- First quarter revenue and billings in
line with expectations; GAAP revenue of $48.4 million, with royalty
revenue of $24.8 million and licensing billings of $75.4
million
- $28.8 million in cash provided by
operating activities
- DDR4 server DIMM chipset revenue up
nearly 40% year-over-year, fueled by continued market share
growth
- Record revenue for IP Cores business;
expanded portfolio with 32G PHY for 5G infrastructure and 112G LR
PHY in 7nm for 400G and 800G networking
Rambus Inc. (NASDAQ:RMBS) today reported financial results for
the first quarter ended March 31, 2019. Total revenue for the first
quarter was in line with expectations at $48.4 million, with
royalty revenue of $24.8 million and licensing billings of $75.4
million. The company also generated $28.8 million in cash provided
by operating activities.
“Rambus had a solid first quarter, with continued execution from
our product teams and a strong balance sheet fueled by cash
generation from operations. We have refocused and augmented our
product portfolio around our core strengths in semiconductor, to
enable new design wins and increased market share,” said Luc
Seraphin, chief executive officer of Rambus.
Business Review
Rambus product businesses made solid progress in the first
quarter, with the addition of new products and design wins at
leading chip and system manufacturers worldwide. We target
performance-driven, high-growth markets including data center and
networking, artificial intelligence and machine learning, IoT and
automotive, where demand for data and security are at their
highest.
The server DIMM chipset business had a positive quarter. Buffer
chipset revenue was up nearly 40% from the same period last year,
despite declines in the overall memory market due to near-term
inventory corrections. Through steady increases in the number of
OEM and data center qualifications, we are making continued gains
in market share for DDR4 buffer chips. In addition to the growth in
DDR4, we have established a first-mover position for
next-generation DDR5 memory buffer chips and continue shipping
samples at the top-end speeds for both the RCD and DB chips.
Our high-speed IP Cores business delivered record revenue and
remains on a trajectory of approximately 50% compounded annual
growth rate. We closed several new SoC design wins for data center,
networking and artificial intelligence, including multiple new ASIC
designs at a Tier 1 SoC customer. In addition to the tape out of
the industry’s first commercial GDDR6 memory PHY on TSMC 7nm, we
expanded our high-performance SerDes portfolio with a leadership
32G SerDes PHY to enable 5G infrastructure and a 112G SerDes PHY to
enable next-generation 400G and 800G communications systems.
The Rambus Cryptography business saw the importance of
semiconductor device-level security continue to grow in the
industry. We increased our traction and opportunities for secure
silicon IP, with a new design win at a major OEM and expanded
agreements for our provisioning services. We continue to build
momentum for our CryptoManager Root of Trust in our key verticals
of artificial intelligence and data center.
Quarterly Financial Review - GAAP
Three Months EndedMarch
31,
(In millions, except for percentages and per share amounts)
2019 2018 Revenue Royalties $ 24.8 $ 21.4
Product revenue 9.0 7.3 Contract and other revenue 14.6 17.7
Total revenue $ 48.4 $ 46.4 Total operating costs and
expenses $ 79.8 $ 90.0 Operating loss $ (31.4 ) $ (43.6 ) Operating
margin (65 )% (94 )% Net loss $ (26.6 ) $ (35.7 ) Diluted net loss
per share $ (0.24 ) $ (0.33 ) Licensing billings (1) $ 75.4
$ 75.9 Net cash provided by operating activities $ 28.8 $
16.8 (1) Licensing
billings is an operational metric that reflects amounts invoiced to
our licensing customers during the period, as adjusted for certain
differences.
Quarterly Financial Review - Non-GAAP
(1)
Three Months EndedMarch
31,
(In millions, except for percentages and per share amounts)
2019 2018 Revenue Royalties $ 24.8 $ 21.4
Product revenue 9.0 7.3 Contract and other revenue 14.6 17.7
Total revenue $ 48.4 $ 46.4 Total operating costs and
expenses $ 67.3 $ 68.7 Operating loss $ (18.9 ) $ (22.3 ) Operating
margin (39 )% (48 )% Net loss $ (9.2 ) $ (11.3 ) Diluted net loss
per share $ (0.08 ) $ (0.10 )
(1) See “Supplemental Reconciliation of GAAP to
Non-GAAP Results” and “Reconciliation of Other GAAP to Non-GAAP
Items” tables included below. Note that the applicable non-GAAP
measures are presented and that revenue is solely presented on a
GAAP basis.
Revenue for the quarter was $48.4 million, with royalty revenue
of $24.8 million and licensing billings of $75.4 million, in line
with expectations. We had GAAP total operating costs and expenses
of $79.8 million and non-GAAP total operating costs and expenses of
$67.3 million, slightly above the high end of our expectations
primarily related to increased facilities costs directly offset by
a corresponding decrease in interest expense, as a result of the
adoption of Accounting Standards Update (ASU) No. 2016-02, Topic
842, “Leases.” We also had GAAP and non-GAAP diluted net loss per
share of $0.24 and $0.08, respectively. Our basic share count was
109.7 million shares and our diluted share count would have been
110.6 million shares.
Cash, cash equivalents, and marketable securities as of March
31, 2019 were $305.9 million, an increase of $28.1 million from
December 31, 2018, mainly due to $28.8 million in cash provided by
operating activities.
2019 Second Quarter Outlook
The Company will discuss revenue guidance for the second quarter
of 2019 during its upcoming conference call. The following table
sets forth second quarter outlook for other measures.
(In millions)
GAAP Non-GAAP (1) Total
operating costs and expenses $81 - $77 $69 - $65 Interest and other
income (expense), net $5 $1 Diluted share count 111 111
(1) See “Reconciliation
of GAAP Forward Looking Estimates to Non-GAAP Forward Looking
Estimates” tables included below.
For the second quarter of 2019, the Company expects operating
costs and expenses to be between $81 million and $77 million.
Additionally, the Company expects non-GAAP operating costs and
expenses to be between $69 million and $65 million. These
expectations also assume non-GAAP interest and other income
(expense), net, of $1 million, tax rate of 24% (refer to non-GAAP
financial information below - income tax adjustments) and diluted
share count of 111 million, and exclude stock-based compensation
expense ($7 million), amortization expense ($5 million), non-cash
interest expense on convertible notes ($2 million) and interest
income related to the significant financing component from
fixed-fee patent and technology licensing arrangements ($6
million).
Conference Call:
Rambus management will discuss the results of the quarter during
a conference call scheduled for 2:00pm PT today. The call, audio
and slides will be available online at investor.rambus.com and a
replay will be available for the next week at the following
numbers: (855) 859-2056 (domestic) or (404) 537-3406
(international) with ID# 9084526.
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 margin, operating income (loss), net income
(loss) and, diluted net income (loss) per share. 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, 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 24 percent for both 2019 and 2018, 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. 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.
About Rambus Inc.
Dedicated to making data faster and safer, Rambus creates
innovative hardware, software and services that drive technology
advancements from the data center to the mobile edge. Our
architecture licenses, IP cores, chips, software and services span
memory and interfaces, security and emerging technologies to
positively impact the modern world. We collaborate with the
industry, partnering with leading chip and system designers,
foundries and service providers. Integrated into tens of billions
of devices and systems, our products power and secure diverse
applications, including Big Data, Internet of Things (IoT)
security, mobile payments and smart ticketing. For more
information, visit rambus.com.
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 product and service
offerings, future profit and growth and financial guidance for the
second quarter of 2019, including operating costs and expenses, and
estimated, fixed, long-term projected tax rates, both on a GAAP and
non-GAAP basis as appropriate. 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.
Rambus Inc.
Condensed Consolidated Balance
Sheets
(In thousands)
(Unaudited)
March 31, 2019 December 31, 2018
ASSETS Current assets: Cash and cash equivalents $
143,016 $ 115,924 Marketable securities 162,850 161,840 Accounts
receivable 43,810 50,863 Unbilled receivables 170,287 176,613
Inventories 8,192 6,772 Prepaids and other current assets 16,857
15,738 Total current assets 545,012 527,750 Intangible
assets, net 55,507 59,936 Goodwill 207,828 207,178 Property, plant
and equipment, net 22,637 57,028 Operating lease right-of-use
assets 19,458 — Deferred tax assets 4,411 4,435 Unbilled
receivables, long-term 459,148 497,003 Other assets 7,419
7,825 Total assets $ 1,321,420 $ 1,361,155
LIABILITIES & STOCKHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 8,274 $ 7,392 Accrued salaries and
benefits 13,666 16,938 Deferred revenue 15,774 19,374 Income taxes
payable, short-term 16,364 16,390 Operating lease liabilities 9,351
— Other current liabilities 5,847 9,191 Total current
liabilities 69,276 69,285 Long-term liabilities: Convertible notes,
long-term 143,612 141,934 Long-term imputed financing obligation —
36,297 Long-term operating lease liabilities 12,308 — Long-term
income taxes payable 73,365 77,280 Other long-term liabilities
22,972 24,247 Total long-term liabilities 252,257
279,758 Total stockholders’ equity 999,887 1,012,112 Total
liabilities and stockholders’ equity $ 1,321,420 $ 1,361,155
Rambus Inc.
Condensed Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months EndedMarch
31,
2019 2018 Revenue: Royalties $ 24,853 $
21,374 Product revenue 8,964 7,313 Contract and other revenue
14,567 17,739 Total revenue
48,384 46,426 Operating costs and expenses:
Cost of product revenue (1) $ 4,427 $ 4,357 Cost of contract and
other revenue 6,771 12,122 Research and development (1) 40,619
40,117 Sales, general and administrative (1) 27,645 30,198
Restructuring charges 331 3,245 Total
operating costs and expenses 79,793 90,039
Operating loss (31,409 ) (43,613 ) Interest income and other
income (expense), net 7,413 9,116 Interest expense (2,271 )
(4,421 ) Interest and other income (expense), net
5,142 4,695 Loss before income taxes (26,267 )
(38,918 ) Provision for (benefit from) income taxes 309
(3,229 ) Net loss $ (26,576 ) $ (35,689 ) Net loss
per share: Basic $ (0.24 ) $ (0.33 ) Diluted $ (0.24 ) $ (0.33 )
Weighted average shares used in per share calculation Basic
109,692 109,358 Diluted 109,692
109,358
_________
(1) Total stock-based compensation expense
for the three months ended March 31, 2019 and 2018 is presented as
follows:
Three Months EndedMarch
31,
2019 2018 Cost of product revenue $ 1 $ 3 Research
and development $ 3,210 $ 3,192 Sales, general and administrative $
3,978 $ 4,319
Rambus Inc.
Supplemental Reconciliation of GAAP to
Non-GAAP Results
(In thousands)
(Unaudited)
Three Months Ended March 31, 2019
2018 Operating costs and expenses $ 79,793 $ 90,039
Adjustments: Stock-based compensation expense (7,189 ) (7,514 )
Acquisition-related transaction costs and retention bonus expense —
(30 ) Amortization expense (4,988 ) (10,531 ) Restructuring charges
(331 ) (3,245 )
Non-GAAP operating costs and expenses
$ 67,285 $ 68,719
Operating loss $ (31,409 ) $ (43,613 ) Adjustments: Stock-based
compensation expense 7,189 7,514 Acquisition-related transaction
costs and retention bonus expense — 30 Amortization expense 4,988
10,531 Restructuring charges 331 3,245
Non-GAAP
operating loss $ (18,901 ) $
(22,293 ) Loss before income taxes $ (26,267 )
$ (38,918 ) Adjustments: Stock-based compensation expense 7,189
7,514 Acquisition-related transaction costs and retention bonus
expense — 30 Amortization expense 4,988 10,531 Restructuring
charges 331 3,245 Non-cash interest expense on convertible notes
1,678 2,679 Non-GAAP loss before income taxes $
(12,081 ) $ (14,919 ) GAAP provision for (benefit from) income
taxes 309 (3,229 ) Adjustment to GAAP provision for (benefit from)
income taxes (3,208 ) (352 ) Non-GAAP benefit from income taxes
(2,899 ) (3,581 )
Non-GAAP net loss $ (9,182
) $ (11,338 ) Non-GAAP basic
net loss per share $ (0.08 ) $ (0.10 )
Non-GAAP diluted net
loss per share $ (0.08 ) $ (0.10 ) Weighted average shares used
in non-GAAP per share calculation: Basic 109,692 109,358 Diluted
109,692 109,358
Supplemental Reconciliation of GAAP to
Non-GAAP Effective Tax Rate (1)
Three Months EndedMarch
31,
2019 2018 GAAP effective tax rate (1)% 8%
Adjustment to GAAP effective tax rate
25 %
16% Non-GAAP effective tax rate
24 %
24% (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 24
percent for both 2019 and 2018, 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.
Rambus Inc.
Reconciliation of Other GAAP to
Non-GAAP Items
(In thousands, except
percentages)
(Unaudited)
GAAP Non-GAAP
Three Months EndedMarch
31,
Three Months EndedMarch
31,
2019 2018 2019 2018
Revenue (i) $ 48,384 $ 46,426 $ 48,384 $ 46,426 Operating loss (ii)
(31,409 ) (43,613 ) (18,901 ) (22,293 ) Operating margin (ii/i) (65
)% (94 )% (39 )% (48 )%
Rambus Inc.
Reconciliation of GAAP Forward Looking
Estimates to Non-GAAP Forward Looking Estimates
(In millions)
(Unaudited)
2019 Second Quarter Outlook
Three Months EndedJune 30,
2019
Low High Forward-looking operating
costs and expenses $ 81.1 $ 77.1 Adjustments: Stock-based
compensation expense (7.2 ) (7.2 ) Amortization expense (5.0 ) (5.0
)
Forward-looking Non-GAAP operating costs and expenses
$ 68.9 $ 64.9
Forward-looking interest and other income (expense), net $ 4.8 $
4.8 Adjustments: Interest income related to significant financing
component from fixed-fee patent and technology licensing
arrangements (5.7 ) (5.7 ) Non-cash interest expense on convertible
notes 1.7 1.7
Forward-looking Non-GAAP interest
and other income (expense), net $ 0.8
$ 0.8
Source: Rambus Inc.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190422005467/en/
Rahul MathurSenior Vice President, Finance and Chief Financial
OfficerRambus Inc.(408) 462-8000rmathur@rambus.com
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