Rimini Street (RMNI) Q2 2026: AI-Driven Service Revenue Rises 10% as Partner Channel Expands
Rimini Street’s Q2 showed accelerating adoption of its AI-enabled ERP solutions, with adjusted service revenue up 10% year-over-year, and a maturing partner ecosystem that is beginning to drive larger deals and pipeline growth. Management reiterated its Rule of 20 targets, balancing growth investments with disciplined cost management, while signaling that AI-led innovation and channel leverage are reshaping the company’s go-to-market and operational model for the second half. Investors should watch for margin recovery as upfront sales and product costs normalize and partner momentum sustains pipeline conversion.
Summary
- AI Solutions Drive New Growth: Adoption of Rimini’s AI ERP offerings is expanding, fueling higher-value client wins and pipeline strength.
- Partner Ecosystem Gains Traction: Indirect sales channels and alliances are contributing to larger transactions and a broader market reach.
- Margin Focus as Growth Investments Peak: Upfront costs for sales and new product launches are expected to moderate, supporting margin recovery in 2027.
Business Overview
Rimini Street provides third-party support, managed services, and AI-enabled solutions for enterprise software, specializing in maintenance and modernization of ERP (Enterprise Resource Planning) systems like SAP and Oracle. The company’s revenue is primarily generated from recurring service subscriptions (93% of total), with a growing portfolio of AI-driven products, including Rimini Agentic UX and Rimini Govern for AI, designed to help clients innovate without costly ERP upgrades or migrations. Major segments include core support services, AI and automation solutions, and consulting, with a strategic shift underway from legacy PeopleSoft support to next-generation offerings.
Performance Analysis
Rimini Street delivered Q2 revenue of $111.1 million, up 6.7% year-over-year, with adjusted revenue (excluding PeopleSoft) up 10%. The company’s core subscription model remains resilient, with a 90% revenue retention rate and 84% of subscription revenue non-cancellable for at least 12 months. Growth in annualized recurring revenue (ARR) excluding PeopleSoft reached $401.1 million, up 8.1% year-over-year, reflecting traction in new offerings and longer client commitments.
Gross margin improved to 60.9%, exceeding a key management target, even as sales and marketing expenses rose to support new product launches and expanded go-to-market efforts. Billings declined 8.8% year-over-year due to renewal timing, but first-half billings grew 3.2%, and pipeline metrics remain robust, with double-digit year-over-year growth and a 30% close rate. The wind-down of PeopleSoft support continues as planned, now at 3% of total revenue, down from 8% in 2024.
- AI-Driven Revenue Mix Shift: Adoption of Rimini’s agentic AI ERP solutions is driving higher-value, multi-year deals and broadening the customer base.
- Partner Channel Acceleration: The indirect channel is contributing larger deals, with million-dollar transactions and growing influence on new bookings.
- Cost Structure in Transition: Elevated sales and marketing spend reflects front-loaded investments in salesforce expansion and AI product launches, expected to peak in 2026.
Cash flow conversion remains strong at 118% year-to-date, and the company further reduced debt by $10 million, reinforcing a disciplined capital allocation stance. Management reiterates its full-year guidance, targeting 4% to 6% revenue growth and 12.5% to 15.5% adjusted EBITDA margin, consistent with its Rule of 20 commitment.
Executive Commentary
"We have now delivered four consecutive quarters of improved growth metrics in alignment with the vision, strategy, and plan we shared at the 2025 Investor Day. And we reiterate our Rule of 20 guidance for fiscal 2026. Second quarter results demonstrate strong demand for our core Rimini support offering, increasing adoption of our broader enterprise software service portfolio and improving sales execution."
Seth Ravin, CEO and President
"We continue to invest strategically in new AI-driven innovation offerings while streamlining global operations to enhance scale and efficiency. Looking ahead, we remain focused on profitable growth, disciplined cost management, and maintaining a strong balance sheet."
Michael Perica, CFO
Strategic Positioning
1. AI-Led Innovation as a Differentiator
Rimini’s transition from a cost-saving support provider to an AI-powered innovation partner is central to its competitive strategy. The company’s agentic AI ERP solutions and governance offerings deliver modernization and automation directly atop legacy ERP systems, enabling clients to innovate without disruptive migrations. This “over-the-top” approach is resonating with clients seeking to reduce total operating costs and accelerate ROI on existing software investments.
2. Channel and Alliance Maturation
The indirect sales ecosystem is evolving from early-stage to a “jog” phase, with more million-dollar deals and deeper integration with partners like ServiceNow. Rimini is investing in channel managers and strategic alliances, leveraging these relationships to extend reach, lower cost of sale, and access new client segments. The company now shares over 1,000 clients with ServiceNow, providing a strong base for joint go-to-market efforts.
3. Sales Model Realignment and Talent Shift
Rimini has restructured its sales force, separating “hunters” focused on new logo acquisition from “farmers” managing renewals and cross-sell. This targeted approach has reversed prior net client losses, with Q2 showing net client gains for the first time in several years. The company is also retraining and upgrading its salesforce to engage on AI and innovation topics, reflecting the evolving complexity of client needs.
4. PeopleSoft Wind-Down and Portfolio Shift
The deliberate exit from PeopleSoft support is freeing resources and shifting the revenue mix toward higher-growth, higher-margin offerings. With PeopleSoft now at just 3% of revenue, Rimini is executing on its multi-year plan to sunset legacy support and concentrate on AI, automation, and consulting services that align with client modernization demands.
5. Capital Allocation and Margin Discipline
Management is balancing growth investments with disciplined capital allocation, evidenced by debt reduction and a strong cash position. While sales and marketing costs are currently elevated due to new product launches and salesforce expansion, these are expected to normalize as revenue from new contracts ramps, supporting margin recovery in 2027 and beyond.
Key Considerations
Rimini Street’s Q2 reflects a company in active transformation, leveraging its AI solutions and partner ecosystem to reposition for sustainable growth and margin expansion. The interplay of front-loaded costs, pipeline momentum, and revenue mix shift will be critical to watch in the coming quarters.
Key Considerations:
- AI Solutions as Growth Engine: Client adoption of agentic AI ERP solutions is translating into larger, multi-year contracts and higher recurring revenue.
- Partner Channel Leverage: The maturing indirect channel is beginning to drive substantial deal flow and could lower future customer acquisition costs.
- Salesforce Evolution: The shift to a hunter-farmer model and retraining on AI is improving new logo wins and retention, but salesforce turnover and skill gaps remain a watchpoint.
- Cost Structure Rebalancing: Elevated sales and marketing spend is likely at or near peak, with margin upside as investments convert to revenue and operational leverage improves.
- Pipeline and Retention Visibility: Double-digit pipeline growth and a 30% close rate provide confidence in second-half targets, but ongoing execution will be key.
Risks
Key risks include execution on salesforce transformation, potential delays in partner channel ramp, and the challenge of maintaining gross margin as new product and service launches require upfront investment. Competitive pressure from incumbent ERP vendors and regulatory changes in software licensing could also impact client decisions and pricing power. Management’s ability to balance growth and profitability will be tested as the company navigates these cross-currents.
Forward Outlook
For Q3 2026, Rimini Street guided to:
- Revenue of $110 to $112 million
For full-year 2026, management reiterated guidance:
- Revenue growth of 4% to 6%
- Adjusted EBITDA margin of 12.5% to 15.5%
Management highlighted several factors that support the outlook:
- Healthy double-digit pipeline growth and high close rates provide visibility into second-half bookings.
- Sales and marketing costs are expected to normalize as revenue from new contracts ramps and product launches mature.
Takeaways
Rimini Street’s Q2 results reinforce its pivot toward AI-enabled services and a more scalable, partner-driven model, with clear signs of pipeline acceleration and margin discipline. The company’s ability to translate innovation investments into profitable growth will define its trajectory as legacy revenue phases out.
- AI-Driven Bookings Momentum: Strong adoption of new AI solutions is fueling larger, longer-term contracts and improving the quality of the revenue base.
- Partner Channel Inflection: The maturing indirect ecosystem is emerging as a strategic multiplier, expanding Rimini’s reach and lowering customer acquisition costs.
- Margin Recovery Watch: Investors should monitor how quickly sales and marketing costs normalize and whether operational leverage from new bookings translates into sustainable margin expansion.
Conclusion
Rimini Street’s Q2 2026 performance demonstrates clear progress in transforming its business model, with AI-led innovation, partner leverage, and a disciplined approach to growth investments. The next phase will test whether these foundations deliver durable revenue growth and margin expansion as legacy support winds down.
Industry Read-Through
Rimini Street’s results signal that enterprise clients are increasingly seeking cost-effective, AI-enabled modernization paths that avoid disruptive ERP migrations, a trend likely to benefit other third-party support and automation vendors. The European Commission’s decision on SAP licensing practices may further level the playing field for alternative providers, increasing customer choice and competitive intensity. Partners and alliances are becoming more critical as go-to-market levers, with scalable ecosystems enabling smaller players to challenge incumbents in the modernization and automation wave sweeping enterprise IT.