Rimini Street's Oracle Settlement: A Sustainable Turnaround or a Temporary Reprieve?

The recent resolution of Rimini Street's (RMNI) 15-year legal battle with Oracle has sparked renewed interest in the stock, with a one-off gain of $31.3 million and a $37.8 million reimbursement from Oracle fees boosting short-term earnings and cash flow. However, the question remains: does this settlement signal a sustainable turnaround, or merely a temporary reprieve for a company grappling with revenue stagnation, margin pressures, and a structural shift in the software support market?

Revenue Stagnation and Structural Headwinds

Rimini Street's Q3 2025 results underscored persistent revenue challenges. While core revenue (excluding Oracle PeopleSoft services) grew 2.5% year-over-year, total revenue declined 1.2% to $103.4 million, reflecting the intentional wind-down of PeopleSoft support, which contributed $30 million annually. This segment is set to phase out by July 2028, eliminating 6% of the company's revenue stream. Over the past five years, Rimini Street's revenue growth has averaged a meager -0.9%, with projections of a 24% annual decline in earnings over the next three years. Analysts attribute this to a broader industry shift toward SaaS/cloud solutions, which threatens to shrink the third-party support market Rimini Street dominates.

Despite a 6.7% year-over-year increase in adjusted billings and a 9.3% rise in remaining performance obligations (RPOs) excluding PeopleSoft, the company's reliance on legacy contracts and its inability to scale in a cloud-first era remain critical risks. As one analyst noted, "Rimini Street's market penetration is less than 2% of its $33.7 billion serviceable addressable market, but structural headwinds-like Oracle's legal dominance and client migration to SaaS-pose existential threats to its long-term growth model."

Margin Durability and Cost Overhaul

The Oracle settlement has provided immediate margin relief. The $37.8 million reimbursement of legal fees and the elimination of $7 million in annual litigation costs should bolster profitability in the near term. Rimini Street's gross margin has historically exceeded 60%, driven by automation and operational efficiency, but the wind-down of PeopleSoft support will likely pressure revenue while the company invests in new growth initiatives.

Adjusted EBITDA for Q3 2025 came in at $10.1 million, below analyst Richard Baldry's $12.1 million forecast, partly due to a $1.3–1.4 million one-time international tax charge. Excluding this, core earnings aligned with expectations, suggesting that operational margins remain resilient. However, Baldry cautions that "sustained margin expansion will require meaningful cross-selling into Rimini's installed base and a pivot toward higher-margin managed services."

Valuation Discount and Investor Skepticism

Rimini Street trades at a steep discount to peers, with a price-to-earnings (P/E) ratio of 8.5x and an EV/EBITDA multiple of 9x, compared to industry averages of 34.1x and 11.7x, respectively. This discount reflects investor skepticism about the company's ability to sustain earnings growth, particularly as the PeopleSoft wind-down progresses. While the stock's valuation appears attractive on a risk-adjusted basis, the reliance on one-off gains-such as the $31.3 million litigation settlement raises concerns about the durability of its earnings model.

Analysts like Baldry argue that the settlement could catalyze a turnaround if management leverages the improved cash flow to invest in innovation and client retention. "The removal of legal distractions and the $37.8 million infusion provide a lifeline, but the real test is whether Rimini can prove its core business can grow without relying on Oracle's missteps," he wrote.

Strategic Initiatives and Long-Term Outlook

Post-settlement, Rimini Street has emphasized expanding its offerings beyond traditional support services, including managed database and application management. The company's strong balance sheet-$38 million in net cash and ongoing share repurchases-provides flexibility to fund these initiatives. However, the transition to a hybrid-IT model, where clients demand more integrated solutions, remains unproven.

The key to a sustainable turnaround lies in Rimini Street's ability to offset the loss of PeopleSoft revenue by 2028. While adjusted billings and RPOs show promise, the company must demonstrate that its core business can grow at a rate exceeding the market's 10.3% annual forecast. This will require not only retaining existing clients but also capturing new ones in a competitive landscape increasingly dominated by cloud-native providers.

Conclusion

Rimini Street's Oracle settlement offers a short-term boost to cash flow and margins, but the long-term outlook hinges on its ability to navigate structural challenges in the software support market. The valuation discount reflects both the risks of revenue stagnation and the potential for a turnaround if management executes its growth strategy effectively. For now, the settlement appears to be a temporary reprieve-a chance to stabilize operations and reposition for growth in a rapidly evolving industry. Whether this becomes a sustainable turnaround will depend on Rimini Street's capacity to innovate and adapt, not just its legal victories.