Rambus

At Rambus, we create cutting-edge semiconductor and IP products, spanning memory and interfaces to security, smart sensors and lighting.

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Rambus Reports First Quarter 2019 Financial Results

  • First quarter revenue and billings in line with expectations; GAAP revenue of $48.4 million, with royalty revenue of $24.8 million and licensing billings of $75.4 million
  • $28.8 million in cash provided by operating activities
  • DDR4 server DIMM chipset revenue up nearly 40% year-over-year, fueled by continued market share growth
  • Record revenue for IP Cores business; expanded portfolio with 32G PHY for 5G infrastructure and 112G LR PHY in 7nm for 400G and 800G networking

SUNNYVALE, Calif. – April 22, 2019 – Rambus Inc. (NASDAQ:RMBS) today reported financial results for the first quarter ended March 31, 2019. Total revenue for the first quarter was in line with expectations at $48.4 million, with royalty revenue of $24.8 million and licensing billings of $75.4 million. The company also generated $28.8 million in cash provided by operating activities.

“Rambus had a solid first quarter, with continued execution from our product teams and a strong balance sheet fueled by cash generation from operations. We have refocused and augmented our product portfolio around our core strengths in semiconductor, to enable new design wins and increased market share,” said Luc Seraphin, chief executive officer of Rambus.

Business Review

Rambus product businesses made solid progress in the first quarter, with the addition of new products and design wins at leading chip and system manufacturers worldwide. We target performance-driven, high-growth markets including data center and networking, artificial intelligence and machine learning, IoT and automotive, where demand for data and security are at their highest.

The server DIMM chipset business had a positive quarter. Buffer chipset revenue was up nearly 40% from the same period last year, despite declines in the overall memory market due to near-term inventory corrections. Through steady increases in the number of OEM and data center qualifications, we are making continued gains in market share for DDR4 buffer chips. In addition to the growth in DDR4, we have established a first-mover position for next-generation DDR5 memory buffer chips and continue shipping samples at the top-end speeds for both the RCD and DB chips.

Our high-speed IP Cores business delivered record revenue and remains on a trajectory of approximately 50% compounded annual growth rate. We closed several new SoC design wins for data center, networking and artificial intelligence, including multiple new ASIC designs at a Tier 1 SoC customer. In addition to the tape out of the industry’s first commercial GDDR6 memory PHY on TSMC 7nm, we expanded our high-performance SerDes portfolio with a leadership 32G SerDes PHY to enable 5G infrastructure and a 112G SerDes PHY to enable next-generation 400G and 800G communications systems.

The Rambus Cryptography business saw the importance of semiconductor device-level security continue to grow in the industry. We increased our traction and opportunities for secure silicon IP, with a new design win at a major OEM and expanded agreements for our provisioning services. We continue to build momentum for our CryptoManager Root of Trust in our key verticals of artificial intelligence and data center.

 

Quarterly Financial Review – GAAPThree Months Ended March 31,
(In millions, except for percentages and per share amounts)20192018
Revenue
Royalties$24.8$21.4
Product revenue9.07.3
Contract and other revenue14.617.7
Total revenue$48.4$46.4
Total operating costs and expenses$79.8$90.0
Operating loss$(31.4)$(43.6)
Operating margin(65)%(94)%
Net loss$(26.6)$(35.7)
Diluted net loss per share$(0.24)$(0.33)
Licensing billings (1)$75.4$75.9
Net cash provided by operating activities$28.8$16.8

 (1) Licensing billings is an operational metric that reflects amounts invoiced to our licensing customers during the period, as adjusted for certain differences.

 

Quarterly Financial Review – Non-GAAP (1)Three Months Ended March 31,
(In millions, except for percentages and per share amounts)20192018
Revenue
Royalties$24.8$21.4
Product revenue9.07.3
Contract and other revenue14.617.7
Total revenue$48.4$46.4
Total operating costs and expenses$67.3$68.7
Operating loss$(18.9)$(22.3)
Operating margin(39)%(48)%
Net loss$(9.2)$(11.3)
Diluted net loss per share$(0.08)$(0.10)

(1)  See “Supplemental Reconciliation of GAAP to Non-GAAP Results” and “Reconciliation of Other GAAP to Non-GAAP Items” tables included below. Note that the applicable non-GAAP measures are presented and that revenue is solely presented on a GAAP basis.

Revenue for the quarter was $48.4 million, with royalty revenue of $24.8 million and licensing billings of $75.4 million, in line with expectations. We had GAAP total operating costs and expenses of $79.8 million and non-GAAP total operating costs and expenses of $67.3 million, slightly above the high end of our expectations primarily related to increased facilities costs directly offset by a corresponding decrease in interest expense, as a result of the adoption of Accounting Standards Update (ASU) No. 2016-02, Topic 842, “Leases.” We also had GAAP and non-GAAP diluted net loss per share of $0.24 and $0.08, respectively. Our basic share count was 109.7 million shares and our diluted share count would have been 110.6 million shares.

Cash, cash equivalents, and marketable securities as of March 31, 2019 were $305.9 million, an increase of $28.1 million from December 31, 2018, mainly due to $28.8 million in cash provided by operating activities.

 2019 Second Quarter Outlook

The Company will discuss revenue guidance for the second quarter of 2019 during its upcoming conference call. The following table sets forth second quarter outlook for other measures. 

(In millions)GAAPNon-GAAP (1)
Total operating costs and expenses$81 – $77$69 – $65
Interest and other income (expense), net$5$1
Diluted share count111111

(1)  See “Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates” tables included below.

For the second quarter of 2019, the Company expects operating costs and expenses to be between $81 million and $77 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $69 million and $65 million. These expectations also assume non-GAAP interest and other income (expense), net, of $1 million, tax rate of 24% (refer to non-GAAP financial information below – income tax adjustments) and diluted share count of 111 million, and exclude stock-based compensation expense ($7 million), amortization expense ($5 million), non-cash interest expense on convertible notes ($2 million) and interest income related to the significant financing component from fixed-fee patent and technology licensing arrangements ($6 million).

 

Conference Call:

Rambus management will discuss the results of the quarter during a conference call scheduled for 2:00pm PT today. The call, audio and slides will be available online at investor.rambus.com and a replay will be available for the next week at the following numbers: (855) 859-2056 (domestic) or (404) 537-3406 (international) with ID# 9084526.

 

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 margin, operating income (loss), net income (loss) and, diluted net income (loss) per share. In computing each of these non-GAAP financial measures, the following items were considered as discussed below: stock-based compensation expenses, acquisition-related transaction costs and retention bonus expense, amortization expenses, 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 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 operation of the Company’s core business.

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 percent for both 2019 and 2018, 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. 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 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 product and service offerings, future profit and growth and financial guidance for the second quarter of 2019, including operating costs and expenses, and estimated, fixed, long-term projected tax rates, both on a GAAP and non-GAAP basis as appropriate. 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.

 

Rambus Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

 

 

March 31,
2019		December 31,
2018
ASSETS
Current assets:
Cash and cash equivalents$143,016$115,924
Marketable securities162,850161,840
Accounts receivable43,81050,863
Unbilled receivables170,287176,613
Inventories8,1926,772
Prepaids and other current assets16,85715,738
Total current assets545,012527,750
Intangible assets, net55,50759,936
Goodwill207,828207,178
Property, plant and equipment, net22,63757,028
Operating lease right-of-use assets19,458—
Deferred tax assets4,4114,435
Unbilled receivables, long-term459,148497,003
Other assets7,4197,825
Total assets$1,321,420$1,361,155
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$8,274$7,392
Accrued salaries and benefits13,66616,938
Deferred revenue15,77419,374
Income taxes payable, short-term16,36416,390
Operating lease liabilities9,351—
Other current liabilities5,8479,191
Total current liabilities69,27669,285
Long-term liabilities:
Convertible notes, long-term143,612141,934
Long-term imputed financing obligation—36,297
Long-term operating lease liabilities12,308—
Long-term income taxes payable73,36577,280
Other long-term liabilities22,97224,247
Total long-term liabilities252,257279,758
Total stockholders’ equity999,8871,012,112
Total liabilities and stockholders’ equity$1,321,420$1,361,155

 

Rambus Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

 

 

 

Three Months Ended

March 31,

20192018
Revenue:
Royalties$24,853$21,374
Product revenue8,9647,313
Contract and other revenue14,56717,739
Total revenue48,38446,426
Operating costs and expenses:
Cost of product revenue (1)$4,427$4,357
Cost of contract and other revenue6,77112,122
Research and development (1)40,61940,117
Sales, general and administrative (1)27,64530,198
Restructuring charges3313,245
Total operating costs and expenses79,79390,039
Operating loss(31,409)(43,613)
Interest income and other income (expense), net7,4139,116
Interest expense(2,271)(4,421)
Interest and other income (expense), net5,1424,695
Loss before income taxes(26,267)(38,918)
Provision for (benefit from) income taxes309(3,229)
Net loss$(26,576)$(35,689)
Net loss per share:
Basic$(0.24)$(0.33)
Diluted$(0.24)$(0.33)
Weighted average shares used in per share calculation
Basic109,692109,358
Diluted109,692109,358

_________

(1) Total stock-based compensation expense for the three months ended March 31, 2019 and 2018 is presented as follows:

Three Months Ended

March 31,

20192018
Cost of product revenue$1$3
Research and development$3,210$3,192
Sales, general and administrative$3,978$4,319

 

Rambus Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Results
(In thousands)
(Unaudited)

Three Months Ended

March 31,

20192018
Operating costs and expenses$79,793$90,039
Adjustments:
Stock-based compensation expense(7,189)(7,514)
Acquisition-related transaction costs and retention bonus expense—(30)
Amortization expense(4,988)(10,531)
Restructuring charges(331)(3,245)
Non-GAAP operating costs and expenses$67,285$68,719
Operating loss$(31,409)$(43,613)
Adjustments:
Stock-based compensation expense7,1897,514
Acquisition-related transaction costs and retention bonus expense—30
Amortization expense4,98810,531
Restructuring charges3313,245
Non-GAAP operating loss$(18,901)$(22,293)
Loss before income taxes$(26,267)$(38,918)
Adjustments:
Stock-based compensation expense7,1897,514
Acquisition-related transaction costs and retention bonus expense—30
Amortization expense4,98810,531
Restructuring charges3313,245
Non-cash interest expense on convertible notes1,6782,679
Non-GAAP loss before income taxes$(12,081)$(14,919)
GAAP provision for (benefit from) income taxes309(3,229)
Adjustment to GAAP provision for (benefit from) income taxes(3,208)(352)
Non-GAAP benefit from income taxes(2,899)(3,581)
Non-GAAP net loss$(9,182)$(11,338)
Non-GAAP basic net loss per share$(0.08)$(0.10)
Non-GAAP diluted net loss per share$(0.08)$(0.10)
Weighted average shares used in non-GAAP per share calculation:
Basic109,692109,358
Diluted109,692109,358

Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1)

 

Three Months Ended

March 31,

20192018
GAAP effective tax rate(1)%8%
Adjustment to GAAP effective tax rate25%16%
Non-GAAP effective tax rate24%24%

 

(1) 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 percent for both 2019 and 2018, 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 year to assist the Company’s planning for future periods.

 

Rambus Inc.
Reconciliation of Other GAAP to Non-GAAP Items
(In thousands, except percentages)
(Unaudited)

 

GAAPNon-GAAP

Three Months Ended

March 31,

Three Months Ended

March 31,

2019201820192018
Revenue (i)$48,384$46,426$48,384$46,426
Operating loss (ii)(31,409)(43,613)(18,901)(22,293)
Operating margin (ii/i)(65)%(94)%(39)%(48)%

 

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

2019 Second Quarter OutlookThree Months Ended

June 30, 2019

LowHigh
Forward-looking operating costs and expenses$81.1$77.1
Adjustments:
Stock-based compensation expense(7.2)(7.2)
Amortization expense(5.0)(5.0)
Forward-looking Non-GAAP operating costs and expenses$68.9$64.9
Forward-looking interest and other income (expense), net$4.8$4.8
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(5.7)(5.7)
Non-cash interest expense on convertible notes1.71.7
Forward-looking Non-GAAP interest and other income (expense), net$0.8$0.8

Rambus Announces Tapeout and Availability of 112G Long Reach SerDes PHY on Leading-edge 7nm Node for High-Performance Communications and Data Centers

SerDes PHY delivers leading-edge performance and power efficiency for next-generation SoCs in data-intensive applications

112G SerDes PHY Subsystem Example

Rambus 112G Long Reach SerDes PHY

Rambus PAM-4 Signaling Transmit Eye

Rambus Modeled PAM-4 Signaling Transmit Eye

SUNNYVALE, Calif. – April 16, 2019 – Today Rambus Inc. (NASDAQ: RMBS) announced its newest portfolio solution of 112G Long Reach (LR) SerDes PHY on a leading-edge 7nm process node for next-generation terabit switches, routers, optical transport networks (OTNs), and high-performance networking equipment.  As the industry rapidly transitions to 400GB and 800GB wired communication applications, 112G is a key building block necessary to support the ever-growing demand for more bandwidth in data center and network applications, doubling the data rate of 56G SerDes. Rambus is at the forefront of implementing 112G design to address the long-reach backplane requirements for next-generation data-intensive applications.

This high-speed PHY provides the optimal combination of power efficiency, performance and area, adding to Rambus’ leading-edge large portfolio of silicon-proven intellectual property (IP), design tools and reference flows. With the introduction of 112G, this technology achieves higher performance to rapidly enable industry infrastructure for the 400GB and 800GB applications.

“By leveraging leading 7nm process technology, Rambus is enabling the next generation of Communications and Data Center applications,” said Hemant Dhulla, VP and GM of IP Cores, Rambus. “We’re excited to continue to expand our IP portfolio and deliver our customers top-of-the-line performance and flexibility for today’s most challenging systems, including solutions like our 112G LR SerDes PHY.”

This latest portfolio addition highlights Rambus leadership in high-speed SerDes PHY IP, leveraging the company’s long tradition of signal and power integrity expertise — remaining at the forefront of innovation in interface technology.

Technical Details
The will deliver enterprise-class performance across the demanding backplane environments beyond 30dB. To achieve this data rate requires an innovative SerDes architecture approach to meet the ever-growing data needs for high-speed data-intensive applications.

Key features of the Rambus 112G LR SerDes PHY include:

  • Scalable ADC-based (analog-to-digital converter) architecture with support for PAM-4 and NRZ signaling
  • DSP-based architecture for improved signal to noise ratio (SNR) and extended reach
  • Configurable to provide power, performance and area (PPA) optimization for medium reach (MR) and long reach (LR) applications.

Availability and Additional Information
The Rambus 112G LR SerDes PHY is currently available for licensing and early access design customers can engage today.

With a near-term roadmap featuring industry-leading 112G solutions for extreme short reach (XSR), the Rambus industry-standard interface offerings are high-quality, complete PHY solutions designed with a system-oriented approach to maximize flexibility in today’s most challenging system environments. For more information on our latest high-speed SerDes PHY portfolio offerings, please visit rambus.com/serdes.

Rambus and GLOBALFOUNDRIES to Deliver High-Speed SerDes on 22FDX® for Communications and 5G Applications

32G PHY will deliver power efficiency and performance for next-generation wireline and wireless infrastructure

SUNNYVALE, Calif. – February 20, 2019 – Rambus Inc. (NASDAQ: RMBS), a leading provider of semiconductor and IP products, today announced the availability of 32G Multi-protocol SerDes PHY on GLOBALFOUNDRIES 22nm FD-SOI (22FDX®) platform for high-volume, high-performance applications. Designed to meet the performance requirements of high-speed wireline, wireless 5G infrastructure and data center applications, the SerDes PHY delivers data rates up to 32 Gbps and supports multiple standards including PCIe 4.0, JESD204B/C, CPRI, and Ethernet.

“Boasting increasingly high performance and network density, Rambus 28G and 32G SerDes will be critical to 5G infrastructure, wireless base stations and remote radio heads, autonomous vehicles, data center optical switches and highly anticipated technologies like artificial intelligence and machine learning inferencing, smart cities, and more,” said Hemant Dhulla, vice president and general manager of IP Cores at Rambus. “By developing our high-speed interfaces on GF’s leading 22FDX process, we are able to deliver the high performance alongside reduced power and area required for these applications.”

“Rambus and GF have a long history of delivering leading-edge solutions on our processes,” said John Kent, vice president of IP at GLOBALFOUNDRIES. “Working together with Rambus enables us to provide our clients with power and area optimized high-speed SerDes interfaces to deliver leadership system solutions, while maintaining compatibility with industry standards.”

The 28G and 32G Multi-protocol SerDes (MPS) PHY is designed with a system-oriented approach, taking the interface, interconnect and channel into account when optimizing performance and features to maximize flexibility in today’s most challenging system environments and applications. These comprehensive high-speed SerDes IP solutions are optimized for power and area in long-reach channels typical of communications, networking and data center applications — making this PHY ideal for challenging high-performance wireline and wireless infrastructure environments.

Learn More about SerDes PHY Solutions

The Rambus industry-standard interface offerings are high-quality, complete PHY solutions designed with a system-oriented approach to maximize flexibility in today’s most challenging system environments.  For more information on Rambus SerDes PHYs, visit: rambus.com/serdes

Availability
Early access design customers for this PHY can engage with Rambus today.  Licensing is also currently available.

Visit Rambus at Mobile World Congress 2019 in Barcelona, Spain
Please visit Rambus at Mobile World Congress in Booth #6H21 (Hall 6) at the Fira Gran Via.

Rambus Announces Tapeout of GDDR6 Memory PHY on TSMC 7nm Process Technology

Leading IP to support TSMC’s customers with AI, HPC, automotive and networking applications

SUNNYVALE and SANTA CLARA, Calif. – Jan. 30, 2019 – Rambus Inc. (NASDAQ: RMBS) today announced the tapeout of its GDDR6 PHY on TSMC 7nm FinFET process technology and is available from Rambus for licensing today. Leveraging almost 30 years of high-speed interface design expertise and using advanced process technology, Rambus has successfully taped out a GDDR6 PHY IP on TSMC 7nm process technology.  With ongoing engagements among design and verification customers, GDDR6 is applicable to a broad range of high-performance applications including networking, data center, advanced driver assistance systems (ADAS), machine learning and artificial intelligence (AI). This fastest discrete memory interface from Rambus will add to TSMC’s large portfolio of silicon proven intellectual property (IP), design tools and reference flows.

Expanding beyond traditional GPU and graphic applications, GDDR6 helps to address market needs in multiple, high-bandwidth applications, as memory performance becomes more critical for overall system performance. This latest addition to the Rambus high-speed-interface IP portfolio highlights the company’s leadership and long tradition of signal- and power-integrity expertise, remaining at the forefront of innovation in interface technology. By providing the industry’s highest speed of up to 16 Gbps, while utilizing established packaging and testing techniques, GDDR6 offers system designers an alternative memory choice that is five times faster than traditional memory available today.

The Rambus GDDR6 offering will also add to TSMC’s portfolio of silicon-proven IP, via its Open Innovation Platform® (OIP) IP Alliance Program. In this program, TSMC’s IP and ecosystem partners like Rambus are able to tapeout and validate in silicon critical IP for TSMC’s various process nodes.

Benefits of the Rambus GDDR6 PHY:

  • Provides the industry’s highest speed of up to 16 Gbps, providing a maximum bandwidth of up to 512 Gbps.
  • Offers PCB and Package design support – allowing customers to quickly and reliably bring their high-speed designs to production.
  • Delivers a timing-closed hard macro solution for easy ASIC integration.
  • Provides access to Rambus system and SI/PI experts helping ASIC designers to ensure maximized signal and power integrity for devices and systems.
  • Presents a LabStation™ development environment that enables quick system bring-up, characterization and debug.
  • Supports high-performance applications including networking, data center, ADAS, machine learning and AI.

“By leveraging TSMC’s 7nm process technology, Rambus furthers its ability to offer first to market products and be on the leading edge of industry standards,” said Hemant Dhulla, VP and GM of IP Cores, Rambus. “We offer a complete system solution for integration, including PCB and package design, to help customers get to production faster. We’re excited to grow as a valuable ecosystem partner of TSMC and deliver a broad IP portfolio to maximize performance and flexibility for today’s most challenging systems.”

Availability
GDDR6 is available from Rambus today for licensing and integrating into system-on-chips (SoCs).

Demonstration Details at DesignCon 2019
At DesignCon from Jan. 29 – Jan. 31, 2019 in Santa Clara, California, Rambus will demonstrate a memory channel signaling at GDDR6 speeds. Rambus will also present, “Memory Options for High Performance Applications,” starting at 9:05 am PT on Jan. 30 in the room, “Great America 3,” that will discuss GDDR6 and other leading technologies. Visit Rambus at Booth 837 to learn more about GDDR6 applications.

For more information on our latest Rambus GDDR6 high speed memory offerings on TSMC, please visit https://www.rambus.com/gddr6.

Rambus and Worldline Widen Collaboration in UK Rail

Partner to deliver ITSO smart tickets on-train and at stations

SUNNYVALE, CA and London, UK – January 29, 2019 – Rambus Inc. (NASDAQ: RMBS), a global leader in smart ticketing, and Worldline, a European market leader in payments and transactional services, today announced the expansion of their collaboration to deliver innovation into UK rail. With the integration of Rambus remote ticket download (RTD) software, Worldline can now deliver ITSO-based smart tickets to customer smartcards with their @Station and Mobile Ticket Issuing Service (MTIS),  providing passengers with a reliable and more convenient ticketing experience.

Paving a frictionless future for the UK with industry-proven technology

Rambus has extensive experience deploying robust and secure ticketing solutions which support rail, subway, bus, tram and ferry smart ticketing operations. Worldline, Europe’s largest payments company, provides solutions to many UK rail franchises who can now directly benefit from this leading technology for issuing smart tickets which lays the foundation for contactless rail journeys. This next-generation ticketing solution will greatly enhance access for customers who will be able to collect tickets at station desks and on train directly from staff.

Russell McCullagh, vice president and general manager of Rambus Ticketing commented: “We’re delighted that Worldline has chosen Rambus’ RTD software to provide their rail operators a proven technology that will deliver a frictionless user experience for rail staff and their customers and can also scale across the rail network. Rambus’ broad experience in delivering ITSO-based smartcard and mobile-based ticketing solutions across the UK transport ecosystem will provide a leading technology for an enhanced Worldline customer experience.”

James Bain, Global Director of Transport at Worldline said: “As Europe’s leading and largest payments provider, our focus is on reducing friction for consumers in how they pay for goods and services. Transit and Transport is no different and is the next big merchant market. Our collaboration with Rambus paves the way to revolutionise access to UK rail services with innovative payment solutions.”

Demonstration Details at Transport Ticketing Global
At Transport Ticketing Global from Jan. 29 – Jan. 30, 2019 in London, experience Rambus’ vision of the future of smart ticketing and ticketless transport, where smartphones and technology will enable truly frictionless travel. Visit Rambus at Stand A32 to learn more.

For more information on the Rambus Smart Ticketing solutions, visit rambus.com/smart-ticketing.

Rambus Reports Fourth Quarter and Fiscal Year 2018 Financial Results

  • Fourth quarter GAAP revenue of $68.5 million; revenue under ASC 605 would have been $102.0 million, in line with expectations; $35.1 million in cash provided by operating activities
  • Record product revenue in 2018 for IP cores and server DIMM chips with wins at Tier 1 customers in data center and communications segments worldwide
  • CryptoManager platform selected to securely provision Authenta™ secure memory product line at Micron

SUNNYVALE, Calif. – January 28, 2019 – Rambus Inc. (NASDAQ:RMBS) today reported financial results for the fourth quarter ended December 31, 2018 under GAAP Accounting Standards Codification Topic 606 (“ASC 606”), which superseded the revenue recognition requirements in ASC Topic 605, Revenue Recognition (“ASC 605”) that was previously applicable. Rambus also reported financial results as they would have been presented under ASC 605. This ASC 605 presentation is required under the modified retrospective transition method that Rambus has chosen to adopt under ASC 606. Rambus notes that this presentation allows a more relevant comparability with prior results, which were all reported under ASC 605.

Luc Seraphin, chief executive officer of Rambus said, “Rambus had a strong fourth quarter and solid year overall, with continued execution from our product teams and record annual revenue for IP cores and server DIMM chips. As we refocus our product portfolio around our core strengths in semiconductor, improve operational efficiency, and continue to generate cash from operations, we align the company for profitable growth.”

Fourth Quarter and Fiscal Year 2018 Financial Highlights
(In millions, except per share amounts)Three Months Ended December 31, 2018Year Ended December 31, 2018
ASC 606ASC 605 (1)ASC 606ASC 605 (1)
GAAPNon-GAAP (2)GAAPNon-GAAP (2)GAAPNon-GAAP (2)GAAPNon-GAAP (2)
Revenue$68.5$68.5$102.0$102.0$231.2$231.2$401.1$401.1
Diluted net income (loss) per share$(0.02)$0.09$0.23$0.28$(1.46)$(0.06)$(0.14)$0.92

(1) As noted above, Rambus is presenting the financial results under ASC 606 along with the results that would have been applicable under ASC 605. The ASC 605 information should be considered in addition to, not as a substitute for, nor superior to or in isolation from, the financial information prepared in accordance with ASC 606

(2)  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.

Business Review

For the Rambus IP cores and Server DIMM chipset businesses, 2018 saw sustained technology leadership in the market, growing customer traction and record revenue. Our DDR4 server DIMM chip business met its revenue targets for the quarter and year and continues to gain market share. With an increasing number of OEM qualifications in the existing server platform and more than double for the upcoming advanced performance CPU refresh, the buffer chip remains poised for growth in 2019. In addition to the steady growth in DDR4, we maintain our leadership position for next-generation DDR5 memory buffer chips and are now shipping customer samples at the top-end speeds for both the RCD and DB chips.

Rambus high-speed IP cores business has been growing at an impressive compound annual growth rate of greater than 50% over the past four years. We continue to gain traction in high-growth, high-performance applications including artificial intelligence, machine learning, graphics, wired switches, and wireless infrastructure. We closed out the year with record revenue fueled by wins with Tier 1 customers in data center and communications segments worldwide. We continued our leadership position in high-end and high-bandwidth SerDes and memory IP cores in advanced process nodes with the tape out of the industry’s first GDDR6 memory PHY in a leading-edge process node. In Q4, we closed a substantial number of design wins with top tier customers worldwide, which sets us up nicely for healthy growth to continue in 2019.

Moving over to our Cryptography business, 2018 saw the importance of semiconductor device-level security grow in the industry, resulting in increased traction and opportunities for our embedded security cores and provisioning capabilities in market segments like IoT, automotive, networking and government. We launched the programmable CryptoManager Root of Trust, which combines our deep security expertise with a modern open architecture, RISC-V, to create an easy-to-consume, secure processing core and have numerous engagements in the semiconductor ecosystem. In Q4, we announced that our CryptoManager platform will be used to securely provision Micron Authenta™ based secure memory. This is a key milestone as it showcases our ability to combine our device-level provisioning solutions with 3rd-party cores to extend our market share and enable a new level of protection for connected devices.

Quarterly Financial Review – GAAPThree Months Ended December 31,
(In millions, except for percentages and per share amounts)20182017
As Reported ASC 606Adjustments (1)ASC 605 (1)As Reported ASC 605
Revenue
Royalties$45.4$31.3$76.7$77.9
Product revenue11.50.411.98.5
Contract and other revenue11.61.813.415.5
Total revenue$68.5$33.5$102.0$101.9
Total operating costs and expenses$72.8$—$72.8$86.2
Operating income (loss)$(4.3)$33.5$29.2$15.7
Operating margin(6)%35%29%15%
Net income (loss)$(2.0)$27.2$25.2$(36.2)
Diluted net income (loss) per share$(0.02)$0.25$0.23$(0.33)
Licensing billings (2)$76.7$—$76.7$76.6
Net cash provided by operating activities$35.1$—$35.1$59.8

(1) As noted above, Rambus is presenting the ASC 606 results together with the adjustments made to reconcile the ASC 606 presentation to the results that would have been applicable under ASC 605. The ASC 605 information should be considered in addition to, not as a substitute for, nor superior to or in isolation from, the financial information prepared in accordance with ASC 606.

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

Quarterly Financial Review – Non-GAAP (1)Three Months Ended December 31,
(In millions, except for percentages and per share amounts)20182017
As Reported ASC 606Adjustments (2)ASC 605 (2)As Reported ASC 605
Revenue
Royalties$45.4$31.3$76.7$77.9
Product revenue11.50.411.98.5
Contract and other revenue11.61.813.415.5
Total revenue$68.5$33.5$102.0$101.9
Total operating costs and expenses$61.6$—$61.6$68.4
Operating income$6.9$33.5$40.4$33.5
Operating margin10%30%40%33%
Net income$9.6$20.7$30.3$21.2
Diluted net income per share$0.09$0.19$0.28$0.19

 

(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)  See note (1) under “Quarterly Financial Review-GAAP” above for a description of the Adjustments and ASC 605 presentations.

Revenue for the quarter was $68.5 million, above the high end of our expectations, due to the structure of our licensing agreements signed within the quarter. Revenue under ASC 605 would have been $102.0 million, at the mid-point of our expectations. Revenue for the year ended December 31, 2018 under ASC 605 was 6% higher than a year ago excluding the impact of the Lighting Division which was wound down in the first quarter of 2018. We had GAAP total operating costs and expenses of $72.8 million and non-GAAP total operating costs and expenses of $61.6 million, at the bottom of our expectations due to our refocus on our core semiconductor business. We also had GAAP and non-GAAP diluted net income (loss) per share of ($0.02) and $0.09, respectively. Total GAAP and non-GAAP diluted net income per share under ASC 605 would have been $0.23 and $0.28, respectively, at the high end of our expectations.

For the year ended December 31, 2018, we had GAAP diluted net loss per share under ASC 605 of $0.14. We also had non-GAAP diluted net income per share under ASC 605 of $0.92, which was 35% higher than a year ago.

Cash, cash equivalents, and marketable securities as of December 31, 2018 were $277.8 million, an increase of $29.6 million from September 30, 2018, mainly due to $35.1 million in cash provided by operating activities. Adjusted EBITDA under ASC 605 for the quarter would have been $43.0 million.

2019 First Quarter Outlook

The Company will discuss revenue guidance for the first quarter of 2019 during its upcoming conference call. The following table sets forth first quarter outlook for other measures.

(In millions)GAAPNon-GAAP (1)
Total operating costs and expenses$78 – $74$66 – $62
Interest and other income (expense), net$3($1)
Diluted share count110110

(1)  See “Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates” tables included below.

For the first quarter of 2019, the Company expects operating costs and expenses to be between $78 million and $74 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $66 million and $62 million. These expectations also assume non-GAAP interest and other income (expense), net, of ($1 million), tax rate of 24% (refer to non-GAAP financial information below – income tax adjustments) and diluted share count of 110 million, and exclude stock-based compensation expense ($7 million), amortization expense ($5 million) and non-cash interest expense on convertible notes ($2 million).

Conference Call:

Rambus management will discuss the results of the quarter during a conference call scheduled for 2:00pm PT today. The call, audio and slides will be available online at investor.rambus.com and a replay will be available for the next week at the following numbers: (855) 859-2056 (domestic) or (404) 537-3406 (international) with ID# 8397247.

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 margin, operating income (loss), net income (loss) and, diluted net income (loss) per share, presented both under ASC 606 and as they would have been presented under ASC 605. In computing each of these non-GAAP financial measures, the following items were considered as discussed below: stock-based compensation expenses, acquisition-related transaction costs and retention bonus expense, amortization expenses, 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 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 operation of the Company’s core business.

Loss on extinguishment of debt. The Company has excluded loss on extinguishment of debt as this represents a cost of refinancing its existing convertible notes and is not a reflection of the Company’s ongoing operations.

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 percent for both 2019 and 2018, and 35 percent for 2017, 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. 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 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 product and service offerings, future profit and growth and financial guidance for the first quarter of 2019, including operating costs and expenses, and estimated, fixed, long-term projected tax rates, both on a GAAP and non-GAAP basis as appropriate. 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.

Rambus Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

 

December 31,December 31,
20182017
ASSETS
Current assets:
Cash and cash equivalents$115,924$225,844
Marketable securities161,840103,532
Accounts receivable50,86325,326
Unbilled receivables176,613566
Inventories6,7725,159
Prepaids and other current assets15,73811,317
Total current assets527,750371,744
Intangible assets, net59,93691,722
Goodwill207,178209,661
Property, plant and equipment, net57,02854,303
Deferred tax assets4,435159,099
Unbilled receivables, long-term497,003—
Other assets7,8254,543
Total assets$1,361,155$891,072
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$7,392$9,614
Accrued salaries and benefits16,93817,091
Deferred revenue19,37418,272
Income taxes payable, short-term16,390258
Convertible notes, short-term—78,451
Other current liabilities9,1919,156
Total current liabilities69,285132,842
Long-term liabilities:
Convertible notes, long-term141,934135,447
Long-term imputed financing obligation36,29737,262
Long-term income taxes payable77,2803,344
Deferred tax liabilities18,9609,830
Other long-term liabilities5,287763
Total long-term liabilities279,758186,646
Total stockholders’ equity1,012,112571,584
Total liabilities and stockholders’ equity$1,361,155$891,072

 

Rambus Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

 

 

Three Months Ended

December 31,

Year Ended

December 31,

2018201720182017
Revenue:
Royalties$45,430$77,861$130,452$289,594
Product revenue11,5378,54338,69036,509
Contract and other revenue11,59615,48762,05966,993
Total revenue68,563101,891231,201393,096
Operating costs and expenses:
Cost of product revenue (1)4,3675,90118,29923,783
Cost of contract and other revenue6,23912,09035,40255,364
Research and development (1)37,39539,417158,339149,135
Sales, general and administrative (1)24,76828,818103,911110,940
Restructuring charges (recoveries)(6)—2,217—
Gain from sale of intellectual property—(54)—(533)
Total operating costs and expenses72,76386,172318,168338,689
Operating income (loss)(4,200)15,719(86,967)54,407
Interest income and other income (expense), net7,24889332,6211,384
Loss on extinguishment of debt—(1,082)—(1,082)
Interest expense(3,251)(3,966)(16,282)(13,720)
Interest and other income (expense), net3,997(4,155)16,339(13,418)
Income (loss) before income taxes(203)11,564(70,628)40,989
Provision for income taxes1,81547,73287,32963,851
Net loss$(2,018)$(36,168)$(157,957)$(22,862)
Net loss per share:
Basic$(0.02)$(0.33)4(1.46)$(0.21)
Diluted$(0.02)$(0.33)$(1.46)$(0.21)
Weighted average shares used in per share calculation
Basic108,826109,737108,450110,198
Diluted108,826109,737108,450110,198

_________

(1) Total stock-based compensation expense for the three months and years ended December 31, 2018 and 2017 are presented as follows:

Three Months Ended

December 31,

Year Ended

December 31,

2018201720182017
Cost of product revenue$1$25$8$78
Research and development$2,920$3,137$12,582$12,185
Sales, general and administrative$3,224$4,072$9,146$15,140

 

 

Rambus Inc.
Supplemental Annual Financial Review
(In millions, except per share amounts)
(Unaudited)

Annual Financial Review – GAAPYear Ended December 31,
(In millions, except for percentages and per share amounts)20182017
As Reported ASC 606Adjustments (1)ASC 605 (1)As Reported ASC 605
Revenue$231.2$169.9$401.1$393.1
Total operating costs and expenses$318.2$—$318.2$338.7
Operating income (loss)$(87.0)$169.9$82.9$54.4
Operating margin(38)%58%21%14%
Net income (loss)$(157.9)$142.6$(15.3)$(22.9)
Diluted net income (loss) per share$(1.46)$1.32$(0.14)$(0.21)
Net cash provided by operating activities$87.1$—$87.1$117.4

 

(1) See note (1) under “Quarterly Financial Review-GAAP” above for a description of the Adjustments and ASC 605 presentations.

 

Annual Financial Review – Non-GAAP (1)Year Ended December 31,
(In millions, except for percentages and per share amounts)20182017
As Reported ASC 606Adjustments (2)ASC 605 (2)As Reported ASC 605
Revenue$231.2$169.9$401.1$393.1
Total operating costs and expenses$264.8$—$264.8$269.1
Operating income (loss)$(33.6)$169.9$136.3$124.0
Operating margin(15)%49%34%32%
Net income (loss)$(6.1)$108.4$102.3$77.5
Diluted net income (loss) per share$(0.06)$0.98$0.92$0.68

(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)  See note (1) under “Quarterly Financial Review-GAAP” above for a description of the Adjustments and ASC 605 presentations.

 

Rambus Inc.
Supplemental Revenue and Licensing Billings
(In thousands)
(Unaudited)

2018 Revenue under ASC 606
Quarter endedYear ended
December 31, 2018September 30, 2018June 30, 2018March 31, 2018December 31, 2018
Revenue
Royalties$45,430$33,599$30,049$21,374$130,452
Product revenue11,53711,7538,0877,31338,690
Contract and other revenue11,59614,40218,32217,73962,059
Total revenue$68,563$59,754$56,458$46,426$231,201

 

2018 Revenue under ASC 605 and Licensing Billings
Quarter endedYear ended
December 31, 2018September 30, 2018June 30, 2018March 31, 2018December 31, 2018
Revenue
Royalties$76,717$75,704$73,626$77,174$303,221
Product revenue11,86711,7538,2217,55639,397
Contract and other revenue13,39812,38316,97315,72958,483
Total revenue$101,982$99,840$98,820$100,459$401,101
Licensing billings (1)$76,717$75,374$73,210$75,924$301,225

 

2017 Revenue under ASC 605 and Licensing Billings
Quarter endedYear ended
December 31, 2017September 30, 2017June 30, 2017March 31, 2017December 31, 2017
Revenue
Royalties$77,861$72,787$69,990$68,956$289,594
Product revenue8,5438,6618,40110,90436,509
Contract and other revenue15,48717,68616,32917,49166,993
Total revenue$101,891$99,134$94,720$97,351$393,096
Licensing billings (1)$76,611$71,537$72,890$68,556$289,594

 

2016 Revenue under ASC 605 and Licensing Billings
Quarter endedYear ended
December 31, 2016September 30, 2016June 30, 2016March 31, 2016December 31, 2016
Revenue
Royalties$70,604$68,298$62,835$62,877$264,614
Product revenue11,7467,0923,9023,31226,052
Contract and other revenue15,20914,4659,7646,49345,931
Total revenue$97,559$89,855$76,501$72,682$336,597
Licensing billings (1)$64,854$71,548$66,604$61,683$264,689

 

(1)  Licensing billings is an operational metric that reflects amounts invoiced to our licensing customers during the period, as adjusted for certain differences.

Rambus Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Results
(In thousands)
(Unaudited)

 

Three Months Ended December 31,Year Ended December 31,
ASC 606ASC 605ASC 606ASC 605
201820182017201820182017
Operating costs and expenses$72,763$72,763$86,172$318,168$318,168$338,689
Adjustments:
Stock-based compensation expense(6,145)(6,145)(7,234)(21,736)(21,736)(27,403)
Acquisition-related transaction costs and retention bonus expense——(30)(70)(70)(248)
Amortization expense(4,989)(4,989)(10,526)(29,341)(29,341)(41,962)
Restructuring charges (recoveries)66—(2,217)(2,217)—
Non-GAAP operating costs and expenses$61,635$61,635$68,382$264,804$264,804$269,076
Operating income (loss)$(4,200)$29,219$15,719$(86,967)$82,933$54,407
Adjustments:
Stock-based compensation expense6,1456,1457,23421,73621,73627,403
Acquisition-related transaction costs and retention bonus expense——307070248
Amortization expense4,9894,98910,52629,34129,34141,962
Restructuring charges (recoveries)(6)(6)—2,2172,217—
Non-GAAP operating income (loss)$6,928$40,347$33,509$(33,603)$136,297$124,020
Income (loss) before income taxes$(203)$27,068$11,564$(70,628)$72,037$40,989
Adjustments:
Stock-based compensation expense6,1456,1457,23421,73621,73627,403
Acquisition-related transaction costs and retention bonus expense——307070248
Amortization expense4,9894,98910,52629,34129,34141,962
Restructuring charges (recoveries)(6)(6)—2,2172,217—
Loss on extinguishment of debt——1,082——1,082
Non-cash interest expense on convertible notes1,6551,6552,2559,2429,2427,579
Non-GAAP income (loss) before income taxes$12,580$39,851$32,691$(8,022)$134,643$119,263
GAAP provision for income taxes1,8151,81547,73287,32987,32963,851
Adjustment to GAAP provision for income taxes1,2047,749(36,290)(89,255)(55,015)(22,109)
Non-GAAP provision for (benefit from) income taxes3,0199,56411,442(1,926)32,31441,742
Non-GAAP net income (loss)$9,561$30,287$21,249$(6,096)$102,329$77,521
Non-GAAP basic net income (loss) per share$0.09$0.28$0.19$(0.06)$0.94$0.70
Non-GAAP diluted net income (loss) per share$0.09$0.28$0.19$(0.06)$0.92$0.68
Weighted average shares used in non-GAAP per share calculation:
Basic108,826108,826109,737108,450108,450110,198
Diluted109,618109,618114,341108,450110,837113,899

Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1)

 

Three Months Ended December 31,Year Ended December 31,
ASC 606ASC 605ASC 606ASC 605
201820182017201820182017
GAAP effective tax rate(894)%7%413%(124)%121%156%
Adjustment to GAAP effective tax rate918%17%(378)%148%(97)%(121)%
Non-GAAP effective tax rate24%24%35%24%24%35%

(1) 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 percent for 2018 and 35 percent for 2017, 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 year to assist the Company’s planning for future periods.

Rambus Inc.
Reconciliation of Other GAAP to Non-GAAP Items
(In thousands, except percentages)
(Unaudited)

GAAPNon-GAAP
Three Months Ended December 31,Three Months Ended December 31,
ASC 606ASC 605ASC 606ASC 605
201820182017201820182017
Revenue (i)$68,563$101,982$101,891$68,563$101,982$101,891
Operating income (loss) (ii)(4,200)29,21915,7196,92840,34733,509
Operating margin (ii/i)(6)%29%15%10%40%33%

 

GAAPNon-GAAP
Year Ended December 31,Year Ended December 31,
ASC 606ASC 605ASC 606ASC 605
201820182017201820182017
Revenue (i)$231,201$401,101$393,096$231,201$401,101$393,096
Operating income (loss) (ii)(86,967)82,93354,407(33,603)136,297124,020
Operating margin (ii/i)(38)%21%14%(15)%34%32%

 

Three Months Ended December 31,
ASC 605
20182017
Net income (loss)$25,253$(36,168)
Add back:
Interest and other income (expense), net2,1514,155
Provision for income taxes1,81547,732
Depreciation expense2,6383,304
Amortization expense4,98910,526
EBITDA (1)$36,846$29,549
Adjustments:
Stock-based compensation expense6,1457,234
Acquisition-related transaction costs and retention bonus expense—30
Restructuring recoveries(6)—
Adjusted EBITDA (2)$42,985$36,813

 

(1)  EBITDA is a non-GAAP measure that management uses to evaluate the cash generating capacity of the company. The most directly comparable GAAP measure is net income (loss). EBITDA is net income (loss) adjusted for net interest and other income (expense), income taxes, and depreciation and amortization. It should not be considered as an alternative to net income computed under GAAP.

(2)  Adjusted EBITDA excludes the impact of other non-GAAP adjustments indicated in the above tables.

 

 

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

2019 First Quarter OutlookThree Months Ended March 31, 2019
LowHigh
Forward-looking operating costs and expenses$78.1$74.1
Adjustments:
Stock-based compensation expense(6.6)(6.6)
Amortization expense(5.0)(5.0)
Forward-looking Non-GAAP operating costs and expenses$66.5$62.5
Forward-looking interest and other income (expense), net$3.4$3.4
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(5.7)(5.7)
Non-cash interest expense on convertible notes1.71.7
Forward-looking Non-GAAP interest and other income (expense), net$(0.6)$(0.6)