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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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        • Made for high speed, reliability and power efficiency, our DDR3, DDR4, and DDR5 DIMM chipsets deliver top-of-the-line performance and capacity for the next wave of computing systems. Learn more about our Memory Interface Chip solutions
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        • With their reduced power consumption and industry-leading data rates, our line-up of memory interface IP solutions support a broad range of industry standards with improved margin and flexibility. Learn more about our Interface IP solutions
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        • From chip-to-cloud-to-crowd, Rambus secure silicon IP helps protect the world’s most valuable resource: data. Securing electronic systems at their hardware foundation, our embedded security solutions span areas including root of trust, tamper resistance, content protection and trusted provisioning. Learn more about our Security IP offerings
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Home > Press Releases > Corporate > Financial

Financial

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 – GAAPThree Months Ended
June 30,
(In millions, except for percentages and per share amounts)20222021
Revenue
Product revenue$53.3$31.2
Royalties48.041.9
Contract and other revenue19.811.8
Total revenue121.184.9
Cost of product revenue20.411.4
Cost of contract and other revenue1.01.0
Amortization of acquired intangible assets (included in total cost of revenue)3.44.5
Total operating expenses (1)60.853.9
Operating income$35.5$14.1
Operating margin29 %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)20222021
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)113115

_________________________________________

(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)GAAPNon-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 count113113

_________________________________________

(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 securities180,175377,718
Accounts receivable63,60244,065
Unbilled receivables146,692135,608
Inventories9,2388,482
Prepaids and other current assets9,97910,600
Total current assets581,146684,364
Intangible assets, net58,86658,420
Goodwill291,995278,810
Property, plant and equipment, net81,73556,035
Operating lease right-of-use assets26,34323,712
Deferred tax assets2,6864,047
Unbilled receivables65,211123,018
Other assets2,9314,240
Total assets$1,110,913$1,232,646
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$20,183$11,279
Accrued salaries and benefits20,68920,945
Convertible notes49,248163,687
Deferred revenue22,16524,755
Income taxes payable20,84620,607
Operating lease liabilities5,8735,992
Other current liabilities22,44020,002
Total current liabilities161,444267,267
Long-term liabilities:
Long-term operating lease liabilities31,21929,099
Long-term income taxes payable12,22021,424
Deferred tax liabilities25,15923,985
Other long-term liabilities42,71328,475
Total long-term liabilities111,311102,983
Total stockholders’ equity838,158862,396
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)2022202120222021
Revenue:
Product revenue$53,302$31,170$101,271$61,951
Royalties48,03841,91078,50270,769
Contract and other revenue19,79211,77940,40922,521
Total revenue121,13284,859220,182155,241
Cost of revenue:
Cost of product revenue20,41711,42238,81422,832
Cost of contract and other revenue9741,0171,5982,573
Amortization of acquired intangible assets3,4214,4396,7998,825
Total cost of revenue24,81216,87847,21134,230
Gross profit96,32067,981172,971121,011
Operating expenses:
Research and development39,53831,46979,35363,823
Sales, general and administrative26,30522,18453,21145,746
Amortization of acquired intangible assets417229826458
Restructuring charges — — —368
Change in fair value of earn-out liability(5,500) —(4,300)—
Total operating expenses60,76053,882129,090110,395
Operating income35,56014,09943,88110,616
Interest income and other income (expense), net2,7382,3814,0985,362
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), net2,390(302)(71,635)65
Income (loss) before income taxes37,95013,797(27,754)10,681
Provision for income taxes2,9302,6313,4442,128
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
Basic110,447112,144110,170112,177
Diluted112,715114,931110,170115,358

 

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

Three Months Ended
June 30,
(In thousands)20222021
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 OutlookThree Months Ended
September 30, 2022
(In millions)LowHigh
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$0.1
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(1.2)(1.2)
Non-cash interest expense on convertible notes0.10.1
Forward-looking Non-GAAP interest and other income (expense), net$(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 – GAAPThree Months Ended
March 31,
(In millions, except for percentages and per share amounts)20222021
Revenue
Product revenue$48.0$30.8
Royalties30.428.9
Contract and other revenue20.610.7
Total revenue99.070.4
Cost of product revenue18.411.4
Cost of contract and other revenue0.61.6
Amortization of acquired intangible assets (included in total cost of revenue)3.44.4
Total operating expenses (1)68.356.5
Operating income (loss)$8.3$(3.5)
Operating margin8%(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)20222021
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)113116

_________________________________________

(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)GAAPNon-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 count114114

_________________________________________

(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 securities164,562377,718
Accounts receivable51,23244,065
Unbilled receivables131,748135,608
Inventories6,1648,482
Prepaids and other current assets12,27710,600
Total current assets545,112684,364
Intangible assets, net57,63458,420
Goodwill279,793278,810
Property, plant and equipment, net54,96556,035
Operating lease right-of-use assets22,71423,712
Deferred tax assets3,9864,047
Unbilled receivables93,367123,018
Other assets3,3044,240
Total assets$1,060,875$1,232,646
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$15,540$11,279
Accrued salaries and benefits17,40220,945
Convertible notes73,860163,687
Deferred revenue20,62424,755
Income taxes payable21,01520,607
Operating lease liabilities5,8545,992
Other current liabilities14,10720,002
Total current liabilities168,402267,267
Long-term liabilities:
Long-term operating lease liabilities27,93929,099
Long-term income taxes payable16,68121,424
Deferred tax liabilities24,57223,985
Other long-term liabilities30,15528,475
Total long-term liabilities99,347102,983
Total stockholders’ equity793,126862,396
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)20222021
Revenue:
Product revenue$47,969$30,781
Royalties30,46428,859
Contract and other revenue20,61710,742
Total revenue99,05070,382
Cost of revenue:
Cost of product revenue18,39711,410
Cost of contract and other revenue6241,556
Amortization of acquired intangible assets3,3784,386
Total cost of revenue22,39917,352
Gross profit76,65153,030
Operating expenses:
Research and development39,81532,354
Sales, general and administrative26,90623,562
Amortization of acquired intangible assets409229
Restructuring charges—368
Change in fair value of earn-out liability1,200—
Total operating expenses68,33056,513
Operating income (loss)8,321(3,483)
Interest income and other income (expense), net1,3602,981
Loss on extinguishment of debt(66,497)—
Loss on fair value adjustment of derivatives, net(8,283)—
Interest expense(605)(2,614)
Interest and other income (expense), net(74,025)367
Loss before income taxes(65,704)(3,116)
Provision for (benefit from) income taxes514(503)
Net loss$(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
Basic109,889112,211
Diluted109,889112,211

 

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

Three Months Ended
March 31,

(In thousands)20222021
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)$367
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(1,827)(2,842)
Non-cash interest expense on convertible notes1051,874
Loss on extinguishment of debt66,497—
Loss on fair value adjustment of derivatives, net8,283—
Realized loss on sale of marketable securities sold for the purpose of notes repurchase688—
Non-GAAP interest and other income (expense), net$(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)LowHigh
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$0.9
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(1.5)(1.5)
Non-cash interest expense on convertible notes0.10.1
Forward-looking Non-GAAP interest and other income (expense), net$(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 – GAAPThree Months Ended
December 31,
(In millions, except for percentages and per share amounts)20212020
Revenue
Product revenue$45.3$21.8
Royalties32.927.7
Contract and other revenue13.612.4
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 margin10%(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)20212020
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 count115115

____________________________

(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)GAAPNon-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 count115115

____________________________

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

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

For the first quarter of 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, 2021December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$107,891$128,967
Marketable securities377,718373,682
Accounts receivable44,06527,903
Unbilled receivables135,608138,813
Inventories8,48214,466
Prepaids and other current assets10,60015,881
Total current assets684,364699,712
Intangible assets, net58,42036,487
Goodwill278,810183,222
Property, plant and equipment, net56,03557,693
Operating lease right-of-use assets23,71228,708
Deferred tax assets4,0474,353
Unbilled receivables, long-term123,018236,699
Other assets4,2404,535
Total assets$1,232,646$1,251,409
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$11,279$8,993
Accrued salaries and benefits20,94523,326
Deferred revenue24,75510,198
Income taxes payable, short-term20,60720,064
Convertible notes, short-term163,687—
Operating lease liabilities5,9924,724
Other current liabilities20,00218,559
Total current liabilities267,26785,864
Long-term liabilities:
Convertible notes, long-term—156,031
Long-term operating lease liabilities29,09934,305
Long-term income taxes payable21,42441,333
Deferred tax liabilities23,98514,276
Other long-term liabilities28,4756,894
Total long-term liabilities102,983252,839
Total stockholders’ equity862,396912,706
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)2021202020212020
Revenue:
Product revenue$45,274$21,774$143,935$113,996
Royalties32,89327,732136,70684,560
Contract and other revenue13,61412,40747,66347,766
Total revenue91,78161,913328,304246,322
Cost of revenue:
Cost of product revenue13,4087,46849,39737,749
Cost of contract and other revenue7271,6474,7565,647
Amortization of acquired intangible assets3,6034,33616,24117,352
Total cost of revenue17,73813,45170,39460,748
Gross profit74,04348,462257,910185,574
Operating expenses:
Research and development36,26334,752135,678139,837
Sales, general and administrative23,10121,23291,05786,441
Amortization of acquired intangible assets4092291,2261,061
Restructuring and other charges—3,2533684,089
Change in fair value of earn-out liability5,300—5,300(1,800)
Total operating expenses65,07359,466233,629229,628
Operating income (loss)8,970(11,004)24,281(44,054)
Interest income and other income (expense), net1,6233,1709,71117,855
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 taxes7,856(10,453)23,286(36,539)
Provision for income taxes1,7511,6024,9523,932
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:
Basic109,161112,706110,538113,254
Diluted114,534112,706114,865113,254

 

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

Three Months Ended
December 31,
(In thousands)20212020
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)$551
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(1,907)(2,984)
Non-cash interest expense on convertible notes1,9541,849
Non-GAAP interest and other income (expense), net$(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)LowHigh
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)$(0.9)
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(1.9)(1.9)
Non-cash interest expense on convertible notes1.81.8
Forward-looking Non-GAAP interest and other income (expense), net$(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 – GAAPThree Months Ended
September 30,
(In millions, except for percentages and per share amounts)20212020
Revenue
Product revenue$36.7$29.8
Royalties33.116.6
Contract and other revenue11.510.5
Total revenue81.356.9
Cost of product revenue13.19.7
Cost of contract and other revenue1.51.3
Amortization of acquired intangible assets (included in total cost of revenue)3.84.3
Total operating expenses (1)58.254.1
Operating income (loss)$4.7$(12.5)
Operating margin6%(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)20212020
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 count114116

_________________________________________

(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)GAAPNon-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 count115115

_________________________________________

(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 securities267,857373,682
Accounts receivable46,67427,903
Unbilled receivables138,281138,813
Inventories8,08514,466
Prepaids and other current assets11,99115,881
Total current assets624,759699,712
Intangible assets, net62,43136,487
Goodwill279,091183,222
Property, plant and equipment, net51,51657,693
Operating lease right-of-use assets25,20228,708
Deferred tax assets3,8464,353
Unbilled receivables151,462236,699
Other assets4,3594,535
Total assets$1,202,666$1,251,409
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$13,281$8,993
Accrued salaries and benefits15,33123,326
Deferred revenue20,32410,198
Income taxes payable20,44320,064
Operating lease liabilities6,5014,724
Other current liabilities19,29518,559
Total current liabilities95,17585,864
Long-term liabilities:
Convertible notes161,733156,031
Long-term operating lease liabilities30,40034,305
Long-term income taxes payable25,79741,333
Deferred tax liabilities23,88814,276
Other long-term liabilities17,8306,894
Total long-term liabilities259,648252,839
Total stockholders’ equity847,843912,706
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)2021202020212020
Revenue:
Product revenue$36,710$29,769$98,661$92,222
Royalties33,04416,602103,81356,828
Contract and other revenue11,52810,54434,04935,359
Total revenue81,28256,915236,523184,409
Cost of revenue:
Cost of product revenue13,1579,66135,98930,281
Cost of contract and other revenue1,4561,2674,0294,000
Amortization of acquired intangible assets3,8134,33612,63813,016
Total cost of revenue18,42615,26452,65647,297
Gross profit62,85641,651183,867137,112
Operating expenses:
Research and development35,59233,73399,415105,085
Sales, general and administrative22,21020,18267,95665,209
Amortization of acquired intangible assets359236817832
Restructuring charges——368836
Change in fair value of earn-out liability———(1,800)
Total operating expenses58,16154,151168,556170,162
Operating income (loss)4,695(12,500)15,311(33,050)
Interest income and other income (expense), net2,7263,5548,08814,685
Interest expense(2,672)(2,586)(7,969)(7,721)
Interest and other income (expense), net549681196,964
Income (loss) before income taxes4,749(11,532)15,430(26,086)
Provision for income taxes1,0731,2053,2012,330
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
Basic108,989113,828111,103113,437
Diluted113,661113,828114,954113,437

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

Three Months Ended
September 30,
(In thousands)20212020
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$968
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(2,163)(3,379)
Non-cash interest expense on convertible notes1,9271,823
Non-GAAP interest and other income (expense), net$(182)$(588)

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

2021 Fourth Quarter OutlookThree Months Ended
December 31, 2021
(In millions)LowHigh
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)$(1.0)
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(1.9)(1.9)
Non-cash interest expense on convertible notes1.91.9
Forward-looking Non-GAAP interest and other income (expense), net$(1.0)$(1.0)

Rambus Reports Second Quarter 2021 Financial Results

  • Exceeded Q2 guidance for revenue and profitability
  • Generated $51.6 million in cash provided by operating activities
  • Initiated $100 million accelerated share repurchase program
  • Accelerated data center solution roadmap with CXL Memory Interconnect Initiative
  • Announced the acquisitions of AnalogX and PLDA

SAN JOSE, Calif. – August 2, 2021 – 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, 2021. GAAP revenue for the second quarter was $84.9 million; licensing billings were $65.2 million, product revenue was $31.2 million, and contract and other revenue was $11.8 million. The Company also generated $51.6 million in cash provided by operating activities.

“Rambus had an exciting second quarter, making a number of strategic advancements to capture the next wave of semiconductor growth focused on next-generation data center architectures, and exceeding financial guidance for the top and bottom line,” said Luc Seraphin, chief executive officer of Rambus. “Product revenue from memory interface chips remains strong, and we had record revenue from security and digital controller IP. The Company continues to scale, putting us in a great position for long-term profitable growth.”

Quarterly Financial Review – GAAPThree Months Ended
June 30,
(In millions, except for percentages and per share amounts)20212020
Revenue
Product revenue$31.2$31.7
Royalties41.918.7
Contract and other revenue11.811.3
Total revenue84.961.7
Cost of product revenue11.410.3
Cost of contract and other revenue1.01.5
Amortization of acquired intangible assets (included in total cost of revenue)4.54.3
Total operating expenses (1)53.956.7
Operating income (loss)$14.1$(11.1)
Operating margin17%(18)%
Net income (loss)$11.2$(9.1)
Diluted net income (loss) per share$0.10$(0.08)
Net cash provided by operating activities$51.6$62.0

_________________________________________

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

Quarterly Financial Review – Non-GAAP (including operational metric) (1)Three Months Ended
June 30,
(In millions)20212020
Licensing billings (2)$65.2$60.7
Product revenue$31.2$31.7
Contract and other revenue$11.8$11.3
Cost of product revenue$11.4$10.3
Cost of contract and other revenue$1.0$1.5
Total operating expenses$43.7$47.7
Interest and other income (expense), net$(0.8)$0.1
Diluted share count115115

_________________________________________

(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 $84.9 million, above the high end of the Company’s expectations. The Company also had licensing billings of $65.2 million, product revenue of $31.2 million, and contract and other revenue of $11.8 million. The Company had total GAAP cost of revenue of $16.9 million and operating expenses of $53.9 million. The Company also had total non-GAAP operating expenses of $56.1 million (which includes non-GAAP cost of revenue), below the low end of its expectations. The Company had GAAP diluted net income per share of $0.10. The Company’s diluted share count was 115 million shares. Due to the Company’s strong performance and focus on operational efficiency, the Company delivered excellent results in the second quarter, exceeding its revenue and profitability guidance.

Cash, cash equivalents, and marketable securities as of June 30, 2021 were $477.1 million, a decrease of $52.0 million from March 31, 2021, mainly due to $100 million paid in connection with an accelerated share repurchase program, partially offset by cash provided by operating activities of approximately $51.6 million.

2021 Third Quarter Outlook

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

(In millions)GAAPNon-GAAP (1)
Licensing billings (2)$59 – $65$59 – $65
Product revenue$34 – $40$34 – $40
Contract and other revenue$11 – $17$11 – $17
Total operating costs and expenses$76 – $72$65 – $61
Interest and other income (expense), net($1)($1)
Diluted share count113113

_________________________________________

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

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

For the third quarter of 2021, the Company expects licensing billings to be between $59 million and $65 million. The Company also expects royalty revenue to be between $25 million and $31 million, product revenue to be between $34 million and $40 million and contract and other revenue to be between $11 million and $17 million. Revenue is not without risk and achieving revenue in this range will require that the Company sign customer agreements for various product sales, solutions licensing among other matters.

The Company also expects operating costs and expenses to be between $76 million and $72 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $65 million and $61 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 ($8 million), amortization expense ($3 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# 7478989.

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, facility restoration costs, 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.

Facility restoration costs. These charges consist of exit costs associated with our leased office space and are excluded because such charges are not directly related to ongoing business results and do not reflect expected future operating expenses.

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.

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, including those relating to Rambus’ expectations regarding business opportunities, the Company’s ability to deliver long-term, profitable growth, and the Company’s outlook and financial guidance for the third 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)June 30,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents$204,731$128,967
Marketable securities272,382373,682
Accounts receivable38,73027,903
Unbilled receivables144,546138,813
Inventories8,05214,466
Prepaids and other current assets10,54415,881
Total current assets678,985699,712
Intangible assets, net27,20336,487
Goodwill183,222183,222
Property, plant and equipment, net50,05857,693
Operating lease right-of-use assets25,80128,708
Deferred tax assets3,9074,353
Unbilled receivables179,503236,699
Other assets4,3064,535
Total assets$1,152,985$1,251,409
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$8,975$8,993
Accrued salaries and benefits15,87823,326
Deferred revenue12,29910,198
Income taxes payable19,75420,064
Operating lease liabilities6,7224,724
Other current liabilities17,79818,559
Total current liabilities81,42685,864
Long-term liabilities:
Convertible notes159,806156,031
Long-term operating lease liabilities31,10434,305
Long-term income taxes payable31,85341,333
Deferred tax liabilities15,14714,276
Other long-term liabilities3,0616,894
Total long-term liabilities240,971252,839
Total stockholders’ equity830,588912,706
Total liabilities and stockholders’ equity$1,152,985$1,251,409

Rambus Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands, except per share amounts)2021202020212020
Revenue:
Product revenue$31,170$31,725$61,951$62,453
Royalties41,91018,74470,76940,226
Contract and other revenue11,77911,24822,52124,815
Total revenue84,85961,717155,241127,494
Cost of revenue:
Cost of product revenue11,42210,27722,83220,620
Cost of contract and other revenue1,0171,5352,5732,733
Amortization of acquired intangible assets4,4394,3368,8258,680
Total cost of revenue16,87816,14834,23032,033
Gross profit67,98145,569121,01195,461
Operating expenses:
Research and development31,46934,68863,82371,352
Sales, general and administrative22,18421,72145,74645,027
Amortization of acquired intangible assets229248458596
Restructuring charges——368836
Change in fair value of earn-out liability———(1,800)
Total operating expenses53,88256,657110,395116,011
Operating income (loss)14,099(11,088)10,616(20,550)
Interest income and other income (expense), net2,3814,6885,36211,131
Interest expense(2,683)(2,580)(5,297)(5,135)
Interest and other income (expense), net(302)2,108655,996
Income (loss) before income taxes13,797(8,980)10,681(14,554)
Provision for income taxes2,6311602,1281,125
Net income (loss)$11,166$(9,140)$8,553$(15,679)
Net income (loss) per share:
Basic$0.10$(0.08)$0.08$(0.14)
Diluted$0.10$(0.08)$0.07$(0.14)
Weighted average shares used in per share calculation
Basic112,144113,572112,177113,240
Diluted114,931113,572115,358113,240

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

Three Months Ended
June 30,
(In thousands)20212020
Cost of product revenue$11,422$10,277
Adjustment:
Stock-based compensation expense(70)—
Non-GAAP cost of product revenue$11,352 $10,277 
Total operating expenses$53,882$56,657
Adjustments:
Stock-based compensation expense(7,228)(6,707)
Acquisition-related costs and retention bonus expense(2,200)(1,577)
Amortization of acquired intangible assets(229)(248)
Expense on abandoned operating leases(521)—
Facility restoration costs—(411)
Non-GAAP total operating expenses$43,704 $47,714 
Interest and other income (expense), net$(302)$2,108
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(2,382)(3,788)
Non-cash interest expense on convertible notes1,9011,798
Non-GAAP interest and other income (expense), net$(783)$118 

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

2021 Third Quarter OutlookThree Months Ended
September 30, 2021
(In millions)LowHigh
Forward-looking operating costs and expenses$76.2$72.2
Adjustments:
Stock-based compensation expense(8.0)(8.0)
Amortization of acquired intangible assets(3.2)(3.2)
Forward-looking Non-GAAP operating costs and expenses$65.0 $61.0 
Forward-looking interest and other income (expense), net$(0.8)$(0.8)
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(2.1)(2.1)
Non-cash interest expense on convertible notes1.91.9
Forward-looking Non-GAAP interest and other income (expense), net$(1.0)$(1.0)

Rambus Reports First Quarter 2021 Financial Results

  • Delivered strong Q1 results at high end of revenue and profitability targets
  • Product revenue of $30.8 million, up 41% quarter over quarter, consisting primarily of memory interface chips
  • Generated $39.5 million in cash provided by operating activities

SAN JOSE, Calif. – May 3, 2021 – 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, 2021. GAAP revenue for the first quarter was $70.4 million; licensing billings were $63.5 million, product revenue was $30.8 million, and contract and other revenue was $10.7 million. The Company also generated $39.5 million in cash provided by operating activities.

“Rambus executed well in the first quarter, with revenue and earnings at the high end of expectations, and strong cash generation fueling investment in our product roadmap,” said Luc Seraphin, chief executive officer of Rambus. “Ongoing share gains for memory interface chips and strong demand in Cloud and other target markets are driving topline growth for the company. We are pleased with our customer momentum and are confident in the Company’s ability to deliver ongoing profitable growth.”

Quarterly Financial Review – GAAP

Three Months Ended

March 31,

(In millions, except for percentages and per share amounts)20212020
Revenue
Royalties$28.9$21.5
Product revenue30.830.7
Contract and other revenue10.713.6
Total revenue$70.4$65.8
Cost of product revenue$11.4$10.3
Cost of contract and other revenue$1.6$1.2
Amortization of acquired intangible assets (included in total cost of revenue)$4.4$4.4
Total operating expenses (1)$56.5$59.4
Operating loss$(3.5)$(9.5)
Operating margin(5)%(14)%
Net loss$(2.6)$(6.5)
Diluted net loss per share$(0.02)$(0.06)
Net cash provided by operating activities$39.5$37.3

(1)  Includes amortization of acquired intangible assets of approximately $0.2 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively.

Quarterly Financial Review – Non-GAAP (including operational metric) (1)

Three Months Ended

March 31,

(In millions)20212020
Licensing billings (2)$63.5$67.1
Product revenue$30.8$30.7
Contract and other revenue$10.7$13.6
Cost of product revenue$11.3$10.3
Cost of contract and other revenue$1.6$1.2
Total operating expenses$45.3$51.9
Interest and other income (expense), net$(0.6)$1.2
Diluted share count116115

(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 $70.4 million, at the high end of the Company’s expectations. The Company also had licensing billings of $63.5 million, product revenue of $30.8 million, and contract and other revenue of $10.7 million. The Company had total GAAP cost of revenue of $17.4 million and operating expenses of $56.5 million. The Company also had total non-GAAP operating expenses of $58.2 million (which includes non-GAAP cost of revenue), lower than the midpoint of its expectations. The Company had GAAP diluted net loss per share of $0.02. The Company’s basic share count was 112 million shares and its diluted share count would have been 116 million shares. Due to the Company’s strong performance and focus on operational efficiency, the Company delivered a strong first quarter, at the high end of its expectations on revenue and profit.

Cash, cash equivalents, and marketable securities as of March 31, 2021 were $529.1 million, an increase of $26.5 million from December 31, 2020, mainly due to $39.5 million in cash provided by operating activities.

2021 Second Quarter Outlook

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

(In millions)GAAPNon-GAAP (1)
Licensing billings (2)$60 – $66$60 – $66
Product revenue$30 – $36$30 – $36
Contract and other revenue$8 – $14$8 – $14
Total operating costs and expenses$74 – $70$61 – $57
Interest and other income (expense), net($1)($1)
Diluted share count116116

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

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

For the second quarter of 2021, the Company expects licensing billings to be between $60 million and $66 million. The Company also expects royalty revenue to be between $32 million and $38 million, product revenue to be between $30 million and $36 million and contract and other revenue to be between $8 million and $14 million. Revenue is not without risk and achieving revenue in this range will require that the Company sign customer agreements for various product sales, solutions licensing among other matters.

The Company also expects operating costs and expenses to be between $74 million and $70 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $61 million and $57 million. These expectations also assume non-GAAP interest and other income (expense), net, of ($1 million), tax rate of 24% and diluted share count of 116 million, and exclude stock-based compensation expense ($8 million), amortization expense ($5 million), non-cash interest expense on convertible notes ($2 million) and interest income related to the significant financing component from fixed-fee patent and technology licensing arrangements ($2 million).

Conference Call

The Company’s management will discuss the results of the quarter during a conference call scheduled for 2:00pm PT today. The call, audio and slides will be available online at investor.rambus.com and a replay will be available for the next week at the following numbers: (855) 859-2056 (domestic) or (404) 537-3406 (international) with ID# 3985069.

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, restructuring charges, expense on abandoned operating leases, restatement and shareholder activist costs, facility restoration costs, 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/divestiture costs and retention bonus expense. These expenses include all direct costs of certain acquisitions, divestitures and the current periods’ portion of any retention bonus expense associated with the acquisitions. The Company excludes these expenses in order to provide better comparability between periods as they are related to acquisitions and divestitures and have no direct correlation to the Company’s operations.

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.

Facility restoration costs. These charges consist of exit costs associated with our leased office space and are excluded because such charges are not directly related to ongoing business results and do not reflect expected future operating expenses.

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

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 drivers of the Company’s topline growth, the Company’s ability to deliver ongoing profitable growth, and the Company’s outlook for the second quarter of 2021. 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

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

 

 

March 31,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents$109,554$136,146
Marketable securities419,574366,503
Accounts receivable35,93727,903
Unbilled receivables137,729138,813
Inventories9,92614,466
Prepaids and other current assets11,61615,881
Total current assets724,336699,712
Intangible assets, net31,87236,487
Goodwill183,222183,222
Property, plant and equipment, net53,68757,693
Operating lease right-of-use assets27,21428,708
Deferred tax assets4,3724,353
Unbilled receivables, long-term207,016236,699
Other assets4,0614,535
Total assets$1,235,780$1,251,409
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$7,802$8,993
Accrued salaries and benefits14,11323,326
Deferred revenue13,53410,198
Income taxes payable, short-term20,18620,064
Operating lease liabilities7,0264,724
Other current liabilities17,74118,559
Total current liabilities80,40285,864
Long-term liabilities:
Convertible notes, long-term157,905156,031
Long-term operating lease liabilities32,53534,305
Long-term income taxes payable36,39141,333
Deferred tax liabilities14,71114,276
Other long-term liabilities4,4306,894
Total long-term liabilities245,972252,839
Total stockholders’ equity909,406912,706
Total liabilities and stockholders’ equity$1,235,780$1,251,409

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

Three Months Ended
March 31,
20212020
Revenue:
Royalties$28,859$21,482
Product revenue30,78130,728
Contract and other revenue10,74213,567
Total revenue70,38265,777
Cost of revenue:
Cost of product revenue11,41010,343
Cost of contract and other revenue1,5561,198
Amortization of acquired intangible assets4,3864,344
Total cost of revenue17,35215,885
Gross profit53,03049,892
Operating expenses:
Research and development32,35436,664
Sales, general and administrative23,56223,306
Amortization of acquired intangible assets229348
Restructuring charges368836
Change in fair value of earn-out liability—(1,800)
Total operating expenses56,51359,354
Operating loss(3,483)(9,462)
Interest income and other income (expense), net2,9816,443
Interest expense(2,614)(2,555)
Interest and other income (expense), net3673,888
Loss before income taxes(3,116)(5,574)
Provision for (benefit from) income taxes(503)965
Net loss$(2,613)$(6,539)
Net loss per share:
Basic$(0.02)$(0.06)
Diluted$(0.02)$(0.06)
Weighted average shares used in per share calculation
Basic112,211112,907
Diluted112,211112,907

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

Three Months Ended

March 31,

20212020
Cost of product revenue$11,410$10,343
Adjustment:
Stock-based compensation expense(89)—
Non-GAAP cost of product revenue$11,321 $10,343
Total operating expenses$56,513$59,354
Adjustments:
Stock-based compensation expense(6,501)(6,072)
Acquisition-related costs and retention bonus expense(655)(1,577)
Amortization of acquired intangible assets(229)(348)
Restructuring charges(368)(836)
Expense on abandoned operating leases(521)—
Restatement and shareholder activist costs(2,956)—
Facility restoration costs—(411)
Change in fair value of earn-out liability—1,800
Non-GAAP total operating expenses$45,283 $51,910 
Interest and other income (expense), net$367$3,888
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(2,842)(4,437)
Non-cash interest expense on convertible notes1,8741,773
Non-GAAP interest and other income (expense), net$(601)$1,224 

 

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

2021 Second Quarter OutlookThree Months Ended

June 30, 2021

LowHigh
Forward-looking operating costs and expenses$73.7$69.7
Adjustments:
Stock-based compensation expense(8.0)(8.0)
Amortization of acquired intangible assets

 

(4.7)(4.7)
Forward-looking Non-GAAP operating costs and expenses$61.0 $57.0 
Forward-looking interest and other income (expense), net$(0.5)$(0.5)
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements(2.4)(2.4)
Non-cash interest expense on convertible notes1.91.9
Forward-looking Non-GAAP interest and other income (expense), net$(1.0)$(1.0)
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