Business and Financial Highlights:
- Generated quarterly revenue of $69.7
million
- Introduced family of DPA resistant
cryptographic cores
- Announced DDR4/3 PHY interoperability
with Northwest Logic
- GAAP diluted net income per share of
$0.05; non-GAAP diluted net income per share of $0.13
Rambus Inc. (NASDAQ:RMBS), the innovative technology solutions
company that brings invention to market, today reported financial
results for the third quarter ended September 30, 2014.
GAAP Financial Results:
Revenue for the third quarter of 2014 was $69.7 million, down 9%
on a sequential basis from the second quarter of 2014 primarily due
to a one-time catch-up payment from the new license agreement
signed with Qualcomm during the second quarter of 2014 and lower
royalty revenue from NVIDIA. As compared to the third quarter of
2013, revenue was down 5% primarily due to lower royalty revenue
from Samsung and NVIDIA, offset by the license agreements signed
with Qualcomm and Micron Technology.
Revenue for the nine months ended September 30, 2014 was $224.5
million, which was up 13% over the prior year period, primarily due
to the license agreements signed with SK hynix, Micron Technology,
Nanya Technology Corporation and Qualcomm, partially offset by
lower royalty revenue from Samsung.
Total operating costs and expenses for the third quarter of 2014
were $55.2 million, 2% lower than the previous quarter and 14%
lower than the third quarter of 2013. Third quarter operating costs
and expenses of $55.2 million included $3.4 million of stock-based
compensation expenses and $6.7 million of amortization expenses. In
comparison, total operating costs and expenses for the second
quarter of 2014 of $56.4 million included $4.9 million of
stock-based compensation expenses, $6.8 million of amortization
expenses and $1.0 million of retention bonus expense from
acquisitions. Total operating costs and expenses for the third
quarter of 2013 were $64.2 million, which included $3.4 million of
stock-based compensation expenses, $8.1 million of impairment of
goodwill, $1.1 million of restructuring charges, $7.4 million of
amortization expenses and $1.5 million of retention bonus expense
from acquisitions. The change in total operating costs and expenses
in the third quarter of 2014 as compared to the second quarter of
2014 was primarily due to decreased stock-based compensation
expenses and retention bonus expense from acquisitions. The change
in total operating costs and expenses in the third quarter of 2014
as compared to the third quarter of 2013 was primarily attributable
to impairment of goodwill and restructuring charges in the third
quarter of 2013 and lower retention bonus expense from acquisitions
partially offset by higher cost of sales associated with the sale
of lighting products and bonus expense.
Total operating costs and expenses for the nine months ended
September 30, 2014 were $166.8 million, 8% lower than the nine
months ended September 30, 2013. The nine months operating costs
and expenses of $166.8 million 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. This is compared to total operating costs and
expenses for the nine months ended September 30, 2013 of $181.8
million, which included $11.9 million of stock-based compensation
expenses, $8.1 million of impairment of goodwill, $3.3 million of
restructuring charges, $8.5 million one-time reversal of accrued SK
hynix related litigation costs, $21.4 million of amortization
expenses and $8.9 million of retention bonus expense from
acquisitions. The change in total operating costs and expenses was
primarily attributable to impairment of goodwill and restructuring
charges in 2013 and lower retention bonus expense from
acquisitions, partially offset by higher cost of sales associated
with the sale of lighting products and as a result of the one-time
reversal of accrued SK hynix related litigation costs in the second
quarter of 2013.
Net income for the third quarter of 2014 was $5.5 million
as compared to net income of $5.0 million in the second
quarter of 2014 and net loss of $5.7 million in the third
quarter of 2013. Diluted net income per share for the third quarter
of 2014 was $0.05 as compared to diluted net income per share of
$0.04 in the second quarter of 2014 and diluted net loss per share
of $0.05 in the third quarter of 2013.
Net income for the nine months ended September 30, 2014 was
$18.4 million as compared to a net loss of $24.0 million for the
same period of 2013. Diluted net income per share for the nine
months ended September 30, 2014 was $0.16 as compared to a diluted
net loss per share of $0.21 for the same period of 2013.
Non-GAAP Financial Results (1):
Total non-GAAP operating costs and expenses in the third quarter
of 2014 were $45.1 million, 3% higher than the previous quarter,
and 5% higher than the third quarter of 2013.
Total non-GAAP operating costs and expenses for the nine months
ended September 30, 2014 were $132.8 million as compared to $136.2
million in the same period of 2013 due primarily to lower general
litigation expenses offset by higher cost of sales associated with
the sale of lighting products.
Non-GAAP net income in the third quarter of 2014 was $14.8
million, 22% lower than the prior quarter and 15% lower than the
third quarter of 2013. Non-GAAP diluted net income per share was
$0.13 in the third quarter of 2014 as compared to $0.16 in the
prior quarter and $0.15 in the third quarter of 2013.
Non-GAAP net income for the nine months ended September 30, 2014
was $53.4 million as compared to $33.3 million in the same period
of 2013. Non-GAAP diluted net income per share was $0.45 for the
nine months ended September 30, 2014 as compared to non-GAAP
diluted net income per share of $0.29 for the nine months ended
September 30, 2013.
Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of
September 30, 2014 were $271.1 million, an increase of
$24.7 million from June 30, 2014.
During the third quarter of 2014, the Company recorded an income
tax provision of approximately $5.3 million. As the Company
continues to maintain a full valuation allowance against its U.S.
deferred tax assets, the Company’s tax provision consists of
primarily foreign withholding taxes.
Fourth Quarter 2014 Outlook:
For the fourth quarter of 2014, the Company expects revenue to
be between $70 million and $75 million. Revenue is not without risk
and includes expectations that the Company will sign new customers
for patent as well as solutions licensing.
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#12537633.
(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, costs of restatement and related
legal activities, restructuring charges, impairment charges,
severance 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 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.
Impairment of goodwill and long-lived assets. These charges
consist of non-cash charges to goodwill and long-lived assets and
are excluded because such charges are non-recurring and do not
reduce the Company’s liquidity.
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.
Costs of restatement and related legal activities. These
expenses consist primarily of investigation, audit, legal and other
professional fees related to the 2006-2007 stock option
investigation and related litigation, as well as recoveries
received from third parties. The Company excludes these costs and
recoveries from its non-GAAP measures primarily because the Company
believes that these non-recurring costs and recoveries 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.
Reversal of one-time litigation costs. These adjustments are a
one-time litigation cost reversal of prior litigation costs accrued
related to previously awarded costs that the Company was required
to pay in connection with the SK hynix and Micron Technology
litigation. The Company excludes these reversals from its non-GAAP
measures because the Company believes that these reversals have no
direct correlation to the operations of the Company’s core business
and they are a one-time event.
Severance costs. These expenses relate to the separation payment
to the Company’s former chief executive officer. The Company
excludes these costs from its non-GAAP measures because the Company
believes that these non-recurring costs have no direct correlation
to the operations of the Company’s core business.
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 and 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
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’ expectations regarding revenue for the fourth quarter of
2014 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,
2014
December 31,
2013
ASSETS Current assets: Cash and cash equivalents $
125,686 $ 338,696 Marketable securities 145,440 48,966 Accounts
receivable 5,099 2,251 Prepaids and other current assets 7,959
8,253 Deferred taxes 1,379 205 Total current assets 285,563
398,371 Intangible assets, net 95,694 117,172 Goodwill 116,899
116,899 Property, plant and equipment, net 65,899 72,642 Deferred
taxes, long-term 560 4,797 Other assets 2,542 3,498 Total
assets $ 567,157 $ 713,379
LIABILITIES &
STOCKHOLDERS’ EQUITY Current liabilities: Accounts
payable $ 5,697 $ 7,001 Accrued salaries and benefits 11,840 33,448
Convertible notes, short-term — 164,047 Other accrued liabilities
8,739 8,346 Total current liabilities 26,276 212,842
Long-term liabilities: Convertible notes, long-term 113,692 109,629
Long-term imputed financing obligation 39,148 39,349 Other
long-term liabilities 10,441 11,330 Total long-term
liabilities 163,281 160,308 Total stockholders’ equity
377,600 340,229 Total liabilities and stockholders’ equity $
567,157 $ 713,379
Rambus Inc.
Condensed Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2014 2013 2014
2013 Revenue: Royalties $
64,009 $ 71,013 $ 207,387 $ 194,244 Contract and other revenue
5,703 2,281 17,131 3,835 Total revenue
69,712 73,294 224,518 198,079 Operating
costs and expenses: Cost of revenue (1) 10,540 8,958 31,199 22,857
Research and development (1) 27,014 27,553 81,580 91,178 Marketing,
general and administrative (1) 18,200 18,698 55,639 57,956
Restructuring charges — 1,129 39 3,335 Impairment of goodwill and
long-lived assets — 8,070 — 8,070 Gain from sale of intellectual
property — — (170 ) (1,388 ) Gain from settlement (510 ) (179 )
(1,530 ) (179 ) Total operating costs and expenses 55,244
64,229 166,757 181,829 Operating income 14,468
9,065 57,761 16,250 Interest income and other income (expense), net
(549 ) 66 (432 ) (1,373 ) Interest expense (3,059 ) (8,552 )
(21,755 ) (23,290 ) Interest and other income (expense), net (3,608
) (8,486 ) (22,187 ) (24,663 ) Income (loss) before income taxes
10,860 579 35,574 (8,413 ) Provision for income taxes 5,347
6,304 17,214 15,558 Net income (loss) $ 5,513
$ (5,725 ) $ 18,360 $ (23,971 ) Net income (loss) per
share: Basic $ 0.05 $ (0.05 ) $ 0.16 $ (0.21 )
Diluted $ 0.05 $ (0.05 ) $ 0.16 $ (0.21 ) Weighted
average shares used in per share calculation Basic 114,523
112,640 114,080 112,144 Diluted 118,206
112,640 117,540 112,144
_________
(1) Total stock-based compensation expense for the three and
nine months ended September 30, 2014 and 2013 are presented as
follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2014 2013 2014 2013 Cost
of revenue $ 12 $ 7 $ 34 $ 12 Research and development $ 1,648 $
1,630 $ 5,574 $ 5,166 Marketing, general and administrative $ 1,781
$ 1,726 $ 5,587 $ 6,707
Rambus Inc.
Supplemental Reconciliation of GAAP to
Non-GAAP Results
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
2014
June 30,
2014
September 30,
2013
September 30,
2014
September 30,
2013
Operating costs and expenses $ 55,244 $ 56,414 $ 64,229 $
166,757 $ 181,829 Adjustments: Stock-based compensation expense
(3,441 ) (4,855 ) (3,363 ) (11,195 ) (11,885 ) Acquisition-related
transaction costs and retention bonus expense (6 ) (1,028 ) (1,512
) (2,469 ) (8,909 ) Amortization expense (6,741 ) (6,757 ) (7,383 )
(20,295 ) (21,420 ) Reversal of one-time litigation costs — — — —
8,482 Restructuring charges — — (1,129 ) (39 ) (3,335 ) Impairment
of goodwill and long-lived assets — — (8,070 ) — (8,070 ) Severance
costs — — — — (514 ) Costs of restatement and related legal
activities — — — — (19 )
Non-GAAP
operating costs and expenses $ 45,056
$ 43,774 $ 42,772
$ 132,759 $ 136,159
Operating income $ 14,468 $ 20,104 $ 9,065 $ 57,761 $ 16,250
Adjustments: Stock-based compensation expense 3,441 4,855 3,363
11,195 11,885 Acquisition-related transaction costs and retention
bonus expense 6 1,028 1,512 2,469 8,909 Amortization expense 6,741
6,757 7,383 20,295 21,420 Reversal of one-time litigation costs — —
— — (8,482 ) Restructuring charges — — 1,129 39 3,335 Impairment of
goodwill and long-lived assets — — 8,070 — 8,070 Severance costs —
— — — 514 Costs of restatement and related legal activities —
— — — 19
Non-GAAP operating
income $ 24,656 $ 32,744
$ 30,522 $ 91,759
$ 61,920 Income (loss) before income
taxes $ 10,860 $ 11,438 $ 579 $ 35,574 $ (8,413 ) Adjustments:
Stock-based compensation expense 3,441 4,855 3,363 11,195 11,885
Acquisition-related transaction costs and retention bonus expense 6
1,028 1,512 2,469 8,909 Amortization expense 6,741 6,757 7,383
20,295 21,420 Reversal of one-time litigation costs — — — — (8,482
) Restructuring charges — — 1,129 39 3,335 Impairment of goodwill
and long-lived assets — — 8,070 — 8,070 Severance costs — — — — 514
Costs of restatement and related legal activities — — — — 19
Impairment of investment 600 — — 600 1,400 Non-cash interest
expense on convertible notes 1,515 5,469 5,135
13,226 13,369 Non-GAAP income before income taxes $
23,163 $ 29,547 $ 27,171 $ 83,398 $ 52,026 GAAP provision for
income taxes 5,347 6,395 6,304 17,214 15,558 Adjustment to GAAP
provision for income taxes 2,992 4,242 3,478
12,810 3,171 Non-GAAP provision for income taxes
8,339 10,637 9,782 30,024 18,729
Non-GAAP net income $ 14,824 $
18,910 $ 17,389 $
53,374 $ 33,297
Non-GAAP basic net income per share $ 0.13 $ 0.17 $ 0.15 $
0.47 $ 0.30
Non-GAAP diluted net income per share $ 0.13 $
0.16 $ 0.15 $ 0.45 $ 0.29 Weighted average shares used in non-GAAP
per share calculation: Basic 114,523 114,116 112,640 114,080
112,144 Diluted 118,206 117,398 116,052 117,540 115,833
Supplemental Reconciliation of GAAP to
Non-GAAP Effective Tax Rate (1)
Three Months Ended Nine
Months Ended
September 30,
2014
June 30,
2014
September 30,
2013
September 30,
2014
September 30,
2013
GAAP effective tax rate 49
%
56
%
1,089
%
48
%
185
%
Adjustment to GAAP effective tax rate
(13
)%
(20
)%
(1,053
)%
(12
)%
(149
)%
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 and 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.
Rambus Inc.Linda Ashmore, 408-462-8411Corporate
Communicationslashmore@rambus.comorRambus Inc.Nicole Noutsios,
408-462-8050Investor Relationsnnoutsios@rambus.com
Rambus (NASDAQ:RMBS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Rambus (NASDAQ:RMBS)
Historical Stock Chart
From Apr 2023 to Apr 2024