Did you know that Rambus is helping a number of industry heavyweights protect smartphones and tablets against side-channel attacks? In recent years, Rambus has licensed its DPA countermeasure technology to multiple corporations including Broadcom, Infineon, ST Microelectronics and Samsung. More specifically, more than 7 billion devices will be manufactured in 2014 with DPA countermeasures licensed from the Cryptography Research (CR) Division of Rambus.
Rambus secures smartphones and tablets
Caught in between
I recently spent four busy days at a tradeshow where I was fortunate enough to get a couple of nice gifts – and perhaps by coincidence, these items are a good representation of where we are in the high-tech market today. Let me explain. As I write this blog, I’m wearing my new fitness-tracking device that I received as part of the ARM IP Connected Community challenge at the Design Automation Conference (DAC) back in early June (I lost the challenge, by the way). The device is fun, tracks my activity, displaying it on my mobile phone – AND reminds me that I am not getting enough exercise or sleep (not so fun). Another gift I received was a battery pack that can recharge my cell phone several times in between plug in opportunities (usually every night). Don’t get me wrong, this was a nice gift, however it hit me that while IoT seems to be the trendy topic, less often is it mentioned that our smartphones can’t get through one day without being recharged! A product like a battery pack would not be necessary if our mobile phones could last a few days on a single charge.
Wave and Bell ID Partner to Combat Online Payment Fraud
EMV card-present transactions enabled for E-Commerce by integrating TPM technology.
Wave Systems Corp. (NASDAQ: WAVX) announced it is partnering with chip lifecycle management solutions company, Bell ID, to offer a joint solution aimed at reducing online payment fraud. The solution will be marketed primarily to card issuing banks, as well as online merchants, governments, and enterprises worldwide.
Using Bell ID’s Trusted Service Manager and Secure Element in The Cloud (SEiTC) server, alongside Wave’s ERAS for TPM management and Wave’s endpoint identity and monitoring expertise, the combined offering provides robust protection for transactions and stored payments. The companies have executed a letter of intent and anticipate the signing of a definitive agreement in August.
The incident rate of card-not-present (CNP) fraud has been growing steadily over the past several years. According to a recent FICO Banking Analytics Blog, CNP fraud now accounts for close to half of all credit card fraud. Countries that have already adopted the EMV® card specification have seen CNP fraud rates increase. In the United States, CNP fraud is expected to rise significantly over the next eighteen months, as the EMV standard is put into effect. The EMV directive, which implements a global standard for a secure chip-based payment application, will make merchants liable for any fraud resulting from transactions on systems that are not EMV-capable.
“Wave’s robust product portfolio is very complementary to Bell ID’s strongly positioned solution set in the financial services market,” said Bill Solms, CEO, Wave Systems. “We see the EMV transition creating high demand for more secure transaction capabilities, and are confident that together we can provide financial institutions with a comprehensive solution for payment authorization and storage.”
“Bell ID has been a pioneer in developing and delivering cloud-based payment platforms” adds Pat Curran, Executive Chairman at Bell ID. “We also have extensive experience in delivering EMV solutions globally and have witnessed fraud transition online as point-of-sale terminals in face-to-face transactions become more secure. We are therefore delighted to extend our offering with Wave to provide a secure online transaction and storage payment solution, which will mitigate against an expected rise in online fraud and provide a trusted link between device identity and internet services.”
Cryptography Research and Entropic Sign License Agreement for DPA Countermeasures to Secure Next Generation Content
Security technology fully protects set-top box SoCs from non-invasive side channel attacks
SAN FRANCISCO and SAN DIEGO – July 23, 2014 – Cryptography Research, the security division of Rambus (NASDAQ:RMBS), and Entropic(NASDAQ:ENTR), a world leader in semiconductor solutions for the connected home, today announced they have signed a patent license agreement allowing for the use of the Cryptography Research side-channel attack countermeasures in Entropic’s integrated circuits. The Cryptography Research patented technology will protect Entropic’s set-top box system-on-a-chip (SoC) products against differential power analysis (DPA) and related attacks. This agreement builds on the previous agreement between the two companies with Entropic already licensing the Cryptography Research CryptoFirewall™ tamper-resistant core for set-top boxes.
“While high value content enhances the Pay-TV experience, it also carries with it substantial risk for our OEM and Service Provider customers,” said Matt Rhodes, senior vice president, Global Marketing, Entropic. “Today’s premium programming requires strong protection systems and CRI’s DPA countermeasure technology provides an essential foundation for any Conditional Access or Digital Rights Management system.”
“The market demands for protection against non-invasive side channel attacks such as DPA have grown with the continued rise of high quality content,” said Paul Kocher, chief scientist of the Rambus Cryptography Research division. “Entropic has been a terrific partner for our CryptoFirewall technology and is once again taking a leadership role in deploying strong content protection technology in the set-top box SoC market.”
Using DPA, attackers can measure the power consumption of a set-top box chip to extract secret cryptographic keys stored within the set-top box. The discovery of secret keys undermines the security of set-top boxes within a service provider’s network and can result in the theft of valuable, high-quality content and services as well as leaving other data like personal information vulnerable. Set-top box SoCs that contain DPA countermeasures prevent the power consumption analysis through a series of techniques to ultimately protect the secret keys of a set-top box from being discovered.
Side channel and DPA attacks are non-invasive attacks that involve monitoring the fluctuating electrical power consumption of a target device and then using advanced statistical methods to derive cryptographic keys and other secrets. Strong countermeasures to these attacks help protect tamper-resistant products used in applications such as banking, pay television, mass transit, secure ID, and wireless telecommunications.
For additional information on DPA Countermeasures, CryptoFirewall or on Cryptography Research visit cryptography.com.
About Entropic
Entropic™ (Nasdaq:ENTR) is a world leader in semiconductor solutions for the connected home. The Company transforms how traditional HDTV broadcast and IP-based streaming video content is seamlessly, reliably, and securely delivered, processed, and distributed into and throughout the home. Entropic’s next-generation Set-top Box (STB) System-on-a-Chip (SoC) and Connectivity solutions enable Pay-TV operators to offer consumers more captivating whole-home entertainment experiences by transforming the way digital entertainment is delivered, connected and consumed – in the home and on the go. For more information, please visit Entropic at:www.entropic.com, read our blog Entropic Topics, or get social with us at@Entropic_News, or on Facebook, Google+, YouTube and LinkedIn.
About Cryptography Research, Inc.
Cryptography Research, Inc. (CRI), a division of Rambus Inc., is a leader in semiconductor security research and development. Established by internationally renowned cryptographer Paul Kocher, CRI develops and licenses innovative technologies in areas including tamper resistance, content protection, anti-counterfeiting, network security, and financial services. Over seven billion security products are made each year under license from CRI. Security systems designed by CRI scientists and engineers protect hundreds of billions of dollars in commerce annually. Additional information is available at: cryptography.com.
Forward Looking Statements
Statements in this press release that are not strictly historical in nature constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements regarding Entropic’s SoC technologies, its related prospects and its role in the future of connected home entertainment. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause Entropic’s actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, competition, risks associated with Entropic dependence on a limited number of customers and suppliers, technology risks, the risk that the market for HD video and multimedia content delivery solutions may not develop as Entropic anticipates and other factors discussed in the “Risk Factors” section of Entropic’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. All forward-looking statements are qualified in their entirety by this cautionary statement. Entropic is providing this information as of the date of this release and does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.
Rambus Reports Second Quarter Financial Results
Business and Financial Highlights
- Signed comprehensive license agreement with Qualcomm for innovative memory, interface and security technologies
- Unveiled CryptoManager™ secure feature management platform with Qualcomm as lead customer
- Generated quarterly revenue of $76.5 million
- Quarterly GAAP diluted net income per share of $0.04
- Quarterly non-GAAP diluted net income per share of $0.16
SUNNYVALE, Calif. – July 21, 2014 — Rambus Inc. (NASDAQ:RMBS), the innovative technology solutions company that brings invention to market, today reported financial results for the second quarter ended June 30, 2014.
GAAP Financial Results:
Revenue for the second quarter of 2014 was $76.5 million, down 2% on a sequential basis from the first quarter of 2014 primarily due to a one-time catch-up payment from the new license agreement signed with Nanya Technology Corporation during the first quarter of 2014. As compared to the second quarter of 2013, revenue was up 32% primarily due to the license agreements signed with SK hynix, Micron Technology, Nanya Technology Corporation and Qualcomm, offset by lower royalty revenue from Samsung.
Revenue for the six months ended June 30, 2014 was $154.8 million, which was up 24% over the prior year period, primarily due to the license agreements signed with SK hynix, Micron Technology, Nanya Technology Corporation and Qualcomm, offset by lower royalty revenue from Samsung.
Total operating costs and expenses for the second quarter of 2014 were $56.4 million, 2% higher than the previous quarter and 8% higher than the second quarter of 2013. Second quarter operating costs and expenses of $56.4 million included $4.9 million of stock-based compensation expenses, $6.8 million of amortization expenses and $1.0 million of retention bonus expense from acquisitions. In comparison, total operating costs and expenses for the first quarter of 2014 of $55.1 million included $2.9 million of stock-based compensation expenses, $6.8 million of amortization expenses and $1.4 million of retention bonus expense from acquisitions. Total operating costs and expenses for the second quarter of 2013 were $52.2 million, which included a credit of $6.2 million of general litigation expenses (primarily due to the $8.5 million one-time reversal of accrued SK hynix related litigation costs), $3.6 million of stock-based compensation expenses, $7.0 million of amortization expenses and $3.4 million of retention bonus expense from acquisitions. The change in total operating costs and expenses in the second quarter of 2014 as compared to the first quarter of 2014 was primarily due to increased stock-based compensation expenses partially offset by lower bonus accrual. The change in total operating costs and expenses in the second quarter of 2014 as compared to the second quarter of 2013 was as a result of the one-time reversal of accrued SK hynix related litigation costs in the second quarter of 2013 and higher cost of sales due to the sale of lighting products offset by lower retention bonus expense from acquisitions, bonus accrual and consulting expenses.
Total operating costs and expenses for the six months ended June 30, 2014 were $111.5 million, 5% lower than the six months ended June 30, 2013. The six months operating costs and expenses of $111.5 million included $7.8 million of stock-based compensation expenses, $13.6 million of amortization expenses and $2.5 million of retention bonus expense from acquisitions. This is compared to total operating costs and expenses for the six months ended June 30, 2013 of $117.6 million, which included $8.5 million of stock-based compensation expenses, $14.0 million of amortization expenses, $8.5 million one-time reversal of accrued SK hynix related litigation costs, $7.4 million of retention bonus expense from acquisitions and $2.2 million of restructuring charges. The change in total operating costs and expenses was primarily attributable to lower retention bonus expense from acquisitions, bonus accrual and lower consulting costs offset by higher cost of sales due to the sale of lighting products and as a result of the one-time reversal of accrued SK hynix related litigation costs in the second quarter of 2013.
Net income for the second quarter of 2014 was $5.0 million as compared to net income of $7.8 million in the first quarter of 2014 and net loss of $7.8 million in the second quarter of 2013. Diluted net income per share for the second quarter of 2014 was $0.04 as compared to diluted net income per share of $0.07 in the first quarter of 2014 and diluted net loss per share of $0.07 in the second quarter of 2013.
Net income for the six months ended June 30, 2014 was $12.8 million as compared to a net loss of $18.2 million for the same period of 2013. Diluted net income per share for the six months ended June 30, 2014 was $0.11 as compared to a diluted net loss per share of $0.16 for the same period of 2013.
Non-GAAP Financial Results (1):
Total non-GAAP operating costs and expenses in the second quarter of 2014 were $43.8 million which was relatively flat as compared to the prior quarter, and 6% lower than the second quarter of 2013.
Total non-GAAP operating costs and expenses for the six months ended June 30, 2014 were $87.7 million as compared to $93.4 million in the same period of 2013 due primarily to lower bonus accrual, lower general litigation expenses and lower consulting costs offset by higher cost of sales due to the sale of lighting products.
Non-GAAP net income in the second quarter of 2014 was $18.9 million, 4% lower than the prior quarter and 273% higher than the second quarter of 2013. Non-GAAP diluted net income per share was $0.16 in the second quarter of 2014 as compared to $0.17 in the prior quarter and $0.04 in the second quarter of 2013.
Non-GAAP net income for the six months ended June 30, 2014 was $38.6 million as compared to $15.9 million in the same period of 2013. Non-GAAP diluted net income per share was $0.33 for the six months ended June 30, 2014 as compared to non-GAAP diluted net income per share of $0.14 for the six months ended June 30, 2013.
Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of June 30, 2014 were $246.4 million, a decrease of $157.0 million from March 31, 2014. During the second quarter of 2014, the Company paid upon maturity $172.5 million of the 5% convertible senior notes due June 2014.
During the second quarter of 2014, the Company recorded an income tax provision of approximately $6.4 million. As the Company continues to maintain a full valuation allowance against its U.S. deferred tax assets, the Company’s tax provision consists of primarily foreign withholding taxes.
Third Quarter 2014 Outlook:
For the third quarter of 2014, the Company expects revenue to be between $68 million and $73 million. Revenue is not without risk and includes expectations that the Company will sign new customers for patent as well as solutions licensing.
Conference Call:
The Company will host a conference call at 2:00 p.m. PT today to discuss its financial results. The call, audio and slides will be available online 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: (855) 859-2056 (domestic) or (404) 537-3406 (international) with ID#70409115.
(1) 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: operating costs and expenses, operating income (loss) and net income (loss). In computing each of these non-GAAP financial measures, the following items were considered: stock-based compensation expenses, acquisition-related transaction costs and retention bonus expense, amortization expenses, costs of restatement and related legal activities, restructuring charges, severance costs, 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 they 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 transaction costs and retention bonus expense. These expenses include all direct costs of certain acquisitions and the current periods’ portion of any retention bonus expense associated with the acquisitions. The Company excludes these expenses in order to provide better comparability between periods.
Restructuring charges. These charges may consist of severance, contractual retention payments, exit costs and other charges and are excluded because such charges are not directly related to ongoing business results and do not reflect expected future operating expenses.
Amortization expense. 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 core operation of the Company’s business.
Costs of restatement and related legal activities. These expenses consist primarily of investigation, audit, legal and other professional fees related to the 2006-2007 stock option investigation and related litigation, as well as recoveries received from third parties. The Company excludes these costs and recoveries from its non-GAAP measures primarily because the Company believes that these non-recurring costs and recoveries have no direct correlation to the core operation of the Company’s business.
Non-cash interest expense. 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.
Reversal of one-time litigation costs. These adjustments are a one-time litigation cost reversal of prior litigation costs accrued related to previously awarded costs that the Company was required to pay in connection with the SK hynix and Micron Technology litigation. The Company excludes these reversals from its non-GAAP measures because the Company believes that these reversals have no direct correlation to the core operations of the Company’s business and they are a one-time event.
Severance costs. These expenses relate to the separation payment to the Company’s former chief executive officer. The Company excludes these costs from its non-GAAP measures because the Company believes that these non-recurring costs have no direct correlation to the core operations of the Company’s business.
Income tax adjustments. For purposes of internal forecasting, planning and analyzing future periods that assumes net income from operations, the Company estimates a fixed, long-term projected tax rate of approximately 36 percent, 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 and deferred tax asset valuation allowance. Accordingly, the Company has applied the 36 percent tax rate to its non-GAAP financial results for all periods to assist the Company’s planning for future periods. The Company has provided below a reconciliation of its GAAP provision for income taxes and GAAP effective tax rate to the assumed non-GAAP provision for income taxes and non-GAAP effective tax rate.
On occasion in the future, there may be other items, such as impairment charges and 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 relating to Rambus’ expectations regarding revenue for the third quarter of 2014 and estimated, fixed, long-term projected tax rates. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by Rambus’ management. Actual results may differ materially. Rambus’ 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. Rambus undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.
About Rambus Inc.
Rambus is the innovative technology solutions company that brings invention to market. Unleashing the intellectual power of our world-class engineers and scientists in a collaborative and synergistic way, Rambus invents, licenses and develops solutions that challenge and enable our customers to create the future. While best known for creating unsurpassed semiconductor memory architectures, Rambus is also developing world-changing products and services in security, advanced LED lighting and displays, and immersive mobile media. For additional information visit rambus.com.
| Condensed Consolidated Balance Sheets (In thousands) (Unaudited) |
||
|---|---|---|
| June 30, 2014 | December 31, 2013 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 99,571 | $ 338,696 |
| Marketable securities | 146,859 | 48,966 |
| Accounts receivable | 12,503 | 2,251 |
| Prepaids and other current assets | 7,283 | 8,253 |
| Deferred taxes | 1,069 | 205 |
| Total current assets | 267,285 | 398,371 |
| Intangible assets, net | 102,435 | 117,172 |
| Goodwill | 116,899 | 116,899 |
| Property, plant and equipment, net | 67,411 | 72,642 |
| Deferred taxes, long-term | 571 | 4,797 |
| Other assets | 3,090 | 3,498 |
| Total assets | $ 557,691 | $ 713,379 |
| Liabilities & Stockholders’ Equity | ||
| Current liabilities: | ||
| Accounts payable | $ 5,465 | $ 7,001 |
| Accrued salaries and benefits | 14,410 | 33,448 |
| Convertible notes, short-term | — | 164,047 |
| Other accrued liabilities | 10,310 | 8,346 |
| Total current liabilities | 30,185 | 212,842 |
| Long-term liabilities: | ||
| Convertible notes, long-term | 112,316 | 109,629 |
| Long-term imputed financing obligation | 39,232 | 39,349 |
| Other long-term liabilities | 9,652 | 11,330 |
| Total long-term liabilities | 161,200 | 160,308 |
| Total stockholders’ equity | 366,306 | 340,229 |
| Total liabilities and stockholders’ equity | $ 557,691 | $ 713,379 |
| Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) |
||||
|---|---|---|---|---|
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||
| 2014 | 2013 | 2014 | 2013 | |
| Revenue: | ||||
| Royalties | $ 69,741 | $ 57,009 | $ 143,378 | $ 123,231 |
| Contract revenue and other revenue | 6,777 | 910 | 11,428 | 1,554 |
| Total revenue | 76,518 | 57,919 | 154,806 | 124,785 |
| Operating costs and expenses: | ||||
| Cost of revenue (1) | 10,637 | 7,365 | 20,659 | 13,899 |
| Research and development (1) | 27,668 | 30,777 | 54,566 | 63,625 |
| Marketing, general and administrative (1) | 18,619 | 14,136 | 37,439 | 39,258 |
| Restructuring charges | — | — | 39 | 2,206 |
| Gain from sale of intellectual property | — | (103) | (170) | (1,388) |
| Gain from settlement | (510) | — | (1,020) | — |
| Total operating costs and expenses | 56,414 | 52,175 | 111,513 | 117,600 |
| Operating income | 20,104 | 5,744 | 43,293 | 7,185 |
| Interest income and other income (expense), net | 104 | (1,419) | 117 | (1,439) |
| Interest expense | (8,770) | (7,426) | (18,696) | (14,738) |
| Interest and other income (expense), net | (8,666) | (8,845) | (18,579) | (16,177) |
| Income (loss) before income taxes | 11,438 | (3,101) | 24,714 | (8,992) |
| Provision for income taxes | 6,395 | 4,743 | 11,867 | 9,254 |
| Net income (loss) | $ 5,043 | $ (7,844) | $ 12,847 | $ (18,246) |
| Net income (loss) per share: | ||||
| Basic | $ 0.04 | $ (0.07) | $ 0.11 | $ (0.16) |
| Diluted | $ 0.04 | $ (0.07) | $ 0.11 | $ (0.16) |
| Weighted average shares used in per share calculation | ||||
| Basic | 114,116 | 112,183 | 113,854 | 111,892 |
| Diluted | 117,398 | 112,183 | 116,733 | 111,892 |
| (1) Total stock-based compensation expense for the three and six months ended June 30, 2014 and 2013 are presented as follows: | ||||
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||
| 2014 | 2013 | 2014 | 2013 | |
| Cost of revenue | $ 15 | $ 5 | $ 22 | $ 5 |
| Research and development | $ 2,615 | $ 1,660 | $ 3,926 | $ 3,536 |
| Marketing, general and administrative | $ 2,225 | $ 1,909 | $ 3,806 | $ 4,981 |
| Supplemental Reconciliation of GAAP to Non-GAAP Results (In thousands) (Unaudited) |
||||||
|---|---|---|---|---|---|---|
| Three Months Ended | Six Months Ended | |||||
| June 30, 2014 | March 31, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | ||
| Operating costs and expenses | $ 56,414 | $ 55,099 | $ 52,175 | $ 111,513 | $ 117,600 | |
| Adjustments: | ||||||
| Stock-based compensation | (4,855) | (2,899) | (3,574) | (7,754) | (8,522) | |
| Acquisition-related transaction costs and retention bonuses | (1,028) | (1,435) | (3,385) | (2,463) | (7,397) | |
| Amortization | (6,757) | (6,797) | (6,997) | (13,554) | (14,037) | |
| Reversal of one-time litigation costs | — | — | 8,482 | — | 8,482 | |
| Restructuring charges | — | (39) | — | (39) | (2,206) | |
| Severance costs | — | — | — | — | (514) | |
| Costs of restatement and related legal activities | — | — | (2) | — | (19) | |
| Non-GAAP operating costs and expenses | $ 43,774 | $ 43,929 | $ 46,699 | $ 87,703 | $ 93,387 | |
| Operating income | $20,104 | $ 23,189 | $ 5,744 | $ 43,293 | $ 7,185 | |
| Adjustments: | ||||||
| Stock-based compensation | 4,855 | 2,899 | 3,574 | 7,754 | 8,522 | |
| Acquisition-related transaction costs and retention bonuses | 1,028 | 1,435 | 3,385 | 2,463 | 7,397 | |
| Amortization | 6,757 | 6,797 | 6,997 | 13,554 | 14,037 | |
| Reversal of one-time litigation costs | — | — | (8,482) | — | (8,482) | |
| Restructuring charges | — | 39 | — | 39 | 2,206 | |
| Severance costs | — | — | — | — | 514 | |
| Costs of restatement and related legal activities | — | — | 2 | — | 19 | |
| Non-GAAP operating income | $ 32,744 | $ 34,359 | $ 11,220 | $ 67,103 | $ 31,398 | |
| Income (loss) before income taxes | $ 11,438 | $ 13,276 | $ (3,101) | $ 24,714 | $ (8,992) | |
| Adjustments: | ||||||
| Stock-based compensation | 4,855 | 2,899 | 3,574 | 7,754 | 8,522 | |
| Acquisition-related transaction costs and retention bonuses | 1,028 | 1,435 | 3,385 | 2,463 | 7,397 | |
| Amortization | 6,757 | 6,797 | 6,997 | 13,554 | 14,037 | |
| Reversal of one-time litigation costs | — | — | (8,482) | — | (8,482) | |
| Restructuring charges | — | 39 | — | 39 | 2,206 | |
| Severance costs | — | — | — | — | 514 | |
| Costs of restatement and related legal activities | — | — | 2 | — | 19 | |
| Impairment of investment | — | — | 1,400 | — | 1,400 | |
| Non-cash interest expense on convertible notes | 5,469 | 6,242 | 4,145 | 11,711 | 8,234 | |
| Non-GAAP income before income taxes | $ 29,547 | $ 30,688 | $ 7,920 | $ 60,235 | $ 24,855 | |
| GAAP provision for income taxes | 6,395 | 5,472 | 4,743 | 11,867 | 9,254 | |
| Adjustment to GAAP provision for income taxes | 4,242 | 5,576 | (1,892) | 9,818 | (307) | |
| Non-GAAP provision for income taxes | 10,637 | 11,048 | 2,851 | 21,685 | 8,947 | |
| Non-GAAP net income | $ 18,910 | $ 19,640 | $ 5,069 | $ 38,550 | $ 15,908 | |
| Non-GAAP basic net income per share | $ 0.17 | $ 0.17 | $ 0.05 | $ 0.34 | $ 0.14 | |
| Non-GAAP diluted net income per share | $ 0.16 | $ 0.17 | $ 0.04 | $ 0.33 | $ 0.14 | |
| Weighted average shares used in non-GAAP per share calculation: | ||||||
| Basic | 114,116 | 113,590 | 112,183 | 113,854 | 111,892 | |
| Diluted | 117,398 | 116,629 | 116,162 | 116,733 | 116,009 | |
| Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1) | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended | Six Months Ended | |||||
| June 30, 2014 | March 31, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | ||
| GAAP effective tax rate | 56% | 41% | 153% | 48% | 103% | |
| Adjustment to GAAP effective tax rate | (20%) | (5%) | (117%) | (12%) | (67%) | |
| Non-GAAP effective tax rate | 36% | 36% | 36% | 36% | 36% | |
| (1) For purposes of internal forecasting, planning and analyzing future periods that assumes net income from operations, the Company estimates a fixed, long-term projected tax rate of approximately 36 percent, 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 and deferred tax asset valuation allowance. Accordingly, the Company has applied the 36 percent tax rate to its non-GAAP financial results for all periods to assist the Company’s planning for future periods. | ||||||
Bell ID Joins Mobey Forum
Offers HCE Expertise To Global Industry Association
Token management specialist, Bell ID, has become a member of Mobey Forum, joining other industry players in empowering banks to take the lead in mobile money. As a new Associate Member, Bell ID will lend its expertise in host card emulation (HCE) to the work of the association’s Business Workgroup as discussions on HCE as a route to market for bank-led mobile payment solutions continue to gain traction across the industry.
Bell ID’s chip lifecycle management software enables banks, mobile network operators and other entities to manage mobile near field communication services and devices, in addition to EMV chip payment cards and other tokens.
“HCE is receiving a lot of press at the moment and is a big talking point for our members,” adds Sirpa Nordlund, Executive Director of Mobey Forum. “Bell ID is a recognized specialist in this area so we welcome its expertise and contribution to further the understanding of the Mobey Forum membership.”
Pat Curran, Executive Chairman of Bell ID, comments: “With HCE coming to the fore, the time was right to join Mobey Forum. With the payment systems working to bring standards forward and Google withdrawing support for physical secure elements, HCE is no longer hype but a credible alternative route to market. As one of the first to market with a cloud-based payments platform, and a background in EMV card management and trusted service management, we look forward to sharing our knowledge and expertise with Mobey Forum.”
Bell ID will contribute to the discussion around HCE at Mobey Day 2014, 7-8 October in Barcelona. Interested to learn more about HCE in general? Watch our short explanatory video.
