Corporate

Rambus Announces Proposed $150 Million Convertible Senior Notes Offering

SUNNYVALE, Calif. — November 13, 2017 — Rambus Inc. (NASDAQ: RMBS) today announced its intention to offer, subject to market conditions and other factors, $150 million aggregate principal amount of its convertible senior notes due 2023 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Act”). Rambus also expects to grant the initial purchasers of the notes a 13-day option to purchase up to an additional $22.5 million aggregate principal amount of the notes to cover over-allotments, if any.

The notes will be unsecured, unsubordinated obligations of Rambus, and interest will be payable semi-annually. Prior to November 1, 2022, the notes will be convertible at the option of the holders only during certain periods upon the occurrence of specified events, and thereafter until the close of business on the second scheduled trading day immediately preceding the maturity date, the notes will be convertible at the option of the holders at any time. The notes will be convertible, subject to certain conditions, into cash up to the aggregate principal amount of the notes to be converted, and any excess conversion value will be convertible into cash, shares of Rambus’ common stock (the “common stock”) or a combination of cash and shares of common stock, at Rambus’ election. Final terms of the notes, including the interest rate, initial conversion rate and other terms, will be determined by negotiations between Rambus and the initial purchasers of the notes.

Rambus expects to use a portion of the net proceeds of the offering of the notes to pay the cost of the convertible note hedge transactions described below (after such cost is partially offset by the proceeds to Rambus of the warrant transactions described below) and to use the remaining proceeds of the offering for the repurchase of up to $60 million aggregate principal amount of Rambus’ 1.125% convertible senior notes due 2018 (the “2018 Notes”) concurrently with the offering of the notes, through one of the initial purchasers of the notes or its affiliates in individually negotiated transactions, and for general corporate purposes.

In connection with the pricing of the notes, Rambus plans to enter into convertible note hedge transactions with one or more of the initial purchasers or their affiliates or other financial institutions (the “option counterparties”). The convertible note hedge transactions are generally expected to reduce potential dilution to the common stock upon any conversion of notes and/or offset any cash payments Rambus is required to make in excess of the principal amount of converted notes, as the case may be. However, the warrant transactions would separately have a dilutive effect to the extent that the market value per share of common stock exceeds the strike price of any warrants. If the initial purchasers exercise their over-allotment option to purchase additional notes, Rambus may enter into additional convertible note hedge and additional warrant transactions relating to the additional notes. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the option counterparties or their respective affiliates expect to purchase shares of common stock and/or enter into various derivative transactions with respect to the common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of the common stock or the notes at that time.

In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the common stock and/or purchasing or selling the common stock or other securities of Rambus in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so during any observation period related to a conversion of notes or in connection with any repurchase of notes by Rambus). This activity could also cause or avoid an increase or a decrease in the market price of the common stock or the notes, which could affect the ability of noteholders to convert the notes and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the amount and value of the consideration that noteholders will receive upon conversion of such notes.

In connection with the purchase of the 2018 Notes, Rambus expects that holders of the 2018 Notes submitting their 2018 Notes for repurchase may purchase shares of common stock to close out their hedge positions with respect to the 2018 Notes, which activity may increase the market price of the common stock.

This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful. Any offer of the securities will be made only by means of a private offering memorandum. The notes and the shares of common stock issuable upon conversion of the notes, if any, will not be registered under the Act or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Act and applicable state laws.

Rambus Reports Third Quarter 2017 Financial Results

Revenue of $99.1 million, up 10% year over year
GAAP diluted net income per share of $0.07; non-GAAP diluted net income per share of $0.19
Announced industry’s first silicon-proven server DIMM buffer chipset capable of achieving the speeds expected for next-generation DDR5
Teamed up with eftpos domestic debit card network in Australia to support roll out of Apple Pay with tokenization software

SUNNYVALE, Calif. – October 23, 2017 – Rambus Inc. (NASDAQ:RMBS) today reported financial results for the third quarter ended September 30, 2017. Total revenue for the quarter was $99.1 million, 10% higher than a year ago, with GAAP diluted net income per share of $0.07 and non-GAAP diluted net income per share of $0.19. Total revenue for the nine months ended September 30, 2017 was $291.2 million, 22% higher than a year ago.

“We continue to demonstrate our leadership and execution on strategic programs with the industry’s first functional server DIMM buffer chipset to reach the speeds targeted for next-generation DDR5 and the integration of our Token Service Provider software at eftpos to support the roll out of Apple Pay in Australia,” said Dr. Ron Black, chief executive officer of Rambus. “We are excited by our progress, with strong execution on strategic programs for the data center and mobile edge markets, as we continue to deliver profitable growth.”

Business Review

In our Memory and Interfaces Division, we continue to demonstrate our technology leadership with the announcement of the industry’s first functional silicon of a server DIMM buffer chipset capable of achieving the speeds expected for next-generation DDR5. This represented an important milestone for both the company and the market, as it puts Rambus in a leadership position and provides an early path to market readiness and adoption for future data center solutions. The IP cores team extended its portfolio of high-speed interfaces for data center and enterprise applications with the addition of 16G and 30G SerDes IP cores on GLOBALFOUNDRIES 14nm FX-14™ ASIC platform. In addition, and as part of the ongoing ecosystem development to ease integration and accelerate adoption, we validated the interoperability of our memory PHYs with Northwest Logic and ARM memory controllers.

Our Security Division, which consists of our cryptography, mobile payments and smart ticketing businesses, had a strong quarter with the Cryptography team demonstrating the CryptoManager IoT Security Service on a leading cloud platform to enable secure device connectivity, monitoring and provisioning. In addition, we announced Cryptography will partner with SiFive to make our cryptography technology available for the SiFive Freedom platform, easing the path to designing innovative and cost-effective SoCs in the open and growing RISC-V hardware ecosystem. For mobile payments, we continue to gain traction for our tokenization solutions, teaming with eftpos, a leading debit card network in Australia, to support the roll out of Apple Pay to their debit card users with our Token Service Provider software.

Financial Review	GAAP		Non-GAAP(1)
(In millions, except for percentages and per share amounts)	Three Months Ended September 30,		Three Months Ended September 30,
	2017	2016	2017	2016
Revenue	$ 99.1	$ 89.9	$ 99.1	$ 89.9
Total operating costs and expenses	$ 82.1	$ 78.1	$ 64.6	$ 60.8
Operating income	$ 17.0	$ 11.8	$ 34.5	$ 29.1
Operating margin	17%	13%	35%	32%
Net Income	$ 7.7	$ 4.5	$ 21.6	$ 18.0
Diluted net income per share	$ 0.07	$ 0.04	$ 0.19	$ 0.16
Total cash and marketable securities	$ 183.6	$ 150.8	$ 183.6	$ 150.8
Total assets	$ 824.1	$ 800.3	$ 824.1	$ 800.3
Total stockholders’ equity	$ 589.5	$ 552.8	$ 589.5	$ 552.8

Financial Review	GAAP		Non-GAAP(1)
(In millions, except for percentages and per share amounts)	Nine Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Revenue	$ 291.2	$ 239.0	$ 291.2	$ 239.0
Total operating costs and expenses	$ 252.5	$ 205.9	$ 200.7	$ 160.3
Operating income	$ 38.7	$ 33.1	$ 90.5	$ 78.7
Operating margin	13%	14%	31%	33%
Net Income	$ 13.3	$ 10.3	$ 56.3	$ 49.3
Diluted net income per share	$ 0.12	$ 0.09	$ 0.49	$ 0.44

(1) See “Supplemental Reconciliation of GAAP to Non-GAAP Results” and “Reconciliation of Other GAAP to Non-GAAP Items” tables included below. Note that the applicable non-GAAP measures are presented and that revenue and the balance sheet items are solely presented on a GAAP basis.

Revenue for the quarter was $99.1 million due to execution in our Security Division and continued strength in our licensing program. As a result of our execution in both businesses, revenue for our Memory and Interface Division was up 9% year over year and revenue for our Security Division was up 17% year over year. GAAP total operating costs and expenses were below the low end of our expectations, yielding $0.07 of GAAP net income per share, at the high end of our expectations. We had non-GAAP net income per share of $0.19, at the high end of our expectations.

Cash, cash equivalents, and marketable securities as of September 30, 2017 were $183.6 million, an increase of $15.7 million from June 30, 2017, mainly due to cash generated from operating activities of approximately $15 million. Adjusted EBITDA for the quarter was $37.8 million.

(In millions, except per share amounts)	GAAP	Non-GAPP(1)
Revenue:	$98 – $104	$98 – $104
Total operating costs and expenses	$88 – $83	$69 – $64
Operating income	$11 – $22	$29 – $40
Diluted net income per share	$0.04 – $0.11	$0.16 – $0.22
(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.

For the fourth quarter of 2017, the Company expects revenue to be between $98 million and $104 million. Revenue is not without risk and achieving revenue in this range will require that the Company sign customer agreements for patent licensing, various product sales, mobile payments software and solutions licensing among other matters. The Company also expects operating costs and expenses to be between $83 million and $88 million, and diluted net income per share to be between $0.04 and $0.11. Additionally, the Company expects non-GAAP operating costs and expenses to be between $64 million and $69 million, and non-GAAP diluted net income per share to be between $0.16 and $0.22. These non-GAAP expectations assume non-GAAP interest and other income and expense of $1.3 million, tax rate of 35% (refer to non-GAAP financial information below – income tax adjustments) and diluted share count of 114 million, and exclude stock-based compensation expense ($8 million), amortization expense ($11 million), and non-cash interest expense on convertible notes ($2 million).

Conference Call:

Rambus management will discuss the results of the quarter during a conference call scheduled for 2:00pm PT today. The call, audio and slides will be available online at investor.rambus.com and a replay will be available for the next week at the following numbers: (855) 859-2056 (domestic) or (404) 537-3406 (international) with ID#98501879.

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 our new product and service offerings, growth for 2017 and financial guidance for the fourth quarter of 2017, including revenue, operating costs and expenses, earnings per share and estimated, fixed, long-term projected tax rates, both on a GAAP and non-GAAP basis as appropriate. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by Rambus’ management. Actual results may differ materially. Rambus’ business generally is subject to a number of risks which are described more fully in Rambus’ periodic reports filed with the Securities and Exchange Commission. Rambus undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

Overview of Non-GAAP Results

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, operating margin, operating income (loss), net income (loss), diluted net income (loss) per share and Adjusted EBITDA. In computing each of these non-GAAP financial measures, the following items were considered as discussed below: stock-based compensation expenses, acquisition-related transaction costs and retention bonus expense, amortization expenses, 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 transaction 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.

Purchase accounting adjustment for inventory fair value step-up. These adjustments are the result of accounting for certain business acquisitions and are excluded because such adjustments are non-recurring. Additionally, the Company excludes these expenses in order to provide better comparability between periods.

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

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

Income tax adjustments. For purposes of internal forecasting, planning and analyzing future periods that assume net income from operations, the Company estimates a fixed, long-term projected tax rate of approximately 35 percent for both 2017 and 2016, 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 for future periods. The Company has provided below a reconciliation of its GAAP provision for income taxes and GAAP effective tax rate to the assumed non-GAAP provision for income taxes and non-GAAP effective tax rate.

On occasion in the future, there may be other items, such as impairments or 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.

Rambus Inc. Condensed Consolidated Balance Sheets (In thousands) (Unaudited)
	September 30, 2017	December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$ 182,345	$ 135,294
Marketable securities	1,287	36,888
Accounts receivable	49,799	21,099
Inventories	5,015	5,633
Prepaids and other current assets	10,998	17,867
Total current assets	249,444	216,781
Intangible assets, net	102,545	132,388
Goodwill	209,318	204,794
Property, plant and equipment, net	54,035	58,442
Deferred tax assets	206,503	168,342
Other assets	2,283	2,749
Total assets	$ 824,128	$ 783,496


LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$ 7,016	$ 9,793
Accrued salaries and benefits	12,278	14,177
Deferred revenue	21,224	16,932
Convertible notes, short-term	131,490	–
Other current liabilities	10,731	10,399
Total current liabilities	182,739	51,301
Long-term liabilities:
Convertible notes, long-term	–	126,167
Long-term imputed financing obligation	37,471	38,029
Other long-term liabilities	14,381	15,217
Total long-term liabilities	51,852	179,413
Total stockholders’ equity	589,537	552,782
Total liabilities and stockholders’ equity	$ 824,128	$ 783,496

Rambus Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited)
	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Revenue:
Royalties	$72,787	$68,298	$211,733	$194,010
Product revenue	8,661	7,092	27,966	14,306
Contract and other revenue	17,686	14,465	51,506	30,722
Total revenue	99,134	89,855	291,205	239,038
Operating costs and expenses:
Cost of product revenue (1)	5,152	7,031	17,882	12,581
Cost of contract and other revenue	14,456	12,393	43,274	33,139
Research and development (1)	36,196	33,820	109,718	91,100
Sales, general and administrative (1)	26,799	24,795	82,122	69,679
Gain from sale of intellectual property	(479)	—	(479)	—
Gain from settlement	—	—	—	(579)
Total operating costs and expenses	82,124	78,039	252,517	205,920
Operating income	17,010	11,816	38,688	33,118
Interest income and other income (expense), net	208	142	491	1,522
Interest expense	(3,287)	(3,193)	(9,754)	(9,497)
Interest and other income (expense), net	(3,079)	(3,051)	(9,263)	(7,975)
Income before income taxes	13,931	8,765	29,425	25,143
Provision for income taxes	6,236	4,254	16,119	14,878
Net income	$7,695	$4,511	$13,306	$10,265
Net income per share:
Basic	$0.07	$0.04	$0.12	$0.09
Diluted	$0.07	$0.04	$0.12	$0.09
Weighted average shares used in per share calculation
Basic	109,555	110,214	110,353	109,951
Diluted	113,119	113,723	113,861	112,805

(1) Total stock-based compensation expense for the three and nine months ended September 30, 2017 and 2016 is presented as follows:
	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Cost of product revenue	$ 20	$ 14	$ 53	$ 42
Research and development	$ 2,969	$ 2,337	$ 9,048	$ 6,526
Sales, general and administrative	$ 3,975	$ 3,092	$ 11,068	$ 8,788

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

	Three Months Ended			Nine Months Ended
	September 30, 2017	June 30, 2017	September 30, 2016	September 30, 2017	September 30, 2016
Operating costs and expenses	$82,124	$86,476	$78,039	$252,517	$205,920
Adjustments:
Stock-based compensation expense	(6,964)	(6,609)	(5,443)	(20,169)	(15,356)
Acquisition-related transaction costs and retention bonus expense	(47)	(90)	(441)	(218)	(3,038)
Purchase accounting adjustment for inventory fair value step-up	—	—	(1,168)	—	(1,168)
Amortization expense	(10,498)	(10,450)	(10,174)	(31,436)	(26,045)
Non-GAAP operating costs and expenses	$64,615	$69,327	$60,813	$200,694	$160,313



Operating income	$ 17,010	$ 8,244	$ 11,816	$ 38,688	$ 33,118
Adjustments:
Stock-based compensation expense	6,964	6,609	5,443	20,169	15,356
Acquisition-related transaction costs and retention bonus expense	47	90	441	218	3,038
Purchase accounting adjustment for inventory fair value step-up	—	—	1,168	—	1,168
Amortization expense	10,498	10,450	10,174	31,436	26,045
Non-GAAP operating income	$ 34,519	$ 25,393	$ 29,042	$ 90,511	$ 78,725

Income before income taxes	$ 13,931	$ 5,112	$ 8,765	$ 29,425	$ 25,143
Adjustments:
Stock-based compensation expense	6,964	6,609	5,443	20,169	15,356
Acquisition-related transaction costs and retention bonuses expense	47	90	441	218	3,038
Purchase accounting adjustment for inventory fair value step-up	—	—	1,168	—	1,168
Amortization expense	10,498	10,450	10,174	31,436	26,045
Non-cash interest expense on convertible notes	1,801	1,774	1,700	5,324	5,026
Non-GAAP income before income taxes	$ 33,241	$ 24,035	$ 27,691	$ 86,572	$ 75,776
GAAP provision for income taxes	6,236	2,507	4,254	16,119	14,878
Adjustment to GAAP provision for income taxes	5,398	5,905	5,438	14,181	11,644
Non-GAAP provision for income taxes	11,634	8,412	9,692	30,300	26,522
Non-GAAP net income	$ 21,607	$ 15,623	$ 17,999	$ 56,272	$ 49,254


Non-GAAP basic net income per share	$ 0.20	$ 0.14	$ 0.16	$ 0.51	$ 0.45
Non-GAAP diluted net income per share	$ 0.19	$ 0.14	$ 0.16	$ 0.49	$ 0.44
Weighted average shares used in non-GAAP per share calculation:
Basic	109,555	110,060	110,214	110,353	109,951
Diluted	113,119	112,565	113,723	113,861	112,805

Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1)

	Three Months Ended			Nine Months Ended
	September 30, 2017	June 30, 2017	September 30, 2016	September 30, 2017	September 30, 2016
GAAP effective tax rate	45%	49%	49%	55%	59%
Adjustment to GAAP effective tax rate	(10)%	(14)%	(14)%	(20)%	(24)%
Non-GAAP effective tax rate	35%	35%	35%	35%	35%


(1) 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 35 percent for both 2017 and 2016, 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 year to assist the Company’s planning for future periods.

Reconciliation of Other GAAP to Non-GAAP Items (In thousands, except percentages) (Unaudited)
	GAAP		Non-GAAP
	Three Months Ended September 30,		Three Months Ended September 30,
	2017	2016	2017	2016
Revenue (i)	$ 99,134	$ 89,855	$ 99,134	$ 89,855
Operating income (ii)	17,010	11,816	34,519	29,042
Operating margin (ii / i)	17%	13%	35%	32%

	GAAP		Non-GAAP
	Nine Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Revenue (i)	$ 291,205	$ 239,038	$ 291,205	$ 239,038
Operating income (ii)	38,688	33,118	90,511	78,725
Operating margin (ii / i)	13%	14%	31%	33%

	Three Months Ended September 30,
	2017	2016
Net income	$ 7,695	$ 4,511
Add back:
Interest and other income (expense), net	3,079	3,051
Provision for income taxes	6,236	4,254
Depreciation expense	3,249	3,423
Amortization expense	10,498	10,174
EBITDA (1)	$ 30,757	$ 25,413
Adjustments:
Stock-based compensation expense	6,964	5,443
Acquisition-related transaction costs and retention bonus expense	47	441
Purchase accounting adjustment for inventory fair value step-up	—	1,168
Adjusted EBITDA (2)	$ 37,768	$ 32,465
(1) EBITDA is a non-GAAP measure that management uses to evaluate the cash generating capacity of the company. The most directly comparable GAAP measure is net income. EBITDA is net income adjusted for net interest expense, income taxes, and depreciation and amortization. It should not be considered as an alternative to net income computed under GAAP. (2) Adjusted EBITDA excludes the impact of other non-GAAP adjustments indicated in the above tables.

Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates (In millions, except per share amounts) (Unaudited)
	Three Months Ended December 31, 2017
	Low	High
Forward-looking operating costs and expenses	$ 87.5	$ 82.5
Adjustments:
Stock-based compensation expense	(7.5)	(7.5)
Amortization expense	(11.0)	(11.0)
Forward-looking Non-GAAP operating costs and expenses	$ 69.0	$ 64.0

Forward-looking operating income	$ 10.5	$ 21.5
Adjustments:
Stock-based compensation expense	7.5	7.5
Amortization expense	11.0	11.0
Forward-looking Non-GAAP operating income	$ 29.0	$ 40.0

Forward-looking income before income taxes	$ 7.5	$ 18.5
Adjustments:
Stock-based compensation expense	7.5	7.5
Amortization expense	11.0	11.0
Non-cash interest expense on convertible notes	1.7	1.7
Forward-looking Non-GAAP income before income taxes	$ 27.7	$ 38.7
Forward-looking GAAP provision for income taxes	2.6	6.5
Adjustment to Forward-looking GAAP provision for income taxes	7.1	7.0
Forward-looking Non-GAAP provision for income taxes	9.7	13.5
Forward-looking Non-GAAP net income	$ 18.0	$ 25.2
Forward-looking Non-GAAP basic net income per share	$ 0.16	$ 0.23
Forward-looking Non-GAAP diluted net income per share	$ 0.16	$ 0.22
Weighted average shares used in forward-looking Non-GAAP per share calculation:
Basic	111.0	111.0
Diluted	114.0	114.0

Rambus Reports Second Quarter 2017 Financial Results

Revenue of $94.7 million, up 24% year over year
GAAP diluted net income per share of $0.02; non-GAAP diluted net income per share of $0.14
Secured customer and partnership agreements with industry leaders including: Cybertrust, Synopsys, Google and Interac
Launched turn-key, secure CryptoManager™ IoT Device Management service and demonstrated with Qualcomm and STMicroelectronics

SUNNYVALE, Calif. – July 24, 2017 – Rambus Inc. (NASDAQ:RMBS) today reported financial results for the second quarter ended June 30, 2017. Total revenue for the quarter was $94.7 million, 24% higher than a year ago, with GAAP diluted net income per share of $0.02 and non-GAAP diluted net income per share of $0.14. Total revenue for the six months ended June 30, 2017 was $192.1 million, 29% higher than a year ago.

“We continue to build upon our positive start to the year with strength in our patent and technology licensing programs, as well as ongoing validation from our partners and customers that our technologies are solving the critical problems facing the data center and mobile edge markets,” said Dr. Ron Black, chief executive officer of Rambus. “We are excited by the momentum in our Security Division, signing agreements with Cybertrust and Synopsys on our CryptoManager Infrastructure and introducing our in-field CryptoManager IoT Device Management service for easy and broad adoption of our provisioning solutions.”

Business Review

In our Memory and Interfaces Division, we expanded our Server DIMM chipset family with the introduction of the industry’s first production, JEDEC-standard DDR4 Non-volatile Register Clock Driver (NVRCD) for NVDIMM applications in high-performance data centers. The NVRCD chip builds upon our existing high-speed chip and signaling expertise to enable non-volatile server memory modules to combine the performance of DRAM with the persistence of storage-class memory, delivering high performance and reliability of data for next-generation enterprise and data center systems. In addition, we signed key renewals and new agreements for patent and technology licensing, closing our largest ever high-speed interface technology agreement with a large semiconductor company.

Our Security Division, which consists of our cryptography, mobile payments and smart ticketing businesses, had an exciting quarter with the launch of our in-field CryptoManager IoT Device Management service for turnkey secure device connectivity, monitoring and provisioning. The service is designed to work with leading cloud platforms and provides out-of-the-box connectivity to IoT service providers and device manufacturers. As part of the launch at IoT World in Santa Clara, we featured live demonstrations with both Qualcomm and STMicroelectronics processor chips showcasing mutual authentication and communication. In addition, we expanded our ecosystem of CryptoManager Infrastructure customers and partners with the addition of Cybertrust, a subsidiary of SoftBank Technology Corp, and Synopsys. Both accelerate adoption of our security solutions and leverage our CryptoManager Infrastructure for secure key provisioning to enable secure, remote lifecycle management and updates of connected devices.

Financial Review	GAAP		Non-GAAP(1)
(In millions, except for percentages and per share amounts)	Three Months Ended June 30,		Three Months Ended June 30,
	2017	2016	2017	2016
Revenue:	$ 94.7	$ 76.5	$ 94.7	$ 76.5
Total operating costs and expenses	$ 86.5	$ 64.5	$ 69.3	$ 50.5
Operating income	$ 8.2	$ 12.0	$ 25.4	$ 26.0
Operating margin	9%	16%	27%	34%
Net Income	$ 2.6	$ 3.9	$ 15.6	$ 16.7
Diluted net income per share	$ 0.02	$ 0.03	$ 0.14	$ 0.15
Total cash and marketable securities	$ 168.0	$ 259.3	$ 168.0	$ 259.3
Total assets	$ 806.0	$ 765.8	$ 806.0	$ 765.8
Total stockholders’ equity	$ 570.2	$ 542.4	$ 570.2	$ 542.4

Financial Review	GAAP		Non-GAAP(1)
(In millions, except for percentages and per share amounts)	Six Months Ended June 30,		Six Months Ended June 30,
	2017	2016	2017	2016
Revenue:	$ 192.1	$ 149.2	$ 192.1	$ 149.2
Total operating costs and expenses	$ 170.4	$ 127.9	$ 136.1	$ 99.5
Operating income	$ 21.7	$ 21.3	$ 56.0	$ 49.7
Operating margin	11%	14%	29%	33%
Net Income	$ 5.6	$ 5.8	$ 34.7	$ 31.3
Diluted net income per share	$ 0.05	$ 0.05	$ 0.30	$ 0.28

(1) See “Supplemental Reconciliation of GAAP to Non-GAAP Results” and “Reconciliation of Other GAAP to Non-GAAP Items” tables included below. Note that the applicable non-GAAP measures are presented and that revenue and the balance sheet items are solely presented on a GAAP basis.

Revenue for the quarter was $94.7 million as execution in our Security Division and Lighting Division offset the anticipated seasonality of our business. As a result of our execution on acquisitions, revenue for our Memory and Interface Division was up 24% year over year and revenue for the Security Division was up 42% year over year. GAAP total operating costs and expenses were at the low end of our expectations, yielding $0.02 of GAAP net income per share and in line with our expectations. We had non-GAAP net income per share of $0.14, towards the high end of our expectations.

Cash, cash equivalents, and marketable securities as of June 30, 2017 were $168.0 million, a decrease of $19.7 million from March 31, 2017, mainly due to the use of $50 million related to the accelerated share repurchase program announced on May 1^st, offset by cash generated from operating activities of approximately $25 million. Adjusted EBITDA for the quarter was $28.7 million.

2017 Third Quarter Outlook

(In millions, except per share amounts)	GAAP	Non-GAAP(1)
Revenue:	$96 – $102	$96 – $102
Total operating costs and expenses	$89 – $85	$71 – $67
Operating income	$7 – $17	$25 – $35
Diluted net income per share	$0.02 – $0.08	$0.14 – $0.20
(1) See “Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates” tables included below.

For the third quarter of 2017, the Company expects revenue to be between $96 million and $102 million. Revenue is not without risk and achieving revenue in this range will require that the Company sign customer agreements for patent licensing, various product sales, mobile payments software and solutions licensing among other matters. The Company also expects operating costs and expenses to be between $85 million and $89 million, and diluted net income per share to be between $0.02 and $0.08. The Company also expects non-GAAP operating costs and expenses to be between $67 million and $71 million, and non-GAAP diluted net income per share to be between $0.14 and $0.20. These non-GAAP expectations assume non-GAAP interest and other income and expense of $1 million, tax rate of 35% (refer to non-GAAP financial information below – income tax adjustments) and diluted share count of 113 million, and exclude stock-based compensation expense ($8 million), amortization expense ($11 million), and non-cash interest expense on convertible notes ($2 million).

Conference Call:

About Rambus Inc.

Rambus creates innovative hardware and software technologies, driving advancements from the data center to the mobile edge. Our chips, customizable IP cores, architecture licenses, tools, software, services, training and innovations improve the competitive advantage of our customers. We collaborate with the industry, partnering with leading ASIC and SoC designers, foundries, IP developers, EDA companies and validation labs. Our products are integrated into tens of billions of devices and systems, powering and securing diverse applications, including Big Data, Internet of Things (IoT), mobile payments, and smart ticketing. At Rambus, we are makers of better. 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 our new product and service offerings, growth for 2017 and financial guidance for the third quarter of 2017, including revenue, operating costs and expenses, earnings per share and estimated, fixed, long-term projected tax rates, both on a GAAP and non-GAAP basis as appropriate. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by Rambus’ management. Actual results may differ materially. Rambus’ business generally is subject to a number of risks which are described more fully in Rambus’ periodic reports filed with the Securities and Exchange Commission. Rambus undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

Overview of Non-GAAP Results

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

Condensed Consolidated Balance Sheets (In thousands) (Unaudited)
	June 30, 2017	December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$ 167,207	$ 135,294
Marketable securities	746	36,888
Accounts receivable	36,788	21,099
Inventories	5,328	5,633
Prepaids and other current assets	12,255	17,867
Total current assets	222,324	216,781
Intangible assets, net	111,875	132,388
Goodwill	207,959	204,794
Property, plant and equipment, net	54,305	58,442
Deferred tax assets	206,942	168,342
Other assets	2,564	2,749
Total assets	$ 805,969	$ 783,496


LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$ 9,099	$ 9,793
Accrued salaries and benefits	14,076	14,177
Deferred revenue	21,327	16,932
Other current liabilities	9,449	10,399
Total current liabilities	53,951	51,301
Long-term liabilities:
Convertible notes, long-term	129,690	126,167
Long-term imputed financing obligation	37,677	38,029
Other long-term liabilities	14,433	15,217
Total long-term liabilities	181,800	179,413
Total stockholders’ equity	570,218	552,782
Total liabilities and stockholders’ equity	$ 805,969	$ 783,496

Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited)
	Three Months Ended June 30,		Six Months Ended June 30,
	2017	2016	2017	2016
Revenue:
Royalties	$ 69,990	$ 62,835	$ 138,946	$ 125,712
Product revenue	8,401	3,902	19,305	7,214
Contract and other revenue	16,329	9,764	33,820	16,257
Total revenue	94,720	76,501	192,071	149,183
Operating costs and expenses:
Cost of product revenue (1)	7,480	3,016	12,730	5,550
Cost of contract and other revenue	14,337	11,073	28,818	20,746
Research and development (1)	37,522	28,753	73,522	57,280
Sales, general and administrative (1)	27,137	21,789	55,323	44,884
Gain from settlement	—	(138)	—	(579)
Total operating costs and expenses	86,476	64,493	170,393	127,881
Operating income	8,244	12,008	21,678	21,302
Interest income and other income (expense), net	129	1,138	283	1,380
Interest expense	(3,261)	(3,163)	(6,467)	(6,304)
Interest and other income (expense), net	(3,132)	(2,025)	(6,184)	(4,924)
Income before income taxes	5,112	9,983	15,494	16,378
Provision for income taxes	2,507	6,107	9,883	10,624
Net income	$2,605	$3,876	$5,611	$5,754
Net income per share:
Basic	$0.02	$0.04	$0.05	$0.05
Diluted	$0.02	$0.03	$0.05	$0.05
Weighted average shares used in per share calculation
Basic	110,060	109,904	110,758	109,818
Diluted	112,565	112,061	114,091	112,202

(1) Total stock-based compensation expense for the three and six months ended June 30, 2017 and 2016 is presented as follows:
	Three Months Ended June 30,		Six Months Ended June 30,
	2017	2016	2017	2016
Cost of product revenue	$ 19	$ 14	$ 33	$ 28
Research and development	$ 3,067	$ 2,109	$ 6,079	$ 4,189
Sales, general and administrative	$ 3,523	$ 2,926	$ 7,093	$ 5,696

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

	Three Months Ended			Six Months Ended
	June 30, 2017	March 31, 2017	June 30, 2016	June 30, 2017	June 30, 2016
Operating costs and expenses	$ 86,476	$ 83,917	$ 64,493	$ 170,393	$ 127,881
Adjustments:
Stock-based compensation expense	(6,609)	(6,596)	(5,049)	(13,205)	(9,913)
Acquisition-related transaction costs and retention bonus expense	(90)	(81)	(789)	(171)	(2,597)
Amortization expense	(10,450)	(10,488)	(8,152)	(20,938)	(15,871)
Non-GAAP operating costs and expenses	$ 69,327	$ 66,752	$ 50,503	$ 136,079	$ 99,500



Operating income	$ 8,244	$ 13,434	$ 12,008	$ 21,678	$ 21,302
Adjustments:
Stock-based compensation expense	6,609	6,596	5,049	13,205	9,913
Acquisition-related transaction costs and retention bonus expense	90	81	789	171	2,597
Amortization expense	10,450	10,488	8,152	20,938	15,871
Non-GAAP operating income	$ 25,393	$ 30,599	$ 25,998	$ 55,992	$ 49,683

Income before income taxes	$ 5,112	$ 10,382	$ 9,983	$ 15,494	$ 16,378
Adjustments:
Stock-based compensation expense	6,609	6,596	5,049	13,205	9,913
Acquisition-related transaction costs and retention bonuses expense	90	81	789	171	2,597
Amortization expense	10,450	10,488	8,152	20,938	15,871
Non-cash interest expense on convertible notes	1,774	1,749	1,675	3,523	3,326
Non-GAAP income before income taxes	$ 24,035	$ 29,296	$ 25,648	$ 53,331	$ 48,085
GAAP provision for income taxes	2,507	7,376	6,107	9,883	10,624
Adjustment to GAAP provision for income taxes	5,905	2,878	2,870	8,783	6,206
Non-GAAP provision for income taxes	8,412	10,254	8,977	18,666	16,830
Non-GAAP net income	$ 15,623	$ 19,042	$ 16,671	$ 34,665	$ 31,255


Non-GAAP basic net income per share	$ 0.14	$ 0.17	$ 0.15	$ 0.31	$ 0.28
Non-GAAP diluted net income per share	$ 0.14	$ 0.17	$ 0.15	$ 0.30	$ 0.28
Weighted average shares used in non-GAAP per share calculation:
Basic	110,060	111,464	109,904	110,758	109,818
Diluted	112,565	115,325	112,061	114,091	112,202

Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1)

	Three Months Ended			Six Months Ended
	June 30, 2017	March 31, 2017	June 30, 2016	June 30, 2017	June 30, 2016
GAAP effective tax rate	49%	71%	61%	64%	65%
Adjustment to GAAP effective tax rate	(14)%	(36)%	(26)%	(29)%	(30)%
Non-GAAP effective tax rate	35%	35%	35%	35%	35%


(1) 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 35 percent for both 2017 and 2016, 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 year to assist the Company’s planning for future periods.

Reconciliation of Other GAAP to Non-GAAP Items (In thousands, except percentages) (Unaudited)
	GAAP		Non-GAAP
	Three Months Ended June 30,		Three Months Ended June 30,
	2017	2016	2017	2016
Revenue (i)	$ 94,720	$ 76,501	$ 94,720	$ 76,501
Operating income (ii)	8,244	12,008	25,393	25,998
Operating margin (ii / i)	9%	16%	27%	34%

	GAAP		Non-GAAP
	Six Months Ended June 30,		Six Months Ended June 30,
	2017	2016	2017	2016
Revenue (i)	$ 192,071	$ 149,183	$ 192,071	$ 149,183
Operating income (ii)	21,678	21,302	55,992	49,683
Operating margin (ii / i)	11%	14%	29%	33%

	Three Months Ended June 30,
	2017	2016
Net income	$ 2,605	$ 3,876
Add back:
Interest and other income (expense), net	3,132	2,025
Provision for income taxes	2,507	6,107
Depreciation expense	3,330	2,996
Amortization expense	10,450	8,152
EBITDA (1)	$ 22,024	$ 23,156
Adjustments:
Stock-based compensation expense	6,609	5,049
Acquisition-related transaction costs and retention bonus expense	90	789
Adjusted EBITDA (2)	$ 28,723	$ 28,994
(1) EBITDA is a non-GAAP measure that management uses to evaluate the cash generating capacity of the company. The most directly comparable GAAP measure is net income. EBITDA is net income adjusted for net interest expense, income taxes, and depreciation and amortization. It should not be considered as an alternative to net income computed under GAAP. (2) Adjusted EBITDA excludes the impact of other non-GAAP adjustments indicated in the above tables.

Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates (In millions, except per share amounts) (Unaudited)
	Three Months Ended September 30, 2017
	Low	High
Forward-looking operating costs and expenses	$ 89.2	$ 85.2
Adjustments:
Stock-based compensation expense	(7.5)	(7.5)
Amortization expense	(11.0)	(11.0)
Forward-looking Non-GAAP operating costs and expenses	$ 70.7	$ 66.7

Forward-looking operating income	$ 6.8	$ 16.8
Adjustments:
Stock-based compensation expense	7.5	7.5
Amortization expense	11.0	11.0
Forward-looking Non-GAAP operating income	$ 25.3	$ 35.3

Forward-looking income before income taxes	$ 4.1	$ 14.1
Adjustments:
Stock-based compensation expense	7.5	7.5
Amortization expense	11.0	11.0
Non-cash interest expense on convertible notes	1.7	1.7
Forward-looking Non-GAAP income before income taxes	$ 24.3	$ 34.3
Forward-looking GAAP provision for income taxes	1.4	4.9
Adjustment to Forward-looking GAAP provision for income taxes	7.1	7.1
Forward-looking Non-GAAP provision for income taxes	8.5	12.0
Forward-looking Non-GAAP net income	15.8	22.3
Forward-looking Non-GAAP basic net income per share	$ 0.14	$ 0.20
Forward-looking Non-GAAP diluted net income per share	$ 0.14	$ 0.20
Weighted average shares used in forward-looking Non-GAAP per share calculation:
Basic	111.0	111.0
Diluted	113.0	113.0

Rambus Appoints Emiko Higashi to Its Board of Directors

Industry veteran brings extensive experience in high-tech investment banking and finance for global semiconductor companies

SUNNYVALE, Calif. – June 5, 2017 – Rambus Inc. (NASDAQ: RMBS) today announced the appointment of Ms. Emiko Higashi as a director to its Board, effective immediately. Ms. Higashi is an industry veteran with broad experience in technology-focused investment banking and finance, along with a comprehensive understanding of business and finance for large global semiconductor companies. She is the founder and managing director of Tomon Partners, LLC, a strategy and mergers and acquisitions (M&A) advisory firm based in San Francisco serving technology and healthcare companies.

“We are pleased to welcome Emiko to our Board,” said Mr. Eric Stang, Chairman of the Board at Rambus. “Ms. Higashi brings extensive experience in business development, M&A and finance for global semiconductor companies along with strong leadership and an entrepreneurial spirit that will help Rambus transition from an IP to a product-based company.”

“Rambus is moving beyond its traditional DRAM market with strong technologies and innovation,” said Higashi. “I look forward to helping guide the future of this organization as it continues its evolution to becoming a product and service company.”

In addition to being the managing director of Tomon Partners, Ms. Higashi also serves on the boards of KLA-Tenchor, MetLife Insurance K.K., a subsidiary of MetLife, Inc., Takeda Pharmaceutical Company Ltd. and Zeptor. Ms. Higashi is also a senior advisor to several private consulting firms. Prior to Tomon Partners, she was a co-founder and Chief Executive Officer of Gilo Ventures, a technology-focused venture capital firm. Other executive and management roles include various roles with investment banks, including Lehman Brothers, being a founding member of Wasserstein Parella and the technology head for their M&A business, and a managing director in charge of Merrill Lynch’s global technology M&A practice. Prior to her investment banking career, Ms. Higashi spent two years as a consultant at McKinsey & Co. in Tokyo, Japan. She holds an MBA from Harvard Business School and a BA from International Christian University in Tokyo.

About Rambus Inc.
Rambus creates innovative hardware and software technologies, driving advancements from the data center to the mobile edge. Our chips, customizable IP cores, architecture licenses, tools, software, services, training and innovations improve the competitive advantage of our customers. We collaborate with the industry, partnering with leading ASIC and SoC designers, foundries, IP developers, EDA companies and validation labs. Our products are integrated into tens of billions of devices and systems, powering and securing diverse applications, including Big Data, Internet of Things (IoT), mobile payments, and smart ticketing. At Rambus, we are makers of better. For more information, visit rambus.com.

Rambus Reports First Quarter 2017 Financial Results

Revenue of $97.4 million, up 34% year over year
GAAP diluted net income per share of $0.03; non-GAAP diluted net income per share of $0.17
Licensed Western Digital for memory and security innovations
Launched Unified Payment Platform, extending mobile OEM pay to retailers

SUNNYVALE, Calif. – April 24, 2017 – Rambus Inc. (NASDAQ:RMBS) today reported financial results for the first quarter ended March 31, 2017. Total revenue for the quarter was $97.4 million, which is 34% higher than a year ago, with GAAP diluted net income per share of $0.03 representing a 50% increase over Q1 of 2016 and non-GAAP diluted net income per share of $0.17 representing a 31% increase over Q1 of 2016.

“We continue to see strong support for our technologies and innovations beyond the traditional DRAM market with the signing of the license agreement with Western Digital for our Flash-based memory designs,” said Dr. Ron Black, chief executive officer of Rambus. “In addition, we introduced our Unified Payment Platform that enhances security, reduces costs for retailers, and delivers a seamless shopping experience for the consumer. Our execution in Q1 sets the foundation for growth for the remainder of 2017.”

Business Review

In our Memory and Interfaces Division, we introduced our High Bandwidth Memory (HBM) PHY solution, available on GLOBALFOUNDRIES process technology, targeting networking and data center applications and designed for systems that require low latency and high bandwidth memory. Also this quarter, as part of a multi-company collaboration, Samsung taped out a 14nm network processor with our high-speed 28G SerDes solution. We also introduced the availability of our industry-leading 56G SerDes PHY and partnered with Samsung to develop it in their latest process technology. These solutions are designed to meet the growing demands of communications and data center applications. Our server DIMM chipset continues to supply the server market, shipping to the key customers in the data center market and we have extended the value of our portfolio beyond the DRAM market with our agreement with Western Digital to utilize our memory and security technologies.

Our Security Division, which consists of our cryptography, mobile payments and smart ticketing groups, had an important quarter with the launch of the Rambus Unified Payment Platform. This platform enhances payment security and reduces costs for retailers by easily integrating payment cards, gift cards, loyalty points, and coupons into a seamless shopping experience for consumers. It securely converts and manages digital value to enable consumers to pay with credit, points and coupons in a single transaction, and transform how they shop and pay.

Finally, our Emerging Solutions Division continues to make exciting progress with the announcement of our expanded collaboration with Microsoft on cryogenic memory. This joint effort focuses on enhancing memory capabilities, reducing energy consumption and improving overall system performance for future high-performance super computers (HPC) and quantum computers operating at cryogenic temperatures.

Financial Review	GAAP						Non-GAAP(1)
(In millions, except for percentages and per share amounts)	Three Months Ended March 31,						Three Months Ended March 31,
	2017			2016			2017			2016
Revenue	$	97.4		$	72.7		$	97.4		$	72.7
Total operating costs and expenses	$	84.0		$	63.4		$	66.8		$	49.0
Operating income	$	13.4		$	9.3		$	30.6		$	23.7
Operating margin	14		%	13		%	31		%	33		%
Net income	$	3.0		$	1.9		$	19.0		$	14.6
Diluted net income per share	$	0.03		$	0.02		$	0.17		$	0.13

Total cash and marketable securities	$	187.6		$	225.6		$	187.6		$	225.6
Total assets	$	826.2		$	752.8		$	826.2		$	752.8
Total stockholders’ equity	$	601.6		$	534.7		$	601.6		$	534.7

(1) See “Supplemental Reconciliation of GAAP to Non-GAAP Results” and “Reconciliation of Other GAAP to Non-GAAP Items” tables included below. Note that the applicable non-GAAP measures are presented and that revenue and the balance sheet items are solely presented on a GAAP basis.

Revenue for the quarter was $97.4 million as execution in our Memory and Interfaces Division and our Security Division offset the anticipated seasonality of our Lighting Division. As a result of our execution on acquisitions, revenue for our Memory and Interface Division was up 32% year over year and revenue for the Security Division was up 65% year over year. GAAP total operating costs and expenses were lower than our expected range, yielding $0.03 of GAAP net income per share and in line with our expectations. We had non-GAAP net income per share of $0.17, at the high end of our expectations.

Cash, cash equivalents, and marketable securities as of March 31, 2017 were $187.6 million, an increase of $15.4 million from December 31, 2016, mainly due to cash generated from operating activities of $17.2 million. Adjusted EBITDA for the quarter was $34.0 million.

2017 Second Quarter Outlook

(In millions, except per share amounts)	GAAP	Non-GAAP (1)
Revenue	$90 – $96	$90 to $96
Total operating costs and expenses	$86 – $90	$67 – $71
Operating income	$0.4 – $10	$19 – $29
Diluted net income per share	($0.01) – $0.04	$0.10 – $0.16

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

For the second quarter of 2017, the Company expects revenue to be between $90 million and $96 million, reflecting our typical seasonality. Revenue is not without risk and achieving revenue in this range will require that the Company sign customer agreements for patent licensing, various product sales, mobile payments software and solutions licensing among other matters. The Company also expects operating costs and expenses to be between $86 million and $90 million, and diluted net income (loss) per share to be between ($0.01) and $0.04. The Company also expects non-GAAP operating costs and expenses to be between $67 million and $71 million, and non-GAAP diluted net income per share to be between $0.10 and $0.16. These non-GAAP expectations assume non-GAAP interest and other income and expense of $1 million, tax rate of 35% (refer to non-GAAP financial information below – income tax adjustments) and diluted share count of 115 million, and exclude stock-based compensation expense ($8 million), amortization expense ($11 million), and non-cash interest expense on convertible notes ($2 million).

Conference Call:
Rambus management will discuss the results of the quarter during a conference call scheduled for 2:00pm PT today. The call, audio and slides will be available online at investor.rambus.com and a replay will be available for the next week at the following numbers: (855) 859-2056 (domestic) or (404) 537-3406 (international) with ID#99301279.

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 our new product and service offering, growth for 2017 and financial guidance for the second quarter of 2017, including revenue, operating costs and expenses, earnings per share and estimated, fixed, long-term projected tax rates. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by Rambus’ management. Actual results may differ materially. Rambus’ business generally is subject to a number of risks which are described more fully in Rambus’ periodic reports filed with the Securities and Exchange Commission. Rambus undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

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

RMBSFN

Overview of Non-GAAP Results

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, operating margin, operating income (loss), net income (loss), diluted net income (loss) per share and Adjusted EBITDA. In computing each of these non-GAAP financial measures, the following items were considered as discussed below: stock-based compensation expenses, acquisition-related transaction costs and retention bonus expense, impairment charges, amortization expenses, 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:

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

Change in contingent consideration. 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 and no cash flow impact.

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.

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

	March 31, 2017		December 31, 2016
ASSETS

Current assets:
Cash and cash equivalents	$	177,455	$	135,294
Marketable securities	10,170		36,888
Accounts receivable	27,353		21,099
Prepaids and other current assets	12,676		17,867
Inventories	5,840		5,633
Total current assets	233,494		216,781
Intangible assets, net	121,355		132,388
Goodwill	206,085		204,794
Property, plant and equipment, net	56,468		58,442
Deferred tax assets	206,075		168,342
Other assets	2,733		2,749
Total assets	$	826,210	$	783,496

LIABILITIES & STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	8,437	$	9,793
Accrued salaries and benefits	10,576		14,177
Deferred revenue	15,658		16,932
Other current liabilities	9,453		10,399
Total current liabilities	44,124		51,301
Long-term liabilities:
Convertible notes, long-term	127,916		126,167
Long-term imputed financing obligation	37,859		38,029
Other long-term liabilities	14,754		15,217
Total long-term liabilities	180,529		179,413
Total stockholders’ equity	601,557		552,782
Total liabilities and stockholders’ equity	$	826,210	$	783,496

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

	Three Months Ended March 31,
	2017		2016

Revenue:
Royalties	$	68,956	$	62,877
Contract and other revenue	28,395		9,805
Total revenue	97,351		72,682
Operating costs and expenses:
Cost of revenue (1)	19,731		12,207
Research and development (1)	36,000		28,527
Sales, general and administrative (1)	28,186		23,095
Gain from settlement	—		(441)
Total operating costs and expenses	83,917		63,388
Operating income	13,434		9,294
Interest income and other income (expense), net	154		242
Interest expense	(3,206)		(3,141)
Interest and other income (expense), net	(3,052)		(2,899)
Income before income taxes	10,382		6,395
Provision for income taxes	7,376		4,517
Net income	$	3,006	$	1,878
Net income per share:
Basic	$	0.03	$	0.02
Diluted	$	0.03	$	0.02
Weighted average shares used in per share calculation
Basic	111,464		109,733
Diluted	115,325		112,252

_________

(1) Total stock-based compensation expense for the three months ended March 31, 2017 and 2016 is presented as follows:


	Three Months Ended March 31,
	2017		2016
Cost of revenue	$	14	$	14
Research and development	$	3,012	$	2,080
Sales, general and administrative	$	3,570	$	2,770

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

	Three Months Ended
	March 31, 2017			December 31, 2016			March 31, 2016

Operating costs and expenses	$	83,917		$	97,035		$	63,388
Adjustments:
Stock-based compensation expense	(6,596		)	(5,657		)	(4,864		)
Acquisition-related transaction costs and retention bonus expense	(81		)	(197		)	(1,808		)
Purchase accounting adjustment for inventory fair value step-up	—			(1,136		)	—
Amortization expense	(10,488		)	(11,093		)	(7,719		)
Impairment of long-lived assets	—			(18,300		)	—
Change in contingent consideration	—			6,845			—
Non-GAAP operating costs and expenses	$	66,752		$	67,497		$	48,997

Operating income	$	13,434		$	524		$	9,294
Adjustments:
Stock-based compensation expense	6,596			5,657			4,864
Acquisition-related transaction costs and retention bonus expense	81			197			1,808
Purchase accounting adjustment for inventory fair value step-up	—			1,136			—
Amortization expense	10,488			11,093			7,719
Impairment of long-lived assets	—			18,300			—
Change in contingent consideration	—			(6,845		)	—
Non-GAAP operating income	$	30,599		$	30,062		$	23,685

Income (loss) before income taxes	$	10,382		$	(2,506	)	$	6,395
Adjustments:
Stock-based compensation expense	6,596			5,657			4,864
Acquisition-related transaction costs and retention bonus expense	81			197			1,808
Purchase accounting adjustment for inventory fair value step-up	—			1,136			—
Amortization expense	10,488			11,093			7,719
Impairment of long-lived assets	—			18,300			—
Change in contingent consideration	—			(6,845		)	—
Non-cash interest expense on convertible notes	1,749			1,723			1,651
Non-GAAP income before income taxes	$	29,296		$	28,755		$	22,437
GAAP provision for income taxes	7,376			939			4,517
Adjustment to GAAP provision for income taxes	2,878			9,125			3,336
Non-GAAP provision for income taxes	10,254			10,064			7,853
Non-GAAP net income	$	19,042		$	18,691		$	14,584

Non-GAAP basic net income per share	$	0.17		$	0.17		$	0.13
Non-GAAP diluted net income per share	$	0.17		$	0.16		$	0.13
Weighted average shares used in non-GAAP per share calculation:
Basic	111,464			110,788			109,733
Diluted	115,325			114,060			112,252

Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1)

	Three Months Ended
	March 31, 2017		December 31, 2016		March 31, 2016

GAAP effective tax rate	71	%	(38	)%	71	%
Adjustment to GAAP effective tax rate	(36	)%	73	%	(36	)%
Non-GAAP effective tax rate	35	%	35	%	35	%

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 35 percent for both 2017 and 2016, 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 year to assist the Company’s planning for future periods.

Rambus Inc.
Reconciliation of Other GAAP to Non-GAAP Items
(In thousands, except percentages)
(Unaudited)

	GAAP						Non-GAAP
	Three Months Ended March 31,						Three Months Ended March 31,
	2017			2016			2017			2016
Revenue (i)	$	97,351		$	72,682		$	97,351		$	72,682
Operating income (ii)	13,434			9,294			30,599			23,685
Operating margin (ii/i)	14		%	13		%	31		%	33		%

	Three Months Ended March 31,
	2017		2016

Net income	$	3,006	$	1,878
Add back:
Interest and other income (expense), net	3,052		2,899
Provision for income taxes	7,376		4,517
Depreciation expense	3,392		2,969
Amortization expense	10,488		7,719
EBITDA (1)	$	27,314	$	19,982
Adjustments:
Stock-based compensation expense	6,596		4,864
Acquisition-related transaction costs and retention bonus expense	81		1,808
Adjusted EBITDA (2)	$	33,991	$	26,654

(1) EBITDA is a non-GAAP measure that management uses to evaluate the cash generating capacity of the company. The most directly comparable GAAP measure is net income. EBITDA is net income adjusted for net interest expense, income taxes, and depreciation and amortization. It should not be considered as an alternative to net income computed under GAAP.

(2) Adjusted EBITDA excludes the impact of other non-GAAP adjustments indicated in the above tables.

Rambus Inc.
Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates
(In millions, except per share amounts)
(Unaudited)

	Three Months Ended June 30, 2017
	Low			High

Forward-looking operating costs and expenses	$	89.6		$	85.6
Adjustments:
Stock-based compensation expense	(7.5		)	(7.5		)
Amortization expense	(11.1		)	(11.1		)
Forward-looking Non-GAAP operating costs and expenses	$	71.0		$	67.0

Forward-looking operating income	$	0.4		$	10.4
Adjustments:
Stock-based compensation expense	7.5			7.5
Amortization expense	11.1			11.1
Forward-looking Non-GAAP operating income	$	19.0		$	29.0

Forward-looking income (loss) before income taxes	$	(2.3	)	$	7.7
Adjustments:
Stock-based compensation expense	7.5			7.5
Amortization expense	11.1			11.1
Non-cash interest expense on convertible notes	1.7			1.7
Forward-looking Non-GAAP income before income taxes	$	18.0		$	28.0
Forward-looking GAAP provision for (benefit from) income taxes	(0.8		)	2.7
Adjustment to Forward-looking GAAP provision for income taxes	7.1			7.1
Forward-looking Non-GAAP provision for income taxes	6.3			9.8
Forward-looking Non-GAAP net income	$	11.7		$	18.2

Forward-looking Non-GAAP basic net income per share	$	0.10		$	0.16
Forward-looking Non-GAAP diluted net income per share	$	0.10		$	0.16
Weighted average shares used in forward-looking Non-GAAP per share calculation:
Basic	112.0			112.0
Diluted	115.0			115.0

Rambus Appoints Two New Fellows

Drs. Helena Handschuh and Thomas Vogelsang, authorities in security and memory, join the company’s prestigious Fellow program

SUNNYVALE, Calif. – March 14, 2017 – Rambus Inc. (NASDAQ:RMBS) today announced it has appointed Drs. Helena Handschuh, a renowned cryptographer, and Thomas Vogelsang, a world recognized DRAM expert, to one of the company’s highest technical positions, Rambus Fellow.

Dr. Handschuh is a well-recognized expert in the security community for her contribution to cryptography, cryptanalysis and hardware security. She was a member of ETSI-SAGE Security Algorithms Group of Experts for more than 10 years where she provided expertise on side-channel analysis and also co-designed GSM, 3G and LTE cryptographic algorithms including MILENAGE, SNOW 3G and other algorithms deployed in over six billion SIM cards and mobile handsets today. Dr. Handschuh served as the Program Co-chair of CHES 2015 and recently served as the Program Chair of CT-RSA 2017, the cryptographer’s track at the RSA Conference. She has also held several appointed and elected offices at the International Association for Cryptographic Research (IACR).

Dr. Handschuh has been appointed to lead the Security Architecture and Advanced Technology team at Rambus, responsible for defining security architecture for existing and next-generation security technologies. She currently chairs the Security Working Group of the Secure Content Storage Association (SCSA) with over 250 members, has published over 40 peer-reviewed papers, and holds 10 patents. She received her Ph.D in Cryptography from Telecom ParisTech.

Dr. Vogelsang is a world-recognized DRAM expert and during the course of his career has made significant contributions to a wide range of technologies, specifically DRAM architecture and core design. He is a senior member of IEEE, has been a lecturer on DRAM at Stanford University, and served as part of the technical program committee for Digital Photography and Mobile Imaging.

As a technical director at Rambus, Dr. Vogelsang has been responsible for several projects and recognized for his work with low-power DRAM energy consumption based on a revolutionary power model he pioneered. This work was published in Micro 2010, a premier technical publication, and has been well accepted with the most citations of any paper published at Rambus. Dr. Vogelsang has also contributed to several new exploratory technologies for Rambus including advanced computational sensing and imaging technologiesVogelsang holds 55 patents and has authored or co-authored 21 papers at numerous prestigious technical conferences around the globe. He holds a Ph.D in Physics from Technical University Munich.

“Both Helena and Thomas have been instrumental in developing some of our most complex technologies for the company,” said Dr. Gary Bronner, vice president of Rambus Labs. “The Rambus Fellow program recognizes exceptional technical leadership and contribution to the company and community, which both Helena and Thomas have demonstrated. We’d like to congratulate them on this prestigious appointment and look forward to their future contributions and technical leadership.”

The Rambus Fellow program was developed in 2006 to recognize those individuals who provide the highest levels of technical leadership and strategic guidance for the company. There are currently five Rambus Fellows that develop and further the technical leadership for the company.

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Rambus Reports First Quarter 2017 Financial Results

Rambus Appoints Two New Fellows

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