SUNNYVALE, Calif., Jan. 27, 2020 /PRNewswire/ -- Rambus Inc.
(NASDAQ:RMBS) today reported financial results for the fourth
quarter ended December 31, 2019.
Total revenue for the fourth quarter was towards the high end of
guidance at $59.9 million; licensing
billings were $63.8 million, product
revenue was $26.6 million, and
contract and other revenue was $13.9
million. The Company also generated $35.4 million in cash provided by operating
activities in the fourth quarter, bringing the 2019 total to
$128.5 million, up 48% year over
year.
"Rambus had an excellent fourth quarter, concluding a very
strong year that was propelled by robust cash from operations and
record Q4 and annual revenue from memory interface chips and
silicon IP," said Luc Seraphin,
chief executive officer of Rambus. "By realigning the Company
around our core strengths in semiconductor and augmenting our
product portfolio, we are well-positioned for continued success in
2020."
Business Review
Guided by our strategic objectives, Rambus continues to focus on
our core strength in semiconductor, optimize the Company for
operational efficiency, and leverage our strong cash generation to
re-invest for growth. Consistent with those priorities, we
redefined our perimeter in 2019 with significant M&A activity
throughout the year and focused the Company on Memory Interface
Chips and Silicon IP solutions for the semiconductor market. The
Company closed the sale of its Payments and Ticketing business to
Visa and completed two silicon IP acquisitions, Northwest Logic for
digital controllers, and the secure silicon IP and protocols
businesses of Verimatrix, formerly Inside Secure.
Rambus continues to execute and demonstrate success across our
product lines. We delivered the second consecutive year of record
revenue from products, with combined results from our Memory
Interface Chips and Silicon IP businesses achieving over 64% growth
year over year from 2018.
Memory Interface Chips was the fastest growing business, with
annual revenue almost doubling year over year. Driven by increased
OEM and data center qualifications, we saw steady gains in our DDR4
memory interface chip market share in Q4 and delivered the third
consecutive quarter of record revenue. The Company remains well
positioned as a first mover for the industry transition to
DDR5.
Silicon IP delivered record revenue in Q4 and drove sustained
growth throughout the year with numerous design wins at tier-1 SoC
customers across our target markets for both interface and security
IP solutions. Most recently, Rambus announced that Enflame
Technology has selected our HBM2 PHY and controller as part of
their next-generation AI training chip. In addition, we expanded
our portfolio of solutions addressing the fast-growing and
demanding applications in AI, 5G and data center with the launch of
a comprehensive PCIe 5 interface solution.
Quarterly
Financial Review - GAAP
|
Three Months
Ended
December 31,
|
(In millions, except
for percentages and per share amounts)
|
2019
|
|
2018
|
Revenue
|
|
|
|
Royalties
|
$
|
19.4
|
|
|
$
|
45.4
|
|
Product
revenue
|
26.6
|
|
|
11.5
|
|
Contract and other
revenue
|
13.9
|
|
|
11.6
|
|
Total
revenue
|
$
|
59.9
|
|
|
$
|
68.5
|
|
Total operating costs
and expenses
|
$
|
73.1
|
|
|
$
|
72.8
|
|
Operating
loss
|
$
|
(13.2)
|
|
|
$
|
(4.2)
|
|
Operating
margin
|
(22)
|
%
|
|
(6)
|
%
|
Net loss
|
$
|
(9.5)
|
|
|
$
|
(2.0)
|
|
Diluted net loss per
share
|
$
|
(0.09)
|
|
|
$
|
(0.02)
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
35.4
|
|
|
$
|
35.1
|
|
|
Quarterly
Financial Review - Non-GAAP (including operational metric)
(1)
|
Three Months
Ended
December 31,
|
(In
millions)
|
2019
|
|
2018
|
Licensing billings
(2)
|
$
|
63.8
|
|
|
$
|
76.7
|
|
Product
revenue
|
$
|
26.6
|
|
|
$
|
11.5
|
|
Contract and other
revenue
|
$
|
13.9
|
|
|
$
|
11.6
|
|
Total operating costs
and expenses
|
$
|
62.3
|
|
|
$
|
61.6
|
|
Interest and other
income (expense), net
|
$
|
1.0
|
|
|
$
|
(0.5)
|
|
Diluted share
count
|
115
|
|
|
110
|
|
|
|
(1)
|
See "Supplemental
Reconciliation of GAAP to Non-GAAP Results" table included below.
Note that the applicable non-GAAP measures are presented and that
revenue is solely presented on a GAAP basis.
|
|
|
(2)
|
Licensing billings is
an operational metric that reflects amounts invoiced to our
licensing customers during the period, as adjusted for certain
differences.
|
Revenue for the quarter was towards the high end of our guidance
at $59.9 million, with licensing
billings of $63.8 million, product
revenue of $26.6 million, and
contract and other revenue of $13.9
million. We had GAAP total operating costs and expenses of
$73.1 million. We also had non-GAAP
total operating costs and expenses of $62.3
million, reflecting higher cost of product revenue related
to increased memory interface chip sales. We also recorded
$0.9 million in revenue and
$2.3 million in operating costs and
expenses associated with our Payments and Ticketing business in the
fourth quarter prior to the sale to Visa. With higher revenue we
had profit towards the high end of our expectations, with GAAP
diluted net loss per share of $0.09.
Our basic share count was 112 million shares and our diluted share
count would have been 115 million shares.
Cash, cash equivalents, and marketable securities as of
December 31, 2019 were $407.7 million, an increase of $69.6 million as compared to September 30, 2019, mainly due to $83.6 million in cash received from the sale of
our payments and ticketing business to Visa in the fourth quarter
and $35.4 million in cash provided by
operating activities, offset by $45.0
million in cash paid for the acquisition of the silicon IP,
secure protocols and provisioning business
from Verimatrix, formerly Inside Secure. Cash provided by
operating activities for the year ended December 31, 2019 was $128.5 million, an increase of $41.4 million, or 48%, from the same period in
the prior year.
2020 First Quarter Outlook
The Company will discuss its full revenue guidance for the first
quarter of 2020 during its upcoming conference call. The following
table sets forth first quarter outlook for other measures.
(In
millions)
|
GAAP
|
|
Non-GAAP
(1)
|
Licensing billings
(2)
|
$60 - $66
|
|
$60 - $66
|
Product
revenue
|
$18 - $24
|
|
$18 - $24
|
Contract and other
revenue
|
$13 - $19
|
|
$13 - $19
|
Total operating costs
and expenses
|
$80 - $76
|
|
$68 - $64
|
Interest and other
income (expense), net
|
$5
|
|
$1
|
Diluted share
count
|
115
|
|
115
|
|
|
(1)
|
See "Reconciliation
of GAAP Forward Looking Estimates to Non-GAAP Forward Looking
Estimates" tables included below. Note that the applicable non-GAAP
measures are presented, and that revenue is solely presented on a
GAAP basis.
|
|
|
(2)
|
Licensing billings is
an operational metric that reflects amounts invoiced to our
licensing customers during the period, as adjusted for certain
differences. This metric is the same for both GAAP and non-GAAP
presentations.
|
For the first quarter of 2020, the Company expects licensing
billings to be between $60 million
and $66 million. The Company also
expects royalty revenue to be between $7
million and $13 million,
product revenue to be between $18
million and $24 million and
contract and other revenue to be between $13
million and $19 million.
Revenue is not without risk and achieving revenue in this range
will require that the Company sign customer agreements for various
product sales and solutions licensing, among other matters.
The Company also expects operating costs and expenses to be
between $80 million and $76 million. Additionally, the Company expects
non-GAAP operating costs and expenses to be between $68 million and $64
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 115 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 ($5 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# 3576589.
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 and interest and other income (expense), net. In
computing each of these non-GAAP financial measures, the following
items were considered as discussed below: stock-based compensation
expenses, acquisition-related/divestiture costs and retention bonus
expense, amortization expenses, impairment (recovery) of assets
held for sale, 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/divestiture costs and retention bonus
expense. These expenses include all direct costs of certain
acquisitions, divestitures 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 as they are related to acquisitions
and divestitures and have no direct correlation to the Company's
operations.
Restructuring and other 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 (recovery) of assets held for sale. These
charges consist of non-cash charges (recoveries) to assets held for
sale and are excluded because such charges (recoveries) are
non-recurring and do not reduce the Company's liquidity.
Facility restoration costs. These charges consist of exit
costs associated with our leased office space 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.
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.
Rambus is a premier Silicon IP and chip provider that makes data
faster and safer. With 30 years of innovation, we continue to
develop the foundational technology for all modern computing
systems. Leveraging our semiconductor expertise, Rambus solutions
speed performance, expand capacity and improve security for today's
most demanding applications. From data center and edge to
artificial intelligence and automotive, our interface and security
IP, and memory interface chips enable SoC and system designers to
deliver their vision of the future. 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 growth in product and
service offerings and product revenue, expected benefits of our
merger, acquisition and divestiture activity and related
integration, and financial guidance for the first quarter of 2020,
including licensing billings and revenue estimates, operating costs
and expenses, interest and other income (expense), net and
estimated, fixed, long-term projected tax rates 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.
Contact:
Rahul Mathur
Senior Vice President, Finance and Chief Financial Officer
Rambus Inc.
(408) 462-8000
rmathur@rambus.com
Rambus
Inc.
Condensed
Consolidated Balance Sheets
(In
thousands)
(Unaudited)
|
|
|
December 31,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
102,176
|
|
|
$
|
115,924
|
|
Marketable
securities
|
305,488
|
|
|
161,840
|
|
Accounts
receivable
|
44,039
|
|
|
50,863
|
|
Unbilled
receivables
|
184,366
|
|
|
176,613
|
|
Inventories
|
10,086
|
|
|
6,772
|
|
Prepaids and other
current assets
|
18,524
|
|
|
15,738
|
|
Total current
assets
|
664,679
|
|
|
527,750
|
|
Intangible assets,
net
|
54,900
|
|
|
59,936
|
|
Goodwill
|
183,465
|
|
|
207,178
|
|
Property, plant and
equipment, net
|
44,714
|
|
|
57,028
|
|
Operating lease
right-of-use assets
|
37,020
|
|
|
—
|
|
Deferred tax
assets
|
4,574
|
|
|
4,435
|
|
Unbilled receivables,
long-term
|
343,703
|
|
|
497,003
|
|
Other assets
|
5,931
|
|
|
7,825
|
|
Total
assets
|
$
|
1,338,986
|
|
|
$
|
1,361,155
|
|
|
|
|
|
LIABILITIES &
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
9,549
|
|
|
$
|
7,392
|
|
Accrued salaries and
benefits
|
20,291
|
|
|
16,938
|
|
Deferred
revenue
|
11,947
|
|
|
19,374
|
|
Income taxes payable,
short-term
|
19,142
|
|
|
16,390
|
|
Operating lease
liabilities
|
6,357
|
|
|
—
|
|
Other current
liabilities
|
18,893
|
|
|
9,191
|
|
Total current
liabilities
|
86,179
|
|
|
69,285
|
|
Long-term
liabilities:
|
|
|
|
Convertible notes,
long-term
|
148,788
|
|
|
141,934
|
|
Long-term imputed
financing obligation
|
—
|
|
|
36,297
|
|
Long-term operating
lease liabilities
|
39,889
|
|
|
—
|
|
Long-term income
taxes payable
|
60,094
|
|
|
77,280
|
|
Deferred tax
liabilities
|
13,846
|
|
|
18,960
|
|
Other long-term
liabilities
|
19,272
|
|
|
5,287
|
|
Total long-term
liabilities
|
281,889
|
|
|
279,758
|
|
Total stockholders'
equity
|
970,918
|
|
|
1,012,112
|
|
Total liabilities and
stockholders' equity
|
$
|
1,338,986
|
|
|
$
|
1,361,155
|
|
Rambus
Inc.
Condensed
Consolidated Statements of Operations
(In thousands,
except per share amounts)
(Unaudited)
|
|
|
Three Months
Ended December
31,
|
|
Year
Ended December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Royalties
|
$
|
19,434
|
|
|
$
|
45,430
|
|
|
$
|
90,785
|
|
|
$
|
130,452
|
|
Product
revenue
|
26,600
|
|
|
11,537
|
|
|
72,972
|
|
|
38,690
|
|
Contract and other
revenue
|
13,913
|
|
|
11,596
|
|
|
60,270
|
|
|
62,059
|
|
Total
revenue
|
59,947
|
|
|
68,563
|
|
|
224,027
|
|
|
231,201
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
Cost of product
revenue (1)
|
9,311
|
|
|
4,367
|
|
|
27,156
|
|
|
18,299
|
|
Cost of contract and
other revenue
|
5,265
|
|
|
6,239
|
|
|
24,219
|
|
|
35,402
|
|
Research and
development (1)
|
36,820
|
|
|
37,395
|
|
|
156,815
|
|
|
158,339
|
|
Sales, general and
administrative (1)
|
24,872
|
|
|
24,768
|
|
|
104,116
|
|
|
103,911
|
|
Restructuring charges
(recoveries)
|
4,588
|
|
|
(6)
|
|
|
8,821
|
|
|
2,217
|
|
Impairment (recovery)
of assets held for sale
|
(7,698)
|
|
|
—
|
|
|
7,439
|
|
|
—
|
|
Total operating costs
and expenses
|
73,158
|
|
|
72,763
|
|
|
328,566
|
|
|
318,168
|
|
Operating
loss
|
(13,211)
|
|
|
(4,200)
|
|
|
(104,539)
|
|
|
(86,967)
|
|
Interest income and
other income (expense), net
|
6,263
|
|
|
7,248
|
|
|
27,375
|
|
|
32,621
|
|
Interest
expense
|
(2,550)
|
|
|
(3,251)
|
|
|
(9,852)
|
|
|
(16,282)
|
|
Interest and other
income (expense), net
|
3,713
|
|
|
3,997
|
|
|
17,523
|
|
|
16,339
|
|
Loss before income
taxes
|
(9,498)
|
|
|
(203)
|
|
|
(87,016)
|
|
|
(70,628)
|
|
Provision for income
taxes
|
34
|
|
|
1,815
|
|
|
3,403
|
|
|
87,329
|
|
Net loss
|
$
|
(9,532)
|
|
|
$
|
(2,018)
|
|
|
$
|
(90,419)
|
|
|
$
|
(157,957)
|
|
Net loss per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.09)
|
|
|
$
|
(0.02)
|
|
|
$
|
(0.81)
|
|
|
$
|
(1.46)
|
|
Diluted
|
$
|
(0.09)
|
|
|
$
|
(0.02)
|
|
|
$
|
(0.81)
|
|
|
$
|
(1.46)
|
|
Weighted average shares
used in per share calculation
|
|
|
|
|
|
|
|
Basic
|
111,883
|
|
|
108,826
|
|
|
110,948
|
|
|
108,450
|
|
Diluted
|
111,883
|
|
|
108,826
|
|
|
110,948
|
|
|
108,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Total stock-based compensation expense
for the three months and years ended December 31, 2019 and 2018 are
presented as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year
Ended December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cost of product
revenue
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
8
|
|
Research and
development
|
$
|
1,756
|
|
|
$
|
2,920
|
|
|
$
|
11,032
|
|
|
$
|
12,582
|
|
Sales, general and
administrative
|
$
|
3,063
|
|
|
$
|
3,224
|
|
|
$
|
15,440
|
|
|
$
|
9,146
|
|
Rambus
Inc.
Supplemental
Reconciliation of GAAP to Non-GAAP Results
(In
thousands)
(Unaudited)
|
|
|
Three Months
Ended
|
|
December
31,
|
|
2019
|
|
2018
|
|
|
|
|
Operating costs and
expenses
|
$
|
73,158
|
|
|
$
|
72,763
|
|
Adjustments:
|
|
|
|
Stock-based
compensation expense
|
(4,819)
|
|
|
(6,145)
|
|
Acquisition-related/divestiture costs and retention
bonus expense
|
(4,250)
|
|
|
—
|
|
Amortization
expense
|
(3,962)
|
|
|
(4,989)
|
|
Restructuring and
other charges (recoveries)
|
(4,588)
|
|
|
6
|
|
Facility restoration
costs
|
(959)
|
|
|
—
|
|
Recovery of assets
held for sale
|
7,698
|
|
|
—
|
|
Non-GAAP operating
costs and expenses
|
$
|
62,278
|
|
|
$
|
61,635
|
|
|
|
|
|
Interest and other
income (expense), net
|
$
|
3,713
|
|
|
$
|
3,997
|
|
Adjustments:
|
|
|
|
Interest income
related to significant financing component from fixed-fee patent
and technology licensing arrangements
|
(4,469)
|
|
|
(6,147)
|
|
Non-cash interest
expense on convertible notes
|
1,749
|
|
|
1,655
|
|
Non-GAAP interest
and other income (expense), net
|
$
|
993
|
|
|
$
|
(495)
|
|
|
|
|
|
Rambus
Inc.
Reconciliation of
GAAP Forward Looking Estimates to Non-GAAP Forward Looking
Estimates
(In
millions)
(Unaudited)
|
|
2020 First Quarter
Outlook
|
Three Months
Ended
March 31, 2020
|
|
Low
|
|
High
|
|
|
|
|
Forward-looking
operating costs and expenses
|
$
|
80.0
|
|
|
$
|
76.0
|
|
Adjustments:
|
|
|
|
Stock-based
compensation expense
|
(7.0)
|
|
|
(7.0)
|
|
Amortization
expense
|
(5.0)
|
|
|
(5.0)
|
|
Forward-looking
Non-GAAP operating costs and expenses
|
$
|
68.0
|
|
|
$
|
64.0
|
|
|
|
|
|
Forward-looking
interest and other income (expense), net
|
$
|
4.6
|
|
|
$
|
4.6
|
|
Adjustments:
|
|
|
|
Interest income
related to significant financing component from fixed-fee patent
and technology licensing arrangements
|
(5.3)
|
|
|
(5.3)
|
|
Non-cash interest
expense on convertible notes
|
1.7
|
|
|
1.7
|
|
Forward-looking
Non-GAAP interest and other income (expense), net
|
$
|
1.0
|
|
|
$
|
1.0
|
|
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SOURCE Rambus Inc.