RMNI US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Rimini Street, Inc. was formed in the State of Nevada in 2005 (“RSI” or “predecessor”) and, through a merger in 2017 with a public company, became Rimini Street, Inc., a Delaware corporation (referred to as the “Company”, “we” and “us”), trading on the Nasdaq Global Market under the ticker symbol “RMNI”. References to “management” or “management team” refer to the officers of the Company.

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A discussion regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 is presented below. A discussion regarding our financial condition and results of operations for fiscal 2023 compared to fiscal 2022 that are not in this Report can be found under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 28, 2024, which discussion is hereby incorporated by reference and is available on the SEC’s website at sec.gov.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and the related notes to those statements included in Item 8 of this Report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk Factors” in Item 1A and elsewhere in this Report. See also “Cautionary Note Regarding Forward-Looking Statements” contained in this Report.

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 on the basis of 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 Consolidated Financial Statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding.

Overview

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.

We founded Rimini Street to disrupt and redefine the enterprise software support market by developing and delivering innovative new solutions that filled a then-unmet need in the enterprise software market. We became and remain the leading independent software support provider for enterprise software based on both the number of active clients supported and recognition by industry analyst firms.

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 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.

To meet the needs of our clients and prospects and to service what we believe is a significantly expanded addressable market opportunity, we continue to expand our solutions portfolio (our “Solutions Portfolio”) to a wider array of enterprise software – including an expanded list of supported software for VMware; managed services for Oracle, SAP, Salesforce®, IBM, ServiceNow®, and open-source database software; and new solutions for security, interoperability, observability and consulting. We also offer a unified package of our services as Rimini ONETM, 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.

As of December 31, 2024, we employed over 2,040 professionals and supported over 3,080 active clients globally, including approximately 73 Fortune 500 companies and 20 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 support, products or services. For example, we count as two separate active client instances in circumstances where we provide support for two different products to the same entity. We market and sell our services globally, primarily through our direct sales force, and have wholly-owned subsidiaries in Australia, Brazil, Canada, UAE (Dubai), France, Germany, Hong Kong, India, Israel, Japan, Korea, Malaysia, Mexico, Netherlands, New Zealand, Poland, Singapore, Sweden, Taiwan, the United Kingdom and the United States. We believe our primary competitors for our support services are the enterprise software vendors whose products we service and support, including Oracle, SAP, IBM, Microsoft and VMware. We believe our primary competitors for our other solutions include systems integrators, security, interoperability and observability vendors; and IT consulting firms.

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Our subscription-based revenue provides a strong foundation for, and visibility into, future period results. We generated revenue of $428.8 million, $431.5 million and $409.7 million for the years ended December 31, 2024, 2023 and 2022, respectively, representing a year-over-year decrease of 1% for 2024 and 5% increase for 2023. We have a history of losses, and as of December 31, 2024, we had an accumulated deficit of $238.5 million. We recorded net loss of $36.3 million, net income of $26.1 million and net loss of $2.5 million for the years ended December 31, 2024, 2023 and 2022, respectively. We generated approximately 49% of our revenue in the United States and approximately 51% of our revenue from our international business for the year ended December 31, 2024.

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

We intend to continue investing for long-term revenue growth and profitability. We have invested and expect to continue investing in expanding our ability 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 enterprise software support, products, and services to address current and evolving client needs.

Recent Developments

Reference is made to Note 9 to our Consolidated Financial Statements included in Part II, Item 8 of this Report for a discussion of developments in our litigation with Oracle.

Additionally, reference is made to Note 5 to our Consolidated Financial Statements included in Part II, Item 8 of this Report for a discussion of developments related to our amended credit facility dated April 30, 2024, (as amended, the “2024 Credit Facility”).

Our Business Model

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. We also believe organizations are increasingly creating more complex IT environments that are a mixture of multiple technologies, business models and vendors, including perpetual license and subscription license software solutions, deployed across the client’s system and cloud computing providers (hybrid IT environments), and consisting of proprietary and non-proprietary open-source software, all from a multitude of different technology vendors. The costs associated with running and supporting these systems; failure and downtime; security exposure; integrating and monitoring; and maintaining the tax, legal and regulatory compliance of these software systems, have increased in both actual spend and as a percentage of the 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 December 31, 2024, 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 we believe 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 we believe 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 be asked to pay an additional fee for Rimini Street Extra Secure Support.

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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 this Report.

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 December 31, 2024, 2023 and 2022, we had approximately 3,080, 3,030 and 3,020 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 support, 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 December 31, 2024, 2023 and 2022, we had over 1,570, 1,530 and 1,510 unique clients, respectively.

The increase in both our active and unique client counts has been a combination of new unique client wins as well as cross-sales of new support, products and services to existing clients. 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 subscription revenue

We recognize subscription revenue on a daily basis. We define annualized subscription 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. Our annualized subscription revenue was approximately $415 million, $432 million and $420 million as of December 31, 2024, 2023 and 2022, respectively. Our annualized subscription revenue calculated as of December 31, 2024 excluded the one-time revenue recognized due to a client event as noted in the Results of Operations.

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-cancelable 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 subscription revenue as of the day prior to the start of the 12-month period. Our revenue retention rate was 88%, 90% and 92% for each of the years ended December 31, 2024, 2023 and 2022, respectively. The decline in our retention rate for the year ended December 31, 2024 was due to attrition during the fourth quarter of 2023 as well as the first and second quarters of 2024, as certain clients did not renew specific subscriptions for a variety of reasons. However, in some cases, these clients maintained or added subscriptions for other products and services. Our net billings during 2024 were about 1% higher than the prior year, with billings growth in the second half of the year partially offsetting the billings decline in the first half of the year.

Gross margin

We derive revenue through the sale 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.

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We define gross profit as the difference between revenue and the costs incurred in providing the software products and services. Gross margin is the ratio of gross profit divided by revenue. Our gross margin was approximately 60.9%, 62.3% and 62.8% for the years ended December 31, 2024, 2023 and 2022, respectively. We believe the gross margin provides an indication of how efficiently and effectively we are operating our business and serving our clients.

Factors Affecting Our Operating Performance

Litigation

The information from Item 3, Legal Proceedings and Item 1A, Risk Factors—Risks Related to Litigation—“We and our President, Chief Executive Officer and Chairman of the Board 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,” is incorporated by reference herein. For claims on which Oracle has prevailed or may prevail, we have been and could be required to pay substantial damages or reimbursement of legal expenses incurred in connection with the proceedings or for our current or past business activities or be enjoined from certain business practices. Any of these outcomes could result in a material adverse effect on our business.

Adoption of enterprise software products and services

We believe the existing market for independent enterprise software support services is underserved. We are a global provider of enterprise software products and services, the leading third-party support provider for Oracle and SAP software products, and a Salesforce partner. We also believe the existing market for our other enterprise software products and services is underserved, and that we have unique products and services that can meet client needs in the marketplace. For example, we provide security, interoperability and compatibility products and services with the Rimini Protect and Rimini Connect solutions.

We also believe that our total addressable market for our enterprise software products and services is substantially larger than our current client base and the products and services we currently offer. As a result, we believe we have the opportunity to expand our global client base and to further increase adoption of our software products and services within and across existing clients. However, as the market for independent enterprise software support services as well as our other software products and services is still emerging, it is difficult for us to predict the timing of when and if widespread acceptance will occur.

Sales cycle

We sell our services to our clients primarily through our direct sales organization. Our sales cycle, depending on the product or service, typically ranges from six months to a year from when a prospective client is engaged. While we believe that there is a significant market opportunity for our enterprise software support, products and services, we often must educate prospective clients about the value of our products and services, which can result in lengthy and multiple sales cycles, particularly for larger prospective clients, as well as the incurrence of significant marketing expenses. Our typical sales cycle with a prospective client begins with the generation of a sales lead through trade shows, industry events, online marketing, media interviews and articles, inbound calls, outbound calls or client, analyst or other referral. The sales lead is followed by an assessment of the prospect’s current software license contract terms where relevant, systems environment, products and releases being used, needs and objectives.

The variability in our sales cycle for software support services is impacted by whether software vendors or other current software support providers are able to convince potential clients that they should renew their software support contract with the existing vendor or procure or renew supplemental support services from the existing vendor, respectively. Another driver of our sales cycle variability is any announcement by a software vendor of their discontinuation, reduction or limitation of support services for a particular software product or release for which we continue to offer a competing support service. In addition, our sales cycle variability for software support is impacted by vendor discounts provided by software vendors to retain existing clients or attract potential clients. Finally, our litigation with Oracle around our support service offerings can also drive sales cycle variability as clients oftentimes perform their own legal due diligence, which can lengthen the sales cycle.

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 current conflicts and recent political and trade turmoil with China, amongst other global challenges. While we do not physically operate in some of

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these countries, we do have operations in Israel. These global events, together with inflationary pressures, have negatively impacted the global economy, causing the U.S. Federal Reserve to raise interest rates in 2022 and to reduce interest rates in 2024.

Uncertainty in changes to be made in laws and regulations by the new U.S. Presidential administration, along with uncertainty about the trade policies of such administration, particularly when pertaining to treaties, tariffs and other limitations on international trade, are causing economic and geopolitical uncertainty. 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 the economic disruptions described above had a significant net impact on our revenue or results of operations during the year ended December 31, 2024.

The extent to which rising inflation, interest rate changes and continuing global economic and geopolitical uncertainty 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 and geopolitical uncertainty. 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 I, Item 1A of this Report) for a discussion of these factors and other risks.

Key Components of Consolidated Statements of Operations

Revenue. We currently derive nearly all of our revenue from subscription-based contracts for software services. Revenue from these contracts is recognized ratably on a straight-line basis over the applicable service period.

Cost of revenue. Cost of revenue includes salaries, benefits and stock-based compensation expenses associated with our technical support and service delivery organizations, as well as allocated overhead and non-personnel expenses such as outside services, professional fees and travel-related expenses. Allocated overhead includes overhead costs for depreciation of equipment, facilities (consisting of leasehold improvements and rent) and technical operations (including costs for compensation of our personnel and costs associated with our infrastructure). We recognize expenses related to our technical support and service delivery organizations as they are incurred. All other costs include royalties paid for the use of products or services resold or licensed to clients, which were provided by other vendors.

Sales and marketing expenses. Sales and marketing expenses consist primarily of personnel costs for our sales, marketing and business development employees and executives, amortization expense associated with capitalized sales commissions, sales commissions that do not qualify for capitalization, travel related expenses, outside services and allocated overhead. Sales commissions are costs of obtaining customer contracts and are capitalized and then amortized over a period of benefit that we have determined to be 4 years.

General and administrative expenses. General and administrative expenses consist primarily of personnel costs for our administrative, legal, human resources, finance and accounting employees and executives. These expenses also include non-employee expenses, such as travel-related expenses, outside services, legal, auditing and other professional fees, and general corporate expenses, along with an allocation of our general overhead expenses.

Reorganization costs.These costs consist primarily of severance costs associated with reorganization plans that occurred in 2024 and 2022.

Litigation costs and related recoveries, net. Litigation costs consist of legal settlements, pre-judgment interest, and third-party professional fees to defend against litigation claims. In the past, we have had liability insurance policies where a portion of our defense costs and litigation judgments or settlements have been reimbursed under the terms of the policies. Such insurance recoveries were reflected as a reduction of litigation costs upon notification of approval for reimbursement by the insurance company.

Interest expense. Interest expense is incurred under our Credit Facilities and other debt obligations. The components of interest expense include the amount of interest payable in cash at the stated interest rate, interest that is payable in kind through additional borrowings, make-whole applicable premium, and accretion of debt discounts and issuance costs (“DDIC”) using the effective interest method. Interest expense also includes payments incurred or received as a result of the interest rate swap agreement.

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Other income (expenses), net. Other income (expenses), net consists primarily of gains or losses on foreign currency transactions and interest income.

Income taxes. The provision for income taxes is based on the amount of our taxable income and enacted federal, state and foreign tax rates, as adjusted for allowable credits and deductions. Our provision for income taxes consists primarily of foreign taxes for the periods presented, as our taxable income for U.S. federal and state purposes is offset by net operating losses. In assessing the realizability of deferred tax assets, we considered whether it is more likely than not that some portion or all of the deferred tax assets would not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We considered the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Results of Operations

Comparison of Years ended December 31, 2024 and 2023

Our consolidated statements of operations for the years ended December 31, 2024 and 2023 are presented below (in thousands):

Variance

Cost of revenue:

Operating expenses:

Non-operating expenses:

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(1)Includes the portion of costs for information technology, security services and facilities costs that are allocated to cost of revenue. In our Consolidated Financial Statements, such costs are 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 decreased from $431.5 million for the year ended December 31, 2023 to $428.8 million for the year ended December 31, 2024, a decrease of $2.7 million or 1%. The decline was due to a lower retention rate for clients beginning in the fourth quarter of 2023. It was partially offset by a one-time revenue recognition of $5.4 million due to a client event during the fourth quarter of 2024. On a regional basis, United States revenue declined from $220.0 million for fiscal 2023 to

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$210.0 million for fiscal 2024, a decline of $10.0 million or 5%, while international revenue grew from $211.5 million for fiscal 2023 to $218.8 million for fiscal 2024, an increase of $7.2 million or 3%.

Previously we announced the wind-down of services for Oracle PeopleSoft products. We are now reassessing our exit from the PeopleSoft business in light of the recent litigation rulings and the continued demand in the market.

Cost of revenue. Total cost of revenue increased from $162.5 million for the year ended December 31, 2023 to $167.7 million for the year ended December 31, 2024, an increase of $5.2 million or 3%. This increase was due to several items. First our costs for employee compensation and benefits increased by $1.9 million. We also experienced an increase in all other costs of $2.1 million, driven primarily by an increase in outside services of $1.3 million, as well as an increase of allocated costs for $1.7 million. Offsetting the increased costs, we experienced a decline in engineering consulting costs of $0.5 million.

The $1.9 million increase in cost of revenue attributable to employee compensation and benefits for the year ended December 31, 2024, was primarily due to an increase in salaries, wages and benefit costs due to a 11% increase in the average number of employees devoted to cost of revenue functions and annual pay increases.

As discussed in Note 9 to our Consolidated Financial Statements included in Part II, Item 8 of this Report, the District Court issued its findings of fact and conclusions of law in Rimini II, accompanied by the “Rimini II Injunction” in July 2023, which had been subject to an administrative stay. The District Court found infringement as to Oracle’s PeopleSoft and Oracle Database products.

A three-judge panel of the Ninth Circuit heard oral argument on our appeal of the District Court’s July 2023 Rimini II judgment and Injunction in June 2024, and the Ninth Circuit issued its decision on our appeal in December 2024. In its decision, the Ninth Circuit vacated multiple copyright rulings, reversed in part the District Court’s Lanham Act ruling, and vacated portions of the Rimini II Injunction that we appealed. In January 2025, Oracle filed a petition for panel rehearing and rehearing en banc in the Ninth Circuit, arguing that the panel had erred in its rulings regarding Section 117(a), derivative works, one of the security-related statements under the Lanham Act, and vacatur of portions of the injunction the Company appealed.

If the Rimini II Injunction becomes effective in a manner substantially similar to the version originally ordered by the District Court, it would impact our delivery of PeopleSoft support services to clients in the future, as well as potentially impact our previously announced plans to wind-down the offering of services for Oracle PeopleSoft products.

We would likely incur additional expenses for incremental labor costs and other contingencies in order to comply. Due to the large number of uncertainties surrounding the outcome of the ongoing litigation, we are unable to determine the final impact on future period costs until a decision is rendered. Any adverse outcome in our ongoing judicial proceedings could have a material adverse effect on our results of operations.

Gross Profit. Gross profit decreased from $269.0 million for the year ended December 31, 2023 to $261.0 million for the year ended December 31, 2024, a decline of $8.0 million or 3%. Gross margin for the year ended December 31, 2023 was 62.3% compared to 60.9% for the year ended December 31, 2024. Our revenue for the year ended December 31, 2024 declined by $2.7 million or 1% compared to the year ended December 31, 2023. Total cost of revenue for the year ended December 31, 2024 increased by $5.2 million, or 3%, compared to the year ended December 31, 2023. Given that the increase in the cost of revenue was 3% and we experienced a decline in revenue of 1%, we realized a decline of 150 basis points in our gross margin for the year ended December 31, 2024 compared to the year ended December 31, 2023. The lower gross margin for the year ended December 31, 2024 was primarily due to increasing employee compensation and benefits, all other costs and administrative allocations despite a slight decline in our revenue.

Sales and marketing expenses. As a percentage of our revenue, sales and marketing expenses have increased from 33% for the year ended December 31, 2023 to 35% for the year ended December 31, 2024. In dollar terms, sales and marketing expenses increased from $142.3 million for the year ended December 31, 2023 to $149.7 million for the year ended December 31, 2024, an increase of $7.4 million or 5%. This increase was primarily due to (i) a $6.3 million increase in travel and entertainment costs, primarily related to a sales training event held in January 2024 (ii) a $1.4 million increase in employee compensation and benefits, (iii) a $1.2 million increase in administrative allocated costs, and (iv) a $1.3 million increase of other costs. These costs increases were offset by (v) a $1.5 million decline in contract labor, (vi) a $0.8 million decline in trade show costs and (vii) a $0.5 million decline for advertising, marketing and promotional costs.

The $1.4 million increase in employee compensation and benefits for the year ended December 31, 2024 was primarily due to an increases of salaries, wages and benefits of $2.1 million offset by a reduction of stock-based compensation expense of $0.6 million.

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General and administrative. General and administrative expenses increased from $73.0 million for the year ended December 31, 2023 to $73.1 million for the year ended December 31, 2024, a slight increase of $40.0 thousand or 0.1%. This increase was primarily due to (i) an increase of computer software costs of $2.7 million, (ii) an increase of professional fees of $1.4 million, (iii) an increase in sales and other taxes of $0.8 million, (iv) an increase of depreciation and amortization expense of $0.6 million, (v) an increase in rent and facility costs of $0.5 million and (vi) an increase of contract labor of $0.4 million. These unfavorable variances were offset, in part, by (vii) a decrease in compensation and benefit costs of $3.6 million and (viii) an increase in our administrative allocations from general and administrative expenses of $2.9 million.

The $3.6 million decline attributable to employee compensation and benefits for the year ended December 31, 2024, was primarily due to a decrease in stock-based compensation expense of $2.1 million, as well as a reduction in salaries, wages, bonus and benefit costs of $1.5 million, which was primarily a result of reorganization activity that occurred during the year ended December 31, 2024.

We expect to continue to incur higher expenses associated with supporting the growth of our business, both in terms of size and geographical diversity, and to meet the increased compliance requirements associated with being a public company. Public company costs that are expected to increase in the future include 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, we currently expect our general and administrative expenses to increase in dollar terms in future periods.

Reorganization costs. During the year ended December 31, 2024, we began a process to evaluate and optimize our cost structure through a headcount reduction. We recognized reorganization costs of $0.1 million for the year ended December 31, 2023 compared to $5.7 million for the year ended December 31, 2024. The increased cost was due primarily to severance costs associated with our 2024 reorganization plan. We are likely to incur additional reorganization costs during 2025 as we continue to optimize our cost structure in areas where opportunities to streamline our operations exist.

Litigation costs and related recoveries, net. For the years ended December 31, 2024 and 2023, litigation costs and related recoveries, net consist of the following (in thousands):

Professional fees and other costs of litigation 6,081 7,033 (952)

Litigation costs, net of related insurance recoveries $ 64,593 $ 9,776 $ 54,817

Litigation expense increased from $2.7 million for year ended December 31, 2023 compared to $58.5 million for the year ended December 31, 2024. On September 23, 2024, the District Court issued its order on Oracle’s motion for attorneys’ fees and taxable costs. The District Court awarded to Oracle $58.2 million in attorneys’ fees and $0.3 million in costs. As a result, we expensed and paid $58.5 million for attorneys’ fees and costs during the year ended December 31, 2024. In December 2023, we reached an agreement with Oracle for $9.7 million for attorneys’ fees and costs, relating to the Rimini I Injunction contempt proceedings. We had previously accrued $6.9 million as an estimate of attorney’s fees and costs during the year ended December 31, 2021. As a result, we recorded an incremental expense of $2.8 million for the year ended December 31, 2023. This expense was offset by a payment received from Oracle of $0.1 million relating to the reduced sanctions award for the Rimini I Injunction contempt proceedings.

Professional fees and other defense costs associated with litigation decreased from $7.0 million for the year ended December 31, 2023 to $6.1 million for the year ended December 31, 2024, a decrease of $1.0 million. This decrease was primarily due to the timing of when costs were incurred for our appeal preparation of the Rimini II decision with the Ninth Circuit.

Interest expense. Interest expense increased from $5.5 million for the year ended December 31, 2023 to $6.3 million for the year ended December 31, 2024, an increase of $0.8 million. Interest expense increased primarily due to rising interest rates on our Credit Facilities, which increased from the effective interest rate of 8.2% for the year ended December 31, 2023 compared to an effective interest rate of 8.8% for the year ended December 31, 2024 under the term loan. In addition, we borrowed $15.0 million in October 2024 from our revolving line of credit, resulting in incremental interest expense of $0.2 million. Finally, we incurred $0.2 million of interest expense related to the Oracle attorneys’ fees and costs noted above during the year ended December 31, 2024.

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Other income (expenses), net. For the year ended December 31, 2023, we had other income, net of $3.0 million as compared to other income, net of $1.8 million for the year ended December 31, 2024, a decline of $1.2 million. For the year ended December 31, 2023, other income, net of $3.0 million was comprised of gains from cash equivalents and investments of $3.7 million which were offset, in part, by foreign exchange losses of $0.3 million and other costs of $0.4 million. For the year ended December 31, 2024, net other income of approximately $1.8 million was comprised of gains from cash equivalents and investments of $3.6 million which were offset significantly by foreign exchange losses of approximately $1.2 million and other costs of $0.6 million.

Income taxes. Income taxes changed from tax expense of $15.2 million for the year ended December 31, 2023 to a tax benefit of $0.4 million for the year ended December 31, 2024, a change of $15.5 million or 102%. This was primarily due to a decrease of income before taxes of $77.9 million in the current year period compared to the prior year period.

Liquidity and Capital Resources

Overview

As of December 31, 2024, we had a working capital deficit of $68.3 million and we had an accumulated deficit of $238.5 million. We recorded net loss of $36.3 million for the year ended December 31, 2024 and net income of $26.1 million for the year ended December 31, 2023, respectively.

Credit Facility

On April 30, 2024, we refinanced our Original Credit Facility, which had an outstanding principal balance of $70.9 million, with a new five-year senior secured credit facility (“2024 Credit Facility”) consisting of a $75.0 million term loan and a $35.0 million revolving line of credit. As of December 31, 2024, we had outstanding term loan borrowings under our 2024 Credit Facility of $73.1 million. In addition, we had availability of $20.0 million under our new revolving line of credit as of December 31, 2024. We borrowed $15.0 million under the revolving line of credit on October 21, 2024. On October 22, 2024, we paid the full amount of the court ordered attorneys’ fees and costs in the Rimini II litigation, as discussed in Note 9 to our Consolidated Financial Statements included in Part II, Item 8 of this Report.

We have a choice of interest rates under the 2024 Credit Facility between (a) SOFR and (b) Base Rate, in each case plus an applicable margin. The applicable margin remains the same as the Original Credit Facility and is based on our Consolidated Total Leverage Ratio (as defined in the 2024 Credit Facility) and whether we elect SOFR (ranging from 2.75% to 3.50%) or a Base Rate (ranging from 1.75% to 2.5%). Interest on the unused portion of the revolving credit line is at rates of between 25 to 40 basis points, depending on our Consolidated Total Leverage Ratio. Annual minimum principal payments over the five-year term for the 2024 Credit Facility are 5%, 5%, 7.5%, 7.5%, and 10%, respectively, with the remaining balance due at the end of the original term.

The 2024 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. We believe that we are in compliance with these financials covenants for the year ended December 31, 2024.

Please refer to Note 5 to the Consolidated Financial Statements included in Part II, Item 8 of this Report for information regarding our 2024 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 $258.0 million that is included in current liabilities as of December 31, 2024. Therefore, we believe that working capital deficit is not as meaningful in evaluating our liquidity since the costs of fulfilling our commitments to provide services to clients are currently limited to approximately 39.1% of the related deferred revenue based on our gross profit percentage of 60.9% for the year ended December 31, 2024.

For the next year, assuming that our operations are not significantly impacted by rising inflation, continued interest rate changes, other global economic or geopolitical uncertainties, or the litigation matters as disclosed in Note 9 to our Consolidated Financial Statements included in Part II, Item 8 of this Report, we believe that cash, cash equivalents and restricted cash of $89.2 million as of December 31, 2024, plus future cash flows from operating activities and our 2024 Credit Facility 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, expansion of sales and marketing activities, and the introduction of new and enhanced services offerings. We may also enter

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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. 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 2024 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.

As discussed below in greater detail, for the year ended December 31, 2024, we utilized cash flows of $38.8 million from our operating activities. We believe our operating cash flows for the year ending December 31, 2024 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 for the years ended December 31, 2024 and 2023 (in thousands):

Net cash provided by (used in):

The effect of foreign currency translation was unfavorable by $8.2 million and $2.2 million for the years ended December 31, 2024 and 2023, respectively, due to unfavorable foreign exchange impacts related to foreign cash. For the year ended December 31, 2024, the unfavorable foreign currency impact was primarily related to our foreign cash held in Japan as the Japanese yen weakened against the U.S. dollar.

Cash Flows Provided by Operating Activities

A key component of our business model generally requires that customers prepay us annually for the services we will provide over the following year or longer. As a result, we collect cash in advance of the date when the vast majority of the related services are provided. For the years ended December 31, 2024 and 2023, cash flows used in and provided by operating activities amounted to $38.8 million and $12.5 million, respectively.

For the year ended December 31, 2024, cash flows utilized by operating activities amounted to $38.8 million. We recognized net loss of $36.3 million, non-cash expenses, net amounted to $8.6 million, and unfavorable changes in operating assets and liabilities, net were $11.2 million for the year ended December 31, 2024. The primary reason for the net loss for the year ended December 31, 2024 was due to the District Court awarding Oracle $58.2 million for attorneys’ fees and $0.3 million in costs on September 23, 2024. In addition, we incurred interest expense of $0.2 million associated with the Oracle award during the three months ended December 31, 2024. We paid $58.5 million to Oracle in October 2024 and then later paid interest of $0.2 million in November 2024. These payments had a significant impact on our operating cash flows for the year ended December 31, 2024, resulting in us utilizing operating funds for the year ended December 31, 2024. For further information regarding our legal matters, please see Note 9 to our Consolidated Financial Statements included in Part II, Item 8 of this Report for a discussion of developments in our litigation with Oracle.

For the year ended December 31, 2024, the non-cash expenses, net of $8.6 million were comprised of the following: stock-based compensation expense of $9.5 million, amortization and accretion related to ROU assets and liabilities of $4.6 million, depreciation and amortization expense of $3.6 million, accretion and amortization of debt discount and issuance costs of $0.8 million, and deferred tax provision benefit of $9.8 million.

For the year ended December 31, 2024, changes in operating assets and liabilities were unfavorable by $11.2 million to the operating cash flows due to several items. The first item was an unfavorable change of $15.2 million for accounts receivable as we collected $416.3 million of accounts receivable during the year ended December 31, 2024 compared to billings, net of $423.0 million, for the year ended December 31, 2024. As a result, our days sales outstanding for accounts receivable was 71 days as of December 31, 2024. Accrued compensation, benefits, commissions and other liabilities were also unfavorable to our operating cash flows for $6.0 million during the year ended December 31, 2024. This was primarily due to payments of $2.7

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million for paid time off related to our employee terminations due in part to our reorganization plan. In addition, we experienced a decline in commission payments of $1.4 million during the year ended December 31, 2024. Also, accounts payable had an unfavorable operating cash flow impact of $0.6 million during the year ended December 31, 2024.

The unfavorable changes were offset by the following favorable changes. Prepaid expenses, deposits and other assets changed favorably by $6.1 million for the year ended December 31, 2024. The change in prepaid expenses, deposits and other assets was primarily due to a reduction of prepaid expense of $2.5 million related to our January 2024 sales event as there was no similar event in January 2025. In addition, we experienced a reduction in prepaid royalties and insurance of $2.6 million as we made fewer prepayments as of December 31, 2024. The favorable change in deferred contract costs of $2.3 million was due to capitalizing $17.2 million of commission costs and amortizing $19.6 million of these costs during the year ended December 31, 2024. Finally, our deferred revenue had a favorable impact on our operating cash flows of $2.2 million, primarily due to recognizing revenue of $428.8 million offset by recording billings, net of $423.0 million for the year ended December 31, 2024.

For the year ended December 31, 2023, cash flows provided by operating activities amounted to $12.5 million. We recognized net income of $26.1 million, non-cash expenses, net amounted to $27.5 million, and unfavorable changes in operating assets and liabilities, net were $41.1 million for the year ended December 31, 2023. For the year ended December 31, 2023, the non-cash expenses, net of $27.5 million were comprised of the following: stock-based compensation expense of $12.5 million, amortization and accretion related to ROU assets and liabilities of $4.5 million, depreciation and amortization expense of $2.8 million, accretion and amortization of debt discount and issuance costs of $1.0 million, and deferred tax provision expense of $6.6 million.

For the year ended December 31, 2023, changes in operating assets and liabilities were unfavorable by $41.1 million to the operating cash flows due to several items. The first item was an unfavorable change of $3.0 million for accounts receivable as we collected $421.0 million of accounts receivable during the year ended December 31, 2023 compared to billings, net of $418.5 million, for the year ended December 31, 2023. As a result, our days sales outstanding for accounts receivable was 71 days as of December 31, 2023. In addition, our deferred revenue had an unfavorable impact on our operating cash flows of $11.4 million, primarily due to recognizing revenue of $431.5 million offset by recording billings, net of $418.5 million for the year ended December 31, 2023. Also, accounts payable had an unfavorable operating cash flow impact of $2.0 million during the year ended December 31, 2023. Accrued compensation, benefits, commissions and other liabilities were also unfavorable to our operating cash flows for $17.8 million during the year ended December 31, 2023. This was primarily due to payments of $9.7 million for the Rimini I Injunction attorneys’ fees and costs settlement, of which we had accrued $6.9 million, $2.5 million related to our 2022 reorganization plan, and incremental professional fee payments of $5.6 million. Prepaid expenses, deposits and other assets changed unfavorably by $6.2 million and deferred contract costs of $0.8 million for the year ended December 31, 2023. The change in prepaid expenses, deposits and other assets of $6.2 million was primarily due to payments made for future sales and marketing activities, software, and insurance. The unfavorable change in deferred contract costs of $0.8 million was due to capitalizing $20.1 million of commission costs and amortizing $19.4 million of these costs during the year ended December 31, 2023.

Cash Flows Used in Investing Activities

Cash flows used in investing activities were primarily driven by investment purchases, investment sales and maturities, and capital expenditures for software development costs, computer equipment and leasehold improvements as we continued to invest in our business infrastructure and geographic locations. Cash provided by investing activities totaled $6.4 million and $3.1 million for the years ended December 31, 2024 and 2023, respectively.

For the year ended December 31, 2024, cash provided by investing activities of $6.4 million consisted of proceeds from sales and maturities of short-term investments of $17.3 million, offset by investment purchases of $7.5 million and capital expenditures of $3.4 million. The capital expenditures of $3.4 million consisted primarily of $2.5 million for capitalized software development costs, new computer equipment, and leasehold improvements in our U.S. entity, and $0.9 million for computer equipment at our foreign locations, primarily in India of $0.3 million and Brazil of $0.3 million.

For the year ended December 31, 2023, cash provided by investing activities of $3.1 million consisted of proceeds from sales and maturities of investments of $40.8 million, offset by investment purchases of $30.5 million and capital expenditures of $7.2 million. The capital expenditures of $7.2 million consisted primarily of $3.6 million for capitalized software development costs, new computer equipment, and furniture and fixtures in our U.S. entity, and $3.6 million for computer equipment at our foreign locations, primarily in India of $1.9 million, Brazil of $0.7 million, and Japan of $0.7 million.

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Cash Flows from Financing Activities

For the year ended December 31, 2024, cash provided by financing activities of $14.0 million was attributable to receiving proceeds of $15.0 million, under our 2024 Credit Facility’s revolving line of credit, and $2.9 million, under our 2024 Credit Facility’s term loan. These items were offset by principal payments of $3.6 million for 2024 Credit Facility’s term loan and finance lease payments of $0.4 million.

For the year ended December 31, 2023, cash utilized in financing activities of $6.9 million was attributable to principal payments related to the Credit Facility of $5.6 million, payments to repurchase shares of Common Stock totaling $1.0 million and finance lease payments of $0.3 million. These cash uses were offset by proceeds of $0.1 million received from stock option exercises.

Foreign Subsidiaries

Our foreign subsidiaries and branches are dependent on our U.S.-based parent company for continued funding. We currently do not intend to repatriate any amounts that have been invested overseas back to the U.S.-based parent. The imposition of the Transition Tax set forth in the U.S. Tax Cuts and Jobs Act of 2017 may reduce or eliminate U.S. federal deferred taxes on the unremitted earnings of our foreign subsidiaries. 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 December 31, 2024, we had cash and cash equivalents of $43.9 million in our foreign subsidiaries.

Contractual Obligations

The following table summarizes our contractual obligations on an undiscounted basis as of December 31, 2024 and the period in which each contractual obligation is due (in thousands):

Year Ending December 31:

Credit Facility:

Principal payments revolving line of credit — — — — 15,000 — 15,000

Lease obligations:

Off-Balance Sheet Arrangements

During the periods presented, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements.

Critical Accounting Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. 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

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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.

With respect to our significant accounting policies that are described in Note 2 to our Consolidated Financial Statements included in Item 8 of this Report, we believe that the following accounting policies involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations.

Income Taxes and Valuation of Deferred Tax Assets

We account for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). Significant judgment is required in determining income tax benefit or expense and in evaluating uncertainties under ASC 740. Deferred taxes are recorded for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are established when it is determined that it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company’s deferred tax assets are primarily the result of U.S. federal net operating loss carryforwards (“NOLs”) and tax credit carryforwards.

The realization of deferred tax assets is dependent upon on our ability to generate sufficient future taxable income during the periods in which those temporary differences become deductible, prior to the expiration of the tax attributes. The evaluation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns and forecasting future profitability.

We assessed the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize existing deferred tax assets within the applicable expiration period. While we believe that we have utilized a reasonable method to determine our deferred tax assets and the related release of our valuation allowance, should factors and conditions differ materially from those used by us, the actual realization of deferred tax assets could differ materially from the reported amounts.

Loss Contingencies

We are subject to various loss contingencies arising in the ordinary course of business. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. If some amount within a range of probable loss appears to be a better estimate than any other amount within the range, we accrue that amount. Alternatively, when no amount within a range of probable loss appears to be a better estimate than any other amount, we accrue the lowest amount in the range. If we determine that a loss is reasonably possible and the range of the loss is estimable, then we disclose the range of the possible loss if the upper end of the range is material. If we cannot estimate the range of loss, we will disclose the reason why it cannot estimate the range of loss, if there is a reasonable possibility that the amount of loss may be material. We regularly evaluate currently available information to determine whether an accrual is required, an accrual should be adjusted and if a range of possible loss should be disclosed.

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 adopted accounting standards, please refer to the section titled Recently Adopted Accounting Pronouncements under Note 2 to our Consolidated Financial Statements included in Item 8 of this Report.

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, “Income Taxes - Improvements to Income Tax Disclosures.” The guidance requires disaggregating income tax disclosures relating to the effective tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, though early adoption is permitted. The implementation of this ASU will result in additional disclosures and will not have an impact on our Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses," and in January 2025, the FASB issued ASU 2025-01, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date." ASU 2024-03 requires additional disclosure of the nature of expenses

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included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027 on a prospective basis. Both early adoption and retrospective application are permitted. We are assessing the impact of the adoption of these standards on our Consolidated Financial Statements and related disclosures.

Item 7A. 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. We generated between 47% and 51% of our revenue from our international business for the years ended December 31, 2024, 2023 and 2022. 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 evaluate the costs and benefits of entering into future hedge transactions for currencies other than the U.S. Dollar.

As of December 31, 2024, 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 $0.9 million in our Consolidated Statements of Operations and Comprehensive Income (Loss) and would have impacted the effect of foreign currency changes on cash by a plus or minus $4.6 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%. Effective February 28, 2023, we amended our Credit Facility to implement certain changes in the reference rate from LIBOR to SOFR. Accordingly, we were previously exposed to market risk due to variable interest rates based on LIBOR and are currently exposed to market risk due to variable interest rates based on SOFR.As of December 31, 2024, we had $73.1 million of outstanding debt under the term loan and $15.0 million of outstanding debt under the revolving line of credit as part of our 2024 Credit Facility. As of this date, a reasonably possible hypothetical adverse change of 100 basis points in would have resulted in an increase of approximately $0.9 million in annual interest expense. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and Note 5 of our Consolidated Financial Statements included in Part II, Item 8 of this Report for more information related to the Credit Facility.

Inflation Risk

With regards to inflation risk and other economic conditions, please refer to Item 1A. Risk Factors included in Part I of this Report.

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Item 8. Financial Statements and Supplementary Data

TABLE OF CONTENTS

Page

Report of Independent Registered Public Accounting Firm 62

Financial Statements:

Consolidated Balance Sheets 64

Consolidated Statements of Operations and Comprehensive Income (Loss) 65

Consolidated Statements of Stockholders’ Deficit 66

Consolidated Statements of Cash Flows 67

Notes to Consolidated Financial Statements 69

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

Rimini Street, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Rimini Street, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income (loss), stockholders’ deficit, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involves our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of revenue contracts with non-standard provisions

As discussed in Note 2 and Note 4 to the consolidated financial statements, the Company recognized $428.8 million in revenue which was primarily derived from the subscription-based software support revenue for the year ended December 31, 2024. A significant portion of the Company’s contracts contain non-standard provisions which require judgment to determine the appropriate accounting through the five-step framework prescribed by ASC Topic 606 – Revenue from Contracts with Customers.

We identified the evaluation of revenue contracts with non-standard provisions related to subscription-based software support revenue as a critical audit matter. This matter required a higher degree of auditor judgment to assess whether non-standard provisions in contracts and amendments were appropriately evaluated by management.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of an internal control over the Company's subscription-based software support revenue processes that included identifying and evaluating non-standard contract provisions. We applied auditor judgment to determine the nature and extent of procedures to be performed over subscriptions-based software support revenue. For a selection of revenue transactions, we developed independent expectations of the revenue recognized based on the provisions in contracts and amendments and compared them to the amounts recorded by the Company.

We also evaluated the overall sufficiency of the audit evidence over revenue by assessing the results of our procedures.

/s/ KPMG LLP

We have served as the Company’s auditor since 2016.

Santa Clara, California

February 27, 2025

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RIMINI STREET, INC.

Consolidated Balance Sheets

(In thousands, except per share amounts)

December 31,

ASSETS

Current assets:

Short-term investments — 9,826

Long-term assets:

Operating lease right-of-use assets 7,161 5,941

LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

Current liabilities:

Current maturities of long-term debt $ 3,093 $ 5,912

Accrued compensation, benefits and commissions 33,586 38,961

Operating lease liabilities, current 3,967 4,321

Long-term liabilities:

Long-term debt, net of current maturities 82,187 64,228

Operating lease liabilities, noncurrent 7,064 6,841

Commitments and contingencies (Note 9)

Stockholders’ deficit:

Accumulated other comprehensive loss (7,389) (4,167)

Total liabilities and stockholders’ deficit $ 369,063 $ 393,796

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

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RIMINI STREET, INC.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except per share amounts)

Years Ended December 31,

Operating expenses:

Impairment charges related to operating lease right-of-use assets — — 3,013

Litigation costs and related recoveries:

Professional fees and other costs of litigation 6,081 7,033 25,654

Insurance costs and recoveries, net — — (389)

Non-operating expenses:

Other comprehensive income:

Foreign currency translation gain (loss) (3,257) 442 (2,480)

Derivative instrument and other adjustments, net of tax 35 (414) 1,009

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

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RIMINI STREET, INC.

Consolidated Statements of Stockholders’ Deficit

(In thousands)

Shares Amount

Stock-based compensation expense — — 10,895 — — — 10,895

Exercise of stock options for cash 554 — 1,012 — — — 1,012

Restricted stock units vested 1,649 — — — — — —

Issuance of Common Stock 60 — — — — — —

Retired shares of Common Stock (853) — (4,740) — — — (4,740)

Other comprehensive loss — — — (1,471) — — (1,471)

Stock-based compensation expense — — 12,522 — — — 12,522

Exercise of stock options for cash 57 — 79 — — — 79

Restricted stock units vested 1,194 — — — — — —

Issuance of Common Stock 75 — — — — — —

Retired shares of Common Stock (248) — (1,014) — — — (1,014)

Other comprehensive income — — — 28 — — 28

Stock-based compensation expense — — 9,545 — — — 9,545

Restricted stock units vested 1,525 — — — — — —

Other comprehensive loss — — — (3,222) — — (3,222)

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

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RIMINI STREET, INC.

Consolidated Statements of Cash Flows

(In thousands)

Years Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Accretion and amortization of debt discount and issuance costs 765 973 973

Non-cash impairment charge — — 3,013

Amortization and accretion related to ROU assets 4,566 4,483 5,530

Changes in operating assets and liabilities:

CASH FLOWS FROM INVESTING ACTIVITIES:

Payment for purchase of short term investments (7,458) (30,525) (31,215)

Net cash provided by (used in) investing activities 6,448 3,077 (24,445)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of 2024 Credit Facility’s term loan 2,938 — —

Proceeds from the 2024 Credit Facility’s revolving line of credit 15,000 — —

Payments to repurchase and retire Common Stock — (1,014) (4,740)

Proceeds from exercise of employee stock options — 79 1,012

Principal payments on financing leases (360) (332) (313)

Net cash provided by (used in) financing activities 14,016 (6,892) (13,568)

Effect of foreign currency changes on cash (8,245) (2,234) (7,441)

Net change in cash, cash equivalents and restricted cash (26,630) 6,418 (10,556)

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

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RIMINI STREET, INC.

Consolidated Statements of Cash Flows, Continued

(In thousands)

Years Ended December 31,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Increase in payables for capital expenditures $ 39 $ — $ —

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

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BASIS OF PRESENTATION

Nature of Business

Rimini Street, Inc. was formed in the State of Nevada in 2005 (“RSI” or “predecessor”) and, through a merger in 2017 with a public company, became Rimini Street, Inc., a Delaware corporation (referred to as the “Company”, “we” and “us”), trading on the Nasdaq Global Market under the ticker symbol “RMNI”. The Company is a global provider of enterprise software support services. Its subscription-based software support products and services offer enterprise software licensees a choice of solutions that replace or supplement the support products offered by enterprise software vendors.

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Consolidation

The 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.

Liquidity

As of December 31, 2024, the Company’s current liabilities exceeded its current assets by $68.3 million, and the Company recorded a net loss of $36.3 million for the year ended December 31, 2024. As of December 31, 2024, the Company had available cash, cash equivalents and restricted cash of $89.2 million. As of December 31, 2024, the Company’s current liabilities included $258.0 million of deferred revenue whereby the costs of fulfilling the Company’s commitments to provide services to its customers was approximately 39% of the related deferred revenue for the year ended December 31, 2024.

On April 30, 2024, the Company amended its $90 million five-year term loan (the “Original Credit Facility”) into a new five-year term loan of $75 million (the 2024 Credit Facility,” and together with the Original Credit Facility, the “Credit Facilities”) . Annual minimum principal payments over the five year term for the 2024 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 2024 Credit Facility and the Original 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 $5.0 million. During the year ended December 31, 2024, 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. 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 9, the Company believes that current cash, cash equivalents, restricted cash, and future cash flow from operating activities and the 2024 Credit Facility 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 significant accounting estimates include, but are not necessarily limited to, the allowance for doubtful accounts receivable, valuation assumptions for stock options, operating lease right-of-use assets and liabilities, deferred income taxes and the related valuation allowances, accretion of discounts on debt, and the evaluation and measurement of contingencies. To the extent there are material differences between the Company’s estimates and the actual results, the Company’s future consolidated results of operation may be affected.

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Risks and Uncertainties

Inherent in the Company’s business are various risks and uncertainties, including its rapidly changing industry. These risks include the Company’s ability to manage its rapid growth and its ability to attract new customers and expand sales to existing customers, risks related to litigation, as well as other risks and uncertainties. In the event that the Company does not successfully execute its business plan, certain assets may not be recoverable, certain liabilities may not be paid and investments in its capital stock may not be recoverable. The Company’s success depends upon the acceptance of its expertise in providing services, development of sales and distribution channels, and its ability to generate significant revenues and cash flows from the use of this expertise.

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 of America. Deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. As of December 31, 2024 and 2023, the Company had cash and cash equivalents with a single financial institution for an aggregate of $32.0 million and $48.9 million, respectively. In addition, as of December 31, 2024, the Company had cash and cash equivalents with three other financial institutions totaling $44.9 million. The Company also had $0.4 million of restricted cash as of December 31, 2024. 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 customer base and their dispersion across different geographies and industries. The Company performs ongoing credit evaluations on certain customers 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.

Segments

The Company operates as a single operating segment determines and discloses segment information in accordance with ASC 280, Segment Reporting (“ASC 280”). See Note 13 for further information regarding the Company’s segment information.

Cash, Cash Equivalents and Restricted Cash

All highly liquid investments purchased with an original maturity of three months or less that are freely available for the Company’s immediate and general business use are classified as cash and cash equivalents. Cash and cash equivalents consist primarily of demand deposits with financial institutions. The restricted cash consists of demand deposits that are pledged as collateral for corporate credit card debts.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable is recorded at the invoiced amount when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. Accounts receivable is presented net of an allowance for doubtful accounts on the consolidated balance sheets. The Company records a provision for doubtful accounts based on historical experience and a detailed assessment of the collectability of its accounts receivable. In estimating the allowance for doubtful accounts, the Company considers, among other factors, the aging of the accounts receivable, its historical write-offs, the credit worthiness of customers, and general economic conditions. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may either be in excess or less than the estimated allowance.

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight-line method over the estimated useful life of the following assets:

Years

Computer equipment 1 - 3

Furniture and fixtures 3 - 7

Capitalized software costs 3 - 7

Leasehold improvements Up to 8 years, not to exceed lease term

Maintenance and repairs are expensed as incurred. Application development costs related to internal use software projects are capitalized and included in property and equipment. Preliminary planning activities and post implementation activities for internal use software projects are expensed as incurred. Construction-in-progress primarily consists of computer equipment and leasehold improvements that have not yet been placed into service for their intended use. Depreciation and amortization commence when assets are initially placed into service for their intended use.

Deferred Contract Costs

Costs incurred to obtain new client contracts and to extend existing client contracts are primarily comprised of sales commissions. Initial sales commissions are generally deferred and amortized over their estimated useful life, which is generally 4 years. We determined the period of benefit by taking into consideration the estimated life cycles for our customers, our technology and other factors. We recognized amortization expense related to deferred contract costs of $19.6 million, $19.4 million and $17.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company accounts for uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”), which applies to all tax positions related to income taxes. Under ASC 740, tax benefits are recognized when it is more-likely-than-not that a tax position will be sustained upon examination by the authorities. The Company recognizes interest and penalties accrued related to uncertain tax benefits as a component of income tax expense.

Impairment of Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is recognized only if the carrying amount of the long-lived assets is not recoverable and exceeds their fair value. The carrying amount of a long-lived asset is not recoverable if the carrying amounts of such assets exceed the estimates of future net undiscounted cash flows expected to be generated by such assets. An impairment charge is recognized for the amount by which the carrying amount of the asset, or asset group, exceeds its fair value. The Company recognized an impairment charge of $3.0 million for the year ended December 31, 2022, related to two of its office leases as the Company ceased use of a portion of the office space due to increased remote work since the COVID-19 pandemic. There was no such impairment charge for the years ended December 31, 2024 and 2023, respectively.

Debt Issuance Costs and Discounts

Debt issuance costs are costs incurred to obtain new debt financing or modify existing debt financing and consist of incremental direct costs incurred for professional fees and due diligence services, including reimbursement of similar costs incurred by the lenders. Debt issuance costs are allocated proportionately between funded and unfunded portions of debt. Amounts paid to the

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

lenders when a financing is consummated are a reduction of the proceeds and are treated as a debt discount. Debt issuance costs and discounts related to funded debt are presented in the accompanying consolidated balance sheet as a reduction in the carrying value of the debt and are accreted to interest expense using the effective interest method. Debt issuance costs related to unfunded debt is presented in the accompanying consolidated balance sheet as a long-term asset and are amortized using the straight-line method over the contractual term of the debt agreement. Unamortized deferred debt issuance costs are not charged to expense when the related debt becomes a demand obligation due to the violation of terms so long as it is probable that the lenders will either waive the violation or will agree to amend or restructure the terms of the indebtedness. If either circumstance is probable, the deferred debt issuance costs continue to be amortized over the remaining term of the initial amortization period. If it is not probable, the costs will be charged to expense. Debt discounts and issuance costs are collectively referred to as DDIC.

Revenue Recognition

Revenue is primarily derived from support services, and to a lesser extent, software licensing and related maintenance and professional services.

Revenue is recognized when performance obligations, as stipulated in the contracts, are transferred to a customer for an amount that reflects the consideration the Company expects to receive in exchange for those support services and service contracts. This occurs when the contracts are executed by both parties, the rights and obligations of the parties are identified, payment terms are identified, the contracts have commercial substance and collectability of consideration is probable. The Company’s contracts generally do not contain any refund provisions other than in the event of our non-performance or breach. However, the Company’s contracts may include non-standard terms negotiated with each respective client that may impact the amount and timing of revenue recognized.

The Company determines revenue recognition through the following steps:

•Identification of the contract with the customer.

•Identification of the performance obligations.

•Determination of the transaction price.

•Allocation of the transaction price to the performance obligations.

•Recognition of revenue when the performance obligations are satisfied.

Most of the Company’s contracts contain a single performance obligation for subscription support services. In a limited number of arrangements, the Company also licenses software and related maintenance services under term-based arrangements or provides professional services. The Company’s performance obligations are evaluated for whether they can be distinct or should be accounted for as one performance obligation and primarily consist of (i) subscription support services or (ii) professional services sold on a time and materials basis.

The transaction price is generally the same as the contractual price. Typically, the structure of our arrangements do not give rise to variable consideration. However, in those instances where variable consideration should exist, the Company includes in its estimates, additional revenue for variable consideration when it has an enforceable right, the amount can be estimated reliably and its realization is probable.

Subscription Services

The Company’s subscription support services are part of a comprehensive support program that helps clients keep their software and systems running smoothly and in full legal compliance. Subscription support services include product support (fixes and installation support), security, advanced support (performance tuning and interoperability), strategic roadmap services (upgrade process), global tax, legal and regulatory services, global security, proactive support services, strategic roadmap services, device and user interface support and account management services. Subscription contracts are generally non-cancelable and do not contain general rights of return. The Company’s support subscription is viewed as a stand-ready performance obligation comprised of a series of distinct services that is satisfied ratably over time as the services are provided. A time-elapsed output method is used to measure progress as the Company’s efforts are expended evenly throughout the period given the nature of the promise is a stand-ready service.

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Services

Other services include both software licensing services and professional services. The Company’s software licensing includes both internally developed software licenses as well as third party licenses. The Company’s professional services consist of various consulting services, which include project oversight, minor software customization or enhancement, and testing of client-developed software customization. Services may be provided solely by the Company, by a partner of the Company, or in combination with the Company's partners. The Company’s professional services are generally provided under a separate statement of work from our subscription support services. Revenue is recognized as services are performed.

Revenues generally include any taxes withheld by foreign customers and subsequently remitted to governmental authorities in those foreign jurisdictions. Foreign withholding taxes included in revenues amounted to $5.4 million, $4.7 million and $3.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The Company typically invoices its customers before the start of the support period, in annual and multi-year installments. When revenue recognized on a contract exceeds billings, the Company records a contract asset. For the years ended December 31, 2024 and 2023, contract assets amounted to $1.3 million and $0.8 million, respectively, and are included in prepaid expenses and other on the consolidated balance sheets. Deferred revenue is a contract liability that consists of billings issued that are non-cancellable in advance of revenue recognition. Deferred revenue is recognized as the Company satisfies its performance obligations over the term of the contracted service period.

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 December 31, 2024, remaining performance obligations amounted to $587.9 million, of which $281.2 million was billed and recorded as deferred revenue. The Company expects to recognize revenue on approximately $258.0 million of the billed remaining performance obligations over the next 12 months, with the remaining deferred revenue balance recognized thereafter.

Advertising

Advertising costs are charged to sales and marketing expense in the period incurred. Advertising expenses were $1.7 million, $2.1 million and $1.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Legal Costs

Legal fees and costs are charged to general and administrative expense as incurred, other than legal fees and costs that are accounted for as deferred offering costs and debt issuance costs.

Loss Contingencies

The Company is subject to various loss contingencies arising in the ordinary course of business. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. If some amount within a range of probable loss appears to be a better estimate than any other amount within the range, the Company accrues that amount. Alternatively, when no amount within a range of probable loss appears to be a better estimate than any other amount, the Company accrues the lowest amount in the range. If the Company determines that a loss is reasonably possible and the range of the loss is estimable, then the Company discloses the range of the possible loss if the upper end of the range is material. If the Company cannot estimate the range of loss, it will disclose the reason why it cannot estimate the range of loss, if there is a reasonable possibility that the amount of loss may be material. The Company regularly evaluates current information available to it to determine whether an accrual is required, an accrual should be adjusted and if a range of possible loss should be disclosed.

Stock-Based Compensation

The Company measures the cost of employee and director services received in exchange for all equity awards granted, based on the fair market value of the award as of the grant date. The Company computes the fair value of options using the Black-Scholes-Merton (“BSM”) option pricing model. The Company recognizes the cost of the equity awards over the period that services are provided to earn the award, usually the vesting period. For restricted stock units (“RSUs”), including performance units (“PSUs”) subject to performance conditions, the fair value of these awards is equal to the fair value of the Company’s

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

common stock on the date of grant. The PSU fair value is subject to the performance measures for those awards based on the level of achievement. Stock-based compensation cost is recognized as an expense on a straight-line basis over the requisite service period as if the award was, in substance, a single award. Stock-based compensation expense is recognized based on awards ultimately expected to vest whereby estimates of forfeitures are based upon historical experience.

Foreign Currency

The Company’s reporting currency is the U.S. Dollar, while the functional currencies of its foreign subsidiaries are their respective local currencies. The asset and liability accounts of the foreign subsidiaries are translated from their local currencies at the exchange rates in effect on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the period. Gains and losses resulting from the translation of the subsidiary balance sheets are recorded net of tax as a component of accumulated other comprehensive loss. Gains and losses from foreign currency transactions are recorded in other income and expense in the consolidated statements of operations and comprehensive loss. The tax effect has not been material to date.

Earnings (Loss) Per Common Share

Basic net income (loss) per common share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding for each period presented. Diluted net income per common share is computed using the treasury stock method by giving effect to the exercise of all potential shares of Common Stock, including stock options, restricted stock and warrants to the extent dilutive.

Reclassification of Prior Year Amounts

Prior year amounts of ROU assets for Brazil have been reclassified from Rest of World for consistency with the current year presentation. This reclassification had no effect on the Consolidated Financial Statements.

Recently Adopted Accounting Pronouncements

The following accounting standards were adopted during the fiscal year 2024:

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures.” The guidance expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this guidance for the year ending December 31, 2024. See Note 13 for further information regarding the Company’s segment information.

NOTE 3 — LEASES

Operating Leases

The Company has operating leases for real estate and equipment with an option to renew the leases in the range of one month to five years. Some of the leases include the option to terminate the leases upon a specified notice period with a penalty. The Company’s leases have various remaining lease terms ranging from three months to sixty-two months. 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 ROU asset and lease liability. As most of the Company’s leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments.

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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 December 31, 2024, the Company did not have any additional material operating leases that have not yet commenced.

The components of operating lease expense and supplemental balance sheet information for the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands):

Other information related to leases as of December 31, was as follows (in thousands):

Supplemental Balance Sheet Information 2024 2023

Operating lease right-of-use assets, noncurrent $ 7,161 $ 5,941

Operating lease liabilities, current $ 3,967 $ 4,321

Operating lease liabilities, noncurrent 7,064 6,841

Total operating lease liabilities $ 11,031 $ 11,162

Weighted Average Remaining Lease Term Years

Operating Leases 3.1

Weighted Average Discount Rate

Operating Leases 8.6 %

Maturities of operating lease liabilities as of December 31, 2024 were as follows (in thousands):

Years Ending December 31:

Thereafter 57

Total future undiscounted lease payments 12,536

Less imputed interest (1,505)

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2024 and 2023, the Company paid $5.7 million and $5.5 million, respectively, for operating leases.

Finance Leases

The Company has entered into various financing lease agreements for certain computer equipment, with one lease agreement outstanding as of December 31, 2024. The remaining lease term is 9 months with an annual implied interest rate of 7.9%. As of December 31, 2024, the future annual minimum lease payments under financing lease obligations are as follows (in thousands):

Years ending December 31:

Thereafter —

Total minimum lease payments 332

Less amounts representing interest (10)

Present value of minimum lease payments 322

Less current portion, included in accrued expenses (322)

Long-term obligation, included in other long-term liabilities $ —

As of December 31, 2024 and 2023, the gross value of leased equipment (included as a component of property and equipment on the consolidated balance sheets) was $5.0 million and was fully depreciated, respectively.

NOTE 4 — OTHER FINANCIAL INFORMATION

Cash, cash equivalents and restricted cash

As of December 31, 2024 and 2023, cash, cash equivalents and restricted cash were as follows (in thousands):

Total cash, cash equivalents and restricted cash $ 89,222 $ 115,852

Allowance for Doubtful Accounts

Activity in the allowance for doubtful accounts is set forth below for the years ended December 31, 2024, 2023 and 2022 (in thousands):

Allowance, beginning of year $ 656 $ 723 $ 576

Write offs, net of recoveries (515) (276) (71)

Prepaid Expenses and Other Current Assets

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2024 and 2023, prepaid expenses and other current assets consisted of the following (in thousands):

Foreign tax refunds receivable 2,846 3,228

Property and Equipment

As of December 31, 2024 and 2023, property and equipment consisted of the following (in thousands):

Depreciation expense was $3.6 million, $2.8 million and $2.5 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Deferred Contract Costs

Activity for deferred contract costs for the years ended December 31, 2024 and 2023 consisted of the following (in thousands):

Capitalized commissions during the period 17,227 20,144

Amortized deferred contract costs during the period (19,560) (19,377)

Other Accrued Liabilities, including Accrued Reorganization Costs

As of December 31, 2024 and 2023, other accrued liabilities consisted of the following (in thousands):

Accrued sales and other taxes $ 8,137 $ 7,963

Accrued reorganization costs 1,052 —

Current maturities of capital lease obligations 322 360

Accrued litigation settlement costs 201 82

During the second quarter of 2024, the Company began a process to optimize its cost structure. The reorganization activity for the years ended December 31, 2024 and 2023 consisted of the following (in thousands):

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued reorganization costs, as of the beginning of period $ — $ —

Foreign currency impact (2) —

Accrued reorganization costs, as of the end of period $ 1,052 $ —

Deferred Revenue

Activity for deferred revenue for the years ended December 31, 2024 and 2023 consisted of the following (in thousands):

Other Income (Expenses), Net

For the years ended December 31, 2024, 2023 and 2022, other expenses, net consisted of the following (in thousands):

Total other income (expenses), net $ 1,790 $ 2,989 $ (13)

NOTE 5 — DEBT

Debt is presented net of debt discounts and issuance costs on the Company’s balance sheets. As of December 31, 2024 and December 31, 2023, debt consisted of the following (in thousands):

Revolving line of credit 15,000 —

Long-term debt, net of current maturities $ 82,187 $ 64,228

For the years ended December 31, 2024, 2023 and 2022, the Company made quarterly principal payments totaling $3.6 million, $5.6 million and $4.5 million, respectively. On May 31, 2022, the Company also prepaid $5.0 million of indebtedness outstanding under its Credit Facility with no prepayment penalty.

On April 30, 2024, the Company refinanced its Original Credit Facility, which had an outstanding principal balance of $70.9 million, with the 2024 Credit Facility, a new five-year senior secured credit facility consisting of a $75.0 million term loan and a $35.0 million revolving line of credit.

For the term loan, the Company has a choice of interest rates between (a) the Secured Overnight Financing Rate (“SOFR”) and (b) a Base Rate (as defined in the 2024 Credit Facility), in each case plus an applicable margin. The applicable margin is based

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

on the Company’s Consolidated Total Leverage Ratio (as defined in the 2024 Credit Facility) and whether the Company elects SOFR (ranging from 2.75% to 3.5%) or Base Rate (ranging from 1.75% to 2.5%). Annual minimum principal payments over the five-year term for the 2024 Credit Facility are 5%, 5%, 7.5%, 7.5%, and 10%, respectively, with the remaining balance due at the end of the term.

For the years ended December 31, 2024 and 2023, the effective interest rate under the term loans for both the 2024 Credit Facility and the Original Credit Facility was 8.8% and 8.2%, respectively.

For the revolving line of credit, the Company has a choice of interest rates between (a) the Secured Overnight Financing Rate (“SOFR”) and (b) a Base Rate (as defined in the 2024 Credit Facility), in each case plus an applicable margin. The applicable margin is based on the Company’s Consolidated Total Leverage Ratio (as defined in the 2024 Credit Facility) and whether the Company elects SOFR (ranging from 2.75% to 3.5%) or Base Rate (ranging from 1.75% to 2.5%). The revolving line of credit bears interest on the unused portion of the credit line at rates of 25 to 40 basis points, depending on the Company’s Consolidated Total Leverage Ratio.

For the year ended December 31, 2024, the average interest rate under the revolving line of credit under the 2024 Credit Facility was 7.5%.

The refinancing was accounted for as a debt modification under ASC 470-50 as the terms of the 2024 Credit Facility were not substantially different than the terms of the Original Credit Facility. Under debt modification accounting, third party costs are expensed as incurred. During the year ended December 30, 2024, the Company expensed $0.2 million in third party transaction costs in connection with the modification. Fees paid to the creditor of $1.1 million were included with the remaining unamortized discount from the Original Credit Facility and are being amortized as an adjustment to interest expense over the remaining term of the 2024 Credit Facility.

Pursuant to a Guaranty and Security Agreement, dated April 30, 2024, among the Credit Parties (as defined in the 2024 Credit Facility) and Capital One, National Association, as agent (the “2024 Guaranty and Security Agreement”), the obligations under the 2024 Credit Facility are guaranteed by certain of the Company’s subsidiaries and are secured, subject to customary permitted liens and exceptions, by a lien on substantially all assets of the Credit Parties.

The 2024 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.

In February 2023, the Company amended its Original Credit Facility. The amendment implemented, among other things, certain changes in the reference rate from the London Interbank Offered Rate (“LIBOR”) to SOFR.

The fair value of the term loan under the 2024 Credit Facility was $73.9 million (Level 2 inputs) as of December 31, 2024 compared to the carrying value of $70.3 million as of December 31, 2024. The fair value of the term loan under the Original Credit Facility was $73.1 million (Level 2 inputs) as of December 31, 2023 compared to the carrying value of $72.3 million as of December 31, 2023.

Effective April 30, 2024, the Company’s interest rate swap agreement was amended in connection with the 2024 Credit Facility to match the new five-year term. The new interest rate swap agreement has a notional value of $40.0 million, with a fixed payer SOFR rate of 3.71% and an initial floating SOFR rate of 5.32%. The floating rate is reset at each month end and the term of the interest rate swap agreement coincides with that of the 2024 Credit Facility. See Note 12 for further information regarding the fair value accounting for the interest rate swap agreement. The modification of the interest rate swap agreement did not have a material impact on the Company’s Consolidated Financial Statements.

Under the 2024 Credit Facility, the Company has $20.0 million in available borrowings under the revolving line of credit as of December 31, 2024. On October 21, 2024, the Company borrowed $15.0 million under the revolving line of credit, which remained outstanding as of December 31, 2024.

Interest Expense

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of interest expense for the years ended December 31, 2024, 2023 and 2022 are presented below (in thousands):

Credit Facilities:

Interest expense under revolving line of credit 223 — —

NOTE 6 — CAPITAL STRUCTURE

Preferred Stock

Upon completion of the Delaware Domestication discussed in Note 1, the Company is authorized to issue 100,000,000 preferred shares with a par value of $0.0001 per share in one or more series. The Company’s board of directors is authorized to establish the voting rights, if any, designations, powers, preferences, special rights, and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Board of Directors had authorized the issuance of up to 180,000 shares of Series A Preferred Stock. All shares of the Series A Preferred Stock had been redeemed as of July 20, 2021.

Common Stock

As of December 31, 2024 and 2023, the Company is authorized to issue up to 1,000,000,000 shares of Common Stock, with a par value of $0.0001 per share. Holders of the Company’s shares of Common Stock are entitled to one vote for each share.

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 the next 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.

For the year ended December 31, 2024, the Company did not acquire any shares of Company Stock. For the year ended December 31, 2023, the Company acquired an aggregate 0.2 million shares of Common Stock on the open market at a total cost of $1.0 million. For the year ended December 31, 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.

NOTE 7 — STOCK-BASED COMPENSATION AND WARRANTS

Overview of Equity Incentive Plans

In October 2013, the Company established the 2013 Equity Incentive Plan, as amended and restated in July 2017 (the “2013 Plan”) that provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs"), performance units (“PSUs”). As of December 31, 2024, the Company had stock options of approximately 9.6 million shares, RSUs of approximately 4.8 million shares and PSUs of 0.8 million shares outstanding under the 2013 Plan. As of December 31, 2024, there are approximately 5.4 million shares available for future grants. The 2013 Plan will expire on July 31, 2027.

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The 2013 Plan provides for stock options to be granted to employees and directors at an exercise price not less than 100% of the fair value at the grant date. The options granted generally have a maximum term of 10 years from grant date and are exercisable upon vesting. Option 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. Options granted to directors generally vest for all of the shares one year after the grant date.

On the first day of each fiscal year beginning in 2018, the 2013 Plan provides that the number of authorized shares available for issuance will increase in an amount equal to the lesser of (i) 4.8 million shares, (ii) 4% of the outstanding shares of all classes of the Company’s Common Stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the Company’s Board of Directors may determine. The Board of Directors approved an increase in the authorized shares of 3.6 million shares on February 26, 2025.

Stock Options

The following table sets forth the summary of stock option activity under the Company’s Stock Plans for the years ended December 31, 2024, 2023 and 2022, (shares in thousands):

Shares Price (1) Term (2) Shares Price (1) Term (2) Shares Price (1) Term (2)

____________________

(1)Represents the weighted average exercise price.

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

(3)As of December 31, 2024, 2023 and 2022, the aggregate intrinsic value of stock options outstanding was $0.2 million, $0.1 million, and $0.2 million, respectively. As of December 31, 2024, 2023 and 2022, the aggregate intrinsic value of vested stock options was $2 thousand, $5 thousand and $0.2 million, respectively.

(4)The number of outstanding stock options that are not expected to ultimately vest due to forfeiture amounted to 0.9 million shares as of December 31, 2024.

The following table presents the total number of shares available for grant under the 2013 Plan for the years ended December 31, 2024, 2023 and 2022 (in thousands):

Forfeited options under Stock Plans 396 336 434

Forfeited RSUs and PSUs under Stock Plans 449 200 559

Shares issued — (75) (60)

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Stock Options

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 for the years ended December 31, 2024, 2023 and 2022:

Expected life (in years) 6.0 6.0 6.0

Dividend yield — % — % — %

Risk-free interest rate 4.3 % 3.8 % 2.7 %

The BSM model requires various highly subjective assumptions that represent management’s best estimates of the fair value of the Company’s Common Stock, volatility, risk-free interest rates, expected term, and dividend yield. The Common Stock option value is based on the Company’s closing market price on the date of grant.

The expected term represents the weighted-average period that options granted are expected to be outstanding giving consideration to vesting schedules. Since the Company does not have an extended history of actual exercises, the Company has estimated the expected term using a simplified method which calculates the expected term as the average of the time-to-vesting and the contractual life of the awards. The Company has never declared or paid cash dividends and does not plan to pay cash dividends in the foreseeable future; therefore, the Company used an expected dividend yield of zero. The risk-free interest rate is based on U.S. Treasury rates in effect during the expected term of the grant. The expected volatility is based on historical volatility of publicly-traded peer companies.

There were no stock option exercises for the year ended December 31, 2024. The intrinsic value of the vested employee options exercised during the years ended December 31, 2023 and 2022 was $0.2 million and $1.9 million, respectively. The weighted-average grant date fair value per share of employee options granted for the years ended December 31, 2024, 2023 and 2022 was $1.66, $2.30 and $2.64, respectively.

As of December 31, 2024, 2023 and 2022, total unrecognized compensation cost related to unvested stock options was $5.7 million, $4.6 million and $4.1 million, respectively. The remaining unrecognized costs are expected to be recognized on a straight-line basis over a weighted-average period of approximately 2.28 years.

Restricted Stock Units

For the year ended December 31, 2024, the Board of Directors granted RSUs under the 2013 Plan for an aggregate of approximately 4.3 million shares of Common Stock to non-employee members of the Board of Directors, officers and employees of the Company. These RSUs vest over periods 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. Based on the weighted average fair market value of the Common Stock of $2.64 per share on the date of grant, the aggregate fair value for the shares underlying the RSUs amounted to $11.3 million as of the grant date that is being recognized as compensation cost over the vesting period. Accordingly, compensation expense of $5.1 million, $7.4 million and $8.2 million was recognized for the years ended December 31, 2024, 2023 and 2022, respectively. The unrecognized portion of $8.7 million is expected to be charged to expense on a straight-line basis as the RSUs vest over a weighted-average period of approximately 2.33 years.

Performance Units

Under the 2024 Long-Term Incentive Plan, the Company granted 0.8 million PSUs with a fair market value of $2.47 on May 6, 2024. The PSUs were measured over a performance period beginning on January 1, 2024 and ending on December 31, 2024 (the “Performance Period”), but will remain subject to a continued service-based vesting requirement. Half of the PSUs awarded are eligible to vest based on the Company’s achievement against a target adjusted EBITDA goal for fiscal year 2024, 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 2024. The ultimate number of PSUs that may vest (as calculated, the “Earned PSUs”) range from zero to 200% of the granted PSUs.

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Under the 2023 Long-Term Incentive Plan, the Company granted 0.6 million PSUs on April 3, 2023 with a fair market value of $3.93 at the time of the grant. The Earned PSUs under the April 3, 2023 grant were earned at 151% which resulted in a grant of 0.3 million PSUs on April 3, 2024. Under the terms of the 2023 LTI Plan, the Earned PSUs 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 recognized compensation expense related to PSUs of $1.5 million and $1.5 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the unrecognized expense of $0.9 million net of forfeitures is expected to be charged to expense on a graded basis as the PSUs vest over a weighted-average period of approximately 1.89 years.

Stock-Based Compensation Expense

The aggregate stock-based compensation expense for stock options, RSUs and PSUs for the years ended December 31, 2024, 2023 and 2022 is classified as follows (in thousands):

Employee Stock Purchase Plan

At the Annual Meeting of Stockholders held on June 7, 2018, the Company’s stockholders approved the Rimini Street, Inc. 2018 Employee Stock Purchase Plan (the “ESPP”). The ESPP provides for the purchase by employees of up to an aggregate of 5.0 million shares of Common Stock. The purchase price per share at which shares are sold in an offering period under the ESPP will be equal to the lesser of 85% of the fair market value of the shares (i) on the first trading day of the offering period, or (ii) on the purchase date (i.e., the last trading day of the offering period). Offering periods will consist of twosix-month periods generally commencing twice each calendar year. The purpose of the ESPP is to provide an opportunity for eligible employees of the Company to purchase shares of the Company at a discount through voluntary contributions from such employees’ eligible pay, thereby attracting, retaining and rewarding such persons and strengthening the mutuality of interest between such employees and the Company’s stockholders. Through December 31, 2024, no offering period under the ESPP had commenced and no shares of Common Stock have been issued under the ESPP.

Outstanding Warrants

As of December 31, 2024, warrants were outstanding for an aggregate of 3.4 million shares of Common Stock and were exercisable at $5.64 per share. The Company’s remaining outstanding warrants are currently exercisable. The exercise price and number of shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, recapitalization, reorganization, merger or consolidation. A summary of the terms of outstanding warrants and the number of shares of RMNI Common Stock issuable upon exercise, is presented below as of December 31, 2024 and 2023 (in thousands, except per share amounts):

Issuance Date Expiration Date Exercise Price Number of Shares

_____________________

(1)The expiration date for the Origination Agent Warrant is the earlier to occur of the stated expiration date or the date when the Company experiences a change of control.

(2)The Origination Agent Warrant was issued upon consummation of the Mergers discussed in Note 1 and resulted in the elimination of the redemption features associated with two warrants issued in 2016.

NOTE 8 — INCOME TAXES

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2024, 2023 and 2022, income (loss) before income taxes was as follows (in thousands):

For the years ended December 31, 2024, 2023 and 2022, the reconciliation between the income tax benefit computed by applying the statutory U.S. federal income tax rate to the pre-tax income before income taxes and total income taxes recognized in the financial statements was as follows (in thousands):

Income tax benefit attributable to U.S. states, net 112 491 53

Permanent differences:

Global intangible low taxed income (170) (40) (206)

Foreign rate differential and foreign tax credits (499) (600) (868)

Decrease in valuation allowance 75 16 82

Total income tax (expense) benefit $ 371 $ (15,173) $ (6,285)

For tax years beginning after January 1, 2018, Global Intangible Low Tax Income (GILTI) requires companies to report income from its foreign subsidiaries that exceeds 10% of the calculated deemed tangible return on its fixed assets. The Company determined the tax effect (before valuation allowance) of the GILTI income inclusion for the year ended December 31, 2024 was $0.8 million.

Under U.S. GAAP, the Company is allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). The Company has elected to treat GILTI as a current period expense and will not record GILTI deferred taxes.

For the years ended December 31, 2024, 2023 and 2022, income taxes consisted of the following (in thousands):

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Current income tax expense:

Federal $ — $ — $ —

Deferred income tax (expense) benefit:

Total deferred income tax (expense) benefit 9,830 (6,645) 2,071

Total (provision) benefit for income taxes $ 371 $ (15,173) $ (6,285)

As of December 31, 2024 and 2023, the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows (in thousands):

Deferred income tax assets:

Accounts payable and accrued expenses 13,302 15,449

Tax credit carryforwards 230 305

Valuation allowance for deferred income tax assets (225) (300)

Deferred income tax liabilities:

Operating lease right-of-use assets (966) (733)

Net deferred tax assets consist of U.S. and foreign net deferred tax assets which are expected to be realized in the future, and that are included in long-term assets in the accompanying consolidated balance sheets. For the years ended December 31, 2024 and 2023, the change in the valuation allowance was a net decrease of $0.1 million and $16 thousand, respectively. The valuation allowance for the year ended December 31, 2024 relates solely to federal foreign tax credits that are not expected to be utilized in the future.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on management’s analysis of all available positive and negative evidence, the Company has determined that a valuation allowance is not required to be recorded on its federal and state deferred tax assets as of December 31, 2024 and 2023, respectively.

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RIMINI STREET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS