Business and Financial Highlights:
- Generated quarterly revenue of $72.7
million
- Extended patent license agreement with
AMD
- Acquired secure mobile payment and
smart ticketing solutions businesses, Bell ID and Ecebs
- Bell ID to support Android Pay
- GAAP diluted net income per share of
$0.02; non-GAAP diluted net income per share of $0.13
Rambus Inc. (NASDAQ:RMBS) today reported financial results for
the first quarter ended March 31, 2016.
GAAP Financial Results:
Revenue for the first quarter of 2016 was $72.7 million, which
was down 5% from the fourth quarter of 2015 primarily due to lower
patent and technology royalty revenue from various customers. As
compared to the first quarter of 2015, revenue was down slightly
primarily due to lower patent royalty revenue, offset by higher
revenue from security technology development projects, including
revenue from the acquisition of SCS.
Total operating costs and expenses for the first quarter of 2016
were $63.4 million, 12% higher than the previous quarter and 15%
higher than the first quarter of 2015. First quarter operating
costs and expenses of $63.4 million included $4.9 million of
stock-based compensation expenses, $7.7 million of amortization
expenses and $1.8 million of acquisition-related transaction costs.
In comparison, total operating costs and expenses for the fourth
quarter of 2015 of $56.4 million included $3.3 million of
stock-based compensation expenses, $6.2 million of amortization
expenses and $3.6 million of restructuring charges. Total operating
costs and expenses for the first quarter of 2015 were $55.0
million, which included $3.8 million of stock-based compensation
expenses and $6.3 million of amortization expenses. The change in
total operating costs and expenses in the first quarter of 2016 as
compared to the fourth quarter of 2015 was primarily due to the
restructuring charges in the fourth quarter of 2015, higher
headcount related costs, acquisition related costs and amortization
expense due to the acquisition in 2016, partially offset by lower
prototyping costs. The change in total operating costs and expenses
in the first quarter of 2016 as compared to the first quarter of
2015 was primarily attributable to the gain from sale of
intellectual property in the first quarter of 2015, higher
headcount related costs, acquisition related costs and amortization
expense due to the acquisition in 2016.
Net income for the first quarter of 2016 was $1.9 million
as compared to net income of $13.0 million in the fourth
quarter of 2015 and net income of $9.5 million in the first quarter
of 2015. Diluted net income per share for the first quarter of 2016
was $0.02 as compared to diluted net income per share of $0.11 in
the fourth quarter of 2015 and diluted net income per share of
$0.08 in the first quarter of 2015, respectively.
Non-GAAP Financial Results (1):
Total non-GAAP operating costs and expenses in the first quarter
of 2016 were $49.0 million, which was 13% higher than the previous
quarter, and 9% higher than the first quarter of 2015.
Non-GAAP net income in the first quarter of 2016 was $14.6
million, 29% lower than the prior quarter and 14% lower than the
first quarter of 2015. Non-GAAP diluted net income per share was
$0.13 in the first quarter of 2016 as compared to $0.18 in the
prior quarter and $0.14 in the first quarter of 2015.
Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of March
31, 2016 were $225.6 million, a decrease of $62.1 million from
December 31, 2015. The decrease in cash was primarily due to
the cash paid for the acquisition in the first quarter of 2016,
partially offset by cash generated from operating activities.
During the first quarter of 2016, the Company recorded an income
tax provision of approximately $4.5 million.
Second Quarter 2016 Outlook:
For the second quarter of 2016, the Company expects revenue to
be between $72 million and $77 million. Achieving revenue in this
range will require that the Company sign new customer agreements
for mobile payments software 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# 89975569.
(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 35 percent for periods in 2016 and 36 percent
for periods in 2015, 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 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 those
relating to Rambus’ expectations regarding 2016 revenue for the
second quarter of 2016, 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 creates cutting-edge semiconductor and IP products,
spanning memory and interfaces to security, smart sensors and
lighting. Our chips, customizable IP cores, architecture licenses,
tools, 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. For more
information, visit www.rambus.com.
RMBSFN
Rambus Inc.
Condensed Consolidated Balance
Sheets
(In thousands)
(Unaudited)
March 31,2016
December 31,2015
ASSETS Current assets: Cash and cash equivalents $
136,629 $ 143,764 Marketable securities 88,943 143,942 Accounts
receivable 14,617 16,408 Prepaids and other current assets 13,017
11,476 Total current assets 253,206 315,590 Intangible
assets, net 114,325 64,266 Goodwill 163,805 116,899 Property, plant
and equipment, net 56,403 56,616 Deferred taxes, long-term 160,464
162,485 Other assets 4,622 2,165 Total assets $ 752,825
$ 718,021
LIABILITIES & STOCKHOLDERS’
EQUITY Current liabilities: Accounts payable $ 4,874 $
4,096 Accrued salaries and benefits 8,432 12,278 Other current
liabilities 26,809 11,992 Total current liabilities 40,115
28,366 Long-term liabilities: Convertible notes, long-term 121,069
119,418 Long-term imputed financing obligation 38,496 38,625 Other
long-term liabilities 18,424 5,079 Total long-term
liabilities 177,989 163,122 Total stockholders’ equity
534,721 526,533 Total liabilities and stockholders’ equity $
752,825 $ 718,021
Rambus Inc.
Condensed Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months EndedMarch
31,
2016 2015 Revenue: Royalties $ 62,877 $
66,963 Contract and other revenue 9,805 5,951 Total
revenue 72,682 72,914 Operating costs and expenses:
Cost of revenue (1) 12,207 10,756 Research and development (1)
28,527 28,534 Sales, general and administrative (1) 23,095 18,502
Gain from sale of intellectual property — (2,260 ) Gain from
settlement (441 ) (510 ) Total operating costs and expenses 63,388
55,022 Operating income 9,294 17,892 Interest income
and other income (expense), net 242 132 Interest expense (3,141 )
(3,083 ) Interest and other income (expense), net (2,899 ) (2,951 )
Income before income taxes 6,395 14,941 Provision for income taxes
4,517 5,439 Net income $ 1,878 $ 9,502
Net income per share: Basic $ 0.02 $ 0.08 Diluted $
0.02 $ 0.08 Weighted average shares used in per share
calculation Basic 109,733 115,336 Diluted 112,252
117,442
_________
(1) Total stock-based compensation expense for the three months
ended March 31, 2016 and 2015 is presented as follows:
Three Months EndedMarch
31,
2016 2015 Cost of revenue $ 14 $ 12 Research and
development $ 2,080 $ 1,767 Sales, general and administrative $
2,770 $ 1,987
Rambus Inc.
Supplemental Reconciliation of GAAP to
Non-GAAP Results
(In thousands)
(Unaudited)
Three Months Ended
March 31,2016
December 31,2015
March 31,2015
Operating costs and expenses $ 63,388 $ 56,439 $ 55,022
Adjustments: Stock-based compensation expense (4,864 ) (3,347 )
(3,766 ) Acquisition-related transaction costs and retention bonus
expense (1,808 ) — (2 ) Amortization expense (7,719 ) (6,160 )
(6,323 ) Restructuring charges — (3,576 ) —
Non-GAAP operating costs and expenses $ 48,997
$ 43,356 $ 44,931
Operating income $ 9,294 $ 20,334 $ 17,892 Adjustments:
Stock-based compensation expense 4,864 3,347 3,766
Acquisition-related transaction costs and retention bonus expense
1,808 — 2 Amortization expense 7,719 6,160 6,323 Restructuring
charges — 3,576 —
Non-GAAP operating
income $ 23,685 $ 33,417
$ 27,983 Income before income
taxes $ 6,395 $ 17,562 $ 14,941 Adjustments: Stock-based
compensation expense 4,864 3,347 3,766 Acquisition-related
transaction costs and retention bonus expense 1,808 — 2
Amortization expense 7,719 6,160 6,323 Restructuring charges —
3,576 — Non-cash interest expense on convertible notes 1,651
1,627 1,559 Non-GAAP income before income taxes $
22,437 $ 32,272 $ 26,591 GAAP provision for income taxes 4,517
4,570 5,439 Adjustment to GAAP provision for income taxes 3,336
7,048 4,134 Non-GAAP provision for income
taxes 7,853 11,618 9,573
Non-GAAP net
income $ 14,584 $ 20,654
$ 17,018 Non-GAAP basic net
income per share $ 0.13 $ 0.19 $ 0.15
Non-GAAP diluted net
income per share $ 0.13 $ 0.18 $ 0.14 Weighted average shares
used in non-GAAP per share calculation: Basic 109,733 111,476
115,336 Diluted 112,252 113,388 117,442
Supplemental Reconciliation of GAAP to
Non-GAAP Effective Tax Rate (1)
Three Months Ended
March 31,2016
December 31,2015
March 31,2015
GAAP effective tax rate 71 % 26 % 36 % Adjustment to
GAAP effective tax rate (36 )% 10 % — % Non-GAAP effective tax rate
35 % 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 35 percent for periods in 2016
and 36 percent for periods in 2015, 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160418006491/en/
Rambus Inc.Linda Ashmore, 408-462-8411Corporate
Communicationslashmore@rambus.comNicole Noutsios,
408-462-8050Investor Relationsnnoutsios@rambus.com
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