Rimini Street keeps growing despite specter of Oracle lawsuit
Effective sales strategies and shifting CIO priorities are helping Rimini grow, according to one analyst
By Chris Kanaracus | Published: 18:30, 28 July 2014
Rimini Street is continuing to rapidly grow revenue for its third-party software support business despite its ongoing litigation with Oracle.
Revenue for the quarter ended June 30 rose 37 percent to US$20.4 million, while the number of active support clients jumped 30 percent to 574, Rimini Street said in an announcement Monday.
"Our performance for the fiscal second quarter exceeded sales plan for both new clients and renewing clients," Rimini Street CEO Seth Ravin said in a statement.
It's not all good news for Rimini Street, which filed documents earlier this year in preparation for an initial public offering. The company lost $12.2 million and $9.9 million in 2011 and 2012, respectively, according to its S-1 filing.
A Rimini Street spokesman declined Monday to provide an update on Rimini's profitability, or lack thereof.
Rimini Street provides support for SAP and Oracle software customers who no longer wish to pay for vendor-provided maintenance, offering a 50 percent discount on their current support bills. These customers may have stable systems and little desire to apply the continual upgrades provided under a vendor support contract.
Ravin is a co-founder of TomorrowNow, a former SAP subsidiary that offered similar services to Oracle customers. Oracle famously sued SAP in 2007 over TomorrowNow's business practices, saying they infringed on its copyrights, and subsequently won a sizable judgment after SAP admitted liability. The matter is not yet concluded, however.
Oracle sued Rimini Street in 2010, saying Ravin had duplicated TomorrowNow's "corrupt business model." Rimini has denied wrongdoing, saying it operates within the bounds of its customer's license rights.
However, in February a judge ruled that Rimini had infringed copyrights on Oracle's PeopleSoft software while supporting customers. The case has yet to go to trial.
There are a number of reasons for Rimini's continued growth, according to analysts.
"They've put a very well-trained sales team together that has managed to overcome the common objections and counter sales strategies that the existing vendors will apply," said analyst Ray Wang, chairman and founder of Constellation Research. "It's pretty effective. I was watching how they addressed all the client issues in a very objective way at a few of our clients."
"The other factor is customers are moving quickly onto other solutions and don't always see the legacy vendor as their solution," Wang said. "As the shift away from the CIO in buying of new technologies continues, many CIOs have to address cost reduction as a key issue instead of new technology purchases with the legacy vendor."
It's also worth noting that Rimini offers indemnification for customers, said analyst Frank Scavo, managing partner of IT consulting firm Strativa, via email.
The Oracle case is helping to clarify the rules of engagement for providing third-party support, he added.
"Going forward after the lawsuit is resolved, I'm highly confident that third-party maintenance providers such as Rimini Street will continue to do business," Scavo said.
Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com