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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 Advances HBM2E Performance to 4.0 Gbps for AI/ML Training Applications

Highlights: 

  • Fully-integrated HBM2E memory interface solution, consisting of verified PHY and controller, achieves industry’s fastest performance
  • New benchmark in performance supports accelerators requiring terabyte-scale bandwidth for artificial intelligence/machine learning (AI/ML) training applications
  • Partners with SK hynix and Alchip to develop 2.5D HBM2E memory system solution using TSMC N7 process and CoWoS® advanced packaging technologies
  • Offers unrivaled system expertise supporting customers with interposer and package reference designs to speed time to market
Figure 1 Rambus HBM2E Interface 4 Gbps Transmit Eye
Figure 1 Rambus HBM2E Interface 4 Gbps Transmit Eye

SAN JOSE, Calif. – Sept. 9, 2020 – Rambus Inc. (NASDAQ: RMBS), a premier silicon IP and chip provider making data faster and safer, today announced it has achieved a record 4 Gbps performance with the Rambus HBM2E memory interface solution consisting of a fully-integrated PHY and controller. Paired with the industry’s fastest HBM2E DRAM from SK hynix operating at 3.6 Gbps, the solution can deliver 460 GB/s of bandwidth from a single HBM2E device. This performance meets the terabyte-scale bandwidth needs of accelerators targeting the most demanding AI/ML training and high-performance computing (HPC) applications.

“With this achievement by Rambus, designers of AI and HPC systems can now implement systems using the world’s fastest HBM2E DRAM running at 3.6 Gbps from SK hynix,” said Uksong Kang, vice president of product planning at SK hynix. “In July, we announced full-scale mass-production of HBM2E for state-of-the-art computing applications demanding the highest bandwidth available.”

The fully-integrated, production-ready Rambus HBM2E memory subsystem runs at 4 Gbps without PHY voltage overdrive. Rambus teamed with SK hynix and Alchip to implement the HBM2E 2.5D system to validate in silicon the Rambus HBM2E PHY and Memory Controller IP using TSMC’s N7 process and CoWoS® (Chip-on-Wafer-on-Substrate) advanced packaging technologies. Co-designing with the engineering team from Rambus, Alchip led the interposer and package substrate design.

“This advancement of Rambus and its partners, using TSMC’s advanced process and packaging technologies, is another important achievement of our ongoing collaboration with Rambus,” said Suk Lee, senior director of the Design Infrastructure Management Division at TSMC. “We look forward to a continued partnership with Rambus to enable the highest performance in AI/ML and HPC applications.”

“Alchip brought a demonstrated track record of success in 7nm and 2.5D package design to this initiative,” said Johnny Shen, CEO of Alchip Technologies. “We’re extremely proud of our contributions to Rambus’ breakthrough achievement.”

Rambus has 30 years of high-speed memory design applied to the most demanding computing applications. Its renowned signal integrity expertise was key to achieving an HBM2E memory interface capable of 4 Gbps operation. This raises a new benchmark for meeting the insatiable bandwidth requirements of AI/ML training.

“With silicon operation up to 4 Gbps, designers can future-proof their HBM2E implementations and can be confident of ample margin for 3.6 Gbps designs,” said Matthew Jones, senior director and general manager of IP cores at Rambus. “As part of every customer engagement, Rambus provides reference designs for the 2.5D package and interposer to ensure first-time right implementations for mission-critical AI/ML designs.”

Benefits of the Rambus HBM2E Memory Interface (PHY and Controller):

  • Achieves the industry’s highest speed of 4 Gbps per pin, delivering a system bandwidth of 460 GB from a single 3.6 Gbps HBM2E DRAM 3D device.
  • Fully-integrated and verified HBM2E PHY and Controller reduces ASIC design complexity and speeds time to market
  • Includes 2.5D package and interposer reference design as part of IP license
  • Provides access to Rambus system and SI/PI experts helping ASIC designers to ensure maximum signal and power integrity for devices and systems
  • Features LabStation™ development environment that enables quick system bring-up, characterization and debug
  • Supports high-performance applications including state-of-the-art AI/ML training and high-performance computing (HPC) systems

For more information on the Rambus Interface IP, including our PHYs and Controllers, please visit rambus.com/interface-ip.

Rambus and Micron Extend Patent License Agreement

SAN JOSE, Calif. – Sept 3, 2020 – Rambus Inc. (Nasdaq: RMBS), a premier silicon IP and chip provider making data faster and safer, today announced it has extended its patent license agreement with Micron for an additional four years. The extension maintains the existing financial terms of the agreement and provides Micron with a license to the extensive portfolio of Rambus patents until December 1, 2024.

“We are very pleased Micron has extended their patent license agreement and with how our broader relationship has grown over time,” said Kit Rodgers, senior vice president of technology partnerships and corporate development at Rambus. “We look forward to our continued collaboration in the future.”

Rambus Reports Second Quarter 2020 Financial Results

  • Excellent quarter, at the high end of expectations for revenue and profit
  • $62.0 million in cash provided by operating activities, the highest quarterly cash generation in over 10 years
  • Fifth consecutive quarter of record revenue from memory interface chips driven by strong demand in data center

SAN JOSE, Calif. – August 3, 2020 – Rambus Inc. (NASDAQ:RMBS), a premier silicon IP and chip provider making data faster and safer, today reported financial results for the second quarter ended June 30, 2020. GAAP revenue for the second quarter was $59.9 million; licensing billings were $60.7 million, product revenue was $31.7 million, and contract and other revenue was $11.2 million. The Company also generated $62.0 million in cash provided by operating activities.

“Rambus had a superb second quarter with cash generated from operations at a 10-year high and our chip business delivering its fifth consecutive quarter of record revenue,” said Luc Seraphin, chief executive officer of Rambus. “This tremendous performance was enabled by our sustained focus on quality and execution, demonstrating our ability to consistently deliver.”

Business Review

The need for increased bandwidth, capacity and security across all data-centric applications continues to create strong sustained demand for products and solutions that improve the performance of the global data infrastructure and drive Rambus growth.

The Company’s memory interface chip business continued its growth trajectory, with a fifth consecutive quarter of record revenue. This performance was driven by a combination of increased data center and OEM qualifications, and an overall increase in market demand. With the recent industry publication of the DDR5 memory specification, Rambus remains poised as a market leader to support our customers’ next-generation systems.

The Rambus Silicon IP business maintained its momentum with design wins for interface and security IP at tier-1 SoC makers across data center, AI and 5G. With the availability of the cutting-edge 112G XSR SerDes for chiplets and co-packaged optics, the Company continues to deliver solutions that enable leading-edge architectures and capabilities for high-performance systems.

Quarterly Financial Review – GAAPThree Months Ended
June 30,
(In millions, except for percentages and per share amounts)20202019
Revenue
Royalties$17.0$27.1
Product revenue31.716.0
Contract and other revenue11.215.2
Total revenue$59.9$58.3
Cost of product revenue$10.3$6.3
Cost of contract and other revenue$1.5$2.9
Amortization of acquired intangible assets (included in total cost of revenue)$4.3$3.8
Total operating expenses (1)$56.2$82.3
Operating loss$(12.5)$(37.0)
Operating margin(21)%64%
Net loss$(10.8)$(37.0)
Diluted net loss per share$(0.09)$(0.33)
Net cash provided by operating activities$62.0$38.7

(1)  Includes amortization of acquired intangible assets of approximately $0.2 million and $1.1 million for the three months ended June 30, 2020 and 2019, respectively.

Quarterly Financial Review – Non-GAAP (including operational metric) (1)Three Months Ended
June 30,
(In millions)20202019
Licensing billings (2)$60.7$64.9
Product revenue$31.7$16.0
Contract and other revenue$11.2$15.2
Cost of product revenue$10.3$6.3
Cost of contract and other revenue$1.5$2.9
Total operating expenses$47.7$54.9
Interest and other income (expense), net$0.1$0.9
Diluted share count115113

(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.

GAAP revenue for the quarter was $59.9 million, at the high end of expectations due to the Company’s strong performance in its memory interface chip business. The Company also had licensing billings of $60.7 million, product revenue of $31.7 million, and contract and other revenue of $11.2 million. Rambus had total GAAP cost of revenue of $16.1 million and operating expenses of $56.2 million. The Company also had total non-GAAP operating expenses of $59.5 million (which includes non-GAAP cost of revenue), below the low end of its expectations through its cost management actions. Due to the Company’s strong performance and cost management actions, its revenue and profit were at the high end of its expectations. The Company had GAAP diluted net loss per share of $0.09. The Company’s basic share count was 114 million shares and its diluted share count would have been 115 million shares.

Cash, cash equivalents, and marketable securities as of June 30, 2020 were $486.1 million, an increase of $50.7 million from March 31, 2020, mainly due to $62.0 million in cash provided by operating activities, the highest quarterly cash generation in over 10 years.

2020 Third Quarter Outlook

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

(In millions)GAAPNon-GAAP (1)
Licensing billings (2)$55 – $61$55 – $61
Product revenue$29 – $35$29 – $35
Contract and other revenue$10 – $16$10 – $16
Total operating costs and expenses$76 – $72$64 – $60
Interest and other income (expense), net$2$0
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 third quarter of 2020, the Company expects licensing billings to be between $55 million and $61 million. The Company also expects royalty revenue to be between $9 million and $15 million, product revenue to be between $29 million and $35 million and contract and other revenue to be between $10 million and $16 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 $76 million and $72 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $64 million and $60 million. These expectations also assume non-GAAP interest and other income (expense), net, of $0 million, tax rate of 24% and diluted share count of 116 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 ($3 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# 1788075.

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 expense, acquisition-related costs and retention bonus expense, restructuring charges, impairment of assets held for sale, amortization expense, escrow settlement refund, 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.

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

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.

Escrow settlement refund. The Company received a refund from an escrow settlement related to a prior acquisition. The Company excludes these items because these receipts are not reflective of ongoing operating results. 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 third 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)

June 30,
2020		December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents$103,275$102,176
Marketable securities382,802305,488
Accounts receivable35,19844,039
Unbilled receivables155,448184,366
Inventories11,55410,086
Prepaids and other current assets17,97018,524
Total current assets706,247664,679
Intangible assets, net45,62454,900
Goodwill183,222183,465
Property, plant and equipment, net50,85844,714
Operating lease right-of-use assets31,40737,020
Deferred tax assets5,3504,574
Unbilled receivables, long-term289,044343,703
Other assets4,8955,931
Total assets$1,316,647$1,338,986
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$14,016$9,549
Accrued salaries and benefits16,17020,291
Deferred revenue10,84111,947
Income taxes payable, short-term20,04419,142
Operating lease liabilities4,4636,357
Other current liabilities17,92418,893
Total current liabilities83,45886,179
Long-term liabilities:
Convertible notes, long-term152,359148,788
Long-term operating lease liabilities37,62639,889
Long-term income taxes payable50,47260,094
Deferred tax liabilities14,72413,846
Other long-term liabilities12,81819,272
Total long-term liabilities267,999281,889
Total stockholders’ equity965,190970,918
Total liabilities and stockholders’ equity$1,316,647$1,338,986

 

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

Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
Revenue:
Royalties$16,957$27,050$36,651$51,903
Product revenue31,72516,03162,45324,995
Contract and other revenue11,24815,21624,81529,783
Total revenue59,93058,297123,919106,681
Cost of revenue:
Cost of product revenue (1)10,2776,31020,62010,737
Cost of contract and other revenue1,5352,9102,7335,818
Amortization of acquired intangible assets4,3363,8078,6807,670
Total cost of revenue16,14813,02732,03324,225
Gross profit43,78245,27091,88682,456
Operating expenses:
Research and development (1)34,68837,89071,35278,509
Sales, general and administrative (1)21,31023,79444,20550,314
Amortization of acquired intangible assets2481,1145962,239
Restructuring charges—2,5288362,859
Change in fair value of earn-out liability——(1,800)—
Impairment of assets held for sale—16,990—16,990
Total operating expenses56,24682,316115,189150,911
Operating loss(12,464)(37,046)(23,303)(68,455)
Interest income and other income (expense), net4,5976,97210,97114,385
Interest expense(2,580)(2,534)(5,135)(4,805)
Interest and other income (expense), net2,0174,4385,8369,580
Loss before income taxes(10,447)(32,608)(17,467)(58,875)
Provision for income taxes3344,3721,2974,681
Net loss$(10,781)$(36,980)$(18,764)$(63,556)
Net loss per share:
Basic$(0.09)$(0.33)$(0.17)$(0.58)
Diluted$(0.09)$(0.33)$(0.17)$(0.58)
Weighted average shares used in per share calculation
Basic113,572110,875113,240110,287
Diluted113,572110,875113,240110,287

_________

(1) Total stock-based compensation expense for the three and six months ended June 30, 2020 and 2019 is presented as follows:

Three Months Ended June 30,Six Months Ended
June 30,
2020201920202019
Cost of product revenue$—$1$—$2
Research and development$2,515$3,058$5,128$6,268
Sales, general and administrative$4,192$4,021$7,651$7,999

 

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

Three Months Ended

June 30,

20202019
Total operating expenses$56,246$82,316
Adjustments:
Stock-based compensation expense(6,707)(7,080)
Acquisition-related costs and retention bonus expense(1,577)—
Amortization of acquired intangible assets(248)(1,114)
Restructuring charges—(2,528)
Impairment of assets held for sale—(16,990)
Escrow settlement refund—296
Non-GAAP total operating expenses$47,714$54,900
Interest and other income (expense), net$2,017$4,438
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(3,697)(5,288)
Non-cash interest expense on convertible notes1,7981,702
Non-GAAP interest and other income (expense), net$118$852

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

2020 Third Quarter OutlookThree Months Ended September 30, 2020
LowHigh
Forward-looking operating costs and expenses$75.6$71.6
Adjustments:
Stock-based compensation expense(7.0)(7.0)
Amortization of acquired intangible assets

 

(4.5)(4.5)
Forward-looking Non-GAAP operating costs and expenses$64.1$60.1
Forward-looking interest and other income (expense), net$1.7$1.7
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(3.3)(3.3)
Non-cash interest expense on convertible notes1.81.8
Forward-looking Non-GAAP interest and other income (expense), net$0.2$0.2

Greg Lang Joins Rambus Board of Directors

Proven technology executive brings 30 years of semiconductor industry leadership experience

SUNNYVALE, Calif. — Jul. 30, 2020 — Rambus Inc. (NASDAQ: RMBS), a premier silicon IP and chip provider dedicated to delivering data faster and safer, today announced the appointment of Greg Lang to its Board of Directors, effective immediately.

Mr. Lang is a proven technology executive with over 30 years of leadership experience in the semiconductor industry. He led PMC-Sierra as president and CEO where he rebuilt their core business in telecom and established new growth engines in storage and data center flash solutions. During this time, Mr. Lang also served on the board of the Semiconductor Industry Association. Previously, Mr. Lang served as the president and CEO at Integrated Device Technology, following his role as vice president and general manager of the Platform Networking Group at Intel.

“We are very pleased to welcome Greg to the Rambus board,” said Chuck Kissner, chairman of the Rambus Board of Directors. “He will bring valuable expertise and insights to support the company’s focus in semiconductors.”

“Rambus products are at the heart of some very exciting megatrends that advance the global data infrastructure,” said Mr. Lang. “I am excited to work with the board and executive team as they continue to develop and expand their portfolio and market position in critical technology areas.”

Lang holds a Master of Business Administration degree from Washington State University and a Bachelor of Business Administration degree from University of Michigan.

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

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