Business and Financial Highlights:
- Generated quarterly revenue of $72.9
million
- Signed patent and technology license
agreements with IBM
- Received Best IoT Innovation Award for
Lensless Smart Sensor
- GAAP diluted net income per share of
$0.08; non-GAAP diluted net income per share of $0.14
Rambus Inc. (NASDAQ:RMBS), the innovative technology solutions
company that brings invention to market, today reported financial
results for the first quarter ended March 31, 2015.
GAAP Financial Results:
Revenue for the first quarter of 2015 was $72.9 million, up 1%
on a sequential basis from the fourth quarter of 2014 primarily due
to a new license agreement signed with IBM during the first quarter
of 2015 and higher royalty revenue from other customers. As
compared to the first quarter of 2014, revenue was down 7%
primarily due to lower royalty revenue, offset by higher revenue
from a new license agreement signed with IBM.
Total operating costs and expenses for the first quarter of 2015
were $55.0 million, 1% higher than the previous quarter and flat as
compared to the first quarter of 2014. First quarter operating
costs and expenses of $55.0 million included $3.8 million of
stock-based compensation expenses and $6.3 million of amortization
expenses. In comparison, total operating costs and expenses for the
fourth quarter of 2014 of $54.5 million included $3.5 million of
stock-based compensation expenses and $6.3 million of amortization
expenses. Total operating costs and expenses for the first quarter
of 2014 were $55.1 million, which included $2.9 million of
stock-based compensation expenses, $6.8 million of amortization
expenses and $1.4 million of retention bonuses from acquisitions.
The change in total operating costs and expenses in the first
quarter of 2015 as compared to the fourth quarter of 2014 was
primarily due to lower gain from sale of intellectual property and
higher headcount related costs partially offset by lower
prototyping and consulting costs. The change in total operating
costs and expenses in the first quarter of 2015 as compared to the
first quarter of 2014 was primarily attributable to the higher gain
from sale of intellectual property and lower retention bonus
expense from acquisitions partially offset by higher headcount
related costs and expenses related to software design tools.
Net income for the first quarter of 2015 was $9.5 million
as compared to net income of $7.8 million in the fourth
quarter of 2014 and net income of $7.8 million in the first
quarter of 2014. Diluted net income per share for the first quarter
of 2015 was $0.08 as compared to diluted net income per share of
$0.07 in the fourth quarter of 2014 and first quarter of 2014,
respectively.
Non-GAAP Financial Results (1):
Total non-GAAP operating costs and expenses in the first quarter
of 2015 were $44.9 million, 1% higher than the previous quarter,
and 2% higher than the first quarter of 2014.
Non-GAAP net income in the first quarter of 2015 was $17.0
million, 2% higher than the prior quarter and 13% lower than the
first quarter of 2014. Non-GAAP diluted net income per share was
$0.14 in the first quarter of 2015 as compared to $0.14 in the
prior quarter and $0.17 in the first quarter of 2014.
Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of March
31, 2015 were $317.8 million, an increase of $17.7 million
from December 31, 2014.
During the first quarter of 2015, the Company recorded an income
tax provision of approximately $5.4 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.
Second Quarter 2015 Outlook:
For the second quarter of 2015, the Company expects revenue to
be between $70 million and $74 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#23044511.
(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 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
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’ expectations regarding revenue for the second 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)
March 31,2015
December 31,2014
ASSETS Current assets: Cash and cash equivalents $
171,567 $ 154,126 Marketable securities 146,194 145,983 Accounts
receivable 6,541 6,001 Prepaids and other current assets 10,141
8,541 Deferred taxes 1,123 187 Total current assets 335,566
314,838 Intangible assets, net 83,049 89,371 Goodwill 116,899
116,899 Property, plant and equipment, net 61,577 64,023 Deferred
taxes, long-term 447 536 Other assets 2,333 2,612 Total
assets $ 599,871 $ 588,279
LIABILITIES &
STOCKHOLDERS’ EQUITY Current liabilities: Accounts
payable $ 5,697 $ 6,962 Accrued salaries and benefits 10,477 14,840
Other accrued liabilities 11,855 12,856 Total current
liabilities 28,029 34,658 Long-term liabilities: Convertible notes,
long-term 116,508 115,089 Long-term imputed financing obligation
38,974 39,063 Other long-term liabilities 10,418 7,847 Total
long-term liabilities 165,900 161,999 Total stockholders’
equity 405,942 391,622 Total liabilities and stockholders’
equity $ 599,871 $ 588,279
Rambus Inc.
Condensed Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months EndedMarch
31,
2015 2014 Revenue: Royalties $ 66,963 $
73,637 Contract and other revenue 5,951 4,651 Total
revenue 72,914 78,288 Operating costs and expenses:
Cost of revenue (1) 10,756 10,022 Research and development (1)
28,534 26,898 Sales, general and administrative (1) 18,502 18,820
Gain from sale of intellectual property (2,260 ) (170 ) Gain from
settlement (510 ) (510 ) Restructuring charges — 39
Total operating costs and expenses 55,022 55,099
Operating income 17,892 23,189 Interest income and other income
(expense), net 132 13 Interest expense (3,083 ) (9,926 ) Interest
and other income (expense), net (2,951 ) (9,913 ) Income before
income taxes 14,941 13,276 Provision for income taxes 5,439
5,472 Net income $ 9,502 $ 7,804 Net income
per share: Basic $ 0.08 $ 0.07 Diluted $ 0.08
$ 0.07 Weighted average shares used in per share calculation
Basic 115,336 113,590 Diluted 117,442 116,629
_________
(1) Total stock-based compensation expense
for the three months ended March 31, 2015 and 2014 are presented as
follows:
Three Months EndedMarch
31,
2015 2014 Cost of revenue $ 12 $ 7 Research and
development $ 1,767 $ 1,311 Sales, general and administrative $
1,987 $ 1,581
Rambus Inc.
Supplemental Reconciliation of GAAP to
Non-GAAP Results
(In thousands)
(Unaudited)
Three Months Ended
March 31,2015
December 31,2014
March 31,2014
Operating costs and expenses $ 55,022 $ 54,455 $ 55,099
Adjustments: Stock-based compensation expense (3,766 ) (3,535 )
(2,899 ) Acquisition-related transaction costs and retention bonus
expense (2 ) (6 ) (1,435 ) Amortization expense (6,323 ) (6,323 )
(6,797 ) Restructuring charges — — (39 )
Non-GAAP
operating costs and expenses $ 44,931
$ 44,591 $ 43,929
Operating income $ 17,892 $ 17,585 $ 23,189 Adjustments:
Stock-based compensation expense 3,766 3,535 2,899
Acquisition-related transaction costs and retention bonus expense 2
6 1,435 Amortization expense 6,323 6,323 6,797 Restructuring
charges — — 39
Non-GAAP operating
income $ 27,983 $ 27,449
$ 34,359 Income before income
taxes $ 14,941 $ 14,676 $ 13,276 Adjustments: Stock-based
compensation expense 3,766 3,535 2,899 Acquisition-related
transaction costs and retention bonus expense 2 6 1,435
Amortization expense 6,323 6,323 6,797 Restructuring charges — — 39
Non-cash interest expense on convertible notes 1,559 1,536
6,242 Non-GAAP income before income taxes $ 26,591 $
26,076 $ 30,688 GAAP provision for income taxes 5,439 6,835 5,472
Adjustment to GAAP provision for income taxes 4,134 2,552
5,576 Non-GAAP provision for income taxes 9,573
9,387 11,048
Non-GAAP net income
$ 17,018 $ 16,689
$ 19,640 Non-GAAP basic net income
per share $ 0.15 $ 0.15 $ 0.17
Non-GAAP diluted net income
per share $ 0.14 $ 0.14 $ 0.17 Weighted average shares used in
non-GAAP per share calculation: Basic 115,336 115,024 113,590
Diluted 117,442 117,620 116,629
Supplemental Reconciliation of GAAP to
Non-GAAP Effective Tax Rate (1)
Three Months Ended
March 31,2015
December 31,2014
March 31,2014
GAAP effective tax rate 36 % 47 % 41 % Adjustment to GAAP
effective tax rate — %
(11)
%
(5)
%
Non-GAAP effective tax rate 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
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