How might this development affect Rimini Street's valuation multiples compared to peers?

Impact on valuation multiples

The GSA Multiple‑Award Schedule (MAS) designation gives Rimini Street (RMNI) a direct procurement channel into the U.S. federal, state, and local government markets—a segment that historically values stability, compliance and predictable pricing over pure cost‑advantage. By unlocking a new, high‑credit customer base, the company is likely to see a lift in both revenue growth and gross‑margin profile: government contracts typically carry higher margins and lower churn than commercial accounts. In a comparable‑company analysis this “government‑ready” attribute is a premium driver – peers such as New Relic (now part of Software AG) or ServiceNow do not have a comparable federal contract pipeline. As a result analysts will tend to apply a higher EV/Revenue and EV/EBITDA multiple to Rimri’s peers, compressing the spread between RMNI and the broader enterprise‑software support peer set (e.g., HPE’s support services, IBM Global Services, or CDW). The market may begin to price a 10‑15 % premium to the sector median EV/Revenue (roughly 3‑4 ×) and a 12‑18 % premium to EV/EBITDA (≈12‑15 ×) for RMNI, especially if the GSA contract translates into $30‑$50 million of incremental FY‑24 revenue (the company’s guidance already anticipates ~$100 M in GSA‑related bookings over the next 12‑18 months).

Trading implications

1. Short‑term catalyst – The news release was accompanied by a 70 % sentiment score and a typical “award” catalyst, which historically pushes the stock 4‑8 % higher in the 2‑3 day window. Expect an upward price drift as analysts upgrade earnings models.
   
2. Valuation re‑rating – If the GSA contract materialises as projected, the consensus forward‑PE could narrow from the current 45‑50× (historical average for RMNI) toward the low‑40s, while peers remain at 48‑55×, narrowing the discount. This creates a relative value play: go long RMNI on a pull‑back or after a brief profit‑taking pull‑back.
   
3. Risk – The incremental revenue is still a small share of total revenue (≈3‑5 % of FY‑24) and depends on win‑rate in federal RFPs. If the GSA schedule leads to slower‑moving procurement cycles, the upside to multiples could be muted. Maintain a stop‑loss ~7 % below current price and monitor the company’s quarterly GSA revenue reporting for confirmation.
   

Actionable tip: Enter a long position at current levels if the stock is trading at a discount to the peer‑adjusted EV/Revenue range (≤3.0×) with a target of 3.4‑3.6× (≈+12‑15 % upside) and place a trailing stop at 6‑8 % below entry. If the stock spikes >6 % on the news, consider a short‑term “sell‑the‑news” scalping for 3‑5 % profit, then re‑enter on a pull‑back to the aforementioned valuation range.