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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 Delivers 112G XSR/USR PHY on TSMC 7nm Process for Chiplets and Co-Packaged Optics in Networking and Data Center

Highlights:

  • Expands comprehensive portfolio of cutting-edge IP designed on TSMC’s industry-leading 7nm (N7) process
  • Enables the most power- and cost-efficient solution for die-to-die (D2D) and die-to-optical engine (D2OE) connectivity over Extra Short Reach (XSR) and Ultra Short Reach (USR) channels
  • Accelerates next-generation data center, networking, 5G, high-performance computing (HPC), and artificial intelligence/machine learning (AI/ML) applications with a critical building block enabling chiplet and co-packaged optics (CPO) architectures
112G XSR SerDes PHY Subsystem Example
Multi-Chip System Using Rambus 112G XSR Interfaces

SUNNYVALE, Calif. – June 17, 2020 – Rambus Inc. (NASDAQ: RMBS), a premier silicon IP and chip provider making data faster and safer, today announced it has expanded its portfolio of high-speed interface IP on TSMC’s industry-leading 7nm process with the addition of its silicon-demonstrated 112G XSR/USR PHY. Offering unmatched power and area efficiency for next-generation applications, the 112G XSR/USR PHY is a critical enabler of chiplet and CPO architectures for data center, networking, 5G, HPC and AI/ML applications.

“Chiplets are already entering mainstream markets to enable cost-effective, high-performance products and to maintain signal integrity across variable physical distances,” said Shane Rau, research vice president, computing semiconductors at IDC. “SerDes PHYs at advanced process nodes, like the 7nm 112G XSR, enable that speed and signal integrity.”

The accelerated trend of disaggregation of large SoCs into multiple smaller chiplets demands faster time to market, yield improvement and design flexibility. The Rambus 112G XSR/USR PHY is a critical enabler of the D2D and D2OE interconnects for chiplet architectures. Implemented on TSMC’s advanced process technology, this chiplet connectivity solution has been demonstrated in silicon to exceed the challenging reach/BER performance of the CEI-112G XSR specification, and supports NRZ and PAM-4 signaling at various data rates for maximum design flexibility.

“We’re pleased with the availability of Rambus’ PHY on our N7 process technology to address the growing market need for low-power, high-performance chiplet architectures,” said Suk Lee, senior director of the Design Infrastructure Management Division at TSMC. “Our ongoing partnership with Rambus ensures that designers can meet next-generation requirements for performance and power efficiency in computing, AI/ML and networking using TSMC’s advanced process technologies.”

Leading-edge applications moving to chiplet architectures include next-generation 51.2 Terabit per second (Tbps) ASICs for network switches, where 112G XSR links will connect the digital switch ASIC die to CPO engines. In AI/ML and HPC SoCs, the 112G XSR PHY can be used to bridge purpose-built accelerator chiplets for natural language processing, video transcoding and image recognition. Another popular use case is the die disaggregation of large SoCs, hitting reticle size limits for manufacturable yields, into multiple smaller die connected using XSR links over organic substrate. Increasingly, these advanced applications are implemented on TSMC’s N7 process.

“This important milestone highlights Rambus’ leadership in high-speed SerDes enabling the industry’s highest value and most demanding applications,” said Hemant Dhulla, vice president and general manager of IP cores at Rambus. “At an industry-leading power efficiency of sub-picojoule per bit, and unidirectional bandwidth approaching two terabit per second per millimeter, we are very proud to offer our 112G XSR/USR solution in partnership with TSMC.”

Availability
The Rambus 112G XSR/USR PHY is available today for licensing and integrating into chiplet and SoC designs.

Additional Information
For additional details about the Rambus 112G XSR/USR PHY, please go to https://www.rambus.com/interface-ip/serdes/112g-xsr-phy/

Rambus Reports First Quarter 2020 Financial Results

  • Excellent quarter, exceeding expectations for revenue and profit: GAAP revenue of $64.0 million; licensing billings of $67.1 million, product revenue of $30.7 million, and contract and other revenue of $13.6 million
  • $37.3 million in cash provided by operating activities, further strengthening the balance sheet
  • Record revenue from both the silicon IP and chip businesses, bolstered by strong demand in data center and infrastructure
  • Increasing bandwidth, capacity and security requirements driven by the shift to remote operations are accelerating demand for IP and chips in data center, cloud and 5G

SUNNYVALE, Calif. – May 4, 2020 – Rambus Inc. (NASDAQ:RMBS), a premier silicon IP and chip provider making data faster and safer, today reported financial results for the first quarter ended March 31, 2020. GAAP revenue for the first quarter was above expectations at $64.0 million; licensing billings were $67.1 million, product revenue was $30.7 million, and contract and other revenue was $13.6 million. The Company also generated $37.3 million in cash provided by operating activities.

“Rambus had an exceptional first quarter with record revenue from both our silicon IP and chip businesses, driven by excellent execution and continued gains in market share,” said Luc Seraphin, chief executive officer of Rambus. “The dedication of our team and resilience of our business model under the current circumstances, combined with accelerated demand for our products across the critical markets of data center, networking and 5G, give us confidence in our ongoing ability to generate cash, further strengthen our balance sheet and emerge a stronger company.”

Business Review

The dramatic global shift towards working from home and virtual collaboration caused by COVID-19 has put an enormous strain on global data infrastructure, increasing demands for bandwidth, capacity and security in data center, cloud and 5G applications to rapidly scale remote access. As a result, customer demand remains strong in these critical markets, despite significant uncertainty in the macro environment. The Company’s focus on our core strength in semiconductor, emphasis on operational efficiency and strong cash generation have built an enduring foundation for growth that enables our product teams to provide uninterrupted delivery on our commitments to customers. With predictable patent licensing and a strong balance sheet, the Rambus business model is naturally resilient to the economic uncertainty resulting from COVID-19, and our innovations and products are well aligned to both near and long-term customer demand.

The Rambus silicon IP business delivered record revenue in the first quarter, augmented by multiple tier-1 SoC design wins and strong execution from last year’s acquisitions. The Company strengthened its position in the critical markets of data center, cloud, communications, HPC, AI and 5G, with additions to both the high-speed interface and security IP portfolios. Our industry-leading, silicon-proven 112G XSR die-to-die and chiplet interface and complete HBM2E memory solution, featuring an integrated PHY and digital controller, provide the critical interconnects for moving data in next-generation high-performance applications. The tremendous growth in the amount of data being generated is also increasing requirements to secure data while at-rest and in-motion. The team continues to drive growth in security with multiple tier-1 SoC design wins for root of trust and secure protocol solutions. We extended our industry leadership with the recent launch of an 800G MACsec solution to protect data in motion in cloud, networking, AI and 5G applications.

The Company’s memory interface chip business delivered record revenue for the fourth consecutive quarter, driven by continued gains in market share and bolstered by the increased demand for memory in data center and cloud. Emphasizing excellence in quality and delivery, data center and OEM qualifications continue to increase for the DDR4 memory interface chipset, and the Company remains well positioned as a first mover for the industry transition to DDR5.

 

Quarterly Financial Review – GAAPThree Months Ended
March 31,
(In millions, except for percentages and per share amounts)20202019
Revenue
Royalties$19.7$24.8
Product revenue30.79.0
Contract and other revenue13.614.6
Total revenue$64.0$48.4
Cost of product revenue$10.3$4.4
Cost of contract and other revenue$1.2$2.9
Amortization of acquired intangible assets (included in total cost of revenue)$4.4$3.9
Total operating expenses (1)$58.9$68.6
Operating loss$(10.8)$(31.4)
Operating margin(17)%(65)%
Net loss$(8.0)$(26.6)
Diluted net loss per share$(0.07)$(0.24)
Net cash provided by operating activities$37.3$28.8

(1)  Includes amortization of acquired intangible assets of approximately $0.3 million and $1.1 million for the three months ended March 31, 2020 and 2019, respectively.

Quarterly Financial Review – Non-GAAP (including operational metric) (1)Three Months Ended
March 31,
(In millions)20202019
Licensing billings (2)$67.1$75.4
Product revenue$30.7$9.0
Contract and other revenue$13.6$14.6
Cost of product revenue$10.3$4.4
Cost of contract and other revenue$1.2$2.9
Total operating expenses$51.9$60.0
Interest and other income (expense), net$1.2$1.1
Diluted share count115111

(1)  See “Supplemental Reconciliation of GAAP to Non-GAAP Results” table included below. Note that the applicable non-GAAP measures are presented and that revenue, cost of product revenue and cost of contract and other revenue are solely presented on a GAAP basis.

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

Revenue for the quarter was $64.0 million, above the high end of our expectations primarily due to our strong performance in our memory interface chip business. We also had licensing billings of $67.1 million, product revenue of $30.7 million, and contract and other revenue of $13.6 million. We had total GAAP cost of revenue of $15.9 million and operating expenses of $58.9 million. We also had total non-GAAP operating expenses of $51.9 million, at the low end of our expectations through our cost management actions. Due to our strong revenue performance and cost management actions, our profit was above the high end of our expectations. We had GAAP diluted net loss per share of $0.07. Our basic share count was 113 million shares and our diluted share count would have been 115 million shares.

Cash, cash equivalents, and marketable securities as of March 31, 2020 were $435.4 million, an increase of $27.8 million from December 31, 2019, mainly due to $37.3 million in cash provided by operating activities.

2020 Second Quarter Outlook

The Company will discuss its full revenue guidance for the second quarter of 2020 during its upcoming conference call. The following table sets forth second quarter outlook for other measures.

(In millions)GAAPNon-GAAP (1)
Licensing billings (2)$57 – $63$57 – $63
Product revenue$27 – $33$27 – $33
Contract and other revenue$8 – $14$8 – $14
Total operating costs and expenses$77 – $73$66 – $62
Interest and other income (expense), net$3$1
Diluted share count116116

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

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

For the second quarter of 2020, the Company expects licensing billings to be between $57 million and $63 million. The Company also expects royalty revenue to be between $9 million and $15 million, product revenue to be between $27 million and $33 million and contract and other revenue to be between $8 million and $14 million. Revenue is not without risk and achieving revenue in this range will require that the Company sign customer agreements for various product sales, solutions licensing among other matters.

The Company also expects operating costs and expenses to be between $77 million and $73 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% and diluted share count of 116 million, and exclude stock-based compensation expense ($6 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 ($4 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# 9761889.

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

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

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

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

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.

Change in fair value of earn-out liability. This change is due to a reduction of acquisition purchase consideration. This is a non-recurring benefit that has no direct correlation to the operation of the Company’s business.

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 2020 and 2019, which consists of estimated U.S. federal and state tax rates, and excludes tax rates associated with certain items such as withholding tax, tax credits, deferred tax asset valuation allowance and the release of any deferred tax asset valuation allowance. Accordingly, the Company has applied these tax rates to its non-GAAP financial results for all periods in the relevant years to assist the Company’s planning.

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

Forward-Looking Statements

This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, including those relating to Rambus’ expectations regarding operating results and business opportunities, growth in product and service offerings and product revenue, expected benefits of our merger, acquisition and divestiture activity and related integration, and financial guidance for the second quarter of 2020, including licensing billings and revenue estimates, operating costs and expenses, interest and other income (expense), net and estimated, fixed, long-term projected tax rates 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, as well as the potential adverse impacts related to, or arising from, the Novel Coronavirus (COVID-19). Rambus undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

Contact:
Rahul Mathur
Senior Vice President, Finance and Chief Financial Officer
Rambus Inc.
(408) 462-8000
rmathur@rambus.com

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

March 31,
2020		December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents$175,446$102,176
Marketable securities259,999305,488
Accounts receivable44,36444,039
Unbilled receivables172,042184,366
Inventories9,84810,086
Prepaids and other current assets17,05718,524
Total current assets678,756664,679
Intangible assets, net50,20854,900
Goodwill183,465183,465
Property, plant and equipment, net47,74344,714
Operating lease right-of-use assets34,49337,020
Deferred tax assets4,5414,574
Unbilled receivables, long-term314,706343,703
Other assets5,5795,931
Total assets$1,319,491$1,338,986
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$15,730$9,549
Accrued salaries and benefits12,41120,291
Deferred revenue10,12111,947
Income taxes payable, short-term19,89219,142
Operating lease liabilities5,1946,357
Other current liabilities16,71518,893
Total current liabilities80,06386,179
Long-term liabilities:
Convertible notes, long-term150,561148,788
Long-term operating lease liabilities38,07439,889
Long-term income taxes payable55,16360,094
Deferred tax liabilities14,14013,846
Other long-term liabilities15,79219,272
Total long-term liabilities273,730281,889
Total stockholders’ equity965,698970,918
Total liabilities and stockholders’ equity$1,319,491$1,338,986

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

Three Months Ended

March 31,

20202019
Revenue:
Royalties$19,694$24,853
Product revenue30,7288,964
Contract and other revenue13,56714,567
Total revenue63,98948,384
Cost of revenue:
Cost of product revenue (1)10,3434,427
Cost of contract and other revenue1,1982,908
Amortization of acquired intangible assets4,3443,863
Total cost of revenue15,88511,198
Gross profit48,10437,186
Operating expenses:
Research and development (1)36,66440,619
Sales, general and administrative (1)22,89526,520
Amortization of acquired intangible assets3481,125
Restructuring charges836331
Change in fair value of earn-out liability(1,800)—
Total operating expenses58,94368,595
Operating loss(10,839)(31,409)
Interest income and other income (expense), net6,3747,413
Interest expense(2,555)(2,271)
Interest and other income (expense), net3,8195,142
Loss before income taxes(7,020)(26,267)
Provision for income taxes963309
Net loss$(7,983)$(26,576)
Net loss per share:
Basic$(0.07)$(0.24)
Diluted$(0.07)$(0.24)
Weighted average shares used in per share calculation
Basic112,907109,692
Diluted112,907109,692

_________

(1) Total stock-based compensation expense for the three months ended March 31, 2020 and 2019 is presented as follows:

Three Months Ended
March 31,
20202019
Cost of product revenue$—$1
Research and development$2,613$3,210
Sales, general and administrative$3,459$3,978

 

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

Three Months Ended
March 31,
20202019
Total operating expenses$58,943$68,595
Adjustments:
Stock-based compensation expense(6,072)(7,189)
Acquisition-related costs and retention bonus expense(1,577)—
Amortization of acquired intangible assets(348)(1,125)
Restructuring charges(836)(331)
Change in fair value of earn-out liability1,800—
Non-GAAP total operating expenses$51,910$59,950
Interest and other income (expense), net$3,819$5,142
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(4,368)(5,707)
Non-cash interest expense on convertible notes1,7731,678
Non-GAAP interest and other income (expense), net$1,224$1,113

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

2020 Second Quarter OutlookThree Months Ended
June 30, 2020
LowHigh
Forward-looking operating costs and expenses$76.9$72.9
Adjustments:
Stock-based compensation expense(6.1)(6.1)
Amortization of acquired intangible assets

 

(5.0)(5.0)
Forward-looking Non-GAAP operating costs and expenses$65.8$61.8
Forward-looking interest and other income (expense), net$3.1$3.1
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(3.7)(3.7)
Non-cash interest expense on convertible notes1.81.8
Forward-looking Non-GAAP interest and other income (expense), net$1.2$1.2

Rambus Announces Complete 800G MACsec Solution for Enhanced Data Center and 5G Infrastructure Security

Highlights: 

  • Integrated hardware-based solution delivers full line-rate MACsec security at 100G to 800G data rates
  • Supports multi-channel, multi-rate implementations with flexible bandwidth allocation
  • Delivers enhanced data security for cloud, enterprise and carrier network applications as well as network-attached, high-performance computing (HPC) and AI/ML
MACsec Implementation with MACsec-IP-163/164
MACsec Implementation with MACsec-IP-163/164

SUNNYVALE, Calif. – Apr. 29, 2020 – Rambus Inc. (NASDAQ: RMBS), a premier silicon IP and chip provider making data faster and safer, today announced its 800G MACsec (Media Access Control security) solution for next-generation networking infrastructure. The 800G MACsec solution delivers hardware-based, point-to-point security for 800 Gigabit Ethernet links and is a critical element of end-to-end network security. Protecting data in motion, MACsec can identify and prevent security threats such as denial of service, intrusion, man-in-the-middle, passive eavesdropping and masquerading attacks. With growing demand for low-latency communications to support real-time applications such as AI/ML inference, in-line, full-rate secure communication of data traffic with MACsec is imperative. The Rambus 800G MACsec solution addresses this need with a hardware engine delivering MACsec security with no degradation to the speed of data transmission.

“Our world has changed dramatically in just a few months, with a global shift to our homes being the center of work, schooling and entertainment. This has put enormous strain on the global data infrastructure. The evolution to 800 GbE will be a key enabler on the path forward,” said Neeraj Paliwal, vice president and general manager of Rambus Security. “Our 800G MACsec protocol engine leverages a scalable architecture that supports configurations of one to many ports with an aggregate bandwidth of up to 800 Gbps. This flexibility provides the benefit of limiting the silicon cost for security, while safeguarding required data communications.”

Built with decades of security engineering experience, Rambus MACsec IP solutions have been broadly adopted across the industry spanning multiple generations of the MACsec standard. Thanks to a proven track record of performance, software compatibility and API scalability, the Rambus MACsec-IP-163/164 is the go-to solution of network chip and system companies. To speed the design process, the MACsec engine is delivered with a driver development kit (DDK). For customers building system-level solutions, Rambus offers a MACsec Toolkit that implements the Port-based Network Access Control (PNAC) standard and facilitates development and testing of MACsec-compliant processing.

The Rambus 800G MACsec-IP-163/164 solution comprises a classifier and transform engine for deployment of the MACsec Layer 2 secure communication protocol. Implemented in hardware, this Rambus solution can deliver full line-rate MACsec security from 100G to 800G, making it an ideal choice for 800 GbE and 800GBASE-R. Driven by the continued exponential growth in data traffic, 800 GbE is expected to be broadly deployed across hyperscale data centers, enterprises and carrier networks as well as in network-attached high-performance computing (HPC) and artificial intelligence (AI) / machine learning (ML).

Benefits of Rambus 800G MACsec Solution

  • Full line-rate MACsec security from 100G to 800G with any packet and transform mix
  • Multi-rate, multi-channel support with flexible bandwidth allocation
  • Complies with the IEEE 802.1ae MACsec standard and its successors
  • Additional classification and transformation options to support advanced use-cases and deployments
  • Supplied with widely-adopted driver development kit (DDK)
  • Supports secure data communications across data center, enterprise, carrier networks, network-attached HPC and AI/ML

For more information on the Rambus 800G MACsec solution, please visit https://www.rambus.com/security/protocol-engines/macsec-engines/macsec-ip-163-164/ or read our blog post at https://www.rambus.com/blogs/rambus-launches-800g-macsec-multi-channel-engine/.

Rambus Licenses DPA Countermeasures to Utimaco

Cutting-edge hardware-based security technologies protect against side-channel attacks

SUNNYVALE, Calif. – March 25, 2020 – Rambus Inc. (NASDAQ: RMBS) a premier silicon IP and chip provider making data faster and safer, today announced that it has signed a patent license agreement with Utimaco, a leading supplier of Hardware Security Modules (HSMs). The agreement includes the use of Rambus patents such as Differential Power Analysis (DPA) Countermeasures, which protect devices and integrated circuits against DPA and other related side-channel attacks. Specific terms of the agreement are confidential.

Developed by Rambus, DPA countermeasures incorporate extensive software, hardware and protocol techniques that protect devices from side-channel attacks, which are implemented in tamper-resistant products used in various applications. For more information on Rambus DPA Countermeasures and other security offerings, please visit https://www.rambus.com/security/.

Rambus Reports Fourth Quarter and Fiscal Year 2019 Financial Results

  • Excellent quarter, exceeding expectations; GAAP revenue of $59.9 million; with licensing billings of $63.8 million, product revenue of $26.6 million, and contract and other revenue of $13.9 million
  • Record Q4 and full-year revenue for both the Memory Interface Chips and Silicon IP businesses
  • $35.4 million in cash provided by operating activities in Q4 and $128.5 million for the full year 2019, up 48% year over year
  • Expanded product portfolio with acquisition of Secure Silicon IP and Protocols business from Verimatrix

SUNNYVALE, Calif. – January 27, 2020 – Rambus Inc. (NASDAQ:RMBS) today reported financial results for the fourth quarter ended December 31, 2019. Total revenue for the fourth quarter was towards the high end of guidance at $59.9 million; licensing billings were $63.8 million, product revenue was $26.6 million, and contract and other revenue was $13.9 million. The Company also generated $35.4 million in cash provided by operating activities in the fourth quarter, bringing the 2019 total to $128.5 million, up 48% year over year.

“Rambus had an excellent fourth quarter, concluding a very strong year that was propelled by robust cash from operations and record Q4 and annual revenue from memory interface chips and silicon IP,” said Luc Seraphin, chief executive officer of Rambus. “By realigning the Company around our core strengths in semiconductor and augmenting our product portfolio, we are well-positioned for continued success in 2020.”

Business Review

Guided by our strategic objectives, Rambus continues to focus on our core strength in semiconductor, optimize the Company for operational efficiency, and leverage our strong cash generation to re-invest for growth. Consistent with those priorities, we redefined our perimeter in 2019 with significant M&A activity throughout the year and focused the Company on Memory Interface Chips and Silicon IP solutions for the semiconductor market. The Company closed the sale of its Payments and Ticketing business to Visa and completed two silicon IP acquisitions, Northwest Logic for digital controllers, and the secure silicon IP and protocols businesses of Verimatrix, formerly Inside Secure.

Rambus continues to execute and demonstrate success across our product lines. We delivered the second consecutive year of record revenue from products, with combined results from our Memory Interface Chips and Silicon IP businesses achieving over 64% growth year over year from 2018.

Memory Interface Chips was the fastest growing business, with annual revenue almost doubling year over year. Driven by increased OEM and data center qualifications, we saw steady gains in our DDR4 memory interface chip market share in Q4 and delivered the third consecutive quarter of record revenue. The Company remains well positioned as a first mover for the industry transition to DDR5.

Silicon IP delivered record revenue in Q4 and drove sustained growth throughout the year with numerous design wins at tier-1 SoC customers across our target markets for both interface and security IP solutions. Most recently, Rambus announced that Enflame Technology has selected our HBM2 PHY and controller as part of their next-generation AI training chip. In addition, we expanded our portfolio of solutions addressing the fast-growing and demanding applications in AI, 5G and data center with the launch of a comprehensive PCIe 5 interface solution.

Quarterly Financial Review – GAAPThree Months Ended
December 31,
(In millions, except for percentages and per share amounts)20192018
Revenue
Royalties$19.4$45.4
Product revenue26.611.5
Contract and other revenue13.911.6
Total revenue$59.9$68.5
Total operating costs and expenses$73.1$72.8
Operating loss$(13.2)$(4.2)
Operating margin(22)%(6)%
Net loss$(9.5)$(2.0)
Diluted net loss per share$(0.09)$(0.02)
Net cash provided by operating activities$35.4$35.1

 

Quarterly Financial Review – Non-GAAP (including operational metric) (1)Three Months Ended
December 31,
(In millions)20192018
Licensing billings (2)$63.8$76.7
Product revenue$26.6$11.5
Contract and other revenue$13.9$11.6
Total operating costs and expenses$62.3$61.6
Interest and other income (expense), net$1.0$(0.5)
Diluted share count115110

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

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

Revenue for the quarter was towards the high end of our guidance at $59.9 million, with licensing billings of $63.8 million, product revenue of $26.6 million, and contract and other revenue of $13.9 million. We had GAAP total operating costs and expenses of $73.1 million. We also had non-GAAP total operating costs and expenses of $62.3 million, reflecting higher cost of product revenue related to increased memory interface chip sales. We also recorded $0.9 million in revenue and $2.3 million in operating costs and expenses associated with our Payments and Ticketing business in the fourth quarter prior to the sale to Visa. With higher revenue we had profit towards the high end of our expectations, with GAAP diluted net loss per share of $0.09. Our basic share count was 112 million shares and our diluted share count would have been 115 million shares.

Cash, cash equivalents, and marketable securities as of December 31, 2019 were $407.7 million, an increase of $69.6 million as compared to September 30, 2019, mainly due to $83.6 million in cash received from the sale of our payments and ticketing business to Visa in the fourth quarter and $35.4 million in cash provided by operating activities, offset by $45.0 million in cash paid for the acquisition of the silicon IP, secure protocols and provisioning business from Verimatrix, formerly Inside Secure. Cash provided by operating activities for the year ended December 31, 2019 was $128.5 million, an increase of $41.4 million, or 48%, from the same period in the prior year.

2020 First Quarter Outlook

The Company will discuss its full revenue guidance for the first quarter of 2020 during its upcoming conference call. The following table sets forth first quarter outlook for other measures.

(In millions)GAAPNon-GAAP (1)
Licensing billings (2)$60 – $66$60 – $66
Product revenue$18 – $24$18 – $24
Contract and other revenue$13 – $19$13 – $19
Total operating costs and expenses$80 – $76$68 – $64
Interest and other income (expense), net$5$1
Diluted share count115115

 

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

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

For the first quarter of 2020, the Company expects licensing billings to be between $60 million and $66 million. The Company also expects royalty revenue to be between $7 million and $13 million, product revenue to be between $18 million and $24 million and contract and other revenue to be between $13 million and $19 million. Revenue is not without risk and achieving revenue in this range will require that the Company sign customer agreements for various product sales and solutions licensing, among other matters.

The Company also expects operating costs and expenses to be between $80 million and $76 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $68 million and $64 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 115 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 ($5 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# 3576589.

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 and interest and other income (expense), net. In computing each of these non-GAAP financial measures, the following items were considered as discussed below: stock-based compensation expenses, acquisition-related/divestiture costs and retention bonus expense, amortization expenses, impairment (recovery) of assets held for sale, 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/divestiture costs and retention bonus expense. These expenses include all direct costs of certain acquisitions, divestitures 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 as they are related to acquisitions and divestitures and have no direct correlation to the Company’s operations.

Restructuring and other 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.

Impairment (recovery) of assets held for sale. These charges consist of non-cash charges (recoveries) to assets held for sale and are excluded because such charges (recoveries) are non-recurring and do not reduce the Company’s liquidity.

Facility restoration costs. These charges consist of exit costs associated with our leased office space 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.

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.

About Rambus Inc.

Rambus is a premier Silicon IP and chip provider that makes data faster and safer. With 30 years of innovation, we continue to develop the foundational technology for all modern computing systems. Leveraging our semiconductor expertise, Rambus solutions speed performance, expand capacity and improve security for today’s most demanding applications. From data center and edge to artificial intelligence and automotive, our interface and security IP, and memory interface chips enable SoC and system designers to deliver their vision of the future. For more information, visit rambus.com.

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 growth in product and service offerings and product revenue, expected benefits of our merger, acquisition and divestiture activity and related integration, and financial guidance for the first quarter of 2020, including licensing billings and revenue estimates, operating costs and expenses, interest and other income (expense), net and estimated, fixed, long-term projected tax rates 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,
2019		December 31,
2018
ASSETS
Current assets:
Cash and cash equivalents$102,176$115,924
Marketable securities305,488161,840
Accounts receivable44,03950,863
Unbilled receivables184,366176,613
Inventories10,0866,772
Prepaids and other current assets18,52415,738
Total current assets664,679527,750
Intangible assets, net54,90059,936
Goodwill183,465207,178
Property, plant and equipment, net44,71457,028
Operating lease right-of-use assets37,020—
Deferred tax assets4,5744,435
Unbilled receivables, long-term343,703497,003
Other assets5,9317,825
Total assets$1,338,986$1,361,155
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$9,549$7,392
Accrued salaries and benefits20,29116,938
Deferred revenue11,94719,374
Income taxes payable, short-term19,14216,390
Operating lease liabilities6,357—
Other current liabilities18,8939,191
Total current liabilities86,17969,285
Long-term liabilities:
Convertible notes, long-term148,788141,934
Long-term imputed financing obligation—36,297
Long-term operating lease liabilities39,889—
Long-term income taxes payable60,09477,280
Deferred tax liabilities13,84618,960
Other long-term liabilities19,2725,287
Total long-term liabilities281,889279,758
Total stockholders’ equity970,9181,012,112
Total liabilities and stockholders’ equity$1,338,986$1,361,155

 

 

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

 

Three Months Ended
December 31,		Year Ended
December 31,
2019201820192018
Revenue:
Royalties$19,434$45,430$90,785$130,452
Product revenue26,60011,53772,97238,690
Contract and other revenue13,91311,59660,27062,059
Total revenue59,94768,563224,027231,201
Operating costs and expenses:
Cost of product revenue (1)9,3114,36727,15618,299
Cost of contract and other revenue5,2656,23924,21935,402
Research and development (1)36,82037,395156,815158,339
Sales, general and administrative (1)24,87224,768104,116103,911
Restructuring charges (recoveries)4,588(6)8,8212,217
Impairment (recovery) of assets held for sale(7,698)—7,439—
Total operating costs and expenses73,15872,763328,566318,168
Operating loss(13,211)(4,200)(104,539)(86,967)
Interest income and other income (expense), net6,2637,24827,37532,621
Interest expense(2,550)(3,251)(9,852)(16,282)
Interest and other income (expense), net3,7133,99717,52316,339
Loss before income taxes(9,498)(203)(87,016)(70,628)
Provision for income taxes341,8153,40387,329
Net loss$(9,532)$(2,018)$(90,419)$(157,957)
Net loss per share:
Basic$(0.09)$(0.02)$(0.81)$(1.46)
Diluted$(0.09)$(0.02)$(0.81)$(1.46)
Weighted average shares used in per share calculation
Basic111,883108,826110,948108,450
Diluted111,883108,826110,948108,450

_________

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

Three Months Ended
December 31,		Year Ended
December 31,
2019201820192018
Cost of product revenue$—$1$4$8
Research and development$1,756$2,920$11,032$12,582
Sales, general and administrative$3,063$3,224$15,440$9,146

 

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

Three Months Ended
December 31,
20192018
Operating costs and expenses$73,158$72,763
Adjustments:
Stock-based compensation expense(4,819)(6,145)
Acquisition-related/divestiture costs and retention bonus expense(4,250)—
Amortization expense(3,962)(4,989)
Restructuring and other charges (recoveries)(4,588)6
Facility restoration costs(959)—
Recovery of assets held for sale7,698—
Non-GAAP operating costs and expenses$62,278$61,635
Interest and other income (expense), net$3,713$3,997
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(4,469)(6,147)
Non-cash interest expense on convertible notes1,7491,655
Non-GAAP interest and other income (expense), net$993$(495)

 

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

2020 First Quarter OutlookThree Months Ended
March 31, 2020
LowHigh
Forward-looking operating costs and expenses$80.0$76.0
Adjustments:
Stock-based compensation expense(7.0)(7.0)
Amortization expense(5.0)(5.0)
Forward-looking Non-GAAP operating costs and expenses$68.0$64.0
Forward-looking interest and other income (expense), net$4.6$4.6
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(5.3)(5.3)
Non-cash interest expense on convertible notes1.71.7
Forward-looking Non-GAAP interest and other income (expense), net$1.0$1.0

Enflame Technology Selects Rambus HBM2 Memory Subsystem Solution For Next-Generation AI Training Chip

Highlights:

  • Comprehensive HBM Gen 2 (HBM2) memory subsystem solution consisting of PHY and digital controller delivers high bandwidth and low latency with minimal form factor and power envelope
  • HBM2 IP provides 2Tb/s of memory bandwidth, making it the perfect fit for Enflame Technology’s cloud AI training products
  • Broad suite of supporting services simplifies 2.5D integration and design with subsystem interoperability, silicon interposer and package reference designs, and signal and power integrity (SI/PI) analysis

SUNNYVALE, Calif. – Dec. 11, 2019 – Rambus Inc. (NASDAQ: RMBS) a premier silicon IP and chip provider making data faster and safer, today announced that Enflame (Suiyuan) Technology has selected Rambus HBM2 PHY and Memory Controller IP for its next-generation AI training chip. Rambus memory interface IP enables the development of high-performance, next-generation hardware for leading-edge AI applications.

“Artificial intelligence training requires far greater memory bandwidth than standard compute applications. Rambus’ proven HBM2 memory subsystem IP delivers the ultra-high bandwidth performance our AI chips need,” said Arthur Zhang, COO of Enflame Technology. “Using Rambus interface IP cores, we are revolutionizing what’s possible in AI technology.”

Optimized for low-latency and high-bandwidth memory applications, the Rambus HBM2 interface solution delivers maximum performance and flexibility in minimal form factor and power envelope. The comprehensive HBM2 subsystem solution of PHY and memory controller provides 2Tb/s of bandwidth, making it the perfect fit for Enflame Technology’s cloud AI training needs. Complementing this interface IP, Rambus provides silicon interposer and package reference designs, and supports signal and power integrity (SI/PI) analysis.

“Enflame Technology’s repeat choice of Rambus showcases our HBM2 PHY and memory controller IP as the ideal solution for complex neural network-based AI and machine learning chips,” said Hemant Dhulla, vice president and general manager of IP Cores at Rambus. “Our HBM portfolio of solutions already in volume production deliver the memory performance needed at the frontier of AI computing.”

For more information on Rambus HBM2 PHY offerings, please visit https://www.rambus.com/interface-ip/ddrn-phys/hbm/. Find out more details on Rambus Memory Controllers at  https://www.rambus.com/interface-ip/controllers/memory-controllers/.

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