Business and Financial Highlights:
- Generated quarterly revenue of $72.8
million
- Extended license agreement with SK
hynix to 2024
- Renewed license agreement with Renesas
Electronics Corporation
- GAAP diluted net income per share of
$0.06; non-GAAP diluted net income per share of $0.13
Rambus Inc. (NASDAQ:RMBS) today reported financial results for
the second quarter ended June 30, 2015.
GAAP Financial Results:
Revenue for the second quarter of 2015 was $72.8 million, which
was relatively flat on a sequential basis from the first quarter of
2015 primarily due to higher sales of security products offset by
lower royalty revenue. As compared to the second quarter of 2014,
revenue was down 5% primarily due to lower royalty revenue, 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.
Revenue for the six months ended June 30, 2015 was $145.7
million, which was down 6% 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 second quarter of
2015 were $57.3 million, 4% higher than the previous quarter and 2%
higher than the second quarter of 2014. Second quarter operating
costs and expenses of $57.3 million included $4.4 million of
stock-based compensation expenses and $6.3 million of amortization
expenses. In comparison, total operating costs and expenses for the
first quarter of 2015 of $55.0 million included $3.8 million of
stock-based compensation expenses and $6.3 million of amortization
expenses. Total operating costs and expenses for the second quarter
of 2014 were $56.4 million, which 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. The change in total operating costs and expenses in
the second quarter of 2015 as compared to the first quarter of 2015
was primarily due to lower gain from sale of intellectual property,
higher prototyping costs and higher costs of sales due to sale of
security and lighting products, partially offset by lower headcount
related costs and lower bonus accrual expense. The change in total
operating costs and expenses in the second quarter of 2015 as
compared to the second quarter of 2014 was primarily attributable
to higher headcount related costs, higher costs of sales due to
sale of security and lighting products and higher prototyping costs
offset by higher gain from sale of intellectual property and lower
retention bonus expense from acquisitions.
Total operating costs and expenses for the six months ended June
30, 2015 were $112.3 million, 1% higher than the six months ended
June 30, 2014. The six months operating costs and expenses of
$112.3 million included $8.2 million of stock-based compensation
expenses and $12.6 million of amortization expenses. This is
compared to total operating costs and expenses for the six months
ended June 30, 2014 of $111.5 million, which included $7.8 million
of stock-based compensation expenses, $13.6 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
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.
Net income for the second quarter of 2015 was $6.9 million
as compared to net income of $9.5 million in the first quarter
of 2015 and net income of $5.0 million in the second quarter
of 2014. Diluted net income per share for the second quarter of
2015 was $0.06 as compared to diluted net income per share of $0.08
in the first quarter of 2015 and diluted net income per share of
$0.04 in the second quarter of 2014, respectively.
Net income for the six months ended June 30, 2015 was $16.4
million as compared to a net income of $12.8 million for the same
period of 2014. Diluted net income per share for the six months
ended June 30, 2015 was $0.14 as compared to a diluted net income
per share of $0.11 for the same period of 2014.
Non-GAAP Financial Results (1):
Total non-GAAP operating costs and expenses in the second
quarter of 2015 were $46.5 million, 4% higher than the previous
quarter, and 6% higher than the second quarter of 2014.
Total non-GAAP operating costs and expenses for the six months
ended June 30, 2015 were $91.5 million as compared to $87.7 million
in the same period of 2014 due primarily to higher headcount
related costs, 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 and lower consulting
costs.
Non-GAAP net income in the second quarter of 2015 was $16.0
million, 6% lower than the prior quarter and 15% lower than the
second quarter of 2014. Non-GAAP diluted net income per share was
$0.13 in the second quarter of 2015 as compared to $0.14 in the
prior quarter and $0.16 in the second quarter of 2014.
Non-GAAP net income for the six months ended June 30, 2015 was
$33.0 million as compared to $38.6 million in the same period of
2014. Non-GAAP diluted net income per share was $0.28 for the six
months ended June 30, 2015 as compared to non-GAAP diluted net
income per share of $0.33 in the same period of 2014.
Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of June 30,
2015 were $348.1 million, an increase of $30.4 million from
March 31, 2015. The increase in cash was driven by operating
activities.
During the second quarter of 2015, the Company recorded an
income tax provision of approximately $5.8 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.
Third Quarter 2015 Outlook:
For the third quarter of 2015, the Company expects revenue to be
between $73 million and $78 million. Revenue is not without risk
and includes expectations that the Company will sign new customer
agreements for patent and 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# 77962571.
(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 third 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)
June 30, 2015 December 31, 2014 ASSETS
Current assets: Cash and cash equivalents $ 201,477 $ 154,126
Marketable securities 146,649 145,983 Accounts receivable 6,745
6,001 Prepaids and other current assets 9,690 8,541 Deferred taxes
1,113 187 Total current assets 365,674 314,838 Intangible
assets, net 76,694 89,371 Goodwill 116,899 116,899 Property, plant
and equipment, net 60,689 64,023 Deferred taxes, long-term 454 536
Other assets 3,345 2,612 Total assets $ 623,755 $
588,279
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities: Accounts payable $ 5,187 $ 6,962 Accrued
salaries and benefits 11,857 14,840 Other accrued liabilities
14,325 12,856 Total current liabilities 31,369 34,658
Long-term liabilities: Convertible notes, long-term 117,949 115,089
Long-term imputed financing obligation 38,874 39,063 Other
long-term liabilities 10,818 7,847 Total long-term
liabilities 167,641 161,999 Total stockholders’ equity
424,745 391,622 Total liabilities and stockholders’ equity $
623,755 $ 588,279
Rambus Inc.
Condensed Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2015 2014 2015 2014 Revenue:
Royalties $ 62,387 $ 69,741 $ 129,350 $ 143,378 Contract and other
revenue 10,425 6,777 16,376 11,428
Total revenue 72,812 76,518 145,726 154,806
Operating costs and expenses: Cost of revenue (1) 12,137
10,637 22,893 20,659 Research and development (1) 29,188 27,668
57,722 54,566 Sales, general and administrative (1) 17,339 18,619
35,841 37,439 Gain from sale of intellectual property (896 ) —
(3,156 ) (170 ) Gain from settlement (510 ) (510 ) (1,020 ) (1,020
) Restructuring charges — — — 39 Total
operating costs and expenses 57,258 56,414 112,280
111,513 Operating income 15,554 20,104 33,446 43,293
Interest income and other income (expense), net 203 104 335 117
Interest expense (3,091 ) (8,770 ) (6,174 ) (18,696 ) Interest and
other income (expense), net (2,888 ) (8,666 ) (5,839 ) (18,579 )
Income before income taxes 12,666 11,438 27,607 24,714 Provision
for income taxes 5,805 6,395 11,244 11,867
Net income $ 6,861 $ 5,043 $ 16,363 $
12,847 Net income per share: Basic $ 0.06 $ 0.04
$ 0.14 $ 0.11 Diluted $ 0.06 $ 0.04
$ 0.14 $ 0.11 Weighted average shares used in
per share calculation Basic 116,027 114,116 115,683
113,854 Diluted 120,939 117,398 119,225
116,733
_________
(1) Total stock-based compensation expense
for the three and six months ended June 30, 2015 and 2014 are
presented as follows:
Three Months EndedJune
30,
Six Months EndedJune 30,
2015 2014 2015 2014 Cost of revenue $
27 $ 15 $ 39 $ 22 Research and development $ 1,988 $ 2,615 $ 3,755
$ 3,926 Sales, general and administrative $ 2,400 $ 2,225 $ 4,387 $
3,806
Rambus Inc.
Supplemental Reconciliation of GAAP to
Non-GAAP Results
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, 2015 March 31, 2015 June
30, 2014 June 30, 2015 June 30, 2014
Operating costs and expenses $ 57,258 $ 55,022 $ 56,414 $
112,280 $ 111,513 Adjustments: Stock-based compensation expense
(4,415 ) (3,766 ) (4,855 ) (8,181 ) (7,754 ) Acquisition-related
transaction costs and retention bonus expense — (2 ) (1,028 ) (2 )
(2,463 ) Amortization expense (6,323 ) (6,323 ) (6,757 ) (12,646 )
(13,554 ) Restructuring charges — — — —
(39 )
Non-GAAP operating costs and expenses $
46,520 $ 44,931 $
43,774 $ 91,451 $
87,703 Operating income $ 15,554 $ 17,892 $
20,104 $ 33,446 $ 43,293 Adjustments: Stock-based compensation
expense 4,415 3,766 4,855 8,181 7,754 Acquisition-related
transaction costs and retention bonus expense — 2 1,028 2 2,463
Amortization expense 6,323 6,323 6,757 12,646 13,554 Restructuring
charges — — — — 39
Non-GAAP
operating income $ 26,292 $
27,983 $ 32,744 $
54,275 $ 67,103 Income
before income taxes $ 12,666 $ 14,941 $ 11,438 $ 27,607 $ 24,714
Adjustments: Stock-based compensation expense 4,415 3,766 4,855
8,181 7,754 Acquisition-related transaction costs and retention
bonus expense — 2 1,028 2 2,463 Amortization expense 6,323 6,323
6,757 12,646 13,554 Restructuring charges — — — — 39 Non-cash
interest expense on convertible notes 1,581 1,559
5,469 3,140 11,711 Non-GAAP income before
income taxes $ 24,985 $ 26,591 $ 29,547 $ 51,576 $ 60,235 GAAP
provision for income taxes 5,805 5,439 6,395 11,244 11,867
Adjustment to GAAP provision for income taxes 3,190 4,134
4,242 7,324 9,818 Non-GAAP provision
for income taxes 8,995 9,573 10,637 18,568
21,685
Non-GAAP net income $
15,990 $ 17,018 $
18,910 $ 33,008 $
38,550 Non-GAAP basic net income per
share $ 0.14 $ 0.15 $ 0.17 $ 0.29 $ 0.34
Non-GAAP diluted
net income per share $ 0.13 $ 0.14 $ 0.16 $ 0.28 $ 0.33
Weighted average shares used in non-GAAP per share calculation:
Basic 116,027 115,336 114,116 115,683 113,854 Diluted 120,939
117,442 117,398 119,225 116,733
Supplemental Reconciliation of GAAP to
Non-GAAP Effective Tax Rate (1)
Three Months Ended Six Months Ended
June 30, 2015 March 31, 2015 June
30, 2014 June 30, 2015 June 30, 2014
GAAP effective tax rate 46
%
36 % 56
%
41
%
48
%
Adjustment to GAAP effective tax rate (10 )% — % (20 )% (5 )% (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 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150720006314/en/
Rambus Inc.Linda Ashmore, 408-462-8411Corporate
Communicationslashmore@rambus.comorRambus Inc.Nicole Noutsios,
408-462-8050Investor Relationsnnoutsios@rambus.com
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