Business and Financial Highlights:
- Generated quarterly revenue of $73.8
million
- Introduced R+ DDR4 server memory
chipset, RB26, for RDIMMs and LRDIMMs
- Cryptography Research Division has been
selected by the Secure Content Storage Association (SCSA) to run
and manage the VIDITY™ Key Issuance Center
- GAAP diluted net income per share of
$1.52; non-GAAP diluted net income per share of $0.14
Rambus Inc. (NASDAQ:RMBS) today reported financial results for
the third quarter ended September 30, 2015.
GAAP Financial Results:
Revenue for the third quarter of 2015 was $73.8 million, which
was up 1% over the second quarter of 2015 primarily due to higher
royalty revenue offset by lower sales of security products. As
compared to the third quarter of 2014, revenue was up 6% primarily
due to higher royalty revenue due to the extension of the license
agreement with SK hynix in the second quarter of 2015 and higher
revenue from a new license agreement signed with IBM during the
first quarter of 2015, offset by lower royalty revenue from ST
Microelectronics.
Revenue for the nine months ended September 30, 2015 was $219.5
million, which was down 2% over the prior year period, primarily
due to lower royalty revenue from ST Microelectronics and NVIDIA
Corporation, offset by higher revenue from a new license agreement
signed with IBM during the first quarter of 2015 as well as higher
sales of security and lighting products.
Total operating costs and expenses for the third quarter of 2015
were $56.1 million, 2% lower than the previous quarter and 2%
higher than the third quarter of 2014. Third quarter operating
costs and expenses of $56.1 million included $3.6 million of
stock-based compensation expenses and $6.3 million of amortization
expenses. In comparison, total operating costs and expenses for the
second quarter of 2015 of $57.3 million included $4.4 million of
stock-based compensation expenses and $6.3 million of amortization
expenses. Total operating costs and expenses for the third quarter
of 2014 were $55.2 million, which included $3.4 million of
stock-based compensation expenses and $6.7 million of amortization
expenses. The change in total operating costs and expenses in the
third quarter of 2015 as compared to the second quarter of 2015 was
primarily due to lower prototyping costs, lower costs of sales due
to lower sales of security and lighting products and lower
stock-based compensation costs partially offset by lower gain from
sale of intellectual property. The change in total operating costs
and expenses in the third quarter of 2015 as compared to the third
quarter of 2014 was primarily attributed to higher expenses related
to software design tools, higher headcount related costs and higher
cost of sales due to higher sales of security and lighting products
offset by lower consulting costs.
Total operating costs and expenses for the nine months ended
September 30, 2015 were $168.4 million, 1% higher than the nine
months ended September 30, 2014. The operating costs and expenses
for the first nine months of 2015 of $168.4 million included $11.7
million of stock-based compensation expenses and $18.9 million of
amortization expenses. This is compared to total operating costs
and expenses for the nine months ended September 30, 2014 of $166.8
million, which included $11.2 million of stock-based compensation
expenses, $20.3 million of amortization expenses and $2.5 million
of retention bonus expense from acquisitions. The change in total
operating costs and expenses was primarily attributable to higher
headcount related costs, higher expenses related to software design
tools, higher cost of sales due to higher sales of security and
lighting products and higher prototyping costs offset by higher
gain from sale of intellectual property, lower retention bonus
expense from acquisitions and lower consulting costs.
Net income for the third quarter of 2015 was $182.0 million
as compared to net income of $6.9 million in the second
quarter of 2015 and net income of $5.5 million in the third quarter
of 2014. Diluted net income per share for the third quarter of 2015
was $1.52 as compared to diluted net income per share of $0.06 in
the second quarter of 2015 and diluted net income per share of
$0.05 in the third quarter of 2014, respectively. The change in net
income for the third quarter of 2015 as compared to the prior
quarter and the third quarter of 2014 included a tax benefit of
$174 million related to the release of the Company's deferred tax
asset valuation allowance against its U.S. deferred tax assets.
Net income for the nine months ended September 30, 2015 was
$198.4 million as compared to a net income of $18.4 million for the
same period of 2014. Diluted net income per share for the nine
months ended September 30, 2015 was $1.67 as compared to a diluted
net income per share of $0.16 for the same period of 2014. The
change in net income is due to the same reason as indicated
above.
Non-GAAP Financial Results (1):
Total non-GAAP operating costs and expenses in the third quarter
of 2015 were $46.3 million, which was relatively flat as compared
to the previous quarter, and 3% higher than the third quarter of
2014.
Total non-GAAP operating costs and expenses for the nine months
ended September 30, 2015 were $137.8 million as compared to $132.8
million in the same period of 2014 due primarily to higher
headcount related costs, higher expenses related to software design
tools, higher cost of sales due to the sale of security and
lighting products and higher prototyping costs offset by higher
gain from sale of intellectual property, lower retention bonus
expense from acquisitions and lower consulting costs.
Non-GAAP net income in the third quarter of 2015 was $17.0
million, 6% higher than the prior quarter and 14% higher than the
third quarter of 2014. Non-GAAP diluted net income per share was
$0.14 in the third quarter of 2015 as compared to $0.13 in the
prior quarter and $0.13 in the third quarter of 2014.
Non-GAAP net income for the nine months ended September 30, 2015
was $50.0 million as compared to $53.4 million in the same period
of 2014. Non-GAAP diluted net income per share was $0.42 for the
nine months ended September 30, 2015 as compared to non-GAAP
diluted net income per share of $0.45 in the same period of
2014.
Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of
September 30, 2015 were $362.9 million, an increase of
$14.8 million from June 30, 2015. The increase in cash
was driven by operating activities.
During the third quarter of 2015, the Company recorded an income
tax benefit of approximately $167.0 million. The Company's tax
benefit includes $174 million tax benefit related to the release of
its deferred tax asset valuation allowance against its U.S.
deferred tax assets.
During the third quarter of 2015, the Company did not repurchase
any shares of its common stock under its share repurchase program
that authorizes the repurchase of up to an aggregate of 20.0
million shares.
Additionally, the Company announced that on October 16, 2015,
its Board of Directors approved the commitment for a restructuring
and a plan of termination resulting in a reduction of 8% of the
Company’s headcount. The restructuring is expected to save
approximately $10 million in 2016, from the current run rate, and
the reductions in expense and associated workforce are expected to
be completed by the first quarter of 2016. The total estimated cash
payout related to the reduction in force will be approximately $3.5
million, which is related to severance and termination benefits.
The estimated non-cash expense is expected to be approximately $1
million.
Fourth Quarter 2015 Outlook:
For the fourth quarter of 2015, the Company expects revenue to
be between $71 million and $77 million. Achieving revenue in this
range will require that the Company sign new customer agreements
for patent and solutions licensing among other matters.
Conference Call:
The Company will host a conference call at 2:00 p.m. PT today to
discuss its financial results. The call, audio and slides will be
available online at investor.rambus.com. A replay will be available
following the call as a webcast on the Rambus Investor Relations
website and for one week at the following numbers: (855) 859-2056
(domestic) or (404) 537-3406 (international) with ID# 55741229.
(1) 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, operating income (loss) and net income (loss). 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, restructuring charges, 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.
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.
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 36 percent, 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 the 36
percent tax rate to its non-GAAP financial results for all periods
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 and 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 relating
to Rambus’ restructuring and plan of termination and expectations
regarding revenue for the fourth quarter of 2015 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.
About Rambus Inc.
Rambus brings invention to market. Our customizable IP cores,
architecture licenses, tools, services, and training improve the
competitive advantage of our customers’ products while accelerating
their time-to-market. Rambus products and innovations capture,
secure and move data. For more information, visit
www.rambus.com.
RMBSFN
Rambus Inc.
Condensed Consolidated Balance
Sheets
(In thousands)
(Unaudited)
September 30,
2015
December 31,
2014
ASSETS Current assets: Cash and cash equivalents $
216,553 $ 154,126 Marketable securities 146,325 145,983 Accounts
receivable 10,314 6,001 Prepaids and other current assets 10,859
8,541 Deferred taxes 17,896 187 Total current assets 401,947
314,838 Intangible assets, net 70,426 89,371 Goodwill 116,899
116,899 Property, plant and equipment, net 59,077 64,023 Deferred
taxes, long-term 143,834 536 Other assets 3,690 2,612 Total
assets $ 795,873 $ 588,279
LIABILITIES &
STOCKHOLDERS’ EQUITY Current liabilities: Accounts
payable $ 5,928 $ 6,962 Accrued salaries and benefits 9,362 14,840
Other accrued liabilities 12,320 12,856 Total current
liabilities 27,610 34,658 Long-term liabilities: Convertible notes,
long-term 119,414 115,089 Long-term imputed financing obligation
38,751 39,063 Other long-term liabilities 4,242 7,847 Total
long-term liabilities 162,407 161,999 Total stockholders’
equity 605,856 391,622 Total liabilities and stockholders’
equity $ 795,873 $ 588,279
Rambus Inc.
Condensed Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2015 2014 2015
2014 Revenue: Royalties $ 66,823 $
64,009 $ 196,173 $ 207,387 Contract and other revenue 6,956
5,703 23,332 17,131 Total revenue 73,779
69,712 219,505 224,518 Operating costs
and expenses: Cost of revenue (1) 11,111 10,540 34,004 31,199
Research and development (1) 27,784 27,014 85,506 81,580 Sales,
general and administrative (1) 17,860 18,200 53,701 55,639 Gain
from sale of intellectual property (106 ) — (3,262 ) (170 ) Gain
from settlement (510 ) (510 ) (1,530 ) (1,530 ) Restructuring
charges — — — 39 Total operating costs
and expenses 56,139 55,244 168,419 166,757
Operating income 17,640 14,468 51,086 57,761 Interest income
and other income (expense), net 539 (549 ) 874 (432 ) Interest
expense (3,117 ) (3,059 ) (9,291 ) (21,755 ) Interest and other
income (expense), net (2,578 ) (3,608 ) (8,417 ) (22,187 ) Income
before income taxes 15,062 10,860 42,669 35,574 Provision for
(benefit from) income taxes (166,971 ) 5,347 (155,727 )
17,214 Net income $ 182,033 $ 5,513 $ 198,396
$ 18,360 Net income per share: Basic $ 1.56 $
0.05 $ 1.71 $ 0.16 Diluted $ 1.52 $
0.05 $ 1.67 $ 0.16 Weighted average shares
used in per share calculation Basic 116,444 114,523
115,940 114,080 Diluted 119,542 118,206
118,997 117,540
_________
(1) Total stock-based compensation expense for the three and
nine months ended September 30, 2015 and 2014 is presented as
follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2015 2014 2015 2014 Cost of revenue $
12 $ 12 $ 51 $ 34 Research and development $ 1,548 $ 1,648 $ 5,303
$ 5,574 Sales, general and administrative $ 2,008 $ 1,781 $ 6,395 $
5,587
Rambus Inc.
Supplemental Reconciliation of GAAP to
Non-GAAP Results
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
2015
June 30,
2015
September 30,
2014
September 30,
2015
September 30,
2014
Operating costs and expenses $ 56,139 $ 57,258 $ 55,244 $
168,419 $ 166,757 Adjustments: Stock-based compensation expense
(3,568 ) (4,415 ) (3,441 ) (11,749 ) (11,195 ) Acquisition-related
transaction costs and retention bonus expense — — (6 ) (2 ) (2,469
) Amortization expense (6,268 ) (6,323 ) (6,741 ) (18,914 ) (20,295
) Restructuring charges — — — — (39 )
Non-GAAP operating costs and expenses $ 46,303
$ 46,520 $ 45,056
$ 137,754 $ 132,759
Operating income $ 17,640 $ 15,554 $ 14,468 $ 51,086 $
57,761 Adjustments: Stock-based compensation expense 3,568 4,415
3,441 11,749 11,195 Acquisition-related transaction costs and
retention bonus expense — — 6 2 2,469 Amortization expense 6,268
6,323 6,741 18,914 20,295 Restructuring charges — — —
— 39
Non-GAAP operating income $
27,476 $ 26,292 $
24,656 $ 81,751 $
91,759 Income before income taxes $ 15,062 $
12,666 $ 10,860 $ 42,669 $ 35,574 Adjustments: Stock-based
compensation expense 3,568 4,415 3,441 11,749 11,195
Acquisition-related transaction costs and retention bonus expense —
— 6 2 2,469 Amortization expense 6,268 6,323 6,741 18,914 20,295
Restructuring charges — — — — 39 Impairment of investment — — 600 —
600 Non-cash interest expense on convertible notes 1,605
1,581 1,515 4,745 13,226 Non-GAAP
income before income taxes $ 26,503 $ 24,985 $ 23,163 $ 78,079 $
83,398 GAAP provision for (benefit from) income taxes (166,971 )
5,805 5,347 (155,727 ) 17,214 Adjustment to GAAP provision for
income taxes 176,512 3,190 2,992 183,836
12,810 Non-GAAP provision for income taxes 9,541
8,995 8,339 28,109 30,024
Non-GAAP net income $ 16,962 $
15,990 $ 14,824 $
49,970 $ 53,374
Non-GAAP basic net income per share $ 0.15 $ 0.14 $ 0.13 $
0.43 $ 0.47
Non-GAAP diluted net income per share $ 0.14 $
0.13 $ 0.13 $ 0.42 $ 0.45 Weighted average shares used in non-GAAP
per share calculation: Basic 116,444 116,027 114,523 115,940
114,080 Diluted 119,542 120,939 118,206 118,997 117,540
Supplemental Reconciliation of GAAP to
Non-GAAP Effective Tax Rate (1)
Three Months Ended Nine Months Ended
September 30,
2015
June 30,
2015
September 30,
2014
September 30,
2015
September 30,
2014
GAAP effective tax rate 1,109
%
46
%
49
%
365
%
48
%
Adjustment to GAAP effective tax rate
(1,073
)%
(10
)%
(13
)%
(329
)%
(12
)%
Non-GAAP effective tax rate 36
%
36
%
36
%
36
%
36
%
(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 36
percent, 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 the 36 percent tax
rate to its non-GAAP financial results for all periods to assist
the Company’s planning for future periods.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151019006369/en/
Rambus Inc.Linda Ashmore, 408-462-8411Corporate
Communicationslashmore@rambus.comorRambus Inc.Nicole Noutsios,
408-462-8050Investor Relationsnnoutsios@rambus.com
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