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Home > Press Releases > Rambus Reports Fourth Quarter and Fiscal Year 2022 Financial Results

Rambus Reports Fourth Quarter and Fiscal Year 2022 Financial Results

  • Delivered strong Q4 revenue and earnings in line with guidance
  • Produced record annual product revenue driven by memory interface chips, up 58% year over year
  • Generated record cash from operations of $230.4 million for full year 2022

SAN JOSE, Calif. – February 6, 2023 – Rambus Inc. (NASDAQ:RMBS), a provider of industry-leading chips and IP making data faster and safer, today reported financial results for the fourth quarter ended December 31, 2022. GAAP revenue for the fourth quarter was $122.4 million; licensing billings were $64.3 million, product revenue was $67.2 million, and contract and other revenue was $23.8 million. The Company also generated $51.3 million in cash provided by operating activities in the fourth quarter.

“Rambus delivered a tremendous performance in 2022, achieving record annual product revenue and cash from operations,” said Luc Seraphin, chief executive officer of Rambus. “Our strategic focus on the data center and strong execution across our diverse offerings continues to drive the company’s long-term profitable growth and enables consistent capital returns to our stockholders.”

Quarterly Financial Review – GAAP Three Months Ended December 31,
(In millions, except for percentages and per share amounts) 2022 2021
Revenue
Product revenue $67.2 $45.3
Royalties 31.4 32.9
Contract and other revenue 23.8 13.6
Total revenue $122.4 $91.8
Cost of product revenue $28.2 $13.4
Cost of contract and other revenue $1.6 $0.7
Amortization of acquired intangible assets (included in total cost of revenue) $3.6 $3.6
Total operating expenses (1) $72.8 $65.1
Operating income $16.2 $9.0
Operating margin 13% 10%
Net income $15.9 $6.1
Diluted net income per share $0.14 $0.05
Net cash provided by operating activities $51.3 $72.2

____________________________

(1)   Includes amortization of acquired intangible assets of approximately $0.4 million for both the three months ended December 31, 2022 and 2021.

Quarterly Financial Review – Supplemental Information(1) Three Months Ended
December 31,
(In millions) 2022 2021
Licensing billings (operational metric) (2) $64.3 $66.6
Product revenue (GAAP) $67.2 $45.3
Contract and other revenue (GAAP) $23.8 $13.6
Non-GAAP cost of product revenue $28.1 $13.3
Cost of contract and other revenue (GAAP) $1.6 $0.7
Non-GAAP total operating expenses $55.8 $51.4
Non-GAAP interest and other income (expense), net $(0.7) $(1.1)
Diluted share count (GAAP) 111 115

____________________________

(1) See “Supplemental Reconciliation of GAAP to Non-GAAP Results” table included below.

(2) Licensing billings is an operational metric that reflects amounts invoiced to our licensing customers during the period, as adjusted for certain differences relating to advanced payments for variable licensing agreements.

GAAP revenue for the quarter was $122.4 million. The Company also had licensing billings of $64.3 million, product revenue of $67.2 million, and contract and other revenue of $23.8 million. The Company had total GAAP cost of revenue of $33.4 million and operating expenses of $72.8 million. The Company also had total non-GAAP operating expenses of $85.4 million (including non-GAAP cost of revenue). The Company’s annual product revenue increased 58% year over year as the Company continues to gain market share. The Company had GAAP diluted net income per share of $0.14. The Company’s basic share count was 108 million shares and its diluted share count was 111 million shares.

Cash, cash equivalents, and marketable securities as of December 31, 2022 were $313.2 million, an increase of $48.4 million as compared to September 30, 2022, mainly due to cash provided by operating activities of approximately $51.3 million. Cash provided by operating activities for the year ended December 31, 2022 was $230.4 million, an increase of $21.2 million or 10%, from the same period in the prior year. 

2023 First Quarter Outlook

The Company will discuss its full revenue guidance for the first quarter of 2023 during its upcoming conference call. The following table sets forth first quarter outlook for other measures.

(In millions) GAAP Non-GAAP (1)
Licensing billings (operational metric) (2) $61- $67 $61- $67
Product revenue $57 – $63 $57 – $63
Contract and other revenue $19 – $25 $19 – $25
Total operating costs and expenses $104 – $100 $87 – $83
Interest and other income (expense), net $0 ($1)
Diluted share count 110 110

____________________________

(1) See “Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates” tables included below. Note that the applicable non-GAAP measures are presented, and that revenue is solely presented on a GAAP basis.

(2) Licensing billings is an operational metric that reflects amounts invoiced to our licensing customers during the period, as adjusted for certain differences relating to advanced payments for variable licensing agreements. This metric is the same for both GAAP and non-GAAP presentations.

For the first quarter of 2023, the Company expects licensing billings to be between $61 million and $67 million. The Company also expects royalty revenue to be between $25 million and $31 million, product revenue to be between $57 million and $63 million and contract and other revenue to be between $19 million and $25 million. Revenue is not without risk and achieving revenue in this range will require that the Company sign customer agreements for various product sales and solutions licensing, among other matters.

The Company also expects operating costs and expenses to be between $104 and $100 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $87 million and $83 million. These expectations also assume non-GAAP interest and other income (expense), net, of ($1 million), tax rate of 24% and diluted share count of 110 million, and exclude stock-based compensation expense ($13 million), amortization expense ($4 million), non-cash interest expense on convertible notes ($0.1 million) and interest income related to the significant financing component from fixed-fee patent and technology licensing arrangements ($1 million).

Conference Call

Rambus management will discuss the results of the quarter during a conference call scheduled for 2:00 p.m. PT today. The call will be webcast and can be accessed via Rambus’ website at investor.rambus.com. A replay will be available following the call on the Rambus Investor Relations website or for one week at the following numbers: (866) 813-9403 (domestic) or (+44) 204-525-0658 (international) with ID# 579366.

Non-GAAP Financial Information

In the commentary set forth above and in the financial statements included in this earnings release, the Company presents the following non-GAAP financial measures: cost of product revenue, operating expenses and interest and other income (expense), net. In computing each of these non-GAAP financial measures, the following items were considered as discussed below: stock-based compensation expenses, acquisition-related costs and retention bonus expense, amortization of acquired intangible assets, expense on abandoned operating leases, change in fair value of earn-out liability, non-cash interest expense and certain other one-time adjustments. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes the non-GAAP financial measures are appropriate for both its own assessment of, and to show investors, how the Company’s performance compares to other periods. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Reconciliation from GAAP to non-GAAP results is included in the financial statements contained in this release.

The Company’s non-GAAP financial measures reflect adjustments based on the following items:

Stock-based compensation expense. These expenses primarily relate to employee stock options, employee stock purchase plans, and employee non-vested equity stock and non-vested stock units. The Company excludes stock-based compensation expense from its non-GAAP measures primarily because such expenses are non-cash expenses that the Company does not believe are reflective of ongoing operating results. Additionally, given the fact that other companies may grant different amounts and types of equity awards and may use different option valuation assumptions, excluding stock-based compensation expense permits more accurate comparisons of the Company’s results with peer companies.

Acquisition-related costs and retention bonus expense. These expenses include all direct costs of certain acquisitions and the current period’s portion of any retention bonus expense associated with the acquisitions. The Company excludes these expenses in order to provide better comparability between periods as they are related to acquisitions and have no direct correlation to the Company’s operations. 

Amortization of acquired intangible assets. The Company incurs expenses for the amortization of intangible assets acquired in acquisitions. The Company excludes these items because these expenses are not reflective of ongoing operating results in the period incurred. These amounts arise from the Company’s prior acquisitions and have no direct correlation to the operation of the Company’s core business.

Expense on abandoned operating leases. Reflects the expense on building leases that were abandoned. The Company excludes these charges because such charges are not directly related to ongoing business results and do not reflect expected future operating expenses.

Change in fair value of earn-out liability. This change is due to adjustments to acquisition purchase consideration. The Company excludes these adjustments because such adjustments are not directly related to ongoing business results and do not reflect expected future operating expenses.

Non-cash interest expense on convertible notes. The Company incurs non-cash interest expense related to its convertible notes. The Company excludes non-cash interest expense related to its convertible notes to provide more accurate comparisons of the Company’s results with other peer companies and to more accurately reflect the Company’s ongoing operations.

Income tax adjustments. For purposes of internal forecasting, planning and analyzing future periods that assume net income from operations, the Company estimates a fixed, long-term projected tax rate of approximately 24% for both 2022 and 2021, which consists of estimated U.S. federal and state tax rates, and excludes tax rates associated with certain items such as withholding tax, tax credits, deferred tax asset valuation allowance and the release of any deferred tax asset valuation allowance. Accordingly, the Company has applied these tax rates to its non-GAAP financial results for all periods in the relevant years to assist the Company’s planning.

On occasion in the future, there may be other items, such as significant gains or losses from contingencies that the Company may exclude in deriving its non-GAAP financial measures if it believes that doing so is consistent with the goal of providing useful information to investors and management.

Forward-Looking Statements

This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, including those relating to Rambus’ expectations regarding business opportunities, the Company’s ability to deliver long-term, profitable growth, product and investment strategies, and the Company’s outlook and financial guidance for the first quarter of 2023 and related drivers, and the Company’s ability to effectively manage supply chain shortages. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by the Company’s management. Actual results may differ materially. The Company’s business generally is subject to a number of risks which are described more fully in Rambus’ periodic reports filed with the Securities and Exchange Commission, as well as the potential adverse impacts related to, or arising from, the COVID-19 and its variants. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

Contact
Desmond Lynch
Senior Vice President, Finance and Chief Financial Officer
(408) 462-8000
dlynch@rambus.com

Rambus Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands) December 31,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents $125,334 $107,891
Marketable securities 187,892 377,718
Accounts receivable 55,368 44,065
Unbilled receivables 125,698 135,608
Inventories 20,900 8,482
Prepaids and other current assets 12,022 10,600
Total current assets 527,214 684,364
Intangible assets, net 50,880 58,420
Goodwill 292,040 278,810
Property, plant and equipment, net 86,255 56,035
Operating lease right-of-use assets 24,143 23,712
Deferred tax assets 3,031 4,047
Unbilled receivables 25,222 123,018
Other assets 3,809 4,240
Total assets $1,012,594 $1,232,646
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $24,815 $11,279
Accrued salaries and benefits 20,502 20,945
Convertible notes 10,378 163,687
Deferred revenue 23,861 24,755
Income taxes payable 18,137 20,607
Operating lease liabilities 5,024 5,992
Other current liabilities 23,992 20,002
Total current liabilities 126,709 267,267
Long-term liabilities:
Long-term operating lease liabilities 29,079 29,099
Long-term income taxes payable 5,892 21,424
Deferred tax liabilities 24,964 23,985
Other long-term liabilities 46,653 28,475
Total long-term liabilities 106,588 102,983
Total stockholders’ equity 779,297 862,396
Total liabilities and stockholders’ equity $1,012,594 $1,232,646

Rambus Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

Three Months Ended
December 31,
Years Ended
December 31,
(In thousands, except per share amounts) 2022 2021 2022 2021
Revenue:
Product revenue $67,178 $45,274 $227,068 $143,935
Royalties 31,436 32,893 139,816 136,706
Contract and other revenue 23,753 13,614 87,909 47,663
Total revenue 122,367 91,781 454,793 328,304
Cost of revenue:
Cost of product revenue 28,209 13,408 88,976 49,397
Cost of contract and other revenue 1,615 727 4,668 4,756
Amortization of acquired intangible assets 3,560 3,603 13,935 16,241
Total cost of revenue 33,384 17,738 107,579 70,394
Gross profit 88,983 74,043 347,214 257,910
Operating expenses:
Research and development 40,121 36,263 158,769 135,678
Sales, general and administrative 27,309 23,101 106,718 91,057
Amortization of acquired intangible assets 415 409 1,674 1,226
Restructuring and other charges — — — 368
Change in fair value of earn-out liability 5,000 5,300 3,111 5,300
Total operating expenses 72,845 65,073 270,272 233,629
Operating income 16,138 8,970 76,942 24,281
Interest income and other income (expense), net 835 1,623 7,771 9,711
Gain on fair value of equity security — — 3,547 —
Loss on extinguishment of debt — — (83,626) —
Loss on fair value adjustment of derivatives, net — — (10,585) —
Interest expense (484) (2,737) (1,874) (10,706)
Interest and other income (expense), net 351 (1,114) (84,767) (995)
Income (loss) before income taxes 16,489 7,856 (7,825) 23,286
Provision for income taxes 540 1,751 6,485 4,952
Net income (loss) $15,949 $6,105 $(14,310) $18,334
Net income (loss) per share:
Basic $0.15 $0.06 $(0.13) $0.17
Diluted $0.14 $0.05 $(0.13) $0.16
Weighted average shares used in per share calculation:
Basic 107,603 109,161 109,472 110,538
Diluted 110,820 114,534 109,472 114,865

Rambus Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Result
(Unaudited)

Three Months Ended
December 31,
(In thousands) 2022 2021
Cost of product revenue $28,209 $13,408
Adjustment:
Stock-based compensation expense (144) $(112)
Non-GAAP cost of product revenue $28,065 $13,296
Total operating expenses $72,845 $65,073
Adjustments:
Stock-based compensation expense (10,122) (6,092)
Acquisition-related costs and retention bonus expense (1,028) (1,308)
Amortization of acquired intangible assets (415) (409)
Expense on abandoned operating leases (521) (559)
Change in fair value of earn-out liability (5,000) (5,300)
Non-GAAP total operating expenses $55,759 $51,405
Interest and other income (expense), net $351 $(1,114)
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements (1,029) (1,907)
Non-cash interest expense on convertible notes 10 1,954
Non-GAAP interest and other income (expense), net $(668) $ (1,067)

 

Rambus Inc.
Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates
(Unaudited)

2023 First Quarter Outlook Three Months Ended

March 31, 2023

(In millions) Low High
Forward-looking operating costs and expenses $103.7 $99.7
Adjustments:
Stock-based compensation expense (12.6) (12.6)
Amortization of acquired intangible assets (4.1) (4.1)
Forward-looking Non-GAAP operating costs and expenses $87.0 $83.0
Forward-looking interest and other income (expense), net $ 0.3 $0.3
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements (0.9) (0.9)
Non-cash interest expense on convertible notes 0.1 0.1
Forward-looking Non-GAAP interest and other income (expense), net $(0.5) $(0.5)

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