation alleging infringement or other violations of intellectual property rights. Many of our competitors and other industry participants have been issued patents and/or have filed patent applications and may assert patent or other intellectual property rights within the industry. Our ongoing litigation with Oracle relates in part to copyright infringement claims and, from time to time, we may receive threatening letters or notices alleging infringement or may be the subject of claims that our services and underlying technology infringe or violate the intellectual property rights of others. Any allegation of infringement, whether innocent or intentional, can adversely impact marketing, sales and our reputation.

Interruptions to or degraded performance of our service could result in client dissatisfaction, damage to our reputation, loss of clients, limited growth and reduction in revenue.

Our software support agreements with our clients generally guarantee a 10-minute response time with respect to certain high-priority issues. If we do not meet the 10-minute guarantee, our clients may in some instances be entitled to liquidated damages, service credits or refunds. To date, no such payments have been made.

We also deliver tax, legal and regulatory updates to our clients. If there are inaccuracies in these updates, or if we are not able to deliver them on a timely basis to our clients, our reputation may be damaged, and we could face claims for compensation from our clients and potentially lose clients.

Any interruptions or delays in our service, whether as a result of third-party error, our own error, natural disasters or other catastrophic events, security breaches or a result of any other issues, whether accidental or willful, could harm our relationships with clients and cause our revenue to decrease and our expenses to increase. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. These factors, in turn, could further reduce our revenue, subject us to liability, cause us to pay liquidated damages, issue credits or cause clients not to renew their agreements with us, any of which could materially adversely affect our business.

We depend and rely on SaaS technologies and related services from third parties in order to operate critical functions of our business and interruptions or performance problems with these technologies or services may adversely affect our business and operating results.

We depend and rely on software-as-a-service, or SaaS, technologies and related services from third parties in order to operate critical functions of our business, including billing and order management, financial accounting services, and customer relationship management services. If these services become unavailable due to extended outages or interruptions, security vulnerabilities, or cyber-attacks, because they are no longer available on commercially reasonable terms or prices, or due to other unforeseen circumstances, our expenses could increase, our ability to manage these critical functions could be interrupted, and our processes for and ability to manage sales of our products, recognize revenue, and support our customers could be impaired, all of which could adversely affect our business and operating results.

We may experience fluctuations in our results of operations due to the sales cycles for our products and services, which makes our future results difficult to predict and could cause our results of operations to fall below expectations or our guidance.

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Our results of operations have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control, including seasonality linked to certain of the sales cycles for our products and services. Historically, our sales cycle has been tied to the renewal dates for our clients’ existing and prior vendor support agreements for the products that we support. Because our clients make support vendor selection decisions in conjunction with the renewal of their existing support agreements with Oracle and SAP, among other enterprise software vendors, we have experienced an increase in business activity during the quarterly periods in which those agreements are up for renewal. However, because we have introduced and intend to continue to introduce products and services for additional software products that do not follow the same renewal timeline or pattern, our past results may not be indicative of our future performance, and comparing our results of operations on a period-to-period basis may not be meaningful. Also, if we are unable to engage a potential client before its renewal date for software support services in a particular year, it will likely be at least another year before we would have the opportunity to engage that potential client again, given that such potential client likely had to renew or extend its existing support agreement for at least an additional year’s worth of service with its existing support provider. Furthermore, our existing clients generally renew their agreements with us at or near the end of each calendar year, so we have also experienced and expect to continue to experience heavier renewal rates in the fourth quarter.

We may not be able to accurately forecast the amount and mix of future product and service subscriptions, revenue and expenses, and as a result, our results of operations may fall below our estimates or the expectations of securities analysts and investors. If our revenue or results of operations fall below the expectations of investors or securities analysts, or below any guidance we may provide, the price of our Common Stock could decline.

Our reputation and/or business could be negatively impacted by ESG matters and/or our reporting of such matters.

There is an increasing focus from regulators, including U.S. state attorneys general, certain investors, certain clients, the communities in which we operate and other stakeholders concerning environmental, social, and governance (“ESG”) matters, both in the United States and internationally. These stakeholders may have differing priorities and expectations regarding ESG matters. In particular, certain of our clients or potential clients might require that we implement specified ESG procedures or standards in order to do business or continue to do business with them. In addition, proxy advisory firms and certain institutional investors who manage investments in public companies are increasingly integrating ESG factors into their investment analysis. The specific consideration of ESG factors in making business, investment and voting decisions is unsettled and still developing. In addition, recent judicial decisions, federal and state legislative actions and actions of private interest groups have challenged certain ESG policies and practices. Accordingly, the frameworks and methods for assessing ESG policies are not fully developed, likely vary across our various stakeholders and will likely continue to evolve over time.

Moreover, the subjective nature of methods used by our various stakeholders to assess a company with respect to ESG criteria could result in erroneous perceptions or a misrepresentation of our actual ESG policies and practices. In addition, we could also incur additional costs and require additional resources to monitor, report and comply with various ESG practices and associated legal, legislative and regulatory requirements. To the extent that our required and voluntary disclosures about ESG matters increase, we could be criticized for the accuracy, adequacy, or completeness of such disclosures. If we fail to comply with specific ESG-related client/potential client or investor expectations and standards, or to provide the disclosure relating to ESG issues that any third parties may believe is necessary or appropriate (regardless of whether there is a legal requirement to do so), our reputation, business, financial condition, and/or results of operations, as well as the price of our common stock, could be negatively impacted.

We may need to change our pricing models to compete successfully.

We currently offer our clients support services for a fee that is equal to a percentage of the annual fees charged by the enterprise software vendor; therefore, changes in such vendors’ fee structures would impact the fees we would receive from our clients. If the enterprise software vendors offer deep discounts on certain services or lower prices generally, we may need to change our pricing models, which could have an adverse effect on our results of operations. In addition, our other product and service offerings, such as our Rimini ONE integrated services, have pricing models that use a variety of different metrics and formulas as compared to our support solutions. To the extent that we do not have substantial experience with pricing such new products and services, we may need to adjust our pricing models for these offerings over time to ensure that we remain competitive and realize a return on our investment in developing these new products and services. If we do not adapt our pricing models as necessary or appropriate, our revenue could decrease and adversely affect our results of operations.

We may not be able to scale our business systems quickly enough to meet our clients’ growing needs, and if we are not able to grow efficiently, our results of operations could be harmed.

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As enterprise software products become more advanced and complex, we will need to devote additional resources to innovating, improving and expanding our offerings to provide relevant products and services to our clients using these more advanced and complex products. In addition, we will need to appropriately scale our internal business systems and our global operations and client engagement teams to serve our growing client base, particularly as our client demographics expand over time. Any such expansion may be expensive and complex, requiring financial investments, management time and attention. Any failure of or delay in these efforts could adversely affect the quality or success of our services and negatively impact client satisfaction, resulting in potential decreased sales to new clients and possibly lower renewal rates by existing clients.

We could also face inefficiencies or operational failures as a result of our efforts to scale our infrastructure. There can be no assurance that the expansion and improvements to our infrastructure and systems will be fully or effectively implemented within budgets or on a timely basis, if at all. Any failure to efficiently scale our business could result in reduced revenue and increased expenditures and adversely impact our operating margins and results of operations.

Because our long-term growth strategy involves further expansion of our sales to clients outside the United States, our business will be susceptible to risks associated with global operations, including currency exchange rate fluctuations.

A significant component of our growth strategy involves the further expansion of our operations and client base outside the United States. Accordingly, our international revenue grew from $48.5 million for the three months ended September 30, 2022 to $51.7 million for the three months ended September 30, 2023, an increase of $3.2 million or 7%. We currently have subsidiaries outside of the United States in Australia, Brazil, Canada, UAE (Dubai), France, Germany, Hong Kong, India, Israel, Japan, Korea, Malaysia, Mexico, Netherlands, New Zealand, Poland, Singapore, Sweden, Taiwan and the United Kingdom, which focus primarily on selling our services in those regions.

In the future, we may expand to other locations outside of the United States. Our current global operations and future initiatives will involve a variety of risks, including among others:

•changes in a specific country’s or region’s political or economic conditions;

•the occurrence of catastrophic events, including natural disasters, that may disrupt our business;

•changes in regulatory requirements, taxes or trade laws or the imposition of trade sanctions;

•currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into currency exchange rate hedging transactions;

•more stringent regulations relating to data security, such as where and how data can be housed, accessed and used, and the unauthorized use of, or access to, commercial and personal information;

•differing labor regulations, especially in countries and geographies where labor laws are more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations;

•challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs as well as hire and retain local management, sales, marketing and support personnel, along with the ability to recapture costs to open up new geographies;

•difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems;

•increased logistics, travel, real estate, infrastructure and legal compliance costs associated with global operations;

•limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries;

•laws and business practices favoring local competitors or general preferences for local vendors;

•limited or insufficient intellectual property protection;

•war, political instability or terrorist activities, including geopolitical actions specific to an international region, such as the ongoing geopolitical conflict between Israel and Hamas;

•exposure to liabilities under anti-corruption and anti-money laundering laws, including the United States Foreign Corrupt Practices Act and similar laws and regulations in other jurisdictions; and

•adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash.

Our exposure in operating our business globally with the risks noted above and the unique challenges of each new geography increase the risk that any potential future expansion efforts that we may undertake will not be successful. If we invest substantial time and resources to expand our global operations and are unable to do so successfully and in a timely manner, our business and results of operations will be adversely affected.

Consolidation in our target sales markets is continuing at a rapid pace, which could harm our business in the event that our clients are acquired and their agreements are terminated, or not renewed or extended.

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Consolidation among companies in our target sales markets has been robust in recent years, and this continuing trend poses a risk for us. If such consolidation rates continue, we expect that some of the acquiring companies will terminate, renegotiate and elect not to renew our agreements with the clients they acquire, which may have an adverse effect on our business and results of operations.

If there is a widespread shift by clients or potential clients to enterprise software vendors, products and releases for which we do not provide software products or services, our business, financial condition and results of operations would be adversely impacted.

Our current revenue is primarily derived from the provision of support services for Oracle and SAP enterprise software products. If other enterprise software vendors, products and releases emerge to take substantial market share from current Oracle and SAP products and releases we support, and we are unable to, or do not, offer products or services for such vendors, products or releases, demand for our products and services may decline or our products and services may become obsolete. Developing new products and services to address different emerging enterprise software vendors, products and releases could take a substantial investment of time and financial resources, and we cannot guarantee that we will be successful. If fewer clients use enterprise software products for which we provide products and services, and we are not able to provide services for new vendors, products and releases, our business may be adversely impacted.

We continue to invest resources in research and development to enhance our current product and service offerings, and other new offerings that will appeal to clients and potential clients, for example, our partnership with Salesforce to support SaaS solutions, our Application Management Services (AMS) for SAP and Oracle products and our Rimini ONE integrated services. The development of new product and service offerings may not generate sufficient revenue to offset the increased research and development expenses and may not generate gross profit margins consistent with our current margins. Also, our new product and service offerings may be in markets that are more competitive than markets for our existing product and service offerings, making it more difficult to introduce them to clients and potential clients effectively or provide them profitably.

If our new or modified products, services or technology do not work as intended, are not responsive to client needs or industry or regulatory changes, are not appropriately timed with market opportunity, or are not effectively brought to market, we may lose existing and prospective clients or related opportunities, in which case our financial condition and results of operations may be adversely impacted, and if we are not successful in implementing any new product and service offerings, we may need to write off the value of our investment in such offerings.

Cybersecurity threats continue to increase in frequency and sophistication; if our data security measures are compromised or unauthorized access to or misuse of client data occurs, our services may be perceived as not being secure, clients may curtail or cease their use of our services, our reputation and our business may be harmed, and we may incur significant liabilities.

Our services sometimes involve accessing, processing, sharing, using, storing and transmitting proprietary information and protected data of our clients. We rely on proprietary and commercially available systems, software, tools and monitoring, as well as other processes, to provide security for accessing, processing, sharing, using, storing and transmitting such information and data. If our security measures are compromised as a result of third-party action, employee, vendor or client error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation could be damaged, our business and our clients may be harmed, and we could incur significant liabilities. Cyberattacks continue to increase in frequency and in magnitude generally, and these threats are being driven by a variety of sources, including nation-state sponsored espionage and hacking activities, industrial espionage, organized crime, sophisticated organizations and hacking groups and individuals. Furthermore, due to tensions related to the ongoing geopolitical conflicts such as between Russia and Ukraine, the risk of cyber-attacks may be elevated. We have been the subject of cybersecurity threats and expect such threats to continue in the future. In addition, if the security measures of our clients are compromised, even without any actual compromise of our own systems or security measures, we may face negative publicity or reputational harm if our clients or anyone else incorrectly attributes the blame for such security breaches to us, our products and services, or our systems. We may also be responsible for repairing any damage caused to our clients’ systems that we support, and we may not be able to make such repairs in a timely manner or at all.

We may be unable to fully anticipate or prevent techniques used to obtain unauthorized access or to sabotage systems because they change frequently and generally are not detected until after an incident has occurred. As we increase our client base and our brand becomes more widely known and recognized, we may become more of a target for third parties seeking to compromise our systems or security measures or gain unauthorized access to our clients’ proprietary information and protected data as was the case in a 2021 successful phishing incident where we were a victim, which resulted in some unauthorized

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sharing of client addresses and outstanding billing data information, but did not significantly impact our business or client relationships.

Although we attempt to identify, mitigate and manage these risks by employing a number of measures, including insurance, monitoring of our systems and networks, employee training and maintenance of backup and protective systems, our systems, networks, products and services remain potentially vulnerable to increasingly sophisticated advanced persistent threats that may have a material effect on our business. In addition, the devotion of additional resources to the security of our information technology systems in the future could significantly increase the cost of doing business or otherwise adversely impact our financial results.

In addition, many governments have enacted laws requiring companies to notify individuals of data security incidents involving certain types of personal data, and some of our clients contractually require notification of any data security compromise. In the event of a data security compromise, we may have difficulty timely complying with notification requirements that are unreasonably short or burdensome. New SEC rules and potential other applicable legislative action will require public disclosure of material security compromises experienced by our clients, by our competitors or by us, which may lead to widespread negative publicity. Any data security compromise in our industry, whether actual or perceived, could harm our reputation, erode client confidence in the effectiveness of our security measures, negatively impact our ability to attract new clients, cause existing clients to elect not to renew their agreements with us, or subject us to third party lawsuits, government investigations, regulatory fines or other action or liability, all or any of which could materially and adversely affect our business, financial condition and results of operations.

We cannot provide assurances that any limitations of liability provisions in our contracts for a security breach would be enforceable or adequate or would otherwise protect us from any such liabilities or damages with respect to any particular claim. Further, certain of our contracts do not contain limitations of liability specific to security breaches, which could expose us to significant liabilities or damages, all or any of which could materially and adversely affect our business, financial condition and results of operations. We also cannot be sure that our existing general liability insurance coverage and coverage for errors or omissions will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more claims, or that the insurer will not deny coverage as to any future claim. The successful assertion of one or more claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of substantial deductible or co-insurance requirements, could have a material adverse effect on our business, financial condition and results of operations.

We are subject to governmental and other legal obligations related to privacy and security, and our actual or perceived failure to comply with such obligations could harm our business.

As an expanding global company, we are subject to the laws and regulations of numerous jurisdictions worldwide regarding accessing, processing, sharing, using, storing, transmitting, disclosure and protection of personal data, the scope of which are constantly changing, subject to differing interpretation and related to jurisdictions where we have operations, customers, or where we conduct marketing, and such laws may be inconsistent between countries or in conflict with other laws, legal obligations or industry standards. For example, the General Data Protection Regulation in the European Union creates a broad range of requirements and imposes substantial penalties for non-compliance, including possible fines of up to 4% of global annual revenue for the preceding financial year or €20 million (whichever is higher) for the most serious infringements. We are also subject to certain requirements in other international jurisdictions with or developing strong privacy and security legislation, as well as expanding U.S. state law, including the California Consumer Privacy Act of 2018, the California Privacy Rights Act of 2020, the Virginia Consumer Data Protection Act of 2021 (effective Jan 1, 2023), the Colorado Consumer Privacy Act of 2021 (effective July 1, 2023), as well as privacy and security legislation in other states, including Nevada, each of which add to the range of privacy- and security-related compliance requirements. We generally comply with industry standards and strive to comply with all applicable legal obligations relating to privacy, data protection and security, but it is possible that these laws and other legal obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with industry standards or our practices or may be mandated at a pace that exceeds our ability to comply. Compliance with such requirements may be costly and may require us to modify our business practices, which could adversely affect our business and profitability. Any failure or perceived failure by us to comply with these laws, policies or other obligations may result in governmental enforcement actions or litigation against us, with potential consequences such as fines and other expenses related to such governmental actions, an order requiring that we change our data practices or business practices, and could cause our clients to lose trust in us, any of which could have an adverse effect on our business.

If our products and services fail due to defects or similar problems, and if we fail to correct any defect or other software problems, we could lose clients, become subject to service performance or warranty claims or incur significant costs.

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Our products and services and the systems infrastructure necessary for the successful delivery of our products and services to clients are inherently complex and may contain material defects or errors unknown to us. We have from time to time found defects in our products and services after delivery to our customers and may discover additional defects in the future. In particular, we have developed our own tools and processes to deliver comprehensive tax, legal and regulatory updates tailored for each client, which we endeavor to deliver to our clients in a shorter timeframe than our competitors, which may result in an increased risk of material defects or errors occurring. We may not be able to detect and correct all defects or errors before clients begin to use our products and services, as some may be unknown. Consequently, defects or errors may be discovered after our products and services are provided and used. These defects or errors could also cause inaccuracies in the data we collect and process for our clients, or even the loss, damage or inadvertent release of such confidential data. Even if we are able to implement fixes or corrections to our tax, legal and regulatory updates in a timely manner, any history of defects or inaccuracies in the data we collect for our clients, or the loss, damage or inadvertent release of such confidential data could cause our reputation to be harmed, and clients may elect not to renew, extend or expand their agreements with us and subject us to service performance credits, warranty or other claims or increased insurance costs. The costs associated with any material defects or errors in our products and services or other performance problems may be substantial and could materially adversely affect our financial condition and results of operations.

If we are not able to maintain an effective system of internal control over financial reporting, current and potential investors could lose confidence in our financial reporting, which could harm our business and have an adverse effect on our Common Stock price.

We have had material weaknesses in our internal control over financial reporting in the past as described in our historical periodic reports filed with the SEC. We remediated the material weaknesses; however, we cannot provide assurance that material weaknesses in our internal control over financial reporting will not be identified in the future.

We are required to have our independent registered public accounting firm attest to and report on management’s assessment of the effectiveness of our internal control over financial reporting. If we are unable to conclude that we have effective internal control over financial reporting, or if our independent registered public accounting firm is unable to provide us with an attestation and an unqualified report as to the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our securities. For further information regarding our controls and procedures, see “Controls and Procedures” in Part I, Item 4 of this Report.

If we fail to enhance and protect our brand, our ability to expand our client base will be impaired and our financial condition may suffer.

We believe that our development and protection of the Rimini Street brand is critical to achieving widespread awareness of our products and services, and as a result, is important to attracting new clients and maintaining existing clients. We also believe that the importance of brand recognition will increase as competition in our market increases. Successful promotion of our brand will depend largely on the effectiveness of our marketing efforts and on our ability to provide reliable products and services at competitive prices, as well as the outcome of our ongoing litigation with Oracle. Brand promotion activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incurred in building our brand. If we fail to successfully promote, maintain and protect our brand, our business could be adversely impacted.

If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, experience reduced revenue and incur costly litigation to protect our rights.

Our success depends, in part, upon protecting our proprietary products, services, knowledge, software tools and processes. We rely on a combination of copyrights, trademarks, service marks, trade secret laws and contractual restrictions to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Any of our copyrights, trademarks, service marks, trade secret rights or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy or use information that we regard as proprietary to create products and services that compete with ours. In addition, the laws of some countries do not protect proprietary rights to the same extent as the laws of the United States. To the extent we expand our global activities, our exposure to unauthorized copying and use of our brand, processes and software tools may increase.

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We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances. No assurance can be given that these agreements will be effective in controlling access to and distribution of our proprietary intellectual property. Further, these agreements may not prevent our competitors from independently developing products and services that are substantially equivalent or superior to our products and services.

Although we have been successful in the past, there can be no assurance that we will receive any additional patent protection for our proprietary software tools and processes. Even if we were to receive patent protection, those patent rights could be invalidated at a later date. Furthermore, any such patent rights may not adequately protect our processes, our software tools or prevent others from designing around our patent claims.

To protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights. Litigation brought to protect and enforce our intellectual property rights could be costly, time consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our products, processes and software tools against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our products and services, impair the functionality of our products and services, delay introductions of new products and services, result in our substituting inferior or more costly technologies into our products and services, or injure our reputation.

We may be subject to additional obligations to collect and remit sales tax and other taxes, and we may be subject to tax liability, interest and/or penalties for past sales, which could adversely harm our business.

State, local and foreign jurisdictions have differing and complex rules and regulations governing sales, use, value-added and other taxes, and these rules and regulations can be subject to varying interpretations that may change over time. In particular, the applicability of such taxes to our products and services in various jurisdictions is unclear. Further, these jurisdictions’ rules regarding tax nexus are complex and can vary significantly. As a result, we could face the possibility of tax assessments and audits, and our liability for these taxes and associated interest and penalties could exceed our original estimates. Should these jurisdictions determine that we should be collecting additional sales, use, value-added or other taxes, it could result in substantial tax liabilities and related penalties for past sales, discourage clients from purchasing our products and services or otherwise harm our business and results of operations.

The amount of and ultimate realization of the benefits from the net operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, our future earnings, and other future events, the effects of which cannot be determined; if we are not able to use a significant portion of our net operating loss carryforwards, our profitability could be adversely affected.

We have United States federal and state net operating loss carryforwards due to prior period losses, which could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our profitability.

In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, our ability to utilize net operating loss carryforwards or other tax attributes in any taxable year may be limited if we experience an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws in the United States. While our ownership changes to date have not triggered any limitations under Section 382, it is possible that any future ownership changes or issuances of our capital stock, could have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our profitability.

We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes in various jurisdictions.

As a multinational organization, we may be subject to taxation in several jurisdictions worldwide with increasingly complex tax laws, the application of which can be uncertain. Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. As such, our results may differ from previous estimates and may materially affect our financial position.

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The amount of taxes we pay in jurisdictions in which we operate could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have a material adverse effect on our liquidity and results of operations. In addition, the authorities in these jurisdictions could review our tax returns and impose additional tax, interest and penalties, and the authorities could claim that various withholding requirements apply to us or our subsidiaries or assert that benefits of tax treaties are not available to us or our subsidiaries, any of which could have a material impact on our business and results of operations.

Any actions taken by governmental authorities, clients or others in response to any lingering impacts of the COVID-19 pandemic in the future may have a material adverse effect on our business, financial condition, results of operations, and cash flows.

The COVID-19 pandemic has adversely affected the global economy, created significant financial market volatility and disrupted global supply chains, business operations and consumer confidence. In response to the COVID-19 pandemic, we have taken, and may take additional or different measures designed to protect the health of our employees and to minimize our operational disruption and resulting provision of services to our clients. As there is still some remaining uncertainty around any lingering impacts of the COVID-19 pandemic on the global economy and consumer confidence, such lingering impact could have a sustained adverse impact on economic and market conditions, which may delay prospective clients’ decisions regarding engaging our services, impair the ability of our current clients to make timely payments to us, cause our current clients to ask for payment concessions or discounts, impact client renewal rates and adversely affect our revenue. If such conditions occur, we may be required to increase our reserves, allowances for doubtful accounts and write-offs of accounts receivable, and our results of operations would be harmed.

We continue to monitor the remaining impact of the COVID-19 pandemic to assess its potential effects on our business. The extent to which our results may be affected will largely depend on future developments which cannot be accurately predicted and are uncertain, but any lingering impacts of the COVID-19 pandemic could have a material adverse effect on our business, financial condition, results of operations, or cash flows. Refer to the section titled “Global Economic Uncertainty” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this Report for additional information.

Risks Related to our Indebtedness and Securities

Our level of indebtedness and any future indebtedness we may incur may limit our operational and financing flexibility and negatively impact our business.

On September 30, 2023, our outstanding indebtedness under the Credit Facility and finance leases totaled $75.1 million. We may incur substantial additional indebtedness in the future. Our Credit Facility and other debt instruments we may enter into in the future may significantly impact our business, including the following among others:

•our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;

•our requirement to use a significant portion of our cash flows from operations to pay principal and interest on our indebtedness, which will reduce the funds available to us for operations and other purposes;

•our level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionately less debt;

•our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited; and

•our level of indebtedness may make us more vulnerable to economic downturns and adverse developments in our business.

We expect to depend primarily on cash generated by our operations for funds to pay our expenses and any amounts due under our Credit Facility and any other indebtedness we may incur. Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control, including inflation and global economic conditions. Our business may not generate sufficient cash flows from operations in the future, and our currently anticipated growth in net sales and cash flows may not be realized, either or both of which could result in our being unable to repay indebtedness or to fund other liquidity needs. If we do not generate adequate resources, we may be required to refinance all or part of our then existing debt, sell assets or borrow more money, in each case on terms that may not be acceptable to us. In addition, the terms of existing or future debt agreements, including our existing Credit Facility, may restrict us from adopting some or any of these alternatives. Our inability to incur additional debt in the

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future could also delay or prevent a change in control of our Company, make some transactions more difficult and impose additional financial or other covenants on us. In addition, any significant levels of indebtedness in the future could make us more vulnerable to economic downturns and adverse developments in our business. Our current indebtedness and any inability to pay our debt obligations as they come due or an inability to incur additional debt could adversely affect our business and results of operations.

The terms of our Credit Facility impose operating and financial restrictions on us.

Our Credit Facility contains certain restrictions and covenants that generally limit our ability to, among other things, create liens on assets, sell assets, engage in mergers or consolidations, make loans or investments, incur additional indebtedness, engage in certain transactions with affiliates, incur certain material ERISA or pension liabilities and pay dividends or repurchase capital stock and in each case, subject to certain exceptions set forth in our credit agreement. Our Credit Facility may limit our ability to engage in these types of transactions even if we believe that a specific transaction would contribute to our future growth or improve our operating results. Our Credit Facility also requires us to achieve specified financial and operating results and maintain compliance with specified financial ratios, including as a condition to accessing additional amounts available for borrowing. As of September 30, 2023 and on the date of filing this Report, we were in compliance with each of these financial covenants. Our ability to comply with these provisions may be affected by events beyond our control. A breach of any of these financial covenants or our inability to comply with required financial ratios in our Credit Facility could result in a default under the Credit Facility in which case the lenders would have the right to declare all borrowings, which includes any principal amount outstanding, together with all accrued, unpaid interest and other amounts owing in respect thereof, to be immediately due and payable. If we are unable to repay all borrowings when due, whether at maturity or if declared due and payable following a default, the lenders would have the right to proceed against the collateral granted to secure the indebtedness. If we breach these covenants or fail to comply with other terms of the Credit Facility and the lenders accelerate the amounts outstanding under the Credit Facility, our business and results of operations would be adversely affected. Additionally, we may need to refinance our Credit Facility at maturity or upon default, and future financing may not be available on acceptable terms, or at all.

Our variable rate indebtedness subjects us to interest rate risk, which, along with the phase-out of LIBOR and transition to SOFR, could cause our indebtedness service obligations to increase significantly.

As a result of market interest rate fluctuations, interest rates under our Credit Facility or other variable rate indebtedness we may incur in the future could be higher or lower than current levels. As interest rates increase, our debt service obligations under our Credit Facility may increase even though the amounts borrowed remain the same, and our net income (loss) and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease. We have entered into an interest rate swap agreement that involves the exchange of floating for fixed rate interest payments in order to partially reduce interest rate volatility under our Credit Facility. However, we currently do not maintain interest rate swap agreements with respect to all of our variable rate indebtedness, and any interest rate swap agreements we enter into in the future may not fully mitigate our interest rate risk.

Effective February 28, 2023, we amended both our Credit Facility and our then-effective interest rate swap agreement to implement certain changes in the reference rate from LIBOR to SOFR in response to the previous announcement by the ICE Benchmark Administration, the administrator of LIBOR, that it would cease publication of all remaining U.S. Dollar LIBOR settings effective June 30, 2023. As a result, we have a choice of interest rates between (a) Adjusted Term SOFR and (b) a Base Rate, in each case plus an applicable margin and as further defined in the Credit Facility. The applicable margin is based on our Consolidated Leverage Ratio (as defined in the Credit Facility) and whether we elect Adjusted Term SOFR (ranging from 1.75 to 2.50%) or Base Rate (ranging from 0.75 to 1.50%). SOFR is a relatively new reference rate, and its composition and characteristics are not the same as LIBOR. SOFR is calculated based on short-term repurchase agreements, backed by Treasury securities. As such, SOFR is observed and backward looking, which stands in contrast with LIBOR under the previous methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting bank panel members. Given SOFR’s limited history, the future performance of SOFR cannot be predicted based on historical performance, and there is no assurance that SOFR will perform in the same way as LIBOR would have performed at any time or that it is a comparable substitute for LIBOR. The consequences of transitioning to SOFR could result in an increase in the cost of our variable rate indebtedness, which may impact our ability to refinance some or all of our existing indebtedness or otherwise have a material adverse impact on our business, financial condition and results of operations.

Our stock repurchase program could affect the price of our Common Stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our Common Stock.

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Our Board of Directors has authorized a $50.0 million stock repurchase program. During the three months ended September 30, 2023, we did not acquire any shares of Common Stock on the open market. Repurchases pursuant to any such stock repurchase program could affect our Common Stock price and increase its volatility. The existence of a stock repurchase program could also cause our Common Stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our Common Stock. Such repurchase program will not obligate us to repurchase any further specific dollar amount or number of shares of Common Stock within that authorization and may be suspended or discontinued at any time, which could cause the market price of our Common Stock to decline. The timing and actual number of further shares repurchased under any such stock repurchase program depends on a variety of factors including the timing of open trading windows, price, corporate and regulatory requirements, and other market conditions. Further, the provisions of the Inflation Reduction Act of 2022 impose an excise tax of 1% tax on the fair market value of stock repurchases made after December 31, 2022, net of certain adjustments for issuances of incentive and other equity. The impact of this provision will depend on the extent of share repurchases and qualified reductions for issuances made in future periods. There can be no assurance that any stock repurchases will enhance stockholder value because the market price of our Common Stock may decline below the levels at which we repurchased shares of Common Stock. Although our stock repurchase program is intended to enhance stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness.

The price of our Common Stock may be volatile, any issuance of Common Stock upon the exercise of remaining warrants will dilute existing stockholders and such issuances and/or any sales of Common Stock by large stockholders may depress the market price of our Common Stock.

The price of our Common Stock may fluctuate due to various factors enumerated in this Risk Factors section and elsewhere in this Report. Additional factors impacting the price of our Common Stock could include:

•the failure of securities analysts to publish research about us, or shortfalls in our results of operations compared to levels forecast by securities analysts;

•any delisting of our Common Stock from Nasdaq Global Market due to any failure to meet listing requirements; and

•the general state of securities markets.

These factors may materially reduce the market price of our Common Stock, regardless of our operating performance. Additionally, we have registered for resale the shares of Common Stock of certain of our significant holders of our Common Stock, including our largest stockholder, Adams Street Partners, LLC. Any sale of large amounts of our Common Stock on the open market or in privately negotiated transactions could have the effect of increasing the volatility and putting significant downward pressure on the price of our Common Stock. Also, the issuance of Common Stock upon exercise of warrants that remain outstanding and exercisable may result in immediate dilution to the equity interests of our existing common stockholders and might result in dilution in the tangible net book value of a share of Common Stock, depending upon the price at which the additional shares are issued. We may also seek to engage in further capital optimization transactions in the future, the result of which could trigger some dilution or have other impacts on the market price of our Common Stock and not achieve an improved capital structure. Any issuance of equity we may undertake in the future to raise additional capital could cause the price of our Common Stock to decline or require us to issue shares at a price that is lower than that paid by holders of our Common Stock in the past, which would result in those newly issued shares being dilutive.

Certain of our common stockholders can exercise significant control, which could limit our stockholders’ ability to influence the outcome of key transactions, including a change of control.

Based on the number of shares of Common Stock outstanding as of September 30, 2023, two of our stockholders have aggregate voting power of 38.4% of our outstanding capital stock. As of September 30, 2023, (i) approximately 26.4% of our outstanding voting capital stock is held by Adams Street Partners LLC and certain Adams Street fund limited partnerships and (ii) approximately 12.0% of our outstanding voting capital stock is beneficially owned by our Chief Executive Officer, Chairman of the Board and President. Our directors and officers or persons affiliated with our directors and officers have aggregate voting power of approximately 40.0% as of September 30, 2023.

As a result, these stockholders, acting together, have significant influence over all matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions. Corporate action might be taken even if other stockholders oppose the action being taken. This concentration of ownership might also have the effect of delaying or preventing a change of control of our company that other stockholders may view as beneficial.

We do not currently intend to pay dividends on our Common Stock and, consequently, the ability to achieve a return on investment in our Common Stock will depend on appreciation in the price of our Common Stock.

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We have not paid any cash dividends on our Common Stock to date. The payment of any cash dividends on our Common Stock will depend upon our revenue, earnings, cash flow and financial condition from time to time. The payment of any dividends is at the discretion of our Board of Directors and is also limited under the terms of our Credit Facility. Our ability to declare dividends on our Common Stock may also be limited by the terms of future financing and other agreements entered into by us from time to time. It is presently expected that we will retain all earnings for use in our business operations and, accordingly, it is not expected that our Board of Directors will declare any dividends on our Common Stock in the foreseeable future. Therefore, the success of an investment in shares of our Common Stock will depend upon any future appreciation in its value. There is no guarantee that shares of our Common Stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.

Risks Relating to our Corporate Governance

The DGCL and our certificate of incorporation, bylaws and corporate governance policies contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.

Our certificate of incorporation and bylaws, and Delaware General Corporation Law (the “DGCL”), contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our Board of Directors and therefore depress the trading price of our Common Stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of our Board of Directors or taking other corporate actions, including effecting changes in our management and corporate governance policies and practices. Among other things, our certificate of incorporation and bylaws include provisions regarding:

•a classified Board of Directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our Board of Directors;

•the ability of our Board of Directors to issue shares of preferred stock, including “blank check” preferred stock, and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

•the limitation of the liability of, and the indemnification of our directors and officers;

•the exclusive right of our Board of Directors to elect a director to fill a vacancy created by the expansion of the Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors;

•the requirement that directors may only be removed from our Board of Directors for cause;

•a prohibition on common stockholder action by written consent, which forces common stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors;

•the requirement that a special meeting of stockholders may be called only by our Board of Directors, the chairperson of our Board of Directors, our chief executive officer or our president (in the absence of a chief executive officer), which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors;

•controlling the procedures for the conduct and scheduling of Board of Directors and stockholder meetings;

•the requirement for the affirmative vote of holders of at least 66 2/3% of the voting power of the then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal any provision of our certificate of incorporation or our bylaws, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board of Directors and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;

•the ability of our Board of Directors to amend the bylaws, which may allow our Board of Directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and

•advance notice procedures with which stockholders must comply to nominate candidates to our Board of Directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board of Directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our Board of Directors or management and corporate governance policies.

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In addition, as a Delaware corporation, we are subject to provisions of Delaware law, including Section 203 of the DGCL, which may prohibit certain stockholders holding 15% or more of our outstanding capital stock from engaging in certain business combinations with us for a specified period of time.

Any provision of our certificate of incorporation, bylaws or DGCL that has the effect of delaying or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Common Stock and could also affect the price that some investors are willing to pay for our Common Stock.

Our bylaws designate a state or federal court located within the State of Delaware as the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, stockholders or employees.

Our bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for:

•any derivative action or proceeding brought on behalf of us;

•any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers or other employees;

•any action asserting a claim against us or any of our directors, officers or employees arising out of or relating to any provision of the DGCL, our certificate of incorporation or our bylaws; or

•any action asserting a claim against us or any of our directors, officers, stockholders or employees that is governed by the internal affairs doctrine of the Court of Chancery.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.

General Risks

Future acquisitions, strategic investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value and adversely affect our financial condition and results of operations.

We may in the future seek to acquire or invest in businesses, products or technologies that we believe could complement or expand our services, enhance our technical capabilities or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not the acquisitions are completed. If we acquire businesses, we may not be able to integrate successfully the acquired personnel, operations and technologies, or effectively manage the combined business following the acquisition. We may not be able to find and identify desirable acquisition targets or be successful in entering into an agreement with any particular target or obtain adequate financing to complete such acquisitions. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our results of operations. In addition, if an acquired business fails to meet our expectations, our business, financial condition and results of operations may be adversely affected.

The commercial insurance market is changing rapidly in response to rising insurance losses and claims, changes in available insurance capacity and adverse worldwide economic conditions, uncertainties, and risks, which may lead to higher premium costs, higher policy deductibles, self-insured retentions, and/or lower coverage limits, potentially impacting our ability to continue our present limits of insurance coverage, obtain sufficient insurance capacity to adequately insure our risks or maintain adequate insurance at a reasonable cost.

Commercial insurance availability and coverage terms, including deductibles, self-insured retentions and pricing, continue to vary with market conditions. While we believe our insurance coverage addresses all material risks to which we are exposed and is adequate and customary for our current global operations, we have observed rapidly changing conditions in the insurance markets relating to nearly all areas of traditional corporate insurance, resulting in higher premium costs, rising policy deductibles/self-insured retentions and lower coverage limits. If these changes continue, we may not be able to continue our present limits of insurance coverage, obtain sufficient insurance capacity to adequately insure our risks and/or obtain and maintain adequate insurance at a reasonable cost. Our insurance policies cover a number of risks and potential liabilities, such as general liability, property coverage, errors and omissions liability, employment liability, business interruptions, cybersecurity

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liability, crime, and directors’ and officers’ liability. We cannot be certain that our insurance coverage will be adequate to cover liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim or become insolvent. The successful assertion of one or more large claims against us that exceed available insurance coverage, the occurrence of changes in our insurance policies, including premium increases, decreases in coverage and the imposition of large deductible, self-insured retentions, or co-insurance requirements, or the insolvency of any of our insurers, could have a material adverse effect on our business, results of operations and financial condition.

Catastrophic events may disrupt our business.

We rely heavily on our network infrastructure and information technology systems for our business operations. A disruption or failure of these systems in the event of an online attack, earthquake, fire, terrorist attack, geopolitical instability such as the conflicts between Israel and Hamas, war, power loss, telecommunications failure, extreme weather conditions (such as hurricanes, wildfires or floods) or other catastrophic event could cause system interruptions, delays in accessing our service, reputational harm, loss of critical data or could prevent us from providing our products and services to our clients. In addition, several of our employee groups reside in areas particularly susceptible to earthquakes, such as the San Francisco Bay Area and Japan, and a major earthquake or other catastrophic event could affect our employees, who may not be able to access our systems, or otherwise continue to provide our services to our clients. A catastrophic event that results in the destruction or disruption of our data centers, or our network infrastructure or information technology systems, or access to our systems could affect our ability to conduct normal business operations and adversely affect our business, financial condition and results of operations. Additionally, the emergence or spread of a pandemic or other widespread health emergency (or concerns over and response to the possibility of such an emergency) could adversely affect our business, financial condition and results of operations.

Failure to comply with laws and regulations applicable to our operations could harm our business.

Our business is subject to regulation by various global governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, environmental laws, consumer protection laws, anti-bribery laws, import/export controls, securities laws and tax laws and regulations. For example, transfer of certain software outside of the United States or to certain persons is regulated by export controls.

In certain jurisdictions, these regulatory requirements may be more stringent than those in the United States. Noncompliance with applicable requirements could subject us to investigations, sanctions, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions and may result in our inability to provide certain products and services. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, or if clients make claims against us for compensation for such non-compliance, our business, financial condition and results of operations could be harmed, and responding to any such type of action will likely result in a significant diversion of management’s attention and resources.

Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our Common Stock.

Securities research analysts may establish and publish their own periodic projections for us. These projections may vary widely and may not accurately predict the results we actually achieve. Our share price may decline if our actual results do not meet the projections of these securities research analysts. Similarly, if one or more of the analysts who write reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our share price or trading volume could decline. If no additional analysts commence coverage of us, the market price and volume for our common shares could be adversely affected.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no repurchases of our Common Stock during the three months ended September 30, 2023.

ITEM 3. Defaults Upon Senior Securities.

    None.

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ITEM 4. Mine Safety Disclosures.

    Not applicable.

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ITEM 5. Other Information.

During the quarter ended September 30, 2023, none of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408(c), except as described below.

The Company’s RSU and PSU notice and award agreements provide that, upon the settlement of awards subject to such agreements, such number of shares of Company common stock as the Company determines appropriate to satisfy associated minimum statutory tax withholding obligations shall automatically be sold on the awardee’s behalf, with the sale proceeds remitted to the appropriate taxing authorities. This provision may constitute a “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K). Certain of our executive officers have elected to automatically sell such number of shares of Company common stock as to generate cash proceeds in excess of the amount needed to satisfy associated minimum statutory tax withholding obligations (at an identified rate) upon settlement of future RSU and/or PSU awards, with all sale proceeds remitted to appropriate taxing authorities.

On October 31, 2023, the Board of Directors of the Company amended and restated the Company’s bylaws to enhance the advance notice requirements for stockholder proposals and director nominations, exclude indemnification for Dodd-Frank clawbacks not permitted under SEC rules and update the Company’s exclusive forum provision.

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ITEM 6. Exhibits.

		Incorporated by Reference
Exhibit Number	Description	Form	File No.	Exhibit	Filing Date
3.1*	Amended and Restated Certificate of Incorporation of the Registrant	8-K	001-37397	3.1	October 16, 2017
3.2†	Amended and Restated Bylaws of the Registrant
31.1†	Certification of Seth A. Ravin, Chief Executive Officer and President, Pursuant to Rule 13a-14(a)
31.2†	Certification of Michael L. Perica, Chief Financial Officer, Pursuant to Rule 13a-14(a)
32.1**	Certification of Seth A. Ravin, Chief Executive Officer and President, Pursuant to 18 U.S.C. Section 1350
32.2**	Certification of Michael L. Perica, Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350
101.INS†	Inline XBRL Instance Document
101.SCH†	Inline XBRL Taxonomy Extension Schema
101.CAL†	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF†	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB†	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE†	Inline XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

____________________

† Filed herewith.

* Previously filed and incorporated herein by reference.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	RIMINI STREET, INC.
Date: November 1, 2023	/s/ Seth A. Ravin
	Name: Seth A. Ravin
	Title: Chief Executive Officer, Chairman of the Board and President
	(Principal Executive Officer)

Date: November 1, 2023	/s/ Michael L. Perica
	Name: Michael L. Perica
	Title: Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

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EX-3.2

Exhibit 3.2

AMENDED AND RESTATED BYLAWS OF

RIMINI STREET, INC

(amended and effective on October 31, 2023)

Table of Contents

Page

ARTICLE I - CORPORATE OFFICES	1
1.1    REGISTERED OFFICE	1
1.2    OTHER OFFICES	1
ARTICLE II - MEETINGS OF STOCKHOLDERS	1
2.1    PLACE OF MEETINGS	1
2.2    ANNUAL MEETING	1
2.3    SPECIAL MEETING	1
2.4    ADVANCE NOTICE PROCEDURES	1
2.5    NOTICE OF STOCKHOLDERS’ MEETINGS	6
2.6    QUORUM	6
2.7    ADJOURNED MEETING; NOTICE	7
2.8    CONDUCT OF BUSINESS	7
2.9    VOTING	7
2.10    STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING	7
2.11    RECORD DATES	7
2.12    PROXIES	8
2.13    LIST OF STOCKHOLDERS ENTITLED TO VOTE	8
2.14    INSPECTORS OF ELECTION	9
ARTICLE III - DIRECTORS	9
3.1    POWERS	9
3.2    NUMBER OF DIRECTORS	9
3.3    ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS	9
3.4    RESIGNATION AND VACANCIES	10
3.5    PLACE OF MEETINGS; MEETINGS BY TELEPHONE	10
3.6    REGULAR MEETINGS	10

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3.7    SPECIAL MEETINGS; NOTICE	11
3.8    QUORUM; VOTING	11
3.9    BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING	11
3.10    FEES AND COMPENSATION OF DIRECTORS	12
3.11    REMOVAL OF DIRECTORS	12
ARTICLE IV - COMMITTEES	12
4.1    COMMITTEES OF DIRECTORS	12
4.2    COMMITTEE MINUTES	12
4.3    MEETINGS AND ACTION OF COMMITTEES	12
4.4    SUBCOMMITTEES	13
ARTICLE V - OFFICERS	13
5.1    OFFICERS	13
5.2    APPOINTMENT OF OFFICERS	13
5.3    SUBORDINATE OFFICERS	13
5.4    REMOVAL AND RESIGNATION OF OFFICERS	14
5.5    VACANCIES IN OFFICES	14
5.6    REPRESENTATION OF SHARES OF OTHER CORPORATIONS	14
5.7    AUTHORITY AND DUTIES OF OFFICERS	14
ARTICLE VI - STOCK	14
6.1    STOCK CERTIFICATES; PARTLY PAID SHARES	14
6.2    SPECIAL DESIGNATION ON CERTIFICATES	15
6.3    LOST CERTIFICATES	15
6.4    DIVIDENDS	15
6.5    TRANSFER OF STOCK	15
6.6    STOCK TRANSFER AGREEMENTS	16
6.7    REGISTERED STOCKHOLDERS	16
ARTICLE VII - MANNER OF GIVING NOTICE AND WAIVER	16

-ii-

7.1    NOTICE OF STOCKHOLDERS’ MEETINGS	16
7.2    NOTICE BY ELECTRONIC TRANSMISSION	16
7.3    NOTICE TO STOCKHOLDERS SHARING AN ADDRESS	17
7.4    NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL	17
7.5    WAIVER OF NOTICE	17
ARTICLE VIII - INDEMNIFICATION	18
8.1    INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS	18
8.2    INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION	18
8.3    SUCCESSFUL DEFENSE	18
8.4    INDEMNIFICATION OF OTHERS	18
8.5    ADVANCED PAYMENT OF EXPENSES	19
8.6    LIMITATION ON INDEMNIFICATION	19
8.7    DETERMINATION; CLAIM	19
8.8    NON-EXCLUSIVITY OF RIGHTS	20
8.9    INSURANCE	20
8.10    SURVIVAL	20
8.11    EFFECT OF REPEAL OR MODIFICATION	20
8.12    CERTAIN DEFINITIONS	20
ARTICLE IX - GENERAL MATTERS	21
9.1    EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS	21
9.2    FISCAL YEAR	21
9.3    SEAL	21
9.4    CONSTRUCTION; DEFINITIONS	21
9.5    EXCLUSIVE FORUM	21
ARTICLE X - AMENDMENTS	22

-iii-

AMENDED AND RESTATED BYLAWS OF RIMINI STREET, INC.

ARTICLE I - CORPORATE OFFICES

1.1    REGISTERED OFFICE

The registered office of Rimini Street, Inc. shall be fixed in the corporation’s certificate of incorporation, as the same may be amended from time to time.

1.2    OTHER OFFICES

The corporation’s board of directors may at any time establish other offices at any place or places where the corporation is qualified to do business.

ARTICLE II - MEETINGS OF STOCKHOLDERS

2.1    PLACE OF MEETINGS

Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the board of directors. The board of directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the corporation’s principal executive office.

2.2    ANNUAL MEETING

The annual meeting of stockholders shall be held each year. The board of directors shall designate the date and time of the annual meeting. At the annual meeting, directors shall be elected and any other proper business may be transacted.

2.3    SPECIAL MEETING

(i)    A special meeting of the stockholders, other than those required by statute, may be called at any time by the board of directors, chairperson of the board of directors, chief executive officer or president (in the absence of a chief executive officer), but a special meeting may not be called by any other person or persons. The board of directors may cancel, postpone or reschedule any previously scheduled special meeting at any time, before or after the notice for such meeting has been sent to the stockholders.

(ii)    The notice of a special meeting shall include the purpose for which the meeting is called. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting by or at the direction of the board of directors, chairperson of the board of directors, chief executive officer or president (in the absence of a chief executive officer). Nothing contained in this Section 2.3(ii) shall be construed as limiting, fixing or affecting the time when a meeting of stockholders called by action of the board of directors may be held.

2.4    ADVANCE NOTICE PROCEDURES

(i)    Advance Notice of Stockholder Business. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be brought: (A) pursuant to the corporation’s proxy materials with respect to such meeting, (B) by or at the direction of the board of directors, or (C) by a stockholder of the corporation who (1) is a stockholder of record at the time of the giving of the notice required by this Section 2.4(i), and on the record date for the determination of stockholders entitled to vote at the annual meeting and (2)

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has timely complied in proper written form with the notice procedures set forth in this Section 2.4(i). In addition, for business to be properly brought before an annual meeting by a stockholder, such business must be a proper matter for stockholder action pursuant to these bylaws, the certificate of incorporation or applicable law. For the avoidance of doubt, clause (C) above shall be the exclusive means for a stockholder to bring business before an annual meeting of stockholders.

(a)    To comply with clause (C) of Section 2.4(i) above, a stockholder’s notice must set forth all information required under this Section 2.4(i) and must be timely received by the secretary of the corporation. To be timely, a stockholder’s notice must be received by the secretary at the principal executive offices of the corporation not later than the 45th day nor earlier than the 75th day before the one-year anniversary of the date on which the corporation first mailed its proxy materials or a notice of availability of proxy materials (whichever is earlier) for the preceding year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or if the date of the annual meeting is advanced by more than 30 days prior to or delayed by more than 60 days after the one-year anniversary of the date of the previous year’s annual meeting, then, for notice by the stockholder to be timely, it must be so received by the secretary not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior to such annual meeting, or the tenth day following the day on which Public Announcement (as defined below) of the date of such annual meeting is first made. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described in this Section 2.4(i)(a). “Public Announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended, or any successor thereto (the “1934 Act”).

(b)    To be in proper written form, a stockholder’s notice to the secretary must set forth as to each matter of business the stockholder intends to bring before the annual meeting: (1) a brief description of the business intended to be brought before the annual meeting and the reasons for conducting such business at the annual meeting (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the certificate of incorporation or these bylaws, the language of the proposed amendment), (2) the name and address, as they appear on the corporation’s books, of the stockholder proposing such business and any Stockholder Associated Person (as defined below), (3) the class and number of shares of the corporation that are held of record or are beneficially owned by the stockholder or any Stockholder Associated Person and any derivative positions held or beneficially held by the stockholder or any Stockholder Associated Person, (4) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of such stockholder or any Stockholder Associated Person with respect to any securities of the corporation, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit from share price changes for, or to increase or decrease the voting power of, such stockholder or any Stockholder Associated Person with respect to any securities of the corporation, (5) any material interest of the stockholder or a Stockholder Associated Person in such business, and (6) a statement whether either such stockholder or any Stockholder Associated Person will deliver a proxy statement and form of proxy to holders of at least the percentage of the corporation’s voting shares required under applicable law to carry the proposal (such information provided and statements made as required by clauses (1) through (6), a “Business Solicitation Statement”). In addition, to be in proper written form, a stockholder’s notice to the secretary must be supplemented not later than ten days following the record date for the determination of stockholders entitled to notice of the meeting, to disclose the information contained in clauses (3) and (4) above as of the record date. For purposes of this Section 2.4, a “Stockholder Associated Person” of any stockholder shall mean (i) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (ii) any beneficial owner of shares of stock of the corporation owned of record or beneficially by such stockholder and on

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whose behalf the proposal or nomination, as the case may be, is being made, or (iii) any person controlling, controlled by or under common control with such person referred to in the preceding clauses (i) and (ii).

(c)    Without exception, no business shall be conducted at any annual meeting except in accordance with the provisions set forth in this Section 2.4(i) and, if applicable, Section 2.4(ii). In addition, business proposed to be brought by a stockholder may not be brought before the annual meeting if such stockholder or a Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Business Solicitation Statement applicable to such business or if the Business Solicitation Statement applicable to such business contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading. The chairperson of the annual meeting shall, if the facts warrant, determine and declare at the annual meeting that business was not properly brought before the annual meeting and in accordance with the provisions of this Section 2.4(i), and, if the chairperson should so determine, he or she shall so declare at the annual meeting that any such business not properly brought before the annual meeting shall not be conducted.

(ii)    Advance Notice of Director Nominations at Annual Meetings. Notwithstanding anything in these bylaws to the contrary, only persons who are nominated in accordance with the procedures set forth in this Section 2.4(ii) shall be eligible for election or re-election as directors at an annual meeting of stockholders. Nominations of persons for election to the board of directors of the corporation shall be made at an annual meeting of stockholders only (A) by or at the direction of the board of directors or (B) by a stockholder of the corporation who (1) was a stockholder of record at the time of the giving of the notice required by this Section 2.4(ii) and on the record date for the determination of stockholders entitled to vote at the annual meeting and (2) has complied with the notice procedures set forth in this Section 2.4(ii). In addition to any other applicable requirements, for a nomination to be made by a stockholder, the stockholder must have given timely notice thereof in proper written form to the secretary of the corporation.

(a)    To comply with clause (B) of Section 2.4(ii) above, a nomination to be made by a stockholder must set forth all information required under this Section 2.4(ii) and must be received by the secretary of the corporation at the principal executive offices of the corporation at the time set forth in, and in accordance with, the final three sentences of Section 2.4(i)(a) above.

(b)    To be in proper written form, such stockholder’s notice to the secretary must set forth:

(1)    as to each person (a “nominee”) whom the stockholder proposes to nominate for election or re-election as a director: (A) the name, age, business address and residence address of the nominee, (B) the principal occupation or employment of the nominee, (C) the class and number of shares of the corporation that are held of record or are beneficially owned by the nominee and any derivative positions held or beneficially held by the nominee, (D) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of the nominee with respect to any securities of the corporation, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit of share price changes for, or to increase or decrease the voting power of the nominee, (E) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, (F) a description of all direct and indirect compensation or other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder of record and beneficial owner or owners, if any, or other person on whose behalf the nomination is made, and their respective affiliates and associates, or other persons acting in concert therewith, on the one hand, and each proposed nominee and his or her respective affiliates and associates or other persons acting in concert therewith, on the other hand, including without limitation all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC if the stockholder of record making the

3

nomination and any beneficial owner or owners, if any, or other person on whose behalf the nomination is made, or any affiliate or associate thereof or other person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; (G) a written statement executed by the nominee acknowledging that as a director of the corporation, the nominee will owe a fiduciary duty under Delaware law with respect to the corporation and its stockholders, (H) the nominee’s written consent to being named in the proxy statement and accompanying proxy card as a nominee and to serving as a director if elected and written representation of his or her intention to serve as a director for such director’s entire term if elected, and (I) all other information relating to the nominee that would be required to be disclosed about such nominee if proxies were being solicited for the election of the nominee as a director, or that is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation the nominee’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected and to the extent not already provided, the information set forth below under Section 2.4(ii)(c)); and

(2)    as to such stockholder giving notice, (A) the information required to be provided pursuant to clauses (2) through (5) of Section 2.4(i)(b) above, and the supplement referenced in the second sentence of Section 2.4(i)(b) above (except that the references to “business” in such clauses shall instead refer to nominations of directors for purposes of this paragraph), and (B) a representation whether either such stockholder or Stockholder Associated Person intends (i) to deliver a proxy statement and form of proxy to holders of at least the percentage of the corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee, (ii) otherwise to solicit proxies or votes from stockholders in support of such proposal or nomination, and/or (iii) to solicit proxies in support of any proposed nominee in accordance with Rule 14a-19 promulgated under the 1934 Act (such information provided and statements made as required by clauses (A) and (B) above, a “Nominee Solicitation Statement”).

(c)    At the request of the board of directors, any person nominated by a stockholder for election as a director must furnish to the secretary of the corporation (1) that information required to be set forth in the stockholder’s notice of nomination of such person as a director as of a date subsequent to the date on which the notice of such person’s nomination was given, (2) a completed written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which form of questionnaire shall be provided by the secretary upon written request) and a written representation and agreement (in the form provided by the secretary upon written request) that such person (A) is not and will not become a party to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed in writing to the corporation or (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (C) would be in compliance, if elected as a director of the corporation, and will comply with, all applicable publicly disclosed corporate governance, code of conduct and ethics, conflict of interest, confidentiality, corporate opportunities, stock ownership, trading and any other policies and guidelines of the corporation applicable to directors, and (3) such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as an independent director of the corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee; in the absence of the furnishing of such information if requested, such stockholder’s nomination shall not be considered in proper form pursuant to this Section 2.4(ii).

(d)    Without exception, no person shall be eligible for election or re-election as a director of the corporation at an annual meeting of stockholders unless nominated in accordance with the provisions set forth in this Section 2.4(ii). In addition, a nominee shall not be eligible for election or re-election if

4

a stockholder or Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Nominee Solicitation Statement applicable to such nominee or if the Nominee Solicitation Statement applicable to such nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading. The chairperson of the annual meeting shall, if the facts warrant, determine and declare at the annual meeting that a nomination was not made in accordance with the provisions prescribed by these bylaws, and if the chairperson should so determine, he or she shall so declare at the annual meeting, and the defective nomination shall be disregarded.

(iii)    Advance Notice of Director Nominations for Special Meetings.

(a)    For a special meeting of stockholders at which directors are to be elected pursuant to Section 2.3, nominations of persons for election to the board of directors shall be made only (1) by or at the direction of the board of directors or (2) by any stockholder of the corporation who (A) is a stockholder of record at the time of the giving of the notice required by this Section 2.4(iii) and on the record date for the determination of stockholders entitled to vote at the special meeting and (B) delivers a timely written notice of the nomination to the secretary of the corporation that includes the information set forth in Sections 2.4(ii)(b) and (ii)(c) above. To be timely, such notice must be received by the secretary at the principal executive offices of the corporation not later than the close of business on the later of the 90th day prior to such special meeting or the tenth day following the day on which Public Announcement is first made of the date of the special meeting and of the nominees proposed by the board of directors to be elected at such meeting. A person shall not be eligible for election or re-election as a director at a special meeting unless the person is nominated (i) by or at the direction of the board of directors or (ii) by a stockholder in accordance with the notice procedures set forth in this Section 2.4(iii). In addition, a nominee shall not be eligible for election or re-election if a stockholder or Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Nominee Solicitation Statement applicable to such nominee or if the Nominee Solicitation Statement applicable to such nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading.

(b)    The chairperson of the special meeting shall, if the facts warrant, determine and declare at the meeting that a nomination or business was not made in accordance with the procedures prescribed by these bylaws, and if the chairperson should so determine, he or she shall so declare at the meeting, and the defective nomination or business shall be disregarded.

(iv)    Appearance at Annual or Special Meeting of Stockholders. Notwithstanding the foregoing provisions of this Section 2.4, unless otherwise required by applicable law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the corporation to present a nomination or proposed business, as applicable, such nomination shall be disregarded and such proposed business shall not be transacted notwithstanding that proxies in respect of such vote may have been received by the corporation. For purposes of this Section 2.4, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. Notwithstanding anything to the contrary in these bylaws, unless otherwise required by law, if any stockholder or party (i) provides notice pursuant to Rule 14a-19(b) promulgated under the 1934 Act with respect to any proposed nominee, and (ii) subsequently fails to comply with the requirements of Rule 14a-19(a)(2) or Rule 14a-19(a)(3) promulgated under the 1934 Act (or fails to timely provide reasonable evidence sufficient to satisfy the corporation that such stockholder has met the requirements of Rule 14a-19(a)(3) promulgated under the 1934 Act in accordance with the following sentence), then the nomination of each such proposed nominee shall be disregarded, notwithstanding that the nominee is included as a nominee in the corporation’s proxy statement, notice of meeting or other proxy materials for the meeting (or any supplement thereto) and that proxies or votes in respect of the election of such proposed nominees may have been received by the corporation (which proxies and

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votes shall be disregarded). Upon request by the corporation, if any stockholder or party provides notice pursuant to Rule 14a-19(b) promulgated under the 1934 Act, such stockholder shall deliver to the corporation, no later than five (5) business days prior to the applicable meeting, reasonable evidence that it or such party has met the requirements of Rule 14a-19(a)(3) promulgated under the 1934 Act. Notwithstanding anything to the contrary set forth herein, and for the avoidance of doubt, the nomination of any person whose name is included as a nominee in the corporation’s proxy statement, notice of meeting or other proxy materials for any annual or special meeting (or any supplement thereto) as a result of any notice provided by any party pursuant to Rule 14a-19(b) promulgated under the 1934 Act with respect to such proposed nominee and whose nomination is not made by or at the direction of the board of directors or any authorized committee thereof shall not be deemed (for purposes of this section or otherwise) to have been made pursuant to the corporation’s notice of meeting (or any supplement thereto) and any such nominee may only be nominated by a stockholder of the corporation pursuant to 2.4(i) clause (C) (and, in the case of a special meeting of stockholders pursuant to and to the extent permitted under Section 2.4(iii)).

(v)    Other Requirements and Rights. In addition to the foregoing provisions of this Section 2.4, a stockholder must also comply with all applicable requirements of state law and of the 1934 Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.4, including, with respect to business such stockholder intends to bring before the annual meeting that involves a proposal that such stockholder requests to be included in the corporation’s proxy statement, the requirements of Rule 14a-8 (or any successor provision) under the 1934 Act. Nothing in this Section 2.4 shall be deemed to affect any right of the corporation to omit a proposal from the corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the 1934 Act.

2.5    NOTICE OF STOCKHOLDERS’ MEETINGS

Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise provided in the DGCL, the certificate of incorporation or these bylaws, the written notice of any meeting of stockholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting.

2.6    QUORUM

The holders of a majority of the stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. Where a separate vote by a class or series or classes or series is required, a majority of the outstanding shares of such class or series or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter, except as otherwise provided by law, the certificate of incorporation or these bylaws.

If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting, or (ii) the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

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2.7    ADJOURNED MEETING; NOTICE

When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the board of directors shall fix a new record date for notice of such adjourned meeting in accordance with Section 213(a) of the DGCL and Section 2.11 of these bylaws, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.

2.8    CONDUCT OF BUSINESS

The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business, and shall have the power to adjourn the meeting to another place, if any, date or time, whether or not a quorum is present.

2.9    VOTING

The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.

Except as may be otherwise provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.

Except as otherwise required by law, the certificate of incorporation or these bylaws, in all matters other than the election of directors, the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Except as otherwise required by law, the certificate of incorporation or these bylaws, directors shall be elected by a plurality of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Where a separate vote by a class or series or classes or series is required, in all matters other than the election of directors, the affirmative vote of the majority of shares of such class or series or classes or series present in person or represented by proxy at the meeting shall be the act of such class or series or classes or series, except as otherwise provided by law, the certificate of incorporation or these bylaws.

2.10    STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Subject to the rights of the holders of the shares of any series of Preferred Stock or any other class of stock or series thereof having a preference over the Common Stock as dividend or upon liquidation, any action required or permitted to be taken by the stockholders of the corporation must be effected at a duly called annual or special meeting of stockholders of the corporation and may not be effected by any consent in writing by such stockholders.

2.11    RECORD DATES

In order that the corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors and which

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record date shall not be more than 60 nor less than 10 days before the date of such meeting. If the board of directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the board of directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination.

If no record date is fixed by the board of directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the provisions of Section 213 of the DGCL and this Section 2.11 at the adjourned meeting.

In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.

2.12    PROXIES

Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. Any stockholder directly or indirectly soliciting proxies from other stockholders must use a proxy card color other than white, which shall be reserved for exclusive use by the board of directors.

2.13    LIST OF STOCKHOLDERS ENTITLED TO VOTE

The officer who has charge of the stock ledger of the corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the corporation’s principal place of business. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a place, then a list of stockholders entitled to vote at the meeting shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then such list shall also be

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open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

2.14    INSPECTORS OF ELECTION

A written proxy may be in the form of a telegram, cablegram, or other means of electronic transmission which sets forth or is submitted with information from which it can be determined that the telegram, cablegram, or other means of electronic transmission was authorized by the person.

Before any meeting of stockholders, the board of directors shall appoint an inspector or inspectors of election to act at the meeting or its adjournment. The number of inspectors shall be either one (1) or three (3). If any person appointed as inspector fails to appear or fails or refuses to act, then the chairperson of the meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy.

Such inspectors shall:

(i)    ascertain the number of shares outstanding and the voting power of each;

(ii)    determine the shares represented at the meeting and the validity of proxies and ballots;

(iii)    count all votes and ballots;

(iv)    determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and

(v)    certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots.

The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three (3) inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

ARTICLE III - DIRECTORS

3.1    POWERS

The business and affairs of the corporation shall be managed by or under the direction of the board of directors, except as may be otherwise provided in the DGCL or the certificate of incorporation.

3.2    NUMBER OF DIRECTORS

The board of directors shall consist of one or more members, each of whom shall be a natural person. Unless the certificate of incorporation fixes the number of directors, the number of directors shall be determined from time to time by resolution of the board of directors. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

3.3    ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS

Except as provided in Section 3.4 of these bylaws, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws. The certificate of incorporation, these bylaws or the corporation’s corporate governance guidelines may prescribe other qualifications for directors.

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If so provided in the certificate of incorporation, the directors of the corporation shall be divided into three classes.

3.4    RESIGNATION AND VACANCIES

Any director may resign at any time upon notice given in writing or by electronic transmission to the corporation. A resignation is effective when the resignation is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. A resignation which is conditioned upon the director failing to receive a specified vote for reelection as a director may provide that it is irrevocable. Unless otherwise provided in the certificate of incorporation or these bylaws, when one or more directors resign from the board of directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective.

Unless otherwise provided in the certificate of incorporation or these bylaws, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and not by stockholders. If the directors are divided into classes, a person so elected by the directors then in office to fill a vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall have been duly elected and qualified.

If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the DGCL.

If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board of directors (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the voting stock at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.

3.5    PLACE OF MEETINGS; MEETINGS BY TELEPHONE

The board of directors may hold meetings, both regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the board of directors, or any committee designated by the board of directors or any subcommittee, may participate in a meeting of the board of directors, or any such committee or subcommittee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

3.6    REGULAR MEETINGS

Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board of directors.

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3.7    SPECIAL MEETINGS; NOTICE

Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairperson of the board of directors, the chief executive officer, the president, the secretary or a majority of the authorized number of directors.

Notice of the time and place of special meetings shall be:

(i)    delivered personally by hand, by courier or by telephone;

(ii)    sent by United States first-class mail, postage prepaid;

(iii)    sent by facsimile; or

(iv)    sent by electronic mail,

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the corporation’s records.

If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least 24 hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the corporation’s principal executive office) nor the purpose of the meeting.

3.8    QUORUM; VOTING

At all meetings of the board of directors, a majority of the total authorized number of directors shall constitute a quorum for the transaction of business. If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws.

If the certificate of incorporation provides that one or more directors shall have more or less than one vote per director on any matter, every reference in these bylaws to a majority or other proportion of the directors shall refer to a majority or other proportion of the votes of the directors.

3.9    BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee or subcommittee thereof, may be taken without a meeting if all members of the board of directors or committee or subcommittee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the board of directors or committee or subcommittee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Any person (whether or not then a director) may provide, whether through instruction to an agent or otherwise, that a consent to action will be effective at a future time (including a time determined upon the happening of an event), no later than 60 days after such instruction is given or such provision is made and such consent shall be deemed to have been given for purposes of this Section

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3.9 at such effective time so long as such person is then a director and did not revoke the consent prior to such time. Any such consent shall be revocable prior to its becoming effective.

3.10    FEES AND COMPENSATION OF DIRECTORS

Unless otherwise restricted by the certificate of incorporation or these bylaws, the board of directors shall have the authority to fix the compensation of directors.

3.11    REMOVAL OF DIRECTORS

Any director may be removed from office by the stockholders of the corporation only for cause.

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

ARTICLE IV - COMMITTEES

4.1    COMMITTEES OF DIRECTORS

The board of directors may, by resolution passed by a majority of the authorized number of directors, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board of directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in these bylaws, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the corporation.

4.2    COMMITTEE MINUTES

Each committee and subcommittee shall keep regular minutes of its meetings and report the same to the board of directors, or the committee, when required.

4.3    MEETINGS AND ACTION OF COMMITTEES

A majority of the directors then serving on a committee or subcommittee shall constitute a quorum for the transaction of business by the committee or subcommittee, unless the certificate of incorporation, these bylaws, a resolution of the board of directors or a resolution of a committee that created the subcommittee requires a greater or lesser number, provided that in no case shall a quorum be less than 1/3 of the directors then serving on the committee or subcommittee. The vote of the majority of the members of a committee or subcommittee present at a meeting at which a quorum is present shall be the act of the committee or subcommittee, unless the certificate of incorporation, these bylaws, a resolution of the board of directors or a resolution of a committee that created the subcommittee requires a greater number. Meetings and actions of committees and subcommittees shall otherwise be governed by, and held and taken in accordance with, the provisions of:

(i)    Section 3.5 (place of meetings and meetings by telephone);

(ii)    Section 3.6 (regular meetings);

(iii)    Section 3.7 (special meetings and notice);

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(iv)    Section 3.8 (quorum; voting);

(v)    Section 7.5 (waiver of notice); and

(vi)    Section 3.9 (action without a meeting)

with such changes in the context of those bylaws as are necessary to substitute the committee or subcommittee and its members for the board of directors and its members. However:

(i)    the time and place of regular meetings of committees and subcommittees may be determined either by resolution of the board of directors or by resolution of the committee or subcommittee;

(ii)    special meetings of committees and subcommittees may also be called by resolution of the board of directors or the committee or subcommittee; and

(iii)    notice of special meetings of committees and subcommittees shall also be given to all alternate members, as applicable, who shall have the right to attend all meetings of the committee or subcommittee. The board of directors, or, in the absence of any such action by the board of directors, the committee or subcommittee, may adopt rules for the government of any committee or subcommittee not inconsistent with the provisions of these bylaws.

Any provision in the certificate of incorporation providing that one or more directors shall have more or less than one vote per director on any matter shall apply to voting in any committee or subcommittee, unless otherwise provided in the certificate of incorporation or these bylaws.

4.4    SUBCOMMITTEES

Unless otherwise provided in the certificate of incorporation, these bylaws or the resolutions of the board of directors designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.

ARTICLE V - OFFICERS

5.1    OFFICERS

The officers of the corporation shall be a president and a secretary. The corporation may also have, at the discretion of the board of directors, a chairperson of the board of directors, a vice chairperson of the board of directors, a chief executive officer, a chief financial officer or treasurer, one or more vice presidents, one or more assistant vice presidents, one or more assistant treasurers, one or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.

5.2    APPOINTMENT OF OFFICERS

The board of directors shall appoint the officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 of these bylaws, subject to the rights, if any, of an officer under any contract of employment.

5.3    SUBORDINATE OFFICERS

The board of directors may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine.

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5.4    REMOVAL AND RESIGNATION OF OFFICERS

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board of directors or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors.

Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

5.5    VACANCIES IN OFFICES

Any vacancy occurring in any office of the corporation shall be filled by the board of directors or as provided in Section 5.3.

5.6    REPRESENTATION OF SHARES OF OTHER CORPORATIONS

The chairperson of the board of directors, the president, any vice president, the treasurer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

5.7    AUTHORITY AND DUTIES OF OFFICERS

All officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the board of directors.

ARTICLE VI - STOCK

6.1    STOCK CERTIFICATES; PARTLY PAID SHARES

The shares of the corporation shall be represented by certificates, provided that the board of directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The corporation shall not have power to issue a certificate in bearer form.

The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

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6.2    SPECIAL DESIGNATION ON CERTIFICATES

If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this section 6.2 or Sections 156, 202(a) or 218(a) of the DGCL or with respect to this section 6.2 a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated stock and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.

6.3    LOST CERTIFICATES

Except as provided in this Section 6.3, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

6.4    DIVIDENDS

The board of directors, subject to any restrictions contained in the certificate of incorporation or applicable law, may declare and pay dividends upon the shares of the corporation’s capital stock. Dividends may be paid in cash, in property, or in shares of the corporation’s capital stock, subject to the provisions of the certificate of incorporation.

The board of directors may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.

6.5    TRANSFER OF STOCK

Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person or by an attorney duly authorized, and, if such stock is certificated, upon the surrender of a certificate or certificates for a like number of shares, properly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer.

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6.6    STOCK TRANSFER AGREEMENTS

The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

6.7    REGISTERED STOCKHOLDERS

The corporation:

(i)    shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;

(ii)    shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and

(iii)    shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VII - MANNER OF GIVING NOTICE AND WAIVER

7.1    NOTICE OF STOCKHOLDERS’ MEETINGS

Notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the corporation’s records. An affidavit of the secretary or an assistant secretary of the corporation or of the transfer agent or other agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

7.2    NOTICE BY ELECTRONIC TRANSMISSION

Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any such consent shall be deemed revoked if:

(i)    the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation in accordance with such consent; and

(ii)    such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice.

However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

Any notice given pursuant to the preceding paragraph shall be deemed given:

(iii)    if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;

(iv)    if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;

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(v)    if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and

(vi)    if by any other form of electronic transmission, when directed to the stockholder.

An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

Notice by a form of electronic transmission shall not apply to Sections 164, 296, 311, 312 or 324 of the DGCL.

7.3    NOTICE TO STOCKHOLDERS SHARING AN ADDRESS

Except as otherwise prohibited under the DGCL, without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the corporation under the provisions of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any stockholder who fails to object in writing to the corporation, within 60 days of having been given written notice by the corporation of its intention to send the single notice, shall be deemed to have consented to receiving such single written notice.

7.4    NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL

Whenever notice is required to be given, under the DGCL, the certificate of incorporation or these bylaws, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.

7.5    WAIVER OF NOTICE

Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.

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ARTICLE VIII - INDEMNIFICATION

8.1    INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS

Subject to the other provisions of this Article VIII, the corporation shall indemnify, to the fullest extent permitted by the DGCL and other applicable law, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director or officer of the corporation, or is or was a director or officer of the corporation serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.

8.2    INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION

Subject to the other provisions of this Article VIII, the corporation shall indemnify, to the fullest extent permitted by the DGCL and other applicable law, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the corporation, or is or was a director or officer of the corporation serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

8.3    SUCCESSFUL DEFENSE

To the extent that a present or former director or officer of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described in Section 8.1 or Section 8.2, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

8.4    INDEMNIFICATION OF OTHERS

Subject to the other provisions of this Article VIII, the corporation shall have power to indemnify its employees and agents to the extent not prohibited by the DGCL or other applicable law. The board of directors shall have the power to delegate to such person or persons the determination of whether employees or agents shall be indemnified.

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8.5    ADVANCED PAYMENT OF EXPENSES

Expenses (including attorneys’ fees) actually and reasonably incurred by an officer or director of the corporation in defending any Proceeding shall be paid by the corporation in advance of the final disposition of such Proceeding upon receipt of a written request therefor (together with documentation reasonably evidencing such expenses) and an undertaking by or on behalf of the person to repay such amounts if it shall ultimately be determined that the person is not entitled to be indemnified under this Article VIII or the DGCL. Such expenses (including attorneys’ fees) actually and reasonably incurred by former directors and officers or other employees and agents of the corporation or by persons serving at the request of the corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, trust or other enterprise may be so paid upon such terms and conditions, if any, as the corporation deems appropriate. The right to advancement of expenses shall not apply to any Proceeding (or any part of any Proceeding) for which indemnity is excluded pursuant to these bylaws, but shall apply to any Proceeding (or any part of any Proceeding) referenced in Section 8.6(ii) or 8.6(iii) prior to a determination that the person is not entitled to be indemnified by the corporation.

8.6    LIMITATION ON INDEMNIFICATION

Subject to the requirements in Section 8.3 and the DGCL, the corporation shall not be obligated to indemnify any person pursuant to this Article VIII in connection with any Proceeding (or any part of any Proceeding):

(i)    for which payment has actually been made to or on behalf of such person under any statute, insurance policy, indemnity provision, vote or otherwise, except with respect to any excess beyond the amount paid;

(ii)    for an accounting or disgorgement of profits pursuant to Section 16(b) of the 1934 Act, or similar provisions of federal, state or local statutory law or common law, if such person is held liable therefor (including pursuant to any settlement arrangements);

(iii)    for any reimbursement of the corporation by such person of any bonus or other incentive-based or equity-based compensation or of any profits realized by such person from the sale of securities of the corporation, as required in each case under the 1934 Act (including any such reimbursements that arise from an accounting restatement of the corporation pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the corporation of profits arising from the purchase and sale by such person of securities in violation of Section 306 of the Sarbanes-Oxley Act), if such person is held liable therefor (including pursuant to any settlement arrangements);

(iv)    for any reimbursement of the corporation by such person of any Erroneously Awarded Compensation as defined in the corporation’s Executive Officer Incentive Compensation Recovery Policy;

(v)    initiated by such person, including any Proceeding (or any part of any Proceeding) initiated by such person against the corporation or its directors, officers, employees, agents or other indemnitees, unless (a) the board of directors authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation, (b) the corporation provides the indemnification, in its sole discretion, pursuant to the powers vested in the corporation under applicable law, (c) otherwise required to be made under Section 8.7 or (d) otherwise required by applicable law; or

(vi)    if prohibited by applicable law.

8.7    DETERMINATION; CLAIM

If a claim for indemnification or advancement of expenses under this Article VIII is not paid in full within 90 days after receipt by the corporation of the written request therefor, the claimant shall be entitled to an adjudication by a court of competent jurisdiction of his or her entitlement to such indemnification or advancement

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of expenses. The corporation shall indemnify such person against any and all expenses that are actually and reasonably incurred by such person in connection with any action for indemnification or advancement of expenses from the corporation under this Article VIII, to the extent such person is successful in such action, and to the extent not prohibited by law. In any such suit, the corporation shall, to the fullest extent not prohibited by law, have the burden of proving that the claimant is not entitled to the requested indemnification or advancement of expenses.

8.8    NON-EXCLUSIVITY OF RIGHTS

The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the certificate of incorporation or any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advancement of expenses, to the fullest extent not prohibited by the DGCL or other applicable law.

8.9    INSURANCE

The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under the provisions of the DGCL.

8.10    SURVIVAL

The rights to indemnification and advancement of expenses conferred by this Article VIII shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

8.11    EFFECT OF REPEAL OR MODIFICATION

A right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to the certificate of incorporation or these bylaws after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.

8.12    CERTAIN DEFINITIONS

For purposes of this Article VIII, references to the “corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article VIII, references to “otherenterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with

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respect to an employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this Article VIII.

ARTICLE IX - GENERAL MATTERS

9.1    EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS

Except as otherwise provided by law, the certificate of incorporation or these bylaws, the board of directors may authorize any officer or officers, or agent or agents, to enter into any contract or execute any document or instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

9.2    FISCAL YEAR

The fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors.

9.3    SEAL

The corporation may adopt a corporate seal, which shall be adopted and which may be altered by the board of directors. The corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

9.4    CONSTRUCTION; DEFINITIONS

Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

9.5    EXCLUSIVE FORUM

Unless the corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (A) any derivative action or proceeding brought on behalf of the corporation, (B) any action asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee of the corporation to the corporation or the corporation’s stockholders, (C) any action asserting a claim against the corporation or any director or officer or other employee of the corporation arising pursuant to any provision of the DGCL, the certificate of incorporation or the bylaws or (D) any action asserting a claim against the corporation or any director, officer, stockholder or employee of the corporation governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware provided, however, that, in the event that the Court of Chancery of the State of Delaware lacks jurisdiction over any such action or proceeding, the sole and exclusive forum for such action or proceeding shall be another state or federal court located within the State of Delaware. Furthermore, unless the corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, or the 1934 Act.

Failure to enforce the foregoing provisions would cause the corporation irreparable harm, and the corporation shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the

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foregoing provisions. Further, the Court of Chancery of the State of Delaware shall have exclusive jurisdiction to determine any dispute, claim or action brought against the corporation by any current or former director, officer or other person entitled or purported to be entitled to indemnification from the corporation by reason of the fact that he or she (or a person for whom he or she is a representative) is or was a director or an officer of the corporation or is or was serving at the request of the corporation in any position or capacity for any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, whether pursuant to the certificate of incorporation, these bylaws or contractual agreement, with respect to any claims thereunder.

ARTICLE X - AMENDMENTS

These bylaws may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the total voting power of outstanding voting securities, voting together as a single class, shall be required for the stockholders of the corporation to alter, amend or repeal, or adopt any provision of these bylaws. The board of directors shall also have the power to adopt, amend or repeal bylaws.

A bylaw amendment adopted by stockholders which specifies the votes that shall be necessary for the election of directors shall not be further amended or repealed by the board of directors.

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Seth A. Ravin, certify that:

1.          I have reviewed this Quarterly Report on Form 10-Q of Rimini Street, Inc.;

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.          The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2023 

/s/ Seth A. Ravin

Seth A. Ravin

Title: Chief Executive Officer and President

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Michael L. Perica, certify that:

1.          I have reviewed this Quarterly Report on Form 10-Q of Rimini Street, Inc.;

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.          The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2023 

/s/ Michael L. Perica

Michael L. Perica

Title: Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Seth A. Ravin, Chief Executive Officer of Rimini Street, Inc. (the “Company”), certify, that, to the best of my knowledge:

1.    The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 1, 2023	By:	/s/ Seth A. Ravin
		Seth A. Ravin
		Title: Chief Executive Officer and President
		(Principal Executive Officer)

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Michael L. Perica, Executive Vice President and Chief Financial Officer of Rimini Street, Inc. (the “Company”), certify, that, to the best of my knowledge:

1.    The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 1, 2023	By:	/s/ Michael L. Perica
		Michael L. Perica
		Title: Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Cover - shares shares in Thousands	9 Months Ended
	Sep. 30, 2023	Oct. 30, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-37397
Entity Registrant Name	Rimini Street, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	36-4880301
Entity Address, Address Line One	1700 S. Pavilion Center Drive
Entity Address, Address Line Two	Suite 330
Entity Address, City or Town	Las Vegas
Entity Address, State or Province	NV
Entity Address, Postal Zip Code	89135
City Area Code	(702)
Local Phone Number	839-9671
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		89,389
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001635282
Current Fiscal Year End Date	--12-31
Common Stock, par value $0.0001 per share
Document Information [Line Items]
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	RMNI
Security Exchange Name	NASDAQ

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Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 108,233	$ 109,008
Restricted cash	427	426
Accounts receivable, net of allowance of $860 and $723, respectively	61,191	116,093
Deferred contract costs, current	17,641	17,218
Short-term investments	19,914	20,115
Prepaid expenses and other	24,678	18,846
Total current assets	232,084	281,706
Long-term assets:
Property and equipment, net of accumulated depreciation and amortization of $17,320 and $15,441, respectively	8,488	6,113
Operating lease right-of-use assets	6,339	7,142
Deferred contract costs, noncurrent	22,412	23,508
Deposits and other	6,643	7,057
Deferred income taxes, net	59,009	65,515
Total assets	334,975	391,041
Current liabilities:
Current maturities of long-term debt	5,912	4,789
Accounts payable	6,139	8,040
Accrued compensation, benefits and commissions	35,782	37,459
Other accrued liabilities	22,718	32,676
Operating lease liabilities, current	4,175	4,223
Deferred revenue, current	214,073	265,840
Total current liabilities	288,799	353,027
Long-term liabilities:
Long-term debt, net of current maturities	65,671	70,003
Deferred revenue, noncurrent	24,326	34,081
Operating lease liabilities, noncurrent	7,511	9,094
Other long-term liabilities	1,718	2,006
Total liabilities	388,025	468,211
Commitments and contingencies (Note 8)
Stockholders’ deficit:
Preferred stock; $0.0001 par value. Authorized 99,820 (excluding 180 shares of Series A Preferred Stock) no other series has been designated	0	0
Common stock; $0.0001 par value. Authorized 1,000,000 shares; issued and outstanding 89,323 and 88,517 shares, respectively	9	9
Additional paid-in capital	164,522	156,401
Accumulated other comprehensive loss	(4,904)	(4,195)
Accumulated deficit	(211,561)	(228,269)
Treasury stock, at cost	(1,116)	(1,116)
Total stockholders' deficit	(53,050)	(77,170)
Total liabilities and stockholders' deficit	$ 334,975	$ 391,041

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Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 860	$ 723
Accumulated depreciation and amortization	$ 17,320	$ 15,441
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (shares)	99,820,000	99,820,000
Series A preferred stock, shares authorized (shares)	180,000	180,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (shares)	89,323,000	88,517,000
Common stock, shares outstanding (shares)	89,323,000	88,517,000

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Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Revenue	$ 107,453	$ 101,931	$ 319,386	$ 301,041
Cost of revenue	40,110	39,271	118,802	113,822
Gross profit	67,343	62,660	200,584	187,219
Operating expenses:
Sales and marketing	35,593	35,934	107,356	103,840
General and administrative	18,384	18,454	55,475	57,267
Reorganization costs	0	0	59	0
Litigation costs and related recoveries:
Professional fees and other costs of litigation	2,127	6,145	5,475	12,837
Insurance costs and recoveries, net	0	92	0	(389)
Litigation costs and related recoveries, net	2,127	6,237	5,475	12,448
Total operating expenses	56,104	60,625	168,365	173,555
Operating income	11,239	2,035	32,219	13,664
Non-operating income and (expenses):
Interest expense	(1,413)	(1,167)	(4,139)	(2,974)
Other income (expenses), net	990	(1,329)	1,799	(2,696)
Income (loss) before income taxes	10,816	(461)	29,879	7,994
Income taxes	(4,015)	56	(13,171)	(5,202)
Net income (loss)	6,801	(405)	16,708	2,792
Other comprehensive income
Foreign currency translation loss	(1,061)	(1,667)	(1,011)	(3,878)
Derivative instrument and other adjustments, net of tax	140	1,220	302	1,220
Comprehensive income (loss)	5,880	(852)	15,999	134
Net income (loss) attributable to common stockholders	$ 6,801	$ (405)	$ 16,708	$ 2,792
Net income (loss) per share attributable to common stockholders:
Basic (in dollars per share)	$ 0.08	$ 0	$ 0.19	$ 0.03
Diluted (in dollars per share)	$ 0.08	$ 0	$ 0.19	$ 0.03
Weighted average number of shares of Common Stock outstanding:
Weighted average number of shares outstanding, basic (shares)	89,228	87,965	88,942	87,441
Weighted average number of shares outstanding, diluted (shares)	89,357	87,965	89,322	89,054

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Unaudited Condensed Consolidated Statements of Stockholders' Deficit - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit	Treasury Stock
Beginning balance (shares) at Dec. 31, 2021		87,107
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options for cash (shares)		518
Restricted stock units vested (shares)		1,391
Issuance of Common Stock (shares)		60
Retired shares of Common Stock (shares)		(853)
Ending balance (shares) at Sep. 30, 2022		88,223
Stockholders' deficit, beginning of period at Dec. 31, 2021	$ (80,386)	$ 9	$ 149,234	$ (2,724)	$ (225,789)	$ (1,116)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock based compensation expense			8,653
Exercise of stock options for cash		0	964
Restricted stock units vested		0	0
Retired shares of Common Stock		0	(4,740)
Other comprehensive loss				(2,658)
Net income (loss)	2,792				2,792
Stockholders' deficit, end of period at Sep. 30, 2022	(75,375)	$ 9	154,111	(5,382)	(222,997)	(1,116)
Beginning balance (shares) at Jun. 30, 2022		87,529
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options for cash (shares)		193
Restricted stock units vested (shares)		701
Issuance of Common Stock (shares)		0
Retired shares of Common Stock (shares)		(200)
Ending balance (shares) at Sep. 30, 2022		88,223
Stockholders' deficit, beginning of period at Jun. 30, 2022	(76,487)	$ 9	152,147	(4,935)	(222,592)	(1,116)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock based compensation expense			2,443
Exercise of stock options for cash		0	513
Restricted stock units vested		0	0
Retired shares of Common Stock		0	(992)
Other comprehensive loss				(447)
Net income (loss)	(405)				(405)
Stockholders' deficit, end of period at Sep. 30, 2022	$ (75,375)	$ 9	154,111	(5,382)	(222,997)	(1,116)
Beginning balance (shares) at Dec. 31, 2022		88,517
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options for cash (shares)		57
Restricted stock units vested (shares)		922
Issuance of Common Stock (shares)	75	75
Retired shares of Common Stock (shares)		(248)
Ending balance (shares) at Sep. 30, 2023		89,323
Stockholders' deficit, beginning of period at Dec. 31, 2022	$ (77,170)	$ 9	156,401	(4,195)	(228,269)	(1,116)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock based compensation expense			9,056
Exercise of stock options for cash		0	79
Restricted stock units vested		0	0
Retired shares of Common Stock		0	(1,014)
Other comprehensive loss				(709)
Net income (loss)	16,708				16,708
Stockholders' deficit, end of period at Sep. 30, 2023	(53,050)	$ 9	164,522	(4,904)	(211,561)	(1,116)
Beginning balance (shares) at Jun. 30, 2023		89,085
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options for cash (shares)		0
Restricted stock units vested (shares)		238
Issuance of Common Stock (shares)		0
Retired shares of Common Stock (shares)		0
Ending balance (shares) at Sep. 30, 2023		89,323
Stockholders' deficit, beginning of period at Jun. 30, 2023	(62,061)	$ 9	161,391	(3,983)	(218,362)	(1,116)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock based compensation expense			3,131
Exercise of stock options for cash		0	0
Restricted stock units vested		0	0
Retired shares of Common Stock		0	0
Other comprehensive loss				(921)
Net income (loss)	6,801				6,801
Stockholders' deficit, end of period at Sep. 30, 2023	$ (53,050)	$ 9	$ 164,522	$ (4,904)	$ (211,561)	$ (1,116)

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Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 16,708	$ 2,792
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense	9,056	8,653
Depreciation and amortization	2,001	1,871
Accretion and amortization of debt discount and issuance costs	728	728
Deferred income taxes	6,263	327
Amortization and accretion related to operating right of use assets	3,347	4,140
Changes in operating assets and liabilities:
Accounts receivable	54,112	75,068
Prepaid expenses, deposits and other	(4,339)	(6,417)
Deferred contract costs	674	(2,412)
Accounts payable	(2,551)	2,710
Accrued compensation, benefits, commissions and other liabilities	(14,702)	(3,842)
Deferred revenue	(57,684)	(46,861)
Net cash provided by operating activities	13,613	36,757
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital expenditures	(3,654)	(3,144)
Payment for purchases of investments	(24,118)	(11,148)
Proceeds from sale of investments	23,614	0
Net cash used in investing activities	(4,158)	(14,292)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of professional fees related to March 2021 Common Stock offering	0	(27)
Principal payments on the Credit Facility	(3,938)	(8,375)
Payments to repurchase and retire Common Stock	(1,014)	(4,740)
Principal payments on capital leases	(247)	(235)
Proceeds from exercise of employee stock options	79	965
Net cash used in financing activities	(5,120)	(12,412)
Effect of foreign currency translation changes	(5,109)	(11,050)
Net change in cash, cash equivalents and restricted cash	(774)	(997)
Cash, cash equivalents and restricted cash at beginning of period	109,434	119,990
Cash, cash equivalents and restricted cash at end of period	108,660	118,993
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	3,409	2,195
Cash paid for income taxes	4,164	1,886
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Increase (decrease) in payables for capital expenditures	$ 669	$ (2)

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NATURE OF BUSINESS AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF BUSINESS AND BASIS OF PRESENTATION

NATURE OF BUSINESS AND BASIS OF PRESENTATION

Nature of Business

Rimini Street, Inc. (the “Company”) is a global provider of end-to-end enterprise software support, products and services. The Company offers a comprehensive family of unified solutions to run, manage, support, customize, configure, connect, protect, monitor, and optimize clients’ enterprise application, database, and technology software platforms.

Basis of Presentation and Consolidation

The Unaudited Condensed Consolidated Financial Statements, which include the accounts of the Company and its wholly-owned subsidiaries, are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by U.S. GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Unaudited Condensed Consolidated Financial Statements have been included. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Audited Consolidated Financial Statements for the year ended December 31, 2022, included in the Company’s 2022 Annual Report on Form 10-K as filed with the SEC on March 1, 2023 (the “2022 Form 10-K”).

The accompanying Unaudited Condensed Consolidated Balance Sheet and related disclosures as of December 31, 2022 have been derived from the Company’s audited financial statements. The Company’s financial condition as of September 30, 2023, and operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the year ending December 31, 2023.

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LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES

LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES

Liquidity

As of September 30, 2023, the Company’s current liabilities exceeded its current assets by $56.7 million, and the Company recorded net income of $6.8 million for the three months ended September 30, 2023. As of September 30, 2023, the Company had available cash, cash equivalents and restricted cash of $108.7 million and short-term investments of $19.9 million. As of September 30, 2023, the Company’s current liabilities included $214.1 million of deferred revenue whereby the historical costs of fulfilling the Company's commitments to provide services to its clients was approximately 37% of the related deferred revenue for the three months ended September 30, 2023.

On July 20, 2021, the Company entered into a five-year term loan of $90 million (the “Credit Facility”). Annual minimum principal payments over the five-year term for the Credit Facility are 5%, 5%, 7.5%, 7.5% and 10%, respectively, with the remaining balance due at the end of the term. See Note 5 for further information regarding the Company's Credit Facility.

Additionally, the Company is obligated to make operating and financing lease payments that are due within the next 12 months in the aggregate amount of $5.6 million. During the third quarter of 2023, the global economy continued to experience interest rate and inflationary pressures, geopolitical conflicts, global supply chain issues, a rise in energy prices and the continuing effects of fiscal and monetary policies adopted by governments in response to and following the global outbreak of the coronavirus (“COVID-19”). Assuming the Company’s ability to operate continues not to be significantly adversely impacted by the related changes in the macroeconomic environment, geopolitical pressures, or the litigation matters described in Note 8, the Company believes that current cash, cash equivalents, restricted cash, and future cash flow from operating activities will be sufficient to meet the Company’s anticipated cash needs, including Credit Facility repayments, working capital needs, capital expenditures and other contractual obligations for at least 12 months from the issuance date of these financial statements.

Use of Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and

accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances to determine the carrying values of assets and liabilities that are not readily apparent from other sources. The Company’s accounting estimates include, but are not necessarily limited to, valuation of accounts receivable, valuation assumptions for stock options and leases, deferred income taxes and the related valuation allowances, and the evaluation and measurement of contingencies. To the extent there are material differences between the Company’s estimates and actual results, the Company’s future consolidated results of operations may be affected.

Recent Accounting Pronouncements

Recently Adopted Standards. The following accounting standards were adopted during fiscal year 2023:

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and amended in December 2022 with ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. ASU 2020-04 provides guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying U.S. GAAP to contracts, hedging relationships and other transactions impacted by reference rate reform. The provisions apply only to those transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. Adoption of the provisions of ASU 2020-04 are optional and are effective from March 12, 2020 through December 31, 2024, as amended by ASU 2022-06. During the three months ended March 31, 2023, the Company adopted the optional relief guidance provided under ASU 2020-04 after modifying its interest rate swap agreement in connection with the amendment of the Credit Facility to implement certain changes in the reference rate from LIBOR to the Secured Overnight Financing Rate (“SOFR”). The application of this expedient preserves the presentation of the derivative consistent with past presentation and did not have a material impact on our Unaudited Condensed Consolidated Financial Statements.

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DEFERRED CONTRACT COSTS AND DEFERRED REVENUE

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

DEFERRED CONTRACT COSTS AND DEFERRED REVENUE

DEFERRED CONTRACT COSTS AND DEFERRED REVENUE

Activity for deferred contract costs consisted of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Deferred contract costs, current and noncurrent, as of the beginning of period	$	40,106	$	39,709	$	40,726	$	36,509
Capitalized commissions during the period	4,913		3,817		13,630		15,620
Amortized deferred contract costs during the period	(4,966)		(4,606)		(14,303)		(13,209)
Deferred contract costs, current and noncurrent, as of the end of period	$	40,053	$	38,920	$	40,053	$	38,920

Deferred revenue activity consisted of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Deferred revenue, current and noncurrent, as of the beginning of period	$	285,324	$	300,387	$	299,921	$	300,268
Billings, net	60,528		49,731		257,864		248,960
Revenue recognized	(107,453)		(101,931)		(319,386)		(301,041)
Deferred revenue, current and noncurrent, as of the end of period	$	238,399	$	248,187	$	238,399	$	248,187

The Company’s remaining performance obligations represent all future non-cancellable revenue under contract that has not yet been recognized as revenue and includes deferred revenue and unbilled amounts. As of September 30, 2023, remaining performance obligations amounted to $550.1 million, of which $238.4 million was billed and recorded as deferred revenue. As of September 30, 2022, remaining performance obligations amounted to $532.3 million, of which $248.2 million was billed and recorded as deferred revenue.

Deferred revenue is a contract liability that consists of billings issued that are non-cancellable and payments received in advance of revenue recognition. The Company typically invoices its customers at the beginning of the contract term, in annual and multi-year installments. Deferred revenue is recognized as the Company satisfies its performance obligations over the term of the contracted service period. The Company expects to recognize revenue on approximately $214.1 million of the billed remaining performance obligations over the next 12 months, with the remaining deferred revenue balance recognized thereafter.

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OTHER FINANCIAL INFORMATION

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

OTHER FINANCIAL INFORMATION

OTHER FINANCIAL INFORMATION

Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands): 

	September 30,		December 31,
	2023		2022
Accrued sales and other taxes	$	5,760	$	6,878
Accrued professional fees	4,078		9,184
Accrued reorganization costs	—		2,526
Current maturities of capital lease obligations	353		333
Income taxes payable	1,285		2,229
Accrued litigation settlement costs	6,982		6,979
Other accrued expenses	4,260		4,547
Total other accrued liabilities	$	22,718	$	32,676

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DEBT

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

DEBT

DEBT

Debt is presented net of debt discounts and issuance costs in the Company's balance sheets and consisted of the following (in thousands):

	September 30,		December 31,
	2023		2022
Credit Facility	$	71,583	$	74,792
Less current maturities	5,912		4,789
Long-term debt, net of current maturities	$	65,671	$	70,003

On February 22, 2023, the Company amended its Credit Facility. The amendment implemented, among other things, certain changes in the reference rate from LIBOR to the SOFR. Effective February 28, 2023, the Company has a choice of interest rates between (a) Adjusted Term SOFR and (b) Base Rate (as defined in the Credit Facility), in each case plus an applicable margin. The applicable margin remains the same as the existing Credit Agreement and is based on the Company’s Consolidated Leverage Ratio (as defined in the Credit Agreement) and whether the Company elects Adjusted Term SOFR (ranging from 1.75 to 2.50%) or Base Rate (ranging from 0.75 to 1.50%).

In addition, the amendment adjusted the definition of Consolidated EBITDA to provide an addback solely for the fourth fiscal quarter of 2022, and any period including such quarter, that costs and legal fees and expenses incurred by the Company in connection with its ongoing litigation with Oracle up to $10.0 million can be added back and included in the applicable calculation of Consolidated EBITDA.

Based on voluntary prepayments made to date under the Credit Facility, the Company currently has available $40.0 million in incremental borrowings available for future use, subject to the terms of the Credit Facility.

On May 31, 2022, the Company amended the Credit Facility to increase the aggregate value of the shares of Common Stock that can be repurchased by the Company to $50 million during the term of the Credit Facility.

On September 30, 2023, June 30, 2023 and March 31, 2023, the Company made its required principal payments under the Credit Facility of $1.7 million, $1.1 million, and $1.1 million, respectively. On September 30, 2022, June 30, 2022 and March

31, 2022, the Company also made its required three principal payments of $1.1 million, respectively. On May 31, 2022, the Company prepaid $5.0 million of indebtedness outstanding under its Credit Facility with no prepayment penalty.

Effective July 20, 2021, the Company received $89.3 million of net proceeds pursuant to the Credit Facility. The borrowings under the Credit Facility were incurred with an original discount of 0.375%. As part of the transaction, the Company incurred issuance costs of $4.2 million, which were capitalized and are being amortized over the term of the Credit Facility.

The Credit Facility originally bore interest at LIBOR, plus a margin ranging from 1.75% to 2.50% through February 28, 2023. Subsequently, the Credit Facility was amended to bear interest at SOFR as noted above. For the three months ended September 30, 2023 and 2022, the average interest rate on the Credit Facility was 7.12% and 3.94%, respectively. For the nine months ended September 30, 2023 and 2022, the average interest rate on the Credit Facility was 6.76% and 3.06%, respectively.

On May 18, 2022, the Company entered into an interest rate swap agreement with a notional value of $40.0 million, with a fixed payer LIBOR rate of 2.9935% and an initial floating LIBOR rate of 0.93557%. The floating rate is reset at each month end and had an embedded floor rate of 0.0%. The term of the interest rate swap agreement coincides with that of the Credit Facility. See Note 11 for further information regarding the fair value accounting for the interest rate swap agreement. Effective February 28, 2023, the interest rate swap agreement was amended in connection with the amendment of the Credit Facility to implement certain changes in the reference rate from LIBOR to SOFR.

The fair value of the Credit Facility was $74.9 million (Level 2 inputs) as of September 30, 2023 compared to the carrying value of $73.9 million as of September 30, 2023. The fair value of the Credit Facility was $78.8 million (Level 2 inputs) as of December 31, 2022 compared to the carrying value of $77.8 million as of December 31, 2022.

The Credit Facility contains certain financial covenants, including a minimum fixed charge coverage ratio greater than 1.25, a total leverage ratio less than 3.75, and a minimum liquidity balance of at least $20 million in U.S. cash. Annual minimum principal payments over the five-year term for the Credit Facility are 5%, 5%, 7.5%, 7.5%, and 10%, respectively, with the remaining balance due at the end of the term.

Pursuant to a Guaranty and Security Agreement, dated July 2, 2021 (the “Guaranty and Security Agreement”), among the Credit Parties and Capital One, National Association, as agent, the obligations under the Credit Facility are guaranteed by certain of the Company’s subsidiaries (the Company and the guarantors, collectively, the “Credit Parties”) and are secured, subject to customary permitted liens and exceptions, by a lien on substantially all assets of the Credit Parties.

The components of interest expense are presented below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Credit Facility:
Interest expense	$	1,147	$	897	$	3,351	$	2,174
Accretion expense related to discount and issuance costs	245		245		728		728
Interest on finance leases	21		25		60		72
	$	1,413	$	1,167	$	4,139	$	2,974

For the three and nine months ended September 30, 2023, interest expense included a reduction related to interest rate swap payments received of $0.2 million and $0.6 million, respectively.

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COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS

COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS 

Common Stock Retired

On May 28, 2022, the Board of Directors authorized an increase to the Company’s previously announced Common Stock repurchase program to increase the value of the shares that could be acquired by the Company from up to $15.0 million over two years to up to $50.0 million over four years, subject to compliance with the Company’s Credit Facility, provided that all other applicable conditions and legal requirements are satisfied.

On February 27, 2022, the Board of Directors approved the adoption of a stock repurchase program to acquire up to $15.0 million of the Company’s Common Stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, through March 4, 2024, subject to compliance with the Company's Credit Facility, which was amended effective January 14, 2022 to increase the aggregate value of the shares of Common Stock that could be acquired by the Company to no greater than $15.0 million during the term of the Credit Facility, provided that all other applicable conditions and legal requirements are satisfied.

During the three months ended September 30, 2023, the Company did not acquire any shares of its Common Stock on the open market. For the nine months ended September 30, 2023, the Company acquired 0.2 million shares of its Common Stock on the open market at a cost of $1.0 million. For the three months ended September 30, 2022, the Company acquired 0.2 million shares of its Common Stock on the open market at a cost of $1.0 million. For the nine months ended September 30, 2022, the Company acquired an aggregate 0.9 million shares of Common Stock on the open market at a total cost of $4.7 million. Upon completion of all repurchase transactions, the associated shares of Common Stock were retired.

Stock Plans

The Company’s stock plans consist of the 2007 Stock Plan (the “2007 Plan”) and the 2013 Equity Incentive Plan, as amended and restated in July 2017 (the “2013 Plan”). The 2007 Plan and the 2013 Plan are collectively referred to as the “Stock Plans”. On February 23, 2023, pursuant to the “evergreen” provisions of the 2013 Plan, the Board of Directors authorized an increase of approximately 3.5 million shares available for grant under the 2013 Plan. For additional information about the Stock Plans, please refer to Note 8 to the Company’s Consolidated Financial Statements for the year ended December 31, 2022, included in Part II, Item 8 of the 2022 Form 10-K. The information presented below provides an update for activity under the Stock Plans for the three and nine months ended September 30, 2023.

On March 31, 2023, the Company’s Board of Directors, approved the Company’s 2023 Long-Term Incentive Plan (the “2023 LTI Plan”), consisting of awards of performance units (“PSUs”), restricted stock units (“RSUs”) and stock options to purchase shares of the Company’s Common Stock under the terms of the Company’s 2013 Equity Incentive Plan (the “2013 Equity Plan”), as amended, effective as of April 3, 2023.

Performance Units

The PSUs awarded under the 2023 LTI Plan (the “Target PSUs”) will be measured over a performance period beginning on January 1, 2023 and ending on December 31, 2023 (the “Performance Period”), but will remain subject to a continued service-based vesting requirement. Half of the PSUs awarded will be eligible to vest based on the Company’s achievement against a target adjusted EBITDA goal for fiscal year 2023, and the remaining half of the PSUs awarded will be eligible to vest based on the Company’s achievement against a target total revenue goal for fiscal year 2023. The ultimate number of PSUs that may vest (as calculated, the “Earned PSUs”) range from zero to 200% of the Target PSUs. Under the terms of the 2023 LTI Plan, the Earned PSUs will vest in equal annual installments on the first, second and third anniversaries of the Date of Grant, generally subject to the awardee continuing to be a Service Provider through the applicable vesting date.

The Company granted 0.6 million PSUs on April 3, 2023 at a grant price of $3.93. The Company recognized compensation expense related to PSUs of $0.4 million and $0.7 million for the three and nine ended September 30, 2023, respectively.

Restricted Stock Units

For the nine months ended September 30, 2023, the Board of Directors granted RSUs under the 2013 Plan to employees and to non-employee members of the Board of Directors for an aggregate of approximately 1.4 million shares of Common Stock. RSU grants vest over periods generally ranging from 12 to 36 months from the respective grant dates and the awards are subject to forfeiture upon termination of employment or service on the Board of Directors, as applicable. Based on the weighted average fair market value of the Common Stock on the date of grant of $4.16 per share, the aggregate fair value for the shares underlying the RSUs amounted to $5.6 million as of the grant date that will be recognized as compensation cost over the vesting period. For the three months ended September 30, 2023 and 2022, the Company recognized compensation expense related to RSUs of approximately $1.8 million and $1.8 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company recognized expense of $5.7 million and $6.6 million, respectively. As of September 30, 2023, the unrecognized expense of $7.0 million net of forfeitures is expected to be charged to expense on a straight-line basis as the RSUs vest over a weighted-average period of approximately 1.6 years.

Stock Options

For the nine months ended September 30, 2023, the Board of Directors granted stock options for the purchase of an aggregate of approximately 1.9 million shares of Common Stock at exercise prices that were equal to the fair market value of the Common Stock on the date of grant. Options granted to employees generally vest as to one-third of the shares subject to the award on each anniversary of the designated vesting commencement date, which may precede the grant date of such award, and expire ten years after the grant date.

The following table sets forth a summary of stock option activity under the Stock Plans for the nine months ended September 30, 2023 (shares in thousands): 

	Shares	Price (1)		Term (2)
Outstanding, December 31, 2022	6,994	$	6.17	5.5
Granted	1,912	4.20
Forfeited	(288)	5.95
Expired	(213)	6.64
Exercised	(57)	1.38
Outstanding, September 30, 2023 (3)(4)	8,348	5.75		5.8
Vested, September 30, 2023 (3)	5,106	6.22		3.8

(1)Represents the weighted average exercise price.

(2)Represents the weighted average remaining contractual term until the stock options expire in years.

(3)As of September 30, 2023, there was no aggregate intrinsic value of all stock options outstanding. As of September 30, 2023, there was no aggregate intrinsic value of vested stock options.

(4)The number of outstanding stock options that are not expected to ultimately vest due to forfeiture amounted to 0.4 million shares as of September 30, 2023.

The following table presents activity affecting the total number of shares available for grant under the Stock Plans for the nine months ended September 30, 2023 (in thousands):

 

Available, December 31, 2022	7,543
Newly authorized by Board of Directors	3,541
Stock options granted	(1,912)
RSUs and PSUs granted	(1,960)
Expired options under Stock Plans	213
Forfeited options under Stock Plans	288
Forfeited RSUs under Stock Plans	177
Repurchased shares of Common Stock	248
Issuance of Common Stock	(75)
Available, September 30, 2023	8,063

The aggregate fair value of approximately 1.9 million stock options granted for the nine months ended September 30, 2023 amounted to $4.5 million, or $2.33 per stock option as of the grant date utilizing the Black-Scholes-Merton (“BSM”) method. The fair valued derived under the BSM method will result in the recognition of compensation cost over the vesting period of the stock options. For the nine months ended September 30, 2023, the fair value of each stock option grant under the Stock Plans was estimated on the date of grant using the BSM option-pricing model, with the following weighted-average assumptions:

 

Expected life (in years)	6.0
Volatility	55%
Dividend yield	0%
Risk-free interest rate	3.75%
Fair value per share of Common Stock on date of grant	$4.20

As of September 30, 2023 and December 31, 2022, total unrecognized compensation costs related to unvested stock options, net of estimated forfeitures, was $5.3 million and $4.1 million, respectively. As of September 30, 2023, the unrecognized costs are expected to be charged to expense on a straight-line basis over a weighted-average vesting period of approximately 2.0 years.

Stock-Based Compensation Expense

Stock-based compensation expense attributable to RSUs and stock options is classified as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	503	$	535	$	1,423	$	1,616
Sales and marketing	817		787		2,067		2,467
General and administrative	1,811		1,121		5,566		4,570
Total	$	3,131	$	2,443	$	9,056	$	8,653

Warrants

As of September 30, 2023, warrants were outstanding for an aggregate of 3.4 million shares of Common Stock exercisable at $5.64 per share. For additional information about these warrants, please refer to Note 8 to the Company’s Consolidated Financial Statements for the year ended December 31, 2022, included in Part II, Item 8 of the 2022 Form 10-K.

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INCOME TAXES

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into law. The IRA includes a 15% corporate alternative minimum tax for companies that report over $1 billion in U.S. profits to shareholders and a 1% excise tax on stock buy backs. The Company does not expect the IRA to have a material tax impact.

For the three months ended September 30, 2023 and 2022, the Company’s effective tax rate was 37.1% and 12.1%, respectively. For the nine months ended September 30, 2023 and 2022, the Company’s effective tax rate was 44.1% and 65.1%, respectively. The Company’s income tax expense was primarily attributable to earnings in the United States and foreign jurisdictions subject to income taxes and foreign withholding taxes. The Company did not have any material changes to its conclusions regarding valuation allowances for deferred income tax assets or uncertain tax positions for the three and nine months ended September 30, 2023 and 2022.

For additional information about income taxes, please refer to Note 9 to the Company’s Consolidated Financial Statements for the year ended December 31, 2022, included in Part II, Item 8 of the 2022 Form 10-K.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Retirement Plan

The Company has defined contribution plans for both its U.S. and foreign employees. For certain of these plans, employees may contribute up to the statutory maximum, which is set by law each year. The plans also provide for employer contributions. For the three months ended September 30, 2023 and 2022, the Company’s matching contributions to these plans totaled $1.0 million and $0.8 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company’s matching contributions to these plans totaled $2.6 million and $2.7 million, respectively.

Rimini I Litigation

In January 2010, certain subsidiaries of Oracle Corporation (together with its subsidiaries individually and collectively, “Oracle”) filed a lawsuit, Oracle USA, Inc. et al. v. Rimini Street, Inc. et al. (United States District Court for the District of Nevada) (the “District Court”) (“Rimini I”), against the Company and its Chief Executive Officer, Chairman of the Board and President, Seth Ravin, alleging that certain of the Company’s processes (Process 1.0) violated Oracle’s license agreements with its customers and that the Company committed acts of copyright infringement and violated other federal and state laws. The litigation involved the Company’s business processes and the manner in which the Company provided services to its clients.

After completion of a jury trial in 2015 and subsequent appeals, the final outcome of Rimini I was that Mr. Ravin was found not liable for any claims and the Company was found liable for only one claim: “innocent infringement,” a jury finding that the Company did not know and had no reason to know that its former support processes were infringing. The jury also found that the infringement did not cause Oracle to suffer lost profits. The Company was ordered to pay a judgment of $124.4 million in 2016, which the Company promptly paid and then pursued appeals. With interest, attorneys’ fees and costs, the total judgment paid by the Company to Oracle after the completion of all appeals was approximately $89.9 million. A portion of such judgment was paid by the Company’s insurance carriers.

Rimini I Injunction Proceedings

Since November 2018, the Company has been subject to a permanent injunction (the “Rimini I Injunction”) prohibiting it from using certain support processes that had been found in Rimini I to “innocently” infringe certain Oracle copyrights. The Rimini I Injunction does not prohibit the Company’s provision of support services for any Oracle product lines, but rather defines the manner in which the Company can provide support services for certain Oracle product lines.

In July 2020, Oracle filed a motion to show cause contending that the Company was in violation of the Rimini I Injunction, and the Company opposed this motion, disputing Oracle’s claims. In January 2022, the District Court issued its findings and order following an evidentiary hearing held in September 2021 regarding whether the Company (i) violated the Rimini I Injunction for certain accused conduct and (ii) should be held in contempt in those instances where the District Court found a violation of the Rimini I Injunction, and what sanctions, if any, were appropriate.

In the order, the District Court ruled in favor of the Company with respect to five of the items. With respect to the other five items, the District Court found the Company violated the Rimini I Injunction, awarded sanctions to Oracle of $0.6 million and ordered that certain computer files be quarantined from use and notice and proof of such quarantining be provided to Oracle. The District Court also ruled that Oracle may recover its reasonable attorneys’ fees and costs. The Company reserved all rights, including appellate rights, with respect to the District Court rulings.

In February 2022, the Company filed a notice of appeal in the District Court, commencing an appeal of the District Court’s January 2022 decision to the Ninth Circuit Court of Appeals (“Court of Appeals”). Shortly thereafter, the District Court stayed the briefing on Oracle’s bill of attorneys’ fees and costs until the Company’s appeal was resolved.

Following oral argument on the appeal held in February 2023, on August 24, 2023, the Court of Appeals issued its decision on the Company’s appeal of the five items for which the District Court held the Company in contempt. The Court of Appeals affirmed the District Court’s contempt findings on four of the five items and reversed the District Court’s finding of contempt on the fifth item, holding that the District Court had abused its discretion in holding the Company in contempt. In addition, the Court of Appeals vacated the District Court’s order to the extent that it read the Rimini I Injunction to prohibit “de minimis” copying, as well as vacated and remanded the sanctions award to the District Court for recalculation in light of its reversal of the contempt finding on the fifth item.

On September 6, 2023, the Company filed a petition for panel rehearing and rehearing en banc of the Court of Appeals’ ruling that the District Court was permitted to use the Copyright Act’s damages framework to measure the original award of $0.6 million in sanctions to Oracle. On October 12, 2023, the Court of Appeals denied the Company’s petition. On October 25, 2023, the District Court filed an order imposing a recalculated award against the Company, reducing the sanctions originally awarded to Oracle by $0.1 million and reimposing the remaining $0.5 million sanctions award, which amount was previously paid by the Company to Oracle, as described below.

At this time, the Company believes that it is in substantial compliance with the Rimini I Injunction and has complied with the order regarding the quarantining of certain computer files. As of September 30, 2023 and December 31, 2022, the Company

had accrued $6.9 million, respectively, as an estimate related to Oracle’s reasonable attorneys’ fees and costs relating to this matter. During the nine months ended September 30, 2022, the Company paid $0.6 million to Oracle for the sanctions award. Regarding the Company’s estimate for reasonable attorneys’ fees and costs, significant judgment is required to determine the amount of loss related to this matter as the outcome is inherently unpredictable and subject to uncertainties. Per order of the District Court, the deadline for Oracle to file its proposed bill of reasonable fees and costs is November 24, 2023. The Company’s response is due sixty (60) days after Oracle’s filing, and Oracle’s reply is due twenty (20) days after the Company’s response. The Company reserves all rights, including appellate rights, with respect to the District Court’s rulings in the contempt matter, including any award of attorneys’ fees and costs. An adverse outcome regarding Oracle’s motion for attorneys’ fees and costs could have a material adverse impact on the Company’s financial position, results of operations and cash flows.

Rimini II Litigation

In October 2014, the Company filed a separate lawsuit, Rimini Street Inc. v. Oracle Int’l Corp., in the District Court against Oracle seeking a declaratory judgment that the Company’s revised “Process 2.0” support practices, in use since at least July 2014, did not infringe certain Oracle copyrights (“Rimini II”). The Company’s operative complaint asserted declaratory judgment, tort, and statutory claims, including a request for injunctive relief against Oracle for unfair competition in violation of the California Unfair Competition Law. Oracle asserted counterclaims including copyright infringement claims, violations of the Digital Millennium Copyright Act (“DMCA”) and Lanham Act, breach of contract and business tort violations with respect to PeopleSoft and other Oracle-branded products, including J.D. Edwards, Siebel, Oracle Database and Oracle E-Business Suite (“EBS”).

In mid-October 2022, on the eve of the Rimini II jury trial, Oracle withdrew all of its monetary damages claims against the Company and the Company’s Chief Executive Officer, Chairman of the Board and President, Mr. Ravin in Rimini II and moved to proceed with a bench trial instead of a jury trial for its claims for equitable relief.

The District Court entered an order on October 24, 2022, dismissing with prejudice Oracle’s claims in Rimini II “for monetary relief of any kind under any legal theory[,] including but not limited to claims for damages, restitution, unjust enrichment, and engorgement. . . .” In addition, Oracle’s claims for breach of contract, inducing breach of contract and an accounting, were dismissed with prejudice, meaning that the claims (including for monetary damages) have been dismissed on their merits and that the judgment rendered is final. Prior to the date of the District Court’s order dismissing with prejudice all of Oracle’s claims for monetary relief, no damages of any kind were awarded by the District Court in Rimini II. The parties each reserved the right to seek or object to any attorneys’ fees and/or costs to the extent permissible by law.

The Rimini II bench trial began in Las Vegas on November 29, 2022 and concluded on December 15, 2022. The parties submitted their proposed findings of fact and conclusions of law to the District Court in February 2023.

On July 24, 2023, the District Court issued its findings of fact and conclusions of law in Rimini II, accompanied by a permanent injunction against the Company (the “Rimini II Injunction”) which, as set forth in detail below, is subject to an administrative stay and is not currently effective. The District Court found infringement as to Oracle’s PeopleSoft and Oracle Database products but did not find infringement as to Oracle’s EBS, Siebel and J.D. Edwards products, further ordering that the Company was entitled to a declaration of non-infringement for Oracle’s EBS product. The District Court also found in favor of Oracle on its DMCA and Lanham Act claims, enjoining the Company from making certain statements and prohibiting certain actions in connection with the manner of marketing, selling and providing services to clients of the Oracle products in question as further described below, and on indirect and vicarious copyright infringement claims against the Company’s Chief Executive Officer, Chairman of the Board and President, Mr. Ravin. The District Court denied the Company’s California Unfair Competition Law claim and other declaratory judgment claims.

On July 25, 2023, the Company filed a notice of appeal in the District Court, commencing an appeal of the District Court’s July 24, 2023 Rimini II judgment and Injunction.

On July 28, 2023, the Company filed an emergency motion with the District Court to stay enforcement of the Rimini II Injunction pending the Company’s appeal of the Rimini II judgment and Injunction.

On August 15, 2023, the District Court issued an order denying the Company’s emergency motion to stay the Rimini II Injunction pending the Company’s appeal with the Court of Appeals, but it granted an administrative stay of the Rimini II Injunction pending the outcome of a motion to stay to be filed by the Company with the Court of Appeals.

On August 22, 2023, the Company filed the separate motion to stay the Rimini II Injunction with the Court of Appeals, asserting that certain provisions of the Rimini II Injunction are vague and overbroad, that the District Court committed legal error, that certain provisions would require the Company to commit criminal acts to comply with its terms, and that the Rimini II Injunction would cause the Company and third parties “irreparable harm,” among other grounds. As of the date of this Report, the Court of Appeals has not issued a decision on the Company’s motion to stay the Rimini II Injunction.

As of the date of this Report, the Rimini II Injunction, as issued by the District Court, is currently stayed by the District Court, meaning that it is not currently effective. The Rimini II Injunction is primarily directed at Oracle’s PeopleSoft software product and, if effective, would limit, but not fully prohibit, the support services the Company can provide its clients using Oracle’s PeopleSoft software product.

Among other things, the Rimini II Injunction requires the Company to immediately and permanently delete certain PeopleSoft software environments, files and updates identified in the Rimini II Injunction, as well as to delete and immediately and permanently discontinue use of certain Company-created automated tools. The Rimini II Injunction also prohibits using, distributing, copying, or making derivative works from certain files, and it prohibits the transfer or copying of PeopleSoft files, updates, and modifications, and portions of PeopleSoft software that are developed, tested, or exist in one client’s systems to the Company’s systems or another client’s systems.

The Rimini II Injunction also specifies that the Company shall not remove, alter or omit any Oracle copyright notices or other Oracle copyright management information from any file that contains an Oracle copyright notice and prohibits the Company from publicly making statements or statements substantially similar to those the District Court found to be “false and misleading,” which are listed in the Rimini II Injunction.

On August 21, 2023, Oracle filed a motion to amend the District Court’s judgment in Rimini II regarding an update, technical specification and tool related to Oracle’s EBS software product. As of the date of this Report, the District Court has not issued a decision on Oracle’s motion to amend.

On September 12, 2023, the Court of Appeals issued an order holding the Company’s appeal of the District Court’s decision in Rimini II in abeyance pending the District Court’s resolution of Oracle’s above-described motion to amend the Rimini II judgment. Accordingly, as of the date of this Report, the briefing schedule for the Company’s appeal of the Rimini II decision has been stayed.

While the Company plans to continue to vigorously pursue a stay of the Rimini II Injunction pending appeal and its appeal of the Rimini II judgment and Injunction, it is unable to predict the timing or outcome of these matters. No assurance is or can be given that the Company will succeed in its efforts to stay the Rimini II Injunction in full or in part pending appeal or prevail in all or part of its Rimini II appeal.

There were no monetary damages included in the District Court’s judgment in Rimini II. The deadline for the parties to file motions for attorneys’ fees and costs is November 6, 2023, and oppositions to such motions are due February 20, 2024. As of the date of this Report, no party has filed such a motion with the District Court. A decision about whether to award any attorneys’ fees and/or costs, and if so, the amounts, will be made by the District Court. Accordingly, at this time the Company does not believe that any award of attorneys’ fees and costs are probable or estimatable. An adverse outcome regarding any Oracle motion for attorneys’ fees and costs could have a material adverse impact on the Company’s financial position, results of operations and cash flows.

The Rimini II Injunction, if reinstated, would affect certain support services delivered by the Company to clients receiving support for Oracle’s PeopleSoft products and is expected to result in additional future period costs, among other potential impacts. However, these costs are not currently estimatable and are not required to be recorded as of September 30, 2023. Accordingly, the Company has made no associated accrual as of September 30, 2023. Any required changes to how support services are delivered to the Company’s PeopleSoft clients could have a material adverse impact on the Company’s financial position, results of operations and cash flows. The percentage of revenue derived from services the Company provides solely for Oracle’s PeopleSoft software product was approximately 8% and 9% of the Company’s total revenue for the three and nine months ended September 30, 2023, respectively.

The Company reserves all rights, including appellate rights, with respect to the District Court’s rulings in Rimini II and the Rimini II Injunction, including any award of attorneys’ fees and costs to Oracle.

Other Litigation

From time to time, the Company may be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business. Regardless of the outcome, litigation can have an adverse impact on the Company because of judgment, defense and settlement costs, diversion of management resources and other factors. At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimatable under ASC 450, Contingencies. Legal fees are expensed as incurred.

Liquidated Damages

The Company enters into agreements with clients that contain provisions related to liquidated damages that would be triggered in the event that the Company is no longer able to provide services to these clients. The maximum cash payments related to these liquidated damages is approximately $12.6 million and $8.1 million as of September 30, 2023 and December 31, 2022, respectively. To date, the Company has not incurred any costs as a result of such provisions and has not accrued any liabilities related to such provisions in these Unaudited Condensed Consolidated Financial Statements.

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RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2023
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	RELATED PARTY TRANSACTIONS An affiliate of Adams Street Partners and its affiliates (collectively referred to as “ASP”) is a member of the Company’s Board of Directors. As of September 30, 2023, ASP owned approximately 26.4% of the Company’s issued and outstanding shares of Common Stock.

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share of Common Stock is computed by dividing net income attributable to common stockholders by the weighted average number of shares of basic Common Stock outstanding. Diluted earnings per share of Common Stock is calculated by adjusting the basic earnings per share of Common Stock for the effects of potential dilutive Common Stock shares outstanding such as stock options, restricted stock units and warrants.

For both the three and nine months ended September 30, 2023 and 2022, basic and diluted net earnings per share of Common Stock were computed by dividing the net income attributable to common stockholders by the weighted average number of common shares outstanding during the respective periods. The following tables set forth the computation of basic and diluted net income attributable to common stockholders (in thousands, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Income (loss) attributable to common stockholders:
Net income (loss)	$	6,801	$	(405)	$	16,708	$	2,792
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Weighted average number of shares of Common Stock outstanding:
Basic	89,228		87,965		88,942		87,441
Warrants	—		—		—		—
Stock options	—		—		18		543
RSUs	129		—		362		1,070
Diluted	89,357		87,965		89,322		89,054
Net income (loss) per share attributable to common stockholders:
Basic	$	0.08	$	—	$	0.19	$	0.03
Diluted	$	0.08	$	—	$	0.19	$	0.03

The following potential Common Stock equivalents were excluded from the computation of diluted net income per share for the respective periods ending on these dates, since the impact of inclusion was anti-dilutive (in thousands): 

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
RSUs and PSUs	2,767	1,243	1,270	460
Stock options	8,358	4,914	7,830	4,161
Warrants	3,440	18,128	3,440	18,128
Total	14,565	24,285	12,540	22,749

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FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS

9 Months Ended

Sep. 30, 2023

Investments, All Other Investments [Abstract]

FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS

FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS

Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. Additional information on fair value measurements is included in Note 13 to the Company’s Consolidated Financial Statements for the year ended December 31, 2022, included in Part II, Item 8 of the 2022 Form 10-K. The Company’s policy is to recognize asset or liability transfers among Level 1, Level 2 and Level 3 as of the actual date of the events or change in circumstances that caused the transfer.

Investments

During September 2022, the Company invested $20 million of its cash and cash equivalents into U.S. Federal agency bonds, U.S. government bonds, U.S. treasury notes and other securities. We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values.

In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Debt investments are classified as available-for-sale and gains and losses are recorded using the specific identification method. Changes in fair value are recorded in the operating statement. Fair value is calculated based on publicly available market information.

Listed below are the cash equivalent and investment balances as of September 30, 2023 (in thousands):

	Fair Value Level	Cost Basis		Unrealized Gains (Losses)		Recorded Basis		Cash Equivalents		Short-term Investments		Long-term Investments
Federal Agency Bonds	Level 2	$	14,895	$	165	$	15,060	$	195	$	14,160	$	705
US Treasury notes	Level 2	5,716		38		5,754		—		5,754		—
		$	20,611	$	203	$	20,814	$	195	$	19,914	$	705

Derivatives

On May 18, 2022, the Company entered into an interest rate swap agreement for a notional value of $40.0 million. The derivative was recognized in the accompanying Unaudited Condensed Consolidated Balance Sheets at its estimated fair value as of September 30, 2023. The Company uses derivatives to manage the risk associated with changes in interest rates. The Company does not enter into derivatives for speculative purposes.

To estimate fair value for the Company's interest rate swap agreement as of September 30, 2023, the Company utilized a present value of future cash flows, leveraging a model-derived valuation that uses Level 2 observable inputs such as interest rate yield curves. The Company estimated the fair value of the interest rate swap agreement to be $1.8 million as of September 30, 2023.

Changes in the fair value of the derivatives that qualify as cash flow hedges are recorded in Accumulated other comprehensive loss in the accompanying Unaudited Condensed Consolidated Balance Sheets until earnings are affected by the variability of the cash flows.

The Company received interest swap payments of $0.2 million and $0.6 million during the three and nine months ended September 30, 2023, respectively, which were recorded as a reduction to interest expense. The Company incurred interest payments of $0.1 million and $0.2 million during the three and nine months ended September 30, 2022, respectively, which were recorded as interest expense.

The amounts recorded for the interest rate swap agreement are described below (in thousands):

Derivative Instrument	Balance Sheet Classification					September 30, 2023		December 31, 2022
Interest rate swap	Deposits and other					$	1,797	$	1,402
	Accumulated other comprehensive loss					1,408		1,107
		Three Months Ended September 30,				Nine Months Ended September 30,
Derivative Instrument	Income Statement Classification	2023		2022		2023		2022
Interest rate swap	Interest expense (benefit)	$	(235)	$	81	$	(600)	$	224

Significant Concentrations

The Company attributes revenues to geographic regions based on the location of its clients’ contracting entities. The following table shows revenues by geographic region (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States of America	$	55,740	$	53,423	$	163,146	$	159,616
International	51,713		48,508		156,240		141,425
Total	$	107,453	$	101,931	$	319,386	$	301,041

No clients represented more than 10% of revenue for both the three and nine months ended September 30, 2023 and 2022. As of September 30, 2023 and December 31, 2022, no clients accounted for more than 10% of total net accounts receivable. The Company tracks its assets by physical location. As of September 30, 2023 and December 31, 2022, the net carrying value of the Company’s property and equipment located outside of the United States amounted to approximately $2.5 million and $1.8 million respectively. As of September 30, 2023, the Company had operating lease right-of-use assets of $3.3 million, $2.4 million and $0.7 million in the United States, India and the rest of the world, respectively. As of December 31, 2022, the Company had operating lease right-of-use assets of $2.6 million, $3.4 million and $1.2 million in the United States, India and the rest of the world, respectively.

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable. The Company maintains its cash, cash equivalents and restricted cash at high-quality financial institutions, primarily in the United States. Deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. As of September 30, 2023 and December 31, 2022, the Company had cash, cash equivalents and restricted cash with a single financial institution for an aggregate of $32.5 million and $44.9 million, respectively. In addition, as of September 30, 2023, the Company had cash and cash equivalents with three other single financial institutions of $61.2 million. As of September 30, 2023 and December 31, 2022, the Company had restricted cash of $0.4 million. The Company has never experienced any losses related to these balances.

Generally, credit risk with respect to accounts receivable is diversified due to the number of entities comprising the Company’s client base and their dispersion across different geographies and industries. The Company performs ongoing credit evaluations on certain clients and generally does not require collateral on accounts receivable. The Company maintains reserves for potential bad debts and historically such losses are generally not significant.

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LEASES

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

LEASES

LEASES

Effective at the start of fiscal 2020, the Company adopted the provisions and expanded disclosure requirements described in Accounting Standards Codification (ASC) Topic 842, Leases. The Company adopted the standard using the prospective method. The Company has operating leases for real estate and equipment with an option to renew the leases for up to one month to five years. Some of the leases include the option to terminate the leases upon 30-days’ notice with a penalty. The Company’s leases have various remaining lease terms ranging from July 2023 to December 2028. The Company’s lease agreements may include renewal or termination options for varying periods that are generally at the Company's discretion. The Company’s lease terms only include those periods related to renewal options the Company believes are reasonably certain to exercise. The Company generally does not include these renewal options as it is not reasonably certain to renew at the lease commencement date. This determination is based on consideration of certain economic, strategic and other factors that the Company evaluates at lease commencement date and reevaluates throughout the lease term. Some leases also include options to terminate the leases and the Company only includes those periods beyond the termination date if it is reasonably certain not to exercise the termination option.

The Company uses a discount rate to calculate the right of use (“ROU”) asset and lease liability. When the implicit rate is known or provided in the lease documents, the Company is required to use this rate. In cases in which the implicit rate is not known, the Company uses an estimated incremental borrowing rate.

Some leasing arrangements require variable payments that are dependent on usage or may vary for other reasons, such as payments for insurance and tax payments. The variable portion of lease payments is not included in the Company’s ROU assets or lease liabilities. Rather, variable payments, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred and are included in lease expenses recorded in selling and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.

The Company has lease agreements with both lease and non-lease components that are treated as a single lease component for all underlying asset classes. Accordingly, all expenses associated with a lease contract are accounted for as lease expenses.

The Company has elected to apply the short-term lease exception for all underlying asset classes. That is, leases with a term of 12 months or less are not recognized on the balance sheet, but rather expensed on a straight-line basis over the lease term. The Company’s leases do not include significant restrictions or covenants, and residual value guarantees are generally not included within its operating leases. As of September 30, 2023, the Company has one additional operating lease with a net present value of $0.5 million in Tokyo, Japan that will commence on October 1, 2023.

The components of lease expense and supplemental balance sheet information were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease expense related to ROU assets and liabilities	$	1,109	$	1,360	$	3,347	$	4,140
Other lease expense	318		229		491		633
Total lease expense	$	1,427	$	1,589	$	3,838	$	4,773

Other information related to leases was as follows (in thousands):

Supplemental Balance Sheet Information	September 30, 2023		December 31, 2022
Operating lease right-of-use assets, noncurrent	$	6,339	$	7,142
	September 30, 2023		December 31, 2022
Operating lease liabilities, current	$	4,175	$	4,223
Operating lease liabilities, noncurrent	7,511		9,094
Total operating lease liabilities	$	11,686	$	13,317

Weighted Average Remaining Lease Term	Years
Operating leases	3
Weighted Average Discount Rate
Operating leases	10.0	%

Maturities of operating lease liabilities as of September 30, 2023 were as follows (in thousands):

Year Ending September 30,
2024	$	5,078
2025	3,956
2026	2,806
2027	1,187
2028	366
Thereafter	94
Total future undiscounted lease payments	13,487
Less imputed interest	(1,801)
Total	$	11,686

For the three months ended September 30, 2023 and 2022, the Company paid $1.3 million and $1.4 million, respectively, for operating lease liabilities. For the nine months ended September 30, 2023 and 2022, the Company paid $4.2 million and $4.1 million, respectively, for operating lease liabilities.

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net income	$ 6,801	$ (405)	$ 16,708	$ 2,792

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Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Nature of Business

Nature of Business

Rimini Street, Inc. (the “Company”) is a global provider of end-to-end enterprise software support, products and services.

Basis of Presentation and Consolidation

Basis of Presentation and Consolidation

The Unaudited Condensed Consolidated Financial Statements, which include the accounts of the Company and its wholly-owned subsidiaries, are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by U.S. GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Unaudited Condensed Consolidated Financial Statements have been included. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Audited Consolidated Financial Statements for the year ended December 31, 2022, included in the Company’s 2022 Annual Report on Form 10-K as filed with the SEC on March 1, 2023 (the “2022 Form 10-K”).

The accompanying Unaudited Condensed Consolidated Balance Sheet and related disclosures as of December 31, 2022 have been derived from the Company’s audited financial statements. The Company’s financial condition as of September 30, 2023, and operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the year ending December 31, 2023.

Use of Estimates

Use of Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and

accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances to determine the carrying values of assets and liabilities that are not readily apparent from other sources. The Company’s accounting estimates include, but are not necessarily limited to, valuation of accounts receivable, valuation assumptions for stock options and leases, deferred income taxes and the related valuation allowances, and the evaluation and measurement of contingencies. To the extent there are material differences between the Company’s estimates and actual results, the Company’s future consolidated results of operations may be affected.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted Standards. The following accounting standards were adopted during fiscal year 2023:

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and amended in December 2022 with ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. ASU 2020-04 provides guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying U.S. GAAP to contracts, hedging relationships and other transactions impacted by reference rate reform. The provisions apply only to those transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. Adoption of the provisions of ASU 2020-04 are optional and are effective from March 12, 2020 through December 31, 2024, as amended by ASU 2022-06. During the three months ended March 31, 2023, the Company adopted the optional relief guidance provided under ASU 2020-04 after modifying its interest rate swap agreement in connection with the amendment of the Credit Facility to implement certain changes in the reference rate from LIBOR to the Secured Overnight Financing Rate (“SOFR”). The application of this expedient preserves the presentation of the derivative consistent with past presentation and did not have a material impact on our Unaudited Condensed Consolidated Financial Statements.

Earnings Per Share

The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share of Common Stock is computed by dividing net income attributable to common stockholders by the weighted average number of shares of basic Common Stock outstanding. Diluted earnings per share of Common Stock is calculated by adjusting the basic earnings per share of Common Stock for the effects of potential dilutive Common Stock shares outstanding such as stock options, restricted stock units and warrants.

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DEFERRED CONTRACT COSTS AND DEFERRED REVENUE (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Deferred Revenue

Activity for deferred contract costs consisted of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Deferred contract costs, current and noncurrent, as of the beginning of period	$	40,106	$	39,709	$	40,726	$	36,509
Capitalized commissions during the period	4,913		3,817		13,630		15,620
Amortized deferred contract costs during the period	(4,966)		(4,606)		(14,303)		(13,209)
Deferred contract costs, current and noncurrent, as of the end of period	$	40,053	$	38,920	$	40,053	$	38,920

Deferred revenue activity consisted of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Deferred revenue, current and noncurrent, as of the beginning of period	$	285,324	$	300,387	$	299,921	$	300,268
Billings, net	60,528		49,731		257,864		248,960
Revenue recognized	(107,453)		(101,931)		(319,386)		(301,041)
Deferred revenue, current and noncurrent, as of the end of period	$	238,399	$	248,187	$	238,399	$	248,187

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OTHER FINANCIAL INFORMATION (Tables)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands): 

	September 30,		December 31,
	2023		2022
Accrued sales and other taxes	$	5,760	$	6,878
Accrued professional fees	4,078		9,184
Accrued reorganization costs	—		2,526
Current maturities of capital lease obligations	353		333
Income taxes payable	1,285		2,229
Accrued litigation settlement costs	6,982		6,979
Other accrued expenses	4,260		4,547
Total other accrued liabilities	$	22,718	$	32,676

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DEBT (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of Carrying Value of Debt

Debt is presented net of debt discounts and issuance costs in the Company's balance sheets and consisted of the following (in thousands):

	September 30,		December 31,
	2023		2022
Credit Facility	$	71,583	$	74,792
Less current maturities	5,912		4,789
Long-term debt, net of current maturities	$	65,671	$	70,003

Schedule of Interest Expense

The components of interest expense are presented below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Credit Facility:
Interest expense	$	1,147	$	897	$	3,351	$	2,174
Accretion expense related to discount and issuance costs	245		245		728		728
Interest on finance leases	21		25		60		72
	$	1,413	$	1,167	$	4,139	$	2,974

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COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

The following table sets forth a summary of stock option activity under the Stock Plans for the nine months ended September 30, 2023 (shares in thousands): 

	Shares	Price (1)		Term (2)
Outstanding, December 31, 2022	6,994	$	6.17	5.5
Granted	1,912	4.20
Forfeited	(288)	5.95
Expired	(213)	6.64
Exercised	(57)	1.38
Outstanding, September 30, 2023 (3)(4)	8,348	5.75		5.8
Vested, September 30, 2023 (3)	5,106	6.22		3.8

(1)Represents the weighted average exercise price.

(2)Represents the weighted average remaining contractual term until the stock options expire in years.

(3)As of September 30, 2023, there was no aggregate intrinsic value of all stock options outstanding. As of September 30, 2023, there was no aggregate intrinsic value of vested stock options.

(4)The number of outstanding stock options that are not expected to ultimately vest due to forfeiture amounted to 0.4 million shares as of September 30, 2023.

Schedule of Stockholders Equity

The following table presents activity affecting the total number of shares available for grant under the Stock Plans for the nine months ended September 30, 2023 (in thousands):

 

Available, December 31, 2022	7,543
Newly authorized by Board of Directors	3,541
Stock options granted	(1,912)
RSUs and PSUs granted	(1,960)
Expired options under Stock Plans	213
Forfeited options under Stock Plans	288
Forfeited RSUs under Stock Plans	177
Repurchased shares of Common Stock	248
Issuance of Common Stock	(75)
Available, September 30, 2023	8,063

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

For the nine months ended September 30, 2023, the fair value of each stock option grant under the Stock Plans was estimated on the date of grant using the BSM option-pricing model, with the following weighted-average assumptions: 

Expected life (in years)	6.0
Volatility	55%
Dividend yield	0%
Risk-free interest rate	3.75%
Fair value per share of Common Stock on date of grant	$4.20

Schedule of Stock-based Compensation Expense

Stock-based compensation expense attributable to RSUs and stock options is classified as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	503	$	535	$	1,423	$	1,616
Sales and marketing	817		787		2,067		2,467
General and administrative	1,811		1,121		5,566		4,570
Total	$	3,131	$	2,443	$	9,056	$	8,653

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following tables set forth the computation of basic and diluted net income attributable to common stockholders (in thousands, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Income (loss) attributable to common stockholders:
Net income (loss)	$	6,801	$	(405)	$	16,708	$	2,792
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Weighted average number of shares of Common Stock outstanding:
Basic	89,228		87,965		88,942		87,441
Warrants	—		—		—		—
Stock options	—		—		18		543
RSUs	129		—		362		1,070
Diluted	89,357		87,965		89,322		89,054
Net income (loss) per share attributable to common stockholders:
Basic	$	0.08	$	—	$	0.19	$	0.03
Diluted	$	0.08	$	—	$	0.19	$	0.03

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following potential Common Stock equivalents were excluded from the computation of diluted net income per share for the respective periods ending on these dates, since the impact of inclusion was anti-dilutive (in thousands): 

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
RSUs and PSUs	2,767	1,243	1,270	460
Stock options	8,358	4,914	7,830	4,161
Warrants	3,440	18,128	3,440	18,128
Total	14,565	24,285	12,540	22,749

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FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS (Tables)

9 Months Ended

Sep. 30, 2023

Investments, All Other Investments [Abstract]

Schedule of Cash Equivalent And Short-Term Investment Balances

Listed below are the cash equivalent and investment balances as of September 30, 2023 (in thousands):

	Fair Value Level	Cost Basis		Unrealized Gains (Losses)		Recorded Basis		Cash Equivalents		Short-term Investments		Long-term Investments
Federal Agency Bonds	Level 2	$	14,895	$	165	$	15,060	$	195	$	14,160	$	705
US Treasury notes	Level 2	5,716		38		5,754		—		5,754		—
		$	20,611	$	203	$	20,814	$	195	$	19,914	$	705

Schedule of Amounts Recorded For Interest Rate Swap Agreements

The amounts recorded for the interest rate swap agreement are described below (in thousands):

Derivative Instrument	Balance Sheet Classification					September 30, 2023		December 31, 2022
Interest rate swap	Deposits and other					$	1,797	$	1,402
	Accumulated other comprehensive loss					1,408		1,107
		Three Months Ended September 30,				Nine Months Ended September 30,
Derivative Instrument	Income Statement Classification	2023		2022		2023		2022
Interest rate swap	Interest expense (benefit)	$	(235)	$	81	$	(600)	$	224

Schedule of Revenues by Geographic Regions

The following table shows revenues by geographic region (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States of America	$	55,740	$	53,423	$	163,146	$	159,616
International	51,713		48,508		156,240		141,425
Total	$	107,453	$	101,931	$	319,386	$	301,041

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LEASES (Tables)

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Schedule of Components of Lease Expense

The components of lease expense and supplemental balance sheet information were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease expense related to ROU assets and liabilities	$	1,109	$	1,360	$	3,347	$	4,140
Other lease expense	318		229		491		633
Total lease expense	$	1,427	$	1,589	$	3,838	$	4,773

Other information related to leases was as follows (in thousands):

Supplemental Balance Sheet Information	September 30, 2023		December 31, 2022
Operating lease right-of-use assets, noncurrent	$	6,339	$	7,142
	September 30, 2023		December 31, 2022
Operating lease liabilities, current	$	4,175	$	4,223
Operating lease liabilities, noncurrent	7,511		9,094
Total operating lease liabilities	$	11,686	$	13,317

Weighted Average Remaining Lease Term	Years
Operating leases	3
Weighted Average Discount Rate
Operating leases	10.0	%

Schedule of Maturities of Operating Lease Liabilities

Maturities of operating lease liabilities as of September 30, 2023 were as follows (in thousands):

Year Ending September 30,
2024	$	5,078
2025	3,956
2026	2,806
2027	1,187
2028	366
Thereafter	94
Total future undiscounted lease payments	13,487
Less imputed interest	(1,801)
Total	$	11,686

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LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)		3 Months Ended		9 Months Ended
	Jul. 20, 2021	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Working capital deficit				$ 56,700,000
Net income		$ 6,801,000	$ (405,000)	16,708,000	$ 2,792,000
Cash, cash equivalents, restricted cash and restricted cash equivalents		108,660,000	$ 118,993,000	108,660,000	$ 118,993,000	$ 109,434,000	$ 119,990,000
Short-term investments		19,914,000		19,914,000		$ 20,115,000
Deferred revenue, current		$ 214,100,000		214,100,000
Cost of goods and services sold (as percentage of revenue)		37.00%
Consulting agreement, term (in years)	5 years
Face amount of debt	$ 90,000,000
Annual minimum principal payments year one	5.00%
Annual minimum principal payments year two	5.00%
Annual minimum principal payments year three	7.50%
Annual minimum principal payments year four	7.50%
Annual minimum principal payments year five	10.00%
Operating and capital lease payments due within next twelve months		$ 5,600,000		$ 5,600,000

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DEFERRED CONTRACT COSTS AND DEFERRED REVENUE - Schedule of Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Capitalized Contract Cost, Net [Abstract]
Deferred contract costs, current and noncurrent, as of the beginning of period	$ 40,106	$ 39,709	$ 40,726	$ 36,509
Capitalized commissions during the period	4,913	3,817	13,630	15,620
Amortized deferred contract costs during the period	(4,966)	(4,606)	(14,303)	(13,209)
Deferred contract costs, current and noncurrent, as of the end of period	40,053	38,920	40,053	38,920
Change in Contract with Customer, Liability [Abstract]
Deferred revenue, current and noncurrent, as of the beginning of period	285,324	300,387	299,921	300,268
Billings, net	60,528	49,731	257,864	248,960
Revenue recognized	(107,453)	(101,931)	(319,386)	(301,041)
Deferred revenue, current and noncurrent, as of the end of period	$ 238,399	$ 248,187	$ 238,399	$ 248,187

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DEFERRED CONTRACT COSTS AND DEFERRED REVENUE- Narrative (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Revenue Recognition and Deferred Revenue [Abstract]
Performance obligation	$ 550,100			$ 532,300
Contract with customer, liability	238,399	$ 285,324	$ 299,921	$ 248,187	$ 300,387	$ 300,268
Deferred revenue, current	$ 214,073		$ 265,840

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OTHER FINANCIAL INFORMATION (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accrued sales and other taxes	$ 5,760	$ 6,878
Accrued professional fees	4,078	9,184
Accrued reorganization costs	0	2,526
Current maturities of capital lease obligations	353	333
Income taxes payable	1,285	2,229
Accrued litigation settlement costs	6,982	6,979
Other accrued expenses	4,260	4,547
Total other accrued liabilities	$ 22,718	$ 32,676
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Total other accrued liabilities	Total other accrued liabilities

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DEBT - Schedule of Carrying Value of Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Less current maturities	$ 5,912	$ 4,789
Long-term debt, net of current maturities	65,671	70,003
Line of Credit
Debt Instrument [Line Items]
Credit Facility	71,583	74,792
Less current maturities	5,912	4,789
Long-term debt, net of current maturities	$ 65,671	$ 70,003

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DEBT - Narrative (Details)								3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Feb. 28, 2023	Feb. 22, 2023 USD ($)	May 31, 2022 USD ($)	Jul. 20, 2021 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($) payment	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($) payment	Dec. 31, 2022 USD ($)	Jun. 30, 2022 USD ($) payment	May 28, 2022 USD ($)	May 27, 2022 USD ($)	May 18, 2022 USD ($)	Mar. 31, 2022 USD ($) payment	Feb. 27, 2022 USD ($)	Jan. 14, 2022 USD ($)
Debt Instrument [Line Items]
Value of shares authorized to be repurchased						$ 50,000,000								$ 50,000,000	$ 15,000,000			$ 15,000,000	$ 15,000,000
Consulting agreement, term (in years)							5 years
Annual minimum principal payments year one							5.00%
Annual minimum principal payments year two							5.00%
Annual minimum principal payments year three							7.50%
Annual minimum principal payments year four							7.50%
Annual minimum principal payments year five							10.00%
Proceeds from interest received								$ 200,000		$ 600,000
Interest rate swap agreement
Debt Instrument [Line Items]
Notional amount																$ 40,000,000
Fixed payer LIBOR Rate (percent)																2.9935%
Initial floating LIBOR rate (percent)																0.93557%
Embedded floor (percent)																0.00%
Proceeds from interest received								200,000		600,000
Line of Credit
Debt Instrument [Line Items]
Minimum fixed charge ratio							1.25
Debt instrument, leverage ratio							3.75
Consulting agreement, term (in years)							5 years
Annual minimum principal payments year one							5.00%
Annual minimum principal payments year two							5.00%
Annual minimum principal payments year three							7.50%
Annual minimum principal payments year four							7.50%
Annual minimum principal payments year five							10.00%
Line of Credit | 2023 Amended Credit Facility
Debt Instrument [Line Items]
Litigation liability limit					$ 10,000,000
Incremental borrowings available	$ 40,000,000							$ 40,000,000		$ 40,000,000
Periodic payment amount of principal	1,700,000	$ 1,100,000	$ 1,100,000
Number of required principal payments | payment									3		3		3				3
Principal payment									$ 1,100,000		$ 1,100,000		$ 1,100,000				$ 1,100,000
Prepaid indebtedness						5,000,000
Prepayment penalty						$ 0
Line of Credit | July 2021 Credit Facility
Debt Instrument [Line Items]
Proceeds from credit facility							$ 89,300,000
Issuance costs discount (percent)							0.375%
Incurred issuance costs							$ 4,200,000
Line of credit facility, interest rate								7.12%	3.94%	6.76%	3.06%
Fair value of the carrying amount	73,900,000							$ 73,900,000		$ 73,900,000		$ 77,800,000
Line of Credit | Level 2 | July 2021 Credit Facility
Debt Instrument [Line Items]
Fair value of the credit facility	$ 74,900,000							$ 74,900,000		$ 74,900,000		$ 78,800,000
Line of Credit | Minimum
Debt Instrument [Line Items]
Financial covenants, minimum liquidity							$ 20,000,000
Line of Credit | Adjusted Term SOFR | Minimum | 2023 Amended Credit Facility
Debt Instrument [Line Items]
Debt instrument, interest rate spread (percent)				1.75%
Line of Credit | Adjusted Term SOFR | Maximum | 2023 Amended Credit Facility
Debt Instrument [Line Items]
Debt instrument, interest rate spread (percent)				2.50%
Line of Credit | Base Rate | Minimum | 2023 Amended Credit Facility
Debt Instrument [Line Items]
Debt instrument, interest rate spread (percent)				0.75%
Line of Credit | Base Rate | Maximum | 2023 Amended Credit Facility
Debt Instrument [Line Items]
Debt instrument, interest rate spread (percent)				1.50%
Line of Credit | LIBOR | Minimum | July 2021 Credit Facility
Debt Instrument [Line Items]
Debt instrument, interest rate spread (percent)							1.75%
Line of Credit | LIBOR | Maximum | July 2021 Credit Facility
Debt Instrument [Line Items]
Debt instrument, interest rate spread (percent)							2.50%

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DEBT - Schedule of Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Debt Instrument [Line Items]
Interest on finance leases	$ 21	$ 25	$ 60	$ 72
Interest expense	1,413	1,167	4,139	2,974
Line of Credit
Debt Instrument [Line Items]
Interest expense	1,147	897	3,351	2,174
Accretion expense related to discount and issuance costs	$ 245	$ 245	$ 728	$ 728

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COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands					3 Months Ended		9 Months Ended
	Apr. 03, 2023	Feb. 23, 2023	May 28, 2022	May 27, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	May 31, 2022	Feb. 27, 2022	Jan. 14, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Value of shares authorized to be repurchased			$ 50,000	$ 15,000						$ 50,000	$ 15,000	$ 15,000
Stock repurchase program, period			4 years	2 years
Stock reacquired and retired (shares)					0	200	248	900
Stock reacquired and retired						$ 1,000	$ 1,000	$ 4,700
Stock Plans
Stock available for grant newly authorized by Board of Directors (shares)		3,500					3,541
Performance Units
Performance units (shares)							1,960
Stock-based compensation expense					$ 3,131	2,443	$ 9,056	8,653
Restricted Stock Units
Restricted stock units granted in period (shares)							1,960
Stock-based compensation expense					$ 3,131	2,443	$ 9,056	8,653
Stock Options
Stock options granted in period (shares)							1,912
Warrants
Warrants outstanding (shares)					3,400		3,400
Exercise price of warrants (in USD per share)					$ 5.64		$ 5.64
Stock options
Restricted Stock Units
Period for recognition of compensation costs not yet recognized related to nonvested awards							2 years
Stock Options
Stock options granted in period (shares)							1,900
Fair value of stock options granted							$ 4,500
Weighted-average grant date fair value per share of options granted in period (usd per share)							$ 2.33
Unrecognized compensation costs					$ 5,300		$ 5,300		$ 4,100
Period for recognition of compensation costs not yet recognized related to nonvested awards							2 years
Performance Units PSUs
Performance Units
Award vesting rights (percentage)							33.33%
Performance units (shares)	600
Performance units grant of price (USD per share)	$ 3.93
Stock-based compensation expense					400		$ 700
Restricted Stock Units
Restricted stock units granted in period (shares)	600
Share price of common stock on date of grant of RSUs (USD per share)	$ 3.93
Stock-based compensation expense					400		$ 700
Stock Options
Award vesting rights (percentage)							33.33%
2013 Plan | RSUs and PSUs
Performance Units
Performance units (shares)							1,400
Performance units grant of price (USD per share)							$ 4.16
Stock-based compensation expense					1,800	1,800	$ 5,700	6,600
Restricted Stock Units
Restricted stock units granted in period (shares)							1,400
Share price of common stock on date of grant of RSUs (USD per share)							$ 4.16
Aggregate fair value of shares underlying RSU's							$ 5,600
Stock-based compensation expense					1,800	$ 1,800	5,700	$ 6,600
Compensation costs not yet recognized of nonvested awards					$ 7,000		$ 7,000
Period for recognition of compensation costs not yet recognized related to nonvested awards							1 year 7 months 6 days
Stock Options
Period for recognition of compensation costs not yet recognized related to nonvested awards							1 year 7 months 6 days
2013 Plan | Stock options
Performance Units
Award vesting rights (percentage)							33.33%
Stock Options
Award vesting rights (percentage)							33.33%
Stock Plans | Stock options
Stock Options
Term of vested options (years)							10 years
Vesting eligibility target - adjusted EBITDA goal | Performance Units PSUs
Performance Units
Vesting eligibility (percent)					50.00%		50.00%
Vesting eligibility target - total revenue goal | Performance Units PSUs
Performance Units
Vesting eligibility (percent)					50.00%		50.00%
Minimum | Performance Units PSUs
Performance Units
Ultimate number of PSU's that may vest as a percentage of the target PSUs (percent)					0.00%		0.00%
Minimum | 2013 Plan | RSUs and PSUs
Restricted Stock Units
Award vesting period							12 months
Maximum | Performance Units PSUs
Performance Units
Ultimate number of PSU's that may vest as a percentage of the target PSUs (percent)					200.00%		200.00%
Maximum | 2013 Plan | RSUs and PSUs
Restricted Stock Units
Award vesting period							36 months

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COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS - Schedule of Stock Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended	9 Months Ended
	Mar. 31, 2023 $ / shares shares	Sep. 30, 2023 USD ($) $ / shares shares
Shares
Granted (shares)		1,912
Forfeited (shares)		(288)
Expired (shares)		(213)
Stock Options Plans
Shares
Outstanding at beginning of period (shares)	6,994	6,994
Granted (shares)		1,912
Forfeited (shares)		(288)
Expired (shares)		(213)
Exercised (shares)		(57)
Outstanding at end of period (shares)		8,348
Vested at end of period (shares)		5,106
Price
Outstanding at beginning of period (USD per share) | $ / shares	$ 6.17	$ 6.17
Granted (USD per share) | $ / shares		4.20
Forfeited (USD per share) | $ / shares		5.95
Expired (USD per share) | $ / shares		6.64
Exercised (USD per share) | $ / shares		1.38
Outstanding at end of period (USD per share) | $ / shares		5.75
Vested (USD per share) | $ / shares		$ 6.22
Term
Term of outstanding options	5 years 6 months	5 years 9 months 18 days
Term of vested options (years)		3 years 9 months 18 days
Aggregate intrinsic value of stock options outstanding | $		$ 0.0
Aggregate intrinsic value of vested stock options | $		$ 0.0
Outstanding stock options not expected to vest (in shares)		400

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COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS - Schedule of Stockholders Equity (Details) - shares shares in Thousands		3 Months Ended		9 Months Ended
	Feb. 23, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Shares Available for Grant [Roll Forward]
Available at beginning of period (shares)				7,543
Newly authorized by Board of Directors (shares)	3,500			3,541
Stock options granted (shares)				(1,912)
RSUs and PSUs granted (shares)				(1,960)
Expired options under Stock Plans (shares)				213
Forfeited options under Stock Plans (shares)				288
Forfeited RSUs under Stock Plans (shares)				177
Repurchased shares of Common Stock (shares)		0	200	248	900
Issuance of Common Stock (shares)				(75)
Available at end of period (shares)		8,063		8,063

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COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details)	9 Months Ended
	Sep. 30, 2023 $ / shares
Share-Based Payment Arrangement [Abstract]
Expected life (in years)	6 years
Volatility (as a percent)	55.00%
Dividend yield (as a percent)	0.00%
Risk-free interest rate (as a percent)	3.75%
Fair value per common share on date of grant (USD per share)	$ 4.20

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COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 3,131	$ 2,443	$ 9,056	$ 8,653
Cost of revenue
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	503	535	1,423	1,616
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	817	787	2,067	2,467
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 1,811	$ 1,121	$ 5,566	$ 4,570

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INCOME TAXES (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Federal statutory income tax rate (as a percent)	37.10%	12.10%	44.10%	65.10%

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COMMITMENTS AND CONTINGENCIES (Details) $ in Millions			1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended	24 Months Ended
	Oct. 25, 2023 USD ($)	Aug. 24, 2023 claim	Jan. 31, 2022 USD ($) claim	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2016 claim	Dec. 31, 2022 USD ($)
Loss Contingencies [Line Items]
Employer contribution				$ 1.0	$ 0.8	$ 2.6	$ 2.7
Current carrying value of guarantor obligations				$ 12.6		$ 12.6				$ 8.1
PeopleSoft Software Services | Revenue Benchmark | Product Concentration
Loss Contingencies [Line Items]
Revenue derived from support services provided (percent)				8.00%		9.00%
Oracle Litigation
Loss Contingencies [Line Items]
Number of claim found liable | claim									1
Damages awarded								$ 124.4
Payments for judgement ordered after fees and costs								$ 89.9
Rimini I Injunction Proceedings
Loss Contingencies [Line Items]
Damages awarded			$ 0.6
Number of claims ruled in favor of defendant | claim			5
Number of claims ruled in favor of plaintiff | claim			5
Number of claim items affirmed from prior court ruling | claim		4
Accrued expense				$ 6.9		$ 6.9				$ 6.9
Amount awarded to other party							$ 0.6
Rimini I Injunction Proceedings | Subsequent Event
Loss Contingencies [Line Items]
Damages awarded	$ 0.5
Reduction in sanctions awarded to plaintiff	$ 0.1

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RELATED PARTY TRANSACTIONS (Details)	9 Months Ended
	Sep. 30, 2023
Adams Street Partners | Related Party | Rimini Street, Inc.
Related Party Transaction [Line Items]
Ownership of common stock outstanding (as a percent)	26.40%

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EARNINGS PER SHARE - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net income (loss)	$ 6,801	$ (405)	$ 16,708	$ 2,792
Weighted average number of shares outstanding, basic (shares)	89,228	87,965	88,942	87,441
Weighted average number of shares outstanding, diluted (shares)	89,357	87,965	89,322	89,054
Basic (in dollars per share)	$ 0.08	$ 0	$ 0.19	$ 0.03
Diluted (in dollars per share)	$ 0.08	$ 0	$ 0.19	$ 0.03
Warrants
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive effect of securities (shares)	0	0	0	0
Stock options
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive effect of securities (shares)	0	0	18	543
RSUs and PSUs
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive effect of securities (shares)	129	0	362	1,070

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EARNINGS PER SHARE - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings (in shares)	14,565	24,285	12,540	22,749
RSUs and PSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings (in shares)	2,767	1,243	1,270	460
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings (in shares)	8,358	4,914	7,830	4,161
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings (in shares)	3,440	18,128	3,440	18,128

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FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS - Narrative (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($) institution	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) institution	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	May 18, 2022 USD ($)	Dec. 31, 2021 USD ($)
Concentration Risk [Line Items]
Investment of cash, and cash equivalents		$ 20,000		$ 20,000
Proceeds from interest received	$ 200		$ 600
Cash paid for interest			3,409	2,195
Operating lease right-of-use assets	6,339		6,339		$ 7,142
Cash, cash equivalents, restricted cash and restricted cash equivalents	108,660	118,993	108,660	118,993	109,434		$ 119,990
Cash and cash equivalents	108,233		108,233		109,008
Interest rate swap agreement
Concentration Risk [Line Items]
Notional amount						$ 40,000
Proceeds from interest received	200		600
Cash paid for interest		$ 100		$ 200
Single Financial Institution
Concentration Risk [Line Items]
Cash, cash equivalents, restricted cash and restricted cash equivalents	32,500		32,500		44,900
Current restricted cash	$ 400		$ 400		400
Three Financial Institutions
Concentration Risk [Line Items]
Number of financial institutions | institution	3		3
Cash and cash equivalents	$ 61,200		$ 61,200
Non-US
Concentration Risk [Line Items]
Property and equipment, net	2,500		2,500		1,800
UNITED STATES
Concentration Risk [Line Items]
Operating lease right-of-use assets	3,300		3,300		2,600
INDIA
Concentration Risk [Line Items]
Operating lease right-of-use assets	2,400		2,400		3,400
Rest of the world
Concentration Risk [Line Items]
Operating lease right-of-use assets	$ 700		$ 700		$ 1,200

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FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS - Schedule of Cash Equivalent And Short-Term Investment Balances (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Debt Securities, Available-for-Sale [Line Items]
Cost Basis	$ 20,611
Unrealized Gains (Losses)	203
Recorded Basis	20,814
Cash Equivalents
Debt Securities, Available-for-Sale [Line Items]
Recorded Basis	195
Short-term Investments
Debt Securities, Available-for-Sale [Line Items]
Recorded Basis	19,914
Long-term Investments
Debt Securities, Available-for-Sale [Line Items]
Recorded Basis	705
Federal Agency Bonds | Level 2
Debt Securities, Available-for-Sale [Line Items]
Cost Basis	14,895
Unrealized Gains (Losses)	165
Recorded Basis	15,060
Federal Agency Bonds | Cash Equivalents | Level 2
Debt Securities, Available-for-Sale [Line Items]
Recorded Basis	195
Federal Agency Bonds | Short-term Investments | Level 2
Debt Securities, Available-for-Sale [Line Items]
Recorded Basis	14,160
Federal Agency Bonds | Long-term Investments | Level 2
Debt Securities, Available-for-Sale [Line Items]
Recorded Basis	705
US Treasury notes | Level 2
Debt Securities, Available-for-Sale [Line Items]
Cost Basis	5,716
Unrealized Gains (Losses)	38
Recorded Basis	5,754
US Treasury notes | Cash Equivalents | Level 2
Debt Securities, Available-for-Sale [Line Items]
Recorded Basis	0
US Treasury notes | Short-term Investments | Level 2
Debt Securities, Available-for-Sale [Line Items]
Recorded Basis	5,754
US Treasury notes | Long-term Investments | Level 2
Debt Securities, Available-for-Sale [Line Items]
Recorded Basis	$ 0

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FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS - Schedule of Amounts Recorded For Interest Rate Swap Agreement (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Derivatives, Fair Value [Line Items]
Interest expense (benefit)	$ 1,413	$ 1,167	$ 4,139	$ 2,974
Deposits and other
Derivatives, Fair Value [Line Items]
Interest rate swap	1,797		1,797		$ 1,402
Accumulated other comprehensive loss
Derivatives, Fair Value [Line Items]
Interest rate swap	1,408		1,408		$ 1,107
Interest rate swap agreement
Derivatives, Fair Value [Line Items]
Interest expense (benefit)	$ (235)	$ 81	$ (600)	$ 224

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FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS - Schedule of Revenues by Geographic Regions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenue	$ 107,453	$ 101,931	$ 319,386	$ 301,041
United States of America
Disaggregation of Revenue [Line Items]
Revenue	55,740	53,423	163,146	159,616
International
Disaggregation of Revenue [Line Items]
Revenue	$ 51,713	$ 48,508	$ 156,240	$ 141,425

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LEASES - Narrative (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($) lease day	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) lease day	Sep. 30, 2022 USD ($)
Lessee, Lease, Description [Line Items]
Days notice required to terminate (days) | day	30		30
Operating lease payments	$ 1.3	$ 1.4	$ 4.2	$ 4.1
Number of additional leases not yet commenced | lease	1		1
Net present value of lease not yet commenced	$ 0.5		$ 0.5
Minimum
Lessee, Lease, Description [Line Items]
Operating lease renewal term (years)	1 month		1 month
Maximum
Lessee, Lease, Description [Line Items]
Operating lease renewal term (years)	5 years		5 years

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LEASES - Schedule of Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases [Abstract]
Operating lease expense related to ROU assets and liabilities	$ 1,109	$ 1,360	$ 3,347	$ 4,140
Other lease expense	318	229	491	633
Total lease expense	$ 1,427	$ 1,589	$ 3,838	$ 4,773

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LEASES - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Operating lease right-of-use assets, noncurrent	$ 6,339	$ 7,142
Operating lease liabilities, current	4,175	4,223
Operating lease liabilities, noncurrent	7,511	9,094
Total operating lease liabilities	$ 11,686	$ 13,317
Weighted average remaining lease term, operating leases (years)	3 years
Weighted average discount rate, operating leases (as a percent)	10.00%

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LEASES - Schedule of Maturities of Lease Liability (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Leases [Abstract]
2024	$ 5,078
2025	3,956
2026	2,806
2027	1,187
2028	366
Thereafter	94
Total future undiscounted lease payments	13,487
Less imputed interest	(1,801)
Total	$ 11,686	$ 13,317