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Rambus

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

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Home > Press Releases > Corporate > Financial

Financial

Rambus Reports Third Quarter 2022 Financial Results

  • 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)

Rambus Initiates Accelerated Share Repurchase Program

SAN JOSE, Calif. – Sep. 12, 2022 – Rambus Inc. (NASDAQ: RMBS), a provider of industry-leading chips and silicon IP making data faster and safer, today announced that it initiated an accelerated share repurchase program with Wells Fargo Bank, National Association (“Wells Fargo Bank”), to repurchase an aggregate of approximately $100 million of its common stock, with an initial delivery of approximately 3.1 million shares.

“As part of our strategic approach to capital allocation, this program demonstrates our confidence in the future growth of the company, and highlights our continuing ability to invest in critical products and technologies while delivering long-term value to our stockholders,” said Luc Seraphin, president and chief executive officer at Rambus.

Under the accelerated share repurchase program, Rambus will pre-pay to Wells Fargo Bank the $100 million purchase price for its common stock and, in turn, Rambus will receive an initial delivery of approximately 3.1 million shares of its common stock from Wells Fargo Bank within the first week of the program. The number of shares to be purchased ultimately by Rambus will be determined based on the volume-weighted average price of Rambus common stock during the terms of the transaction, minus an agreed upon discount between the parties. The program is expected to be completed within four months.

The accelerated share repurchase program is part of the broader share repurchase program previously authorized by the Rambus Board of Directors.

About Rambus Inc.

Rambus is a provider of industry-leading chips and silicon IP making data faster and safer. With over 30 years of advanced semiconductor experience, we are a pioneer in high-performance memory subsystems that solve the bottleneck between memory and processing for data-intensive systems. Whether in the cloud, at the edge or in your hand, real-time and immersive applications depend on data throughput and integrity. Rambus products and innovations deliver the increased bandwidth, capacity and security required to meet the world’s data needs and drive ever-greater end-user experiences. For more information, visit rambus.com.

Forward-Looking Statements

This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 relating, among other things, to the terms of Rambus’ accelerated share repurchase program, including timing, Rambus’ growth potential, and the long-term success of Rambus’ investment strategy. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by Rambus’ management. Actual results may differ materially. The forward-looking statements contained in this press release are subject to risks and uncertainties, including those more fully described in Rambus’ Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2022. The forward-looking statements in this press release are based on information available to Rambus as of the date hereof, and Rambus 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 Reports Second Quarter 2022 Financial Results

  • 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)

Rambus Reports First Quarter 2022 Financial Results

  • 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)

Rambus Reports Fourth Quarter and Fiscal Year 2021 Financial Results

  • 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)

Rambus Reports Third Quarter 2021 Financial Results

  • 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)
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