Financial

• Exceeded guidance for Q3 revenue and earnings
• Delivered record quarterly product revenue driven by memory interface chips
• Generated $80 million in cash from operations
• Initiated $100 million accelerated share repurchase program

SAN JOSE, Calif. – October 31, 2022– Rambus Inc. (NASDAQ:RMBS), a provider of industry-leading chips and IP making data faster and safer, today reported financial results for the third quarter ended September 30, 2022. GAAP revenue for the third quarter was $112.2 million, licensing billings were $62.2 million, product revenue was $58.6 million, and contract and other revenue was $23.7 million. The Company also generated $80 million in cash provided by operating activities in the third quarter.

“Rambus had an excellent performance in the third quarter, exceeding guidance and delivering record cash and product revenue,” said Luc Seraphin, chief executive officer of Rambus. “Our strategic focus and strong execution in data center, combined with a diverse portfolio of offerings, drive the company’s long-term profitable growth and enable consistent capital returns to our stockholders.”

Quarterly Financial Review – GAAP		Three Months Ended September 30,
(In millions, except for percentages and per share amounts)		2022		2021
Revenue
Product revenue		$58.6		$36.7
Royalties		29.9		33.1
Contract and other revenue		23.7		11.5
Total revenue		112.2		81.3
Cost of product revenue		21.9		13.1
Cost of contract and other revenue		1.5		1.5
Amortization of acquired intangible assets (included in total cost of revenue)		3.6		3.8
Total operating expenses (1)		68.3		58.2
Operating income		$16.9		$4.7
Operating margin		15%		6%
Net income		$0.9		$3.7
Diluted net income per share		$0.01		$0.03
Net cash provided by operating activities		$80.0		$46.0

_________________________________________

⁽¹⁾   Includes amortization of acquired intangible assets of approximately $0.4 million for each of the three months ended September 30, 2022 and 2021.

Quarterly Financial Review – Supplemental Information(1)		Three Months Ended September 30,
(In millions)		2022		2021
Licensing billings (operational metric) (2)		$62.2		$66.1
Product revenue (GAAP)		$58.6		$36.7
Contract and other revenue (GAAP)		$23.7		$11.5
Non-GAAP cost of product revenue		$21.8		$13.1
Cost of contract and other revenue (GAAP)		$1.5		$1.5
Non-GAAP total operating expenses		$54.6		$48.2
Non-GAAP interest and other income (expense), net		$1.6		$(0.2)
Diluted share count (GAAP)		112		114

_________________________________________

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

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

GAAP revenue for the quarter was $112.2 million. The Company also had licensing billings of $62.2 million, product revenue of $58.6 million, and contract and other revenue of $23.7 million. The Company had GAAP cost of revenue of $27.0 million and operating expenses of $68.3 million. The Company also had total non-GAAP operating expenses of $77.9 million (including non-GAAP cost of revenue). The Company’s basic share count was 110 million shares and its diluted share count was 112 million shares.

Cash, cash equivalents, and marketable securities as of September 30, 2022 were $264.8 million, a decrease of $86.8 million from June 30, 2022, mainly due to $100 million paid in connection with an accelerated share repurchase program, $58.9 million paid in connection with the repayment of 2023 senior notes, $14.4 million paid in connection with the settlement of warrants, partially offset by $80 million in cash generated by operating activities and proceeds of $19.3 million from the settlement of senior convertible note hedges.

2022 Fourth Quarter Outlook

The Company will discuss its full revenue guidance for the fourth quarter of 2022 during its upcoming conference call. The following table sets forth fourth quarter outlook for other measures.

(In millions)		GAAP		Non-GAAP (1)
Licensing billings (operational metric) (2)		$59 – $65		$59 – $65
Product revenue (GAAP)		$63 – $69		$63 – $69
Contract and other revenue (GAAP)		$21 – $27		$21 – $27
Total operating costs and expenses		$100 – $96		$86 – $82
Interest and other income (expense), net		$0		($1)
Diluted share count		110		110

_________________________________________

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

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

For the fourth quarter of 2022, the Company expects licensing billings to be between $59 million and $65 million. The Company also expects royalty revenue to be between $29 million and $35 million, product revenue to be between $63 million and $69 million and contract and other revenue to be between $21 million and $27 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 $100 million and $96 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $86 million and $82 million. These expectations also assume non-GAAP interest and other income (expense), net, of ($1 million), tax rate of 24% and diluted share count of 110 million, and exclude stock-based compensation expense ($10 million), amortization expense ($4 million), non-cash interest expense ($0.1 million) and interest income related to the significant financing component from fixed-fee patent and technology licensing arrangements ($1 million).

Conference Call

The Company’s management will discuss the results of the quarter during a conference call scheduled for 2:00 p.m. 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: (866) 813-9403 (domestic) or (+44) 204-525-0658 (international) with ID# 714912.

Non-GAAP Financial Information

In the commentary set forth above and in the financial statements included in this earnings release, the Company presents the following non-GAAP financial measures: cost of product revenue, operating expenses and interest and other income (expense), net. In computing each of these non-GAAP financial measures, the following items were considered as discussed below: stock-based compensation expense, acquisition-related costs and retention bonus expense, amortization of acquired intangible assets, expense on abandoned operating leases, change in fair value of earn-out liability, loss on extinguishment of debt, loss on fair value adjustment of derivatives, net, realized loss on sale of marketable securities sold for the purpose of notes repurchase, 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. A reconciliation from GAAP to non-GAAP results is included in the financial statements contained in this release.

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

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

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

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

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

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

Gain on sale of equity security. The Company has excluded gain on sale of equity security as this is not a reflection of the Company’s ongoing operations.

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

Loss on fair value adjustment of derivatives, net. The Company has excluded its loss on fair value adjustment of derivatives, net, as this represents cost and benefits of repurchasing its convertible notes and is not a reflection of the Company’s ongoing operations.

Realized loss on sale of marketable securities sold for the purpose of notes repurchase. The Company has excluded its realized loss on sale of marketable securities sold for the purpose of repurchasing its convertible notes as this is not a reflection of the Company’s ongoing operations.

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

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

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

Forward-Looking Statements

This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, including those relating to Rambus’ expectations regarding business opportunities, the Company’s ability to deliver long-term, profitable growth, product and investment strategies, and the Company’s outlook and financial guidance for the fourth quarter of 2022 and related drivers, and the Company’s ability to effectively manage supply chain shortages. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by the Company’s management. Actual results may differ materially. The Company’s business generally is subject to a number of risks which are described more fully in Rambus’ periodic reports filed with the Securities and Exchange Commission, as well as the potential adverse impacts related to, or arising from, the COVID-19 and its variants. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

 

Rambus Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands)		September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents		$141,559		$107,891
Marketable securities		123,289		377,718
Accounts receivable		38,547		44,065
Unbilled receivables		142,037		135,608
Inventories		14,161		8,482
Prepaids and other current assets		14,584		10,600
Total current assets		474,177		684,364
Intangible assets, net		54,856		58,420
Goodwill		292,038		278,810
Property, plant and equipment, net		78,563		56,035
Operating lease right-of-use assets		25,232		23,712
Deferred tax assets		2,803		4,047
Unbilled receivables		37,914		123,018
Other assets		3,473		4,240
Total assets		$969,056		$1,232,646
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$20,405		$11,279
Accrued salaries and benefits		16,654		20,945
Convertible notes		10,368		163,687
Deferred revenue		23,460		24,755
Income taxes payable		20,024		20,607
Operating lease liabilities		5,435		5,992
Other current liabilities		20,085		20,002
Total current liabilities		116,431		267,267
Long-term liabilities:
Long-term operating lease liabilities		30,093		29,099
Long-term income taxes payable		7,818		21,424
Deferred tax liabilities		25,746		23,985
Other long-term liabilities		39,084		28,475
Total long-term liabilities		102,741		102,983
Total stockholders’ equity		749,884		862,396
Total liabilities and stockholders’ equity		$969,056		$1,232,646

Rambus Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

		Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share amounts)		2022		2021		2022		2021
Revenue:
Product revenue		$58,619		$36,710		$159,890		$98,661
Royalties		29,878		33,044		108,380		103,813
Contract and other revenue		23,747		11,528		64,156		34,049
Total revenue		112,244		81,282		332,426		236,523
Cost of revenue:
Cost of product revenue		21,953		13,157		60,767		35,989
Cost of contract and other revenue		1,455		1,456		3,053		4,029
Amortization of acquired intangible assets		3,576		3,813		10,375		12,638
Total cost of revenue		26,984		18,426		74,195		52,656
Gross profit		85,260		62,856		258,231		183,867
Operating expenses:
Research and development		39,295		35,592		118,648		99,415
Sales, general and administrative		26,198		22,210		79,409		67,956
Amortization of acquired intangible assets		433		359		1,259		817
Restructuring charges		—		—		—		368
Change in fair value of earn-out liability		2,411		—		(1,889)		—
Total operating expenses		68,337		58,161		197,427		168,556
Operating income		16,923		4,695		60,804		15,311
Interest income and other income (expense), net		6,385		2,726		10,483		8,088
Loss on extinguishment of debt		(17,129)		—		(83,626)		—
Loss on fair value adjustment of derivatives, net		(2,302)		—		(10,585)		—
Interest expense		(437)		(2,672)		(1,390)		(7,969)
Interest and other income (expense), net		(13,483)		54		(85,118)		119
Income (loss) before income taxes		3,440		4,749		(24,314)		15,430
Provision for income taxes		2,501		1,073		5,945		3,201
Net income (loss)		$939		$3,676		$(30,259)		$12,229
Net income (loss) per share:
Basic		$0.01		$0.03		$(0.27)		$0.11
Diluted		$0.01		$0.03		$(0.27)		$0.11
Weighted average shares used in per share calculation
Basic		109,968		108,989		110,102		111,103
Diluted		111,962		113,661		110,102		114,954

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

		Three Months Ended September 30,
(In thousands)		2022		2021
Cost of product revenue		$21,953		$13,157
Adjustment:
Stock-based compensation expense		(142)		(101)
Non-GAAP cost of product revenue		$21,811		$13,056
Total operating expenses		$68,337		$58,161
Adjustments:
Stock-based compensation expense		(8,730)		(7,381)
Acquisition-related costs and retention bonus expense		(1,627)		(1,658)
Amortization of acquired intangible assets		(433)		(359)
Expense on abandoned operating leases		(520)		(521)
Change in fair value of earn-out liability		(2,411)		—
Non-GAAP total operating expenses		$54,616		$48,242
Interest and other income (expense), net		$(13,483)		$54
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1,248)		(2,163)
Non-cash interest expense on convertible notes		33		1,927
Gain on sale of equity security		(3,547)		—
Loss on extinguishment of debt		17,129		—
Loss on fair value adjustment of derivatives, net		2,302		—
Realized loss on sale of marketable securities sold for the purpose of notes repurchase		450		—
Non-GAAP interest and other income (expense), net		$1,636		$(182)

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

2022 Fourth Quarter Outlook		Three Months Ended December 31, 2022
(In millions)		Low		High
Forward-looking operating costs and expenses		$100.3		$96.3
Adjustments:
Stock-based compensation expense		(10.3)		(10.3)
Amortization of acquired intangible assets		(4.0)		(4.0)
Forward-looking Non-GAAP operating costs and expenses		$86.0		$82.0
Forward-looking interest and other income (expense), net		$0.4		$0.4
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1.0)		(1.0)
Non-cash interest expense		0.1		0.1
Forward-looking Non-GAAP interest and other income (expense), net		$(0.5)		$(0.5)

• Delivered Q2 revenue and earnings at the high end of guidance
• Achieved record quarterly product revenue driven by memory interface chips
• Expanded DDR5 portfolio with introduction of companion chips for server and client memory modules
• Generated $56.5 million in cash from operations

SAN JOSE, Calif. – August 1, 2022– Rambus Inc. (NASDAQ:RMBS), a provider of industry-leading chips and IP making data faster and safer, today reported financial results for the second quarter ended June 30, 2022. GAAP revenue for the second quarter was $121.1 million, licensing billings were $66.1 million, product revenue was $53.3 million, and contract and other revenue was $19.8 million. The Company also generated $56.5 million in cash provided by operating activities in the second quarter.

“Rambus delivered a strong performance with another quarter of record product revenue from memory interface chips and sustained silicon IP momentum driving our results,” said Luc Seraphin, chief executive officer of Rambus. “We continue to address the growing needs of the data center with our diverse and expanding portfolio of offerings to fuel the company’s long-term profitable growth.”

Quarterly Financial Review – GAAP		Three Months Ended June 30,
(In millions, except for percentages and per share amounts)		2022		2021
Revenue
Product revenue		$53.3		$31.2
Royalties		48.0		41.9
Contract and other revenue		19.8		11.8
Total revenue		121.1		84.9
Cost of product revenue		20.4		11.4
Cost of contract and other revenue		1.0		1.0
Amortization of acquired intangible assets (included in total cost of revenue)		3.4		4.5
Total operating expenses (1)		60.8		53.9
Operating income		$35.5		$14.1
Operating margin		29 %		17 %
Net income		$35.0		$11.2
Diluted net income per share		$0.31		$0.10
Net cash provided by operating activities		$56.5		$51.6

_________________________________________

⁽¹⁾   Includes amortization of acquired intangible assets of approximately $0.4 million and $0.2 million for the three months ended June 30, 2022 and 2021, respectively.

 

Quarterly Financial Review – Supplemental Information(1)		Three Months Ended June 30,
(In millions)		2022		2021
Licensing billings (operational metric) (2)		$66.1		$65.2
Product revenue (GAAP)		$53.3		$31.2
Contract and other revenue (GAAP)		$19.8		$11.8
Non-GAAP cost of product revenue		$20.3		$11.4
Cost of contract and other revenue (GAAP)		$1.0		$1.0
Non-GAAP total operating expenses		$54.9		$43.7
Non-GAAP interest and other income (expense), net		$1.0		$(0.8)
Diluted share count (GAAP)		113		115

_________________________________________

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

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

GAAP revenue for the quarter was $121.1 million, at the high end of the Company’s guidance. The Company also had licensing billings of $66.1 million, product revenue of $53.3 million, and contract and other revenue of $19.8 million. The Company had GAAP cost of revenue of $24.8 million and operating expenses of $60.8 million. The Company also had total non-GAAP operating expenses of $76.1 million (including non-GAAP cost of revenue). The Company had GAAP diluted net income per share of $0.31. The Company’s basic share count was 110 million shares and its diluted share count was 113 million shares.

Cash, cash equivalents, and marketable securities as of June 30, 2022 were $351.6 million, an increase of $7.9 million from March 31, 2022, mainly due to $56.5 million in cash generated by operating activities, partially offset by $24.7 million paid in connection with the repayment of 2023 senior notes and $16.1 million paid in connection with the acquisition of Hardent, Inc.

2022 Third Quarter Outlook

The Company will discuss its full revenue guidance for the third quarter of 2022 during its upcoming conference call. The following table sets forth third quarter outlook for other measures.

(In millions)		GAAP		Non-GAAP (1)
Licensing billings (operational metric) (2)		$63 – $69		$63 – $69
Product revenue (GAAP)		$51 – $57		$51 – $57
Contract and other revenue (GAAP)		$18 – $24		$18 – $24
Total operating costs and expenses		$94 – $90		$81 – $77
Interest and other income (expense), net		$0		($1)
Diluted share count		113		113

_________________________________________

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

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

For the third quarter of 2022, the Company expects licensing billings to be between $63 million and $69 million. The Company also expects royalty revenue to be between $29 million and $35 million, product revenue to be between $51 million and $57 million and contract and other revenue to be between $18 million and $24 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 $94 million and $90 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $81 million and $77 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 113 million, and exclude stock-based compensation expense ($9 million), amortization expense ($4 million), non-cash interest expense on convertible notes ($0.1 million) and interest income related to the significant financing component from fixed-fee patent and technology licensing arrangements ($1 million). 

Conference Call

The Company’s management will discuss the results of the quarter during a conference call scheduled for 2:00 p.m. 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: (866) 813-9403 (domestic) or (+44) 204-525-0658 (international) with ID# 092440.

Non-GAAP Financial Information

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

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

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

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

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

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

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

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

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

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

Forward-Looking Statements

This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, including those relating to Rambus’ expectations regarding business opportunities, the Company’s ability to deliver long-term, profitable growth, product and investment strategies, and the Company’s outlook and financial guidance for the third quarter of 2022 and related drivers, and the Company’s ability to effectively manage supply chain shortages. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by the Company’s management. Actual results may differ materially. The Company’s business generally is subject to a number of risks which are described more fully in Rambus’ periodic reports filed with the Securities and Exchange Commission, as well as the potential adverse impacts related to, or arising from, the COVID-19 and its variants. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

Contact
Nicole Noutsios
Rambus Investor Relations
(510) 315-1003
rambus@nmnadvisors.com

Rambus Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands)		June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents		$171,460		$107,891
Marketable securities		180,175		377,718
Accounts receivable		63,602		44,065
Unbilled receivables		146,692		135,608
Inventories		9,238		8,482
Prepaids and other current assets		9,979		10,600
Total current assets		581,146		684,364
Intangible assets, net		58,866		58,420
Goodwill		291,995		278,810
Property, plant and equipment, net		81,735		56,035
Operating lease right-of-use assets		26,343		23,712
Deferred tax assets		2,686		4,047
Unbilled receivables		65,211		123,018
Other assets		2,931		4,240
Total assets		$1,110,913		$1,232,646
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$20,183		$11,279
Accrued salaries and benefits		20,689		20,945
Convertible notes		49,248		163,687
Deferred revenue		22,165		24,755
Income taxes payable		20,846		20,607
Operating lease liabilities		5,873		5,992
Other current liabilities		22,440		20,002
Total current liabilities		161,444		267,267
Long-term liabilities:
Long-term operating lease liabilities		31,219		29,099
Long-term income taxes payable		12,220		21,424
Deferred tax liabilities		25,159		23,985
Other long-term liabilities		42,713		28,475
Total long-term liabilities		111,311		102,983
Total stockholders’ equity		838,158		862,396
Total liabilities and stockholders’ equity		$1,110,913		$1,232,646

 

Rambus Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

		Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except per share amounts)		2022		2021		2022		2021
Revenue:
Product revenue		$53,302		$31,170		$101,271		$61,951
Royalties		48,038		41,910		78,502		70,769
Contract and other revenue		19,792		11,779		40,409		22,521
Total revenue		121,132		84,859		220,182		155,241
Cost of revenue:
Cost of product revenue		20,417		11,422		38,814		22,832
Cost of contract and other revenue		974		1,017		1,598		2,573
Amortization of acquired intangible assets		3,421		4,439		6,799		8,825
Total cost of revenue		24,812		16,878		47,211		34,230
Gross profit		96,320		67,981		172,971		121,011
Operating expenses:
Research and development		39,538		31,469		79,353		63,823
Sales, general and administrative		26,305		22,184		53,211		45,746
Amortization of acquired intangible assets		417		229		826		458
Restructuring charges		—		—		—		368
Change in fair value of earn-out liability		(5,500)		—		(4,300)		—
Total operating expenses		60,760		53,882		129,090		110,395
Operating income		35,560		14,099		43,881		10,616
Interest income and other income (expense), net		2,738		2,381		4,098		5,362
Loss on extinguishment of debt		—		—		(66,497)		—
Loss on fair value adjustment of derivatives, net		—		—		(8,283)		—
Interest expense		(348)		(2,683)		(953)		(5,297)
Interest and other income (expense), net		2,390		(302)		(71,635)		65
Income (loss) before income taxes		37,950		13,797		(27,754)		10,681
Provision for income taxes		2,930		2,631		3,444		2,128
Net income (loss)		$35,020		$11,166		$(31,198)		$8,553
Net income (loss) per share:
Basic		$0.32		$0.10		$(0.28)		$0.08
Diluted		$0.31		$0.10		$(0.28)		$0.07
Weighted average shares used in per share calculation
Basic		110,447		112,144		110,170		112,177
Diluted		112,715		114,931		110,170		115,358

 

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

		Three Months Ended June 30,
(In thousands)		2022		2021
Cost of product revenue		$20,417		$11,422
Adjustment:
Stock-based compensation expense		(132)		(70)
Non-GAAP cost of product revenue		$20,285		$11,352
Total operating expenses		$60,760		$53,882
Adjustments:
Stock-based compensation expense		(8,504)		(7,228)
Acquisition-related costs and retention bonus expense		(1,949)		(2,200)
Amortization of acquired intangible assets		(417)		(229)
Expense on abandoned operating leases		(531)		(521)
Change in fair value of earn-out liability		5,500		—
Non-GAAP total operating expenses		$54,859		$43,704
Interest and other income (expense), net		$2,390		$ (302)
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1,455)		(2,382)
Non-cash interest expense on convertible notes		45		1,901
Non-GAAP interest and other income (expense), net		$980		$(783)

 

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

2022 Third Quarter Outlook		Three Months Ended September 30, 2022
(In millions)		Low		High
Forward-looking operating costs and expenses		$94.0		$90.0
Adjustments:
Stock-based compensation expense		(9.0)		(9.0)
Amortization of acquired intangible assets		(4.0)		(4.0)
Forward-looking Non-GAAP operating costs and expenses		$ 81.0		$ 77.0
Forward-looking interest and other income (expense), net		$0.1		$0.1
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1.2)		(1.2)
Non-cash interest expense on convertible notes		0.1		0.1
Forward-looking Non-GAAP interest and other income (expense), net		$(1.0)		$(1.0)

• Exceeded Q1 guidance for revenue
• Delivered record quarterly product revenue of $48.0 million driven by memory interface chips
• Strengthened balance sheet by retiring debt and generating $42.6 million in cash from operations

SAN JOSE, Calif. – May 2, 2022– Rambus Inc. (NASDAQ:RMBS), a provider of industry-leading chips and IP making data faster and safer, today reported financial results for the first quarter ended March 31, 2022. GAAP revenue for the first quarter was $99.0 million, licensing billings were $64.1 million, product revenue was $48.0 million, and contract and other revenue was $20.6 million. The Company also generated $42.6 million in cash provided by operating activities in the first quarter.

“Rambus delivered a strong first quarter with record product revenue propelled by robust demand in the data center,” said Luc Seraphin, chief executive officer of Rambus. “With our balanced and diverse portfolio of offerings contributing at scale, we continue to generate cash, execute on our strategy and invest in exciting programs to accelerate the company’s profitable growth.”

Quarterly Financial Review – GAAP		Three Months Ended March 31,
(In millions, except for percentages and per share amounts)		2022		2021
Revenue
Product revenue		$48.0		$30.8
Royalties		30.4		28.9
Contract and other revenue		20.6		10.7
Total revenue		99.0		70.4
Cost of product revenue		18.4		11.4
Cost of contract and other revenue		0.6		1.6
Amortization of acquired intangible assets (included in total cost of revenue)		3.4		4.4
Total operating expenses (1)		68.3		56.5
Operating income (loss)		$8.3		$(3.5)
Operating margin		8%		(5)%
Net loss		$(66.2)		$(2.6)
Diluted net loss per share		$(0.60)		$(0.02)
Net cash provided by operating activities		$42.6		$39.5

_________________________________________

⁽¹⁾   Includes amortization of acquired intangible assets of approximately $0.4 million and $0.2 million for the three months ended March 31, 2022 and 2021, respectively.

Quarterly Financial Review – Supplemental Information(1)		Three Months Ended March 31,
(In millions)		2022		2021
Licensing billings (operational metric) (2)		$64.1		$63.5
Product revenue (GAAP)		$48.0		$30.8
Contract and other revenue (GAAP)		$20.6		$10.7
Non-GAAP cost of product revenue		$18.3		$11.3
Cost of contract and other revenue (GAAP)		$0.6		$1.6
Non-GAAP total operating expenses		$56.0		$45.3
Non-GAAP interest and other income (expense), net		$(0.3)		$(0.6)
Diluted share count (GAAP)		113		116

_________________________________________

⁽¹⁾ See “Supplemental Reconciliation of GAAP to Non-GAAP Results” table included below.
⁽²⁾ Licensing billings is an operational metric that reflects amounts invoiced to our licensing customers during the period, as adjusted for certain differences relating to advanced payments for variable licensing agreements.

GAAP revenue for the quarter was $99.0 million, exceeding the Company’s guidance. The Company also had licensing billings of $64.1 million, product revenue of $48.0 million, and contract and other revenue of $20.6 million. The Company had GAAP cost of revenue of $22.4 million and operating expenses of $68.3 million. The Company also had total non-GAAP operating expenses of $74.9 million (which includes non-GAAP cost of revenue). The Company had GAAP diluted net loss per share of $0.60. The Company’s basic share count was 110 million shares and its diluted share count would have been 113 million shares.

Cash, cash equivalents, and marketable securities as of March 31, 2022 were $343.7 million, a decrease of $141.9 million from December 31, 2021, mainly due to approximately $174.5 million paid in connection with the repayment of 2023 senior notes, $55.1 million paid in connection with the settlement of warrants, partially offset by proceeds of $72.4 million from the settlement of senior convertible note hedges and $42.6 million cash generated by operating activities.

2022 Second Quarter Outlook

The Company will discuss its full revenue guidance for the second quarter of 2022 during its upcoming conference call. The following table sets forth second quarter outlook for other measures.

(In millions)		GAAP		Non-GAAP (1)
Licensing billings (operational metric) (2)		$61 – $67		$61 – $67
Product revenue (GAAP)		$49 – $55		$49 – $55
Contract and other revenue (GAAP)		$18 – $24		$18 – $24
Total operating costs and expenses		$92 – $88		$79 – $75
Interest and other income (expense), net		($1)		($1)
Diluted share count		114		114

_________________________________________

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

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

For the second quarter of 2022, the Company expects licensing billings to be between $61 million and $67 million. The Company also expects royalty revenue to be between $42 million and $48 million, product revenue to be between $49 million and $55 million and contract and other revenue to be between $18 million and $24 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 $92 million and $88 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $79 million and $75 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 114 million, and exclude stock-based compensation expense ($9 million), amortization expense ($4 million), non-cash interest expense on convertible notes ($0.1 million) and interest income related to the significant financing component from fixed-fee patent and technology licensing arrangements ($2 million).

Conference Call

The Company’s management will discuss the results of the quarter during a conference call scheduled for 2:00 p.m. 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# 6285426.

Non-GAAP Financial Information

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

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

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

Acquisition-related costs and retention bonus expense. These expenses include all direct costs of certain acquisitions and the current 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.

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

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.

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

Restatement and shareholder activist costs. These charges consist of costs associated with our restatement of our financial statements and certain shareholder activist costs 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 adjustments of acquisition purchase consideration. The Company excludes these adjustments because such adjustments are not directly related to ongoing business results and do not reflect expected future operating expenses.

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

Loss on fair value adjustment of derivatives, net. The Company has excluded its loss on fair value adjustment of derivatives, net, as this represents cost and benefits of repurchasing its convertible notes and is not a reflection of the Company’s ongoing operations.

Realized loss on sale of marketable securities sold for the purpose of notes repurchase. The Company has excluded its realized loss on sale of marketable securities sold for the purpose of notes repurchase as this is not a reflection of the Company’s ongoing operations.

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

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

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

Forward-Looking Statements

This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, including those relating to Rambus’ expectations regarding business opportunities, the Company’s ability to deliver long-term, profitable growth, product and investment strategies, and the Company’s outlook and financial guidance for the second quarter of 2022 and related drivers, and the Company’s ability to effectively manage supply chain shortages. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by the Company’s management. Actual results may differ materially. The Company’s business generally is subject to a number of risks which are described more fully in Rambus’ periodic reports filed with the Securities and Exchange Commission, as well as the potential adverse impacts related to, or arising from, the Novel Coronavirus (COVID-19) and its variants. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

Contact

Keith Jones
Vice President, Finance and Interim Chief Financial Officer
Rambus Inc.
(408) 462-8000
kjones@rambus.com

Rambus Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands)		March 31, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents		$179,129		$107,891
Marketable securities		164,562		377,718
Accounts receivable		51,232		44,065
Unbilled receivables		131,748		135,608
Inventories		6,164		8,482
Prepaids and other current assets		12,277		10,600
Total current assets		545,112		684,364
Intangible assets, net		57,634		58,420
Goodwill		279,793		278,810
Property, plant and equipment, net		54,965		56,035
Operating lease right-of-use assets		22,714		23,712
Deferred tax assets		3,986		4,047
Unbilled receivables		93,367		123,018
Other assets		3,304		4,240
Total assets		$1,060,875		$1,232,646
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$15,540		$11,279
Accrued salaries and benefits		17,402		20,945
Convertible notes		73,860		163,687
Deferred revenue		20,624		24,755
Income taxes payable		21,015		20,607
Operating lease liabilities		5,854		5,992
Other current liabilities		14,107		20,002
Total current liabilities		168,402		267,267
Long-term liabilities:
Long-term operating lease liabilities		27,939		29,099
Long-term income taxes payable		16,681		21,424
Deferred tax liabilities		24,572		23,985
Other long-term liabilities		30,155		28,475
Total long-term liabilities		99,347		102,983
Total stockholders’ equity		793,126		862,396
Total liabilities and stockholders’ equity		$1,060,875		$1,232,646

 

Rambus Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

		Three Months Ended March 31,
(In thousands, except per share amounts)		2022		2021
Revenue:
Product revenue		$47,969		$30,781
Royalties		30,464		28,859
Contract and other revenue		20,617		10,742
Total revenue		99,050		70,382
Cost of revenue:
Cost of product revenue		18,397		11,410
Cost of contract and other revenue		624		1,556
Amortization of acquired intangible assets		3,378		4,386
Total cost of revenue		22,399		17,352
Gross profit		76,651		53,030
Operating expenses:
Research and development		39,815		32,354
Sales, general and administrative		26,906		23,562
Amortization of acquired intangible assets		409		229
Restructuring charges		—		368
Change in fair value of earn-out liability		1,200		—
Total operating expenses		68,330		56,513
Operating income (loss)		8,321		(3,483)
Interest income and other income (expense), net		1,360		2,981
Loss on extinguishment of debt		(66,497)		—
Loss on fair value adjustment of derivatives, net		(8,283)		—
Interest expense		(605)		(2,614)
Interest and other income (expense), net		(74,025)		367
Loss before income taxes		(65,704)		(3,116)
Provision for (benefit from) income taxes		514		(503)
Net loss		$(66,218)		$(2,613)
Net loss per share:
Basic		$(0.60)		$(0.02)
Diluted		$(0.60)		$(0.02)
Weighted average shares used in per share calculation
Basic		109,889		112,211
Diluted		109,889		112,211

 

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

		Three Months Ended March 31,
(In thousands)		2022		2021
Cost of product revenue		$ 18,397		$11,410
Adjustment:
Stock-based compensation expense		(125)		(89)
Non-GAAP cost of product revenue		$18,272		$11,321
Total operating expenses		$68,330		$56,513
Adjustments:
Stock-based compensation expense		(7,653)		(6,412)
Acquisition-related costs and retention bonus expense		(2,575)		(655)
Amortization of acquired intangible assets		(409)		(229)
Restructuring charges		—		(368)
Expense on abandoned operating leases		(539)		(521)
Restatement and shareholder activist costs		—		(2,956)
Change in fair value of earn-out liability		(1,200)		—
Non-GAAP total operating expenses		$55,954		$45,372
Interest and other income (expense), net		$(74,025)		$367
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1,827)		(2,842)
Non-cash interest expense on convertible notes		105		1,874
Loss on extinguishment of debt		66,497		—
Loss on fair value adjustment of derivatives, net		8,283		—
Realized loss on sale of marketable securities sold for the purpose of notes repurchase		688		—
Non-GAAP interest and other income (expense), net		$(279)		$(601)

 

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

2022 Second Quarter Outlook		Three Months Ended June 30, 2022
(In millions)		Low		High
Forward-looking operating costs and expenses		$91.7		$87.7
Adjustments:
Stock-based compensation expense		(9.0)		(9.0)
Amortization of acquired intangible assets		(3.7)		(3.7)
Forward-looking Non-GAAP operating costs and expenses		$79.0		$75.0
Forward-looking interest and other income (expense), net		$0.9		$0.9
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1.5)		(1.5)
Non-cash interest expense on convertible notes		0.1		0.1
Forward-looking Non-GAAP interest and other income (expense), net		$(0.5)		$(0.5)

• Achieved excellent Q4 results, exceeding guidance for revenue and profitability
• Produced record annual product revenue of $143.9 million driven by memory interface chips, up 26% year over year
• Generated record cash from operations of $209.2 million for full year 2021, with $72.2 million generated in Q4

SAN JOSE, Calif. – February 7, 2022 – Rambus Inc. (NASDAQ:RMBS), a provider of industry-leading chips and IP making data faster and safer, today reported financial results for the fourth quarter ended December 31, 2021. GAAP revenue for the fourth quarter was $91.8 million; licensing billings were $66.6 million, product revenue was $45.3 million, and contract and other revenue was $13.6 million. The Company also generated $72.2 million in cash provided by operating activities in the fourth quarter, setting an annual record of $209.2 million for the full year 2021.

“Rambus delivered an outstanding fourth quarter contributing to an exceptionally good year, driven by excellent execution and record product revenue,” said Luc Seraphin, chief executive officer of Rambus. “The record cash generation fuels our ongoing strategic investment in scaling the business, returning value to stockholders, and extending our product roadmap to enable continued profitable growth.”

 

Quarterly Financial Review – GAAP	Three Months Ended December 31,
(In millions, except for percentages and per share amounts)	2021		2020
Revenue
Product revenue	$45.3		$21.8
Royalties	32.9		27.7
Contract and other revenue	13.6		12.4
Total revenue	$91.8		$61.9
Cost of product revenue	$13.4		$7.5
Cost of contract and other revenue	$0.7		$1.6
Amortization of acquired intangible assets (included in total cost of revenue)	$3.6		$4.3
Total operating expenses (1)	$65.1		$59.5
Operating income (loss)	$9.0		$(11.0)
Operating margin	10%		(18) %
Net income (loss)	$6.1		$(12.1)
Diluted net income (loss) per share	$0.05		$(0.11)
Net cash provided by operating activities	$72.2		$42.1

____________________________

⁽¹⁾   Includes amortization of acquired intangible assets of approximately $0.4 million and $0.2 million for the three months ended December 31, 2021 and 2020, respectively.

 

Quarterly Financial Review – Non-GAAP (including operational metric) (1)	Three Months Ended December 31,
(In millions)	2021		2020
Licensing billings (2)	$66.6		$64.2
Product revenue	$45.3		$21.8
Contract and other revenue	$13.6		$12.4
Cost of product revenue	$13.3		$7.5
Cost of contract and other revenue	$0.7		$1.6
Total operating expenses	$51.4		$46.7
Interest and other income (expense), net	$(1.1)		$(0.6)
Diluted share count	115		115

____________________________

⁽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 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 $91.8 million, exceeding the Company’s guidance. The Company also had licensing billings of $66.6 million, product revenue of $45.3 million, and contract and other revenue of $13.6 million. The Company had total GAAP cost of revenue of $17.7 million and operating expenses of $65.1 million. The Company also had total non-GAAP operating expenses of $65.4 million (which includes non-GAAP cost of revenue), at the low end of its expectations through its operational efficiency. The Company’s annual product revenue increased 26% year over year as the Company continues to gain market share. Due to the Company’s strong performance and operational efficiency, the Company delivered a strong fourth quarter, exceeding guidance for revenue and profitability. The Company had GAAP diluted net income per share of $0.05. The Company’s basic share count was 109 million shares and its diluted share count was 115 million shares.

Cash, cash equivalents, and marketable securities as of December 31, 2021 were $485.6 million, an increase of $65.9 million as compared to September 30, 2021, mainly due to cash provided by operating activities of approximately $72.2 million. Cash provided by operating activities for the year ended December 31, 2021 was $209.2 million, an increase of $23.7 million or 13%, from the same period in the prior year.

2022 First Quarter Outlook

The Company will discuss its full revenue guidance for the first quarter of 2022 during its upcoming conference call. The following table sets forth first quarter outlook for other measures.

(In millions)	GAAP		Non-GAAP (1)
Licensing billings (2)	$64 – $70		$64 – $70
Product revenue	$43 – $49		$43 – $49
Contract and other revenue	$12 – $18		$12 – $18
Total operating costs and expenses	$84 – $80		$73 – $69
Interest and other income (expense), net	($1)		($1)
Diluted share count	115		115

____________________________

⁽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 2022, the Company expects licensing billings to be between $64 million and $70 million. The Company also expects royalty revenue to be between $30 million and $36 million, product revenue to be between $43 million and $49 million and contract and other revenue to be between $12 million and $18 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 $84 million and $80 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $73 million and $69 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 115 million, and exclude stock-based compensation expense ($7 million), amortization expense ($4 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 ($2 million).

Conference Call

Rambus management will discuss the results of the quarter during a conference call scheduled for 2:00 p.m. PT today. The call, 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# 5264419.

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 costs and retention bonus expense, amortization of acquired intangible assets, restructuring and other charges, depreciation expense on unused Electronic Design Automation (“EDA”) software licenses, expense on abandoned operating leases, change in fair value of earn-out liability, non-cash interest expense and certain other one-time adjustments. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes the non-GAAP financial measures are appropriate for both its own assessment of, and to show investors, how the Company’s performance compares to other periods. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Reconciliation from GAAP to non-GAAP results is included in the financial statements contained in this release.

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

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

Acquisition-related costs and retention bonus expense. These expenses include all direct costs of certain acquisitions and the current 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.

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

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.

Depreciation expense on unused EDA software licenses. Reflects the accelerated depreciation expense on EDA software licenses that were abandoned. The Company excludes these charges because such charges are not directly related to ongoing business results and do not reflect expected future operating expenses.

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

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

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

Income tax adjustments. For purposes of internal forecasting, planning and analyzing future periods that assume net income from operations, the Company estimates a fixed, long-term projected tax rate of approximately 24% for both 2021 and 2020, which consists of estimated U.S. federal and state tax rates, and excludes tax rates associated with certain items such as withholding tax, tax credits, deferred tax asset valuation allowance and the release of any deferred tax asset valuation allowance. Accordingly, the Company has applied these tax rates to its non-GAAP financial results for all periods in the relevant years to assist the Company’s planning.

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

Forward-Looking Statements

This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, including those relating to Rambus’ expectations regarding business opportunities, the Company’s ability to deliver long-term, profitable growth, industry growth rates, the successful integrations of AnalogX and PLDA, product and investment strategies, the long-term sustainability of the Company’s increased product revenue and cash generated from operating activities, the Company’s outlook and financial guidance for the first quarter of 2022 and related drivers, and the Company’s ability to effectively manage supply chain shortages. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by the Company’s management. Actual results may differ materially. The Company’s business generally is subject to a number of risks which are described more fully in Rambus’ periodic reports filed with the Securities and Exchange Commission, as well as the potential adverse impacts related to, or arising from, the Novel Coronavirus (COVID-19) and its variants. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

Contact

Keith Jones
Vice President, Finance and Interim Chief Financial Officer
Rambus Inc.
(408) 462-8000
kjones@rambus.com

Rambus Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

 

(In thousands)		December 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents		$107,891		$128,967
Marketable securities		377,718		373,682
Accounts receivable		44,065		27,903
Unbilled receivables		135,608		138,813
Inventories		8,482		14,466
Prepaids and other current assets		10,600		15,881
Total current assets		684,364		699,712
Intangible assets, net		58,420		36,487
Goodwill		278,810		183,222
Property, plant and equipment, net		56,035		57,693
Operating lease right-of-use assets		23,712		28,708
Deferred tax assets		4,047		4,353
Unbilled receivables, long-term		123,018		236,699
Other assets		4,240		4,535
Total assets		$1,232,646		$1,251,409
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$11,279		$8,993
Accrued salaries and benefits		20,945		23,326
Deferred revenue		24,755		10,198
Income taxes payable, short-term		20,607		20,064
Convertible notes, short-term		163,687		—
Operating lease liabilities		5,992		4,724
Other current liabilities		20,002		18,559
Total current liabilities		267,267		85,864
Long-term liabilities:
Convertible notes, long-term		—		156,031
Long-term operating lease liabilities		29,099		34,305
Long-term income taxes payable		21,424		41,333
Deferred tax liabilities		23,985		14,276
Other long-term liabilities		28,475		6,894
Total long-term liabilities		102,983		252,839
Total stockholders’ equity		862,396		912,706
Total liabilities and stockholders’ equity		$1,232,646		$1,251,409

 

Rambus Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

 

		Three Months Ended December 31,				Years Ended December 31,
(In thousands, except per share amounts)		2021		2020		2021		2020
Revenue:
Product revenue		$45,274		$21,774		$143,935		$113,996
Royalties		32,893		27,732		136,706		84,560
Contract and other revenue		13,614		12,407		47,663		47,766
Total revenue		91,781		61,913		328,304		246,322
Cost of revenue:
Cost of product revenue		13,408		7,468		49,397		37,749
Cost of contract and other revenue		727		1,647		4,756		5,647
Amortization of acquired intangible assets		3,603		4,336		16,241		17,352
Total cost of revenue		17,738		13,451		70,394		60,748
Gross profit		74,043		48,462		257,910		185,574
Operating expenses:
Research and development		36,263		34,752		135,678		139,837
Sales, general and administrative		23,101		21,232		91,057		86,441
Amortization of acquired intangible assets		409		229		1,226		1,061
Restructuring and other charges		—		3,253		368		4,089
Change in fair value of earn-out liability		5,300		—		5,300		(1,800)
Total operating expenses		65,073		59,466		233,629		229,628
Operating income (loss)		8,970		(11,004)		24,281		(44,054)
Interest income and other income (expense), net		1,623		3,170		9,711		17,855
Interest expense		(2,737)		(2,619)		(10,706)		(10,340)
Interest and other income (expense), net		(1,114)		551		(995)		7,515
Income (loss) before income taxes		7,856		(10,453)		23,286		(36,539)
Provision for income taxes		1,751		1,602		4,952		3,932
Net income (loss)		$6,105		$(12,055)		$18,334		$(40,471)
Net income (loss) per share:
Basic		$0.06		$(0.11)		$0.17		$(0.36)
Diluted		$0.05		$(0.11)		$0.16		$(0.36)
Weighted average shares used in per share calculation:
Basic		109,161		112,706		110,538		113,254
Diluted		114,534		112,706		114,865		113,254

 

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

		Three Months Ended
		December 31,
(In thousands)		2021		2020
Cost of product revenue		$13,408		$7,468
Adjustment:
Stock-based compensation expense		(112)		—
Non-GAAP cost of product revenue		$13,296		$7,468
Total operating expenses		$65,073		$59,466
Adjustments:
Stock-based compensation expense		(6,092)		(6,165)
Acquisition-related costs and retention bonus expense		(1,308)		(781)
Amortization of acquired intangible assets		(409)		(229)
Restructuring and other charges		—		(3,253)
Depreciation expense on unused EDA software licenses		—		(2,183)
Expense on abandoned operating leases		(559)		(174)
Change in fair value of earn-out liability		(5,300)		—
Non-GAAP total operating expenses		$51,405		$46,681
Interest and other income (expense), net		$(1,114)		$551
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1,907)		(2,984)
Non-cash interest expense on convertible notes		1,954		1,849
Non-GAAP interest and other income (expense), net		$(1,067)		$(584)

 

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

2022 First Quarter Outlook		Three Months Ended March 31, 2022
(In millions)		Low		High
Forward-looking operating costs and expenses		$83.8		$79.8
Adjustments:
Stock-based compensation expense		(7.0)		(7.0)
Amortization of acquired intangible assets		(3.8)		(3.8)
Forward-looking Non-GAAP operating costs and expenses		$73.0		$69.0
Forward-looking interest and other income (expense), net		$(0.9)		$(0.9)
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1.9)		(1.9)
Non-cash interest expense on convertible notes		1.8		1.8
Forward-looking Non-GAAP interest and other income (expense), net		$(1.0)		$(1.0)

• Delivered Q3 revenue and profitability in line with guidance
• Generated $46.0 million in cash provided by operating activities
• Delivered record product revenue of $36.7 million, consisting mainly of memory interface chips
• Closed the acquisitions of AnalogX and PLDA, bolstering Silicon IP business and CXL Memory Interconnect Initiative

SAN JOSE, Calif. – November 1, 2021 – Rambus Inc. (NASDAQ:RMBS), a provider of industry-leading chips and IP making data faster and safer, today reported financial results for the third quarter ended September 30, 2021. GAAP revenue for the third quarter was $81.3 million; licensing billings were $66.1 million, product revenue was $36.7 million, and contract and other revenue was $11.5 million. The Company also generated $46.0 million in cash provided by operating activities.

“Rambus delivered a strong third quarter, supported by great execution from the team,” said Luc Seraphin, chief executive officer of Rambus. “We are well positioned for continued profitable growth as demonstrated by this quarter’s record product revenue from memory interface chips. Strategically, we continue to scale the business as the integrations of AnalogX and PLDA are well underway with the new teams already contributing new products and design wins.”

Quarterly Financial Review – GAAP		Three Months Ended September 30,
(In millions, except for percentages and per share amounts)		2021				2020
Revenue
Product revenue		$36.7				$29.8
Royalties		33.1				16.6
Contract and other revenue		11.5				10.5
Total revenue		81.3				56.9
Cost of product revenue		13.1				9.7
Cost of contract and other revenue		1.5				1.3
Amortization of acquired intangible assets (included in total cost of revenue)		3.8				4.3
Total operating expenses (1)		58.2				54.1
Operating income (loss)		$4.7				$(12.5)
Operating margin		6%				(22)%
Net income (loss)		$3.7				$(12.7)
Diluted net income (loss) per share		$0.03				$(0.11)
Net cash provided by operating activities		$46.0				$44.1

_________________________________________

⁽¹⁾   Includes amortization of acquired intangible assets of approximately $0.4 million and $0.2 million for the three months ended September 30, 2021 and 2020, respectively.

Quarterly Financial Review – Non-GAAP (including operational metric) (1)		Three Months Ended September 30,
(In millions)		2021				2020
Licensing billings (2)		$66.1				$63.1
Product revenue		$36.7				$29.8
Contract and other revenue		$11.5				$10.5
Cost of product revenue		$13.1				$9.7
Cost of contract and other revenue		$1.5				$1.3
Total operating expenses		$48.2				$45.8
Interest and other income (expense), net		$(0.2)				$(0.6)
Diluted share count		114				116

_________________________________________

⁽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 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 $81.3 million, in line with the Company’s expectations. The Company also had licensing billings of $66.1 million, product revenue of $36.7 million, and contract and other revenue of $11.5 million. The Company had GAAP cost of revenue of $18.4 million and operating expenses of $58.2 million. The Company also had total non-GAAP operating expenses of $62.8 million (which includes non-GAAP cost of revenue), in line with the Company’s expectations. The Company had GAAP diluted net income per share of $0.03. The Company’s diluted share count was 114 million shares. Due to the Company’s strong performance and focus on operational efficiency, the Company delivered strong results in the third quarter, with revenue and profitability in line with expectations.

Cash, cash equivalents, and marketable securities as of September 30, 2021 were $419.7 million, a decrease of $57.4 million from June 30, 2021, mainly due to approximately $97.1 million paid in connection with the acquisitions of AnalogX Inc. and PLDA Group, net of cash acquired of approximately $8.6 million, partially offset by cash provided by operating activities of approximately $46.0 million.

2021 Fourth Quarter Outlook

The Company will discuss its full revenue guidance for the fourth quarter of 2021 during its upcoming conference call. The following table sets forth fourth quarter outlook for other measures.

(In millions)		GAAP		Non-GAAP (1)
Licensing billings (2)		$62 – $68		$62 – $68
Product revenue		$40 – $46		$40 – $46
Contract and other revenue		$12 – $18		$12 – $18
Total operating costs and expenses		$80 – $76		$68 – $64
Interest and other income (expense), net		($1)		($1)
Diluted share count		115		115

_________________________________________

⁽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 fourth quarter of 2021, the Company expects licensing billings to be between $62 million and $68 million. The Company also expects royalty revenue to be between $26 million and $32 million, product revenue to be between $40 million and $46 million and contract and other revenue to be between $12 million and $18 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 $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% and diluted share count of 115 million, and exclude stock-based compensation expense ($8 million), amortization expense ($4 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 ($2 million).

Conference Call

The Company’s management will discuss the results of the quarter during a conference call scheduled for 2:00 p.m. 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# 9537075.

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, amortization of acquired intangible assets, expense on abandoned operating leases, non-cash interest expense and certain other one-time adjustments. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes the non-GAAP financial measures are appropriate for both its own assessment of, and to show investors, how the Company’s performance compares to other periods. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Reconciliation from GAAP to non-GAAP results is included in the financial statements contained in this release.

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

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

Acquisition-related costs and retention bonus expense. These expenses include all direct costs of certain acquisitions and the current 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.

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

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

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 2021 and 2020, which consists of estimated U.S. federal and state tax rates, and excludes tax rates associated with certain items such as withholding tax, tax credits, deferred tax asset valuation allowance and the release of any deferred tax asset valuation allowance. Accordingly, the Company has applied these tax rates to its non-GAAP financial results for all periods in the relevant years to assist the Company’s planning.

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

Forward-Looking Statements

This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, including those relating to Rambus’ expectations regarding business opportunities, the Company’s ability to deliver long-term, profitable growth, the successful integrations of AnalogX and PLDA, product and investment strategies, and the Company’s outlook and financial guidance for the fourth quarter of 2021 and related drivers. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by the Company’s management. Actual results may differ materially. The Company’s business generally is subject to a number of risks which are described more fully in Rambus’ periodic reports filed with the Securities and Exchange Commission, as well as the potential adverse impacts related to, or arising from, the Novel Coronavirus (COVID-19). The Company 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

Source: Rambus Inc.
Rambus Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands)		September 30, 2021				December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents		$151,871				$128,967
Marketable securities		267,857				373,682
Accounts receivable		46,674				27,903
Unbilled receivables		138,281				138,813
Inventories		8,085				14,466
Prepaids and other current assets		11,991				15,881
Total current assets		624,759				699,712
Intangible assets, net		62,431				36,487
Goodwill		279,091				183,222
Property, plant and equipment, net		51,516				57,693
Operating lease right-of-use assets		25,202				28,708
Deferred tax assets		3,846				4,353
Unbilled receivables		151,462				236,699
Other assets		4,359				4,535
Total assets		$1,202,666				$1,251,409
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$13,281				$8,993
Accrued salaries and benefits		15,331				23,326
Deferred revenue		20,324				10,198
Income taxes payable		20,443				20,064
Operating lease liabilities		6,501				4,724
Other current liabilities		19,295				18,559
Total current liabilities		95,175				85,864
Long-term liabilities:
Convertible notes		161,733				156,031
Long-term operating lease liabilities		30,400				34,305
Long-term income taxes payable		25,797				41,333
Deferred tax liabilities		23,888				14,276
Other long-term liabilities		17,830				6,894
Total long-term liabilities		259,648				252,839
Total stockholders’ equity		847,843				912,706
Total liabilities and stockholders’ equity		$1,202,666				$1,251,409

Rambus Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

		Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands, except per share amounts)		2021				2020				2021				2020
Revenue:
Product revenue		$36,710				$29,769				$98,661				$92,222
Royalties		33,044				16,602				103,813				56,828
Contract and other revenue		11,528				10,544				34,049				35,359
Total revenue		81,282				56,915				236,523				184,409
Cost of revenue:
Cost of product revenue		13,157				9,661				35,989				30,281
Cost of contract and other revenue		1,456				1,267				4,029				4,000
Amortization of acquired intangible assets		3,813				4,336				12,638				13,016
Total cost of revenue		18,426				15,264				52,656				47,297
Gross profit		62,856				41,651				183,867				137,112
Operating expenses:
Research and development		35,592				33,733				99,415				105,085
Sales, general and administrative		22,210				20,182				67,956				65,209
Amortization of acquired intangible assets		359				236				817				832
Restructuring charges		—				—				368				836
Change in fair value of earn-out liability		—				—				—				(1,800)
Total operating expenses		58,161				54,151				168,556				170,162
Operating income (loss)		4,695				(12,500)				15,311				(33,050)
Interest income and other income (expense), net		2,726				3,554				8,088				14,685
Interest expense		(2,672)				(2,586)				(7,969)				(7,721)
Interest and other income (expense), net		54				968				119				6,964
Income (loss) before income taxes		4,749				(11,532)				15,430				(26,086)
Provision for income taxes		1,073				1,205				3,201				2,330
Net income (loss)		$3,676				$(12,737)				$12,229				$(28,416)
Net income (loss) per share:
Basic		$0.03				$(0.11)				$0.11				$(0.25)
Diluted		$0.03				$(0.11)				$0.11				$(0.25)
Weighted average shares used in per share calculation
Basic		108,989				113,828				111,103				113,437
Diluted		113,661				113,828				114,954				113,437

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

		Three Months Ended September 30,
(In thousands)		2021				2020
Cost of product revenue		$13,157				$9,661
Adjustment:
Stock-based compensation expense		(101)				—
Non-GAAP cost of product revenue		$13,056				$9,661
Total operating expenses		$58,161				$54,151
Adjustments:
Stock-based compensation expense		(7,381)				(6,834)
Acquisition-related costs and retention bonus expense		(1,658)				(1,327)
Amortization of acquired intangible assets		(359)				(236)
Expense on abandoned operating leases		(521)				—
Non-GAAP total operating expenses		$48,242				$45,754
Interest and other income (expense), net		$54				$968
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(2,163)				(3,379)
Non-cash interest expense on convertible notes		1,927				1,823
Non-GAAP interest and other income (expense), net		$(182)				$(588)

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

2021 Fourth Quarter Outlook		Three Months Ended December 31, 2021
(In millions)		Low				High
Forward-looking operating costs and expenses		$79.9				$75.9
Adjustments:
Stock-based compensation expense		(8.0)				(8.0)
Amortization of acquired intangible assets		(3.9)				(3.9)
Forward-looking Non-GAAP operating costs and expenses		$68.0				$64.0
Forward-looking interest and other income (expense), net		$(1.0)				$(1.0)
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1.9)				(1.9)
Non-cash interest expense on convertible notes		1.9				1.9
Forward-looking Non-GAAP interest and other income (expense), net		$(1.0)				$(1.0)