SUNNYVALE, Calif., May 4, 2020 /PRNewswire/ -- Rambus
Inc. (NASDAQ:RMBS), a premier silicon IP and chip provider making
data faster and safer, today reported financial results for the
first quarter ended March 31, 2020.
GAAP revenue for the first quarter was above expectations at
$64.0 million; licensing billings
were $67.1 million, product revenue
was $30.7 million, and contract and
other revenue was $13.6 million. The
Company also generated $37.3 million
in cash provided by operating activities.
"Rambus had an exceptional first quarter with record revenue
from both our silicon IP and chip businesses, driven by excellent
execution and continued gains in market share," said Luc Seraphin, chief executive officer of Rambus.
"The dedication of our team and resilience of our business model
under the current circumstances, combined with accelerated demand
for our products across the critical markets of data center,
networking and 5G, give us confidence in our ongoing ability to
generate cash, further strengthen our balance sheet and emerge a
stronger company."
Business Review
The dramatic global shift towards working from home and virtual
collaboration caused by COVID-19 has put an enormous strain on
global data infrastructure, increasing demands for bandwidth,
capacity and security in data center, cloud and 5G applications to
rapidly scale remote access. As a result, customer demand remains
strong in these critical markets, despite significant uncertainty
in the macro environment. The Company's focus on our core strength
in semiconductor, emphasis on operational efficiency and strong
cash generation have built an enduring foundation for growth that
enables our product teams to provide uninterrupted delivery on our
commitments to customers. With predictable patent licensing and a
strong balance sheet, the Rambus business model is naturally
resilient to the economic uncertainty resulting from COVID-19, and
our innovations and products are well aligned to both near and
long-term customer demand.
The Rambus silicon IP business delivered record revenue in the
first quarter, augmented by multiple tier-1 SoC design wins and
strong execution from last year's acquisitions. The Company
strengthened its position in the critical markets of data center,
cloud, communications, HPC, AI and 5G, with additions to both the
high-speed interface and security IP portfolios. Our
industry-leading, silicon-proven 112G XSR die-to-die and chiplet
interface and complete HBM2E memory solution, featuring an
integrated PHY and digital controller, provide the critical
interconnects for moving data in next-generation high-performance
applications. The tremendous growth in the amount of data being
generated is also increasing requirements to secure data while
at-rest and in-motion. The team continues to drive growth in
security with multiple tier-1 SoC design wins for root of trust and
secure protocol solutions. We extended our industry leadership with
the recent launch of an 800G MACsec solution to protect data in
motion in cloud, networking, AI and 5G applications.
The Company's memory interface chip business delivered record
revenue for the fourth consecutive quarter, driven by continued
gains in market share and bolstered by the increased demand for
memory in data center and cloud. Emphasizing excellence in quality
and delivery, data center and OEM qualifications continue to
increase for the DDR4 memory interface chipset, and the Company
remains well positioned as a first mover for the industry
transition to DDR5.
Quarterly
Financial Review - GAAP
|
Three Months
Ended
March 31,
|
(In millions, except
for percentages and per share amounts)
|
2020
|
|
2019
|
Revenue
|
|
|
|
Royalties
|
$
|
19.7
|
|
|
$
|
24.8
|
|
Product
revenue
|
30.7
|
|
|
9.0
|
|
Contract and other
revenue
|
13.6
|
|
|
14.6
|
|
Total
revenue
|
$
|
64.0
|
|
|
$
|
48.4
|
|
Cost of product
revenue
|
$
|
10.3
|
|
|
$
|
4.4
|
|
Cost of contract and
other revenue
|
$
|
1.2
|
|
|
$
|
2.9
|
|
Amortization of
acquired intangible assets (included in total cost of
revenue)
|
$
|
4.4
|
|
|
$
|
3.9
|
|
Total operating
expenses (1)
|
$
|
58.9
|
|
|
$
|
68.6
|
|
Operating
loss
|
$
|
(10.8)
|
|
|
$
|
(31.4)
|
|
Operating
margin
|
(17)
|
%
|
|
(65)
|
%
|
Net loss
|
$
|
(8.0)
|
|
|
$
|
(26.6)
|
|
Diluted net loss per
share
|
$
|
(0.07)
|
|
|
$
|
(0.24)
|
|
Net cash provided by
operating activities
|
$
|
37.3
|
|
|
$
|
28.8
|
|
|
|
(1)
|
Includes amortization
of acquired intangible assets of approximately $0.3 million and
$1.1 million for the three months ended March 31, 2020 and 2019,
respectively.
|
|
|
Quarterly
Financial Review - Non-GAAP (including operational metric)
(1)
|
Three Months
Ended
March 31,
|
(In
millions)
|
2020
|
|
2019
|
Licensing billings
(2)
|
$
|
67.1
|
|
|
$
|
75.4
|
|
Product
revenue
|
$
|
30.7
|
|
|
$
|
9.0
|
|
Contract and other
revenue
|
$
|
13.6
|
|
|
$
|
14.6
|
|
Cost of product
revenue
|
$
|
10.3
|
|
|
$
|
4.4
|
|
Cost of contract and
other revenue
|
$
|
1.2
|
|
|
$
|
2.9
|
|
Total operating
expenses
|
$
|
51.9
|
|
|
$
|
60.0
|
|
Interest and other
income (expense), net
|
$
|
1.2
|
|
|
$
|
1.1
|
|
Diluted share
count
|
115
|
|
|
111
|
|
|
|
(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, cost of product revenue and cost of contract and other
revenue are 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 $64.0
million, above the high end of our expectations primarily
due to our strong performance in our memory interface chip
business. We also had licensing billings of $67.1 million, product revenue of $30.7 million, and contract and other revenue of
$13.6 million. We had total GAAP cost
of revenue of $15.9 million and
operating expenses of $58.9 million.
We also had total non-GAAP operating expenses of $51.9 million, at the low end of our expectations
through our cost management actions. Due to our strong revenue
performance and cost management actions, our profit was above the
high end of our expectations. We had GAAP diluted net loss per
share of $0.07. Our basic share count
was 113 million shares and our diluted share count would have been
115 million shares.
Cash, cash equivalents, and marketable securities as of
March 31, 2020 were $435.4 million, an increase of $27.8 million from December 31, 2019, mainly due to $37.3 million in cash provided by operating
activities.
2020 Second Quarter Outlook
The Company will discuss its full revenue guidance for the
second quarter of 2020 during its upcoming conference call. The
following table sets forth second quarter outlook for other
measures.
(In
millions)
|
GAAP
|
|
Non-GAAP
(1)
|
Licensing billings
(2)
|
$57 - $63
|
|
$57 - $63
|
Product
revenue
|
$27 - $33
|
|
$27 - $33
|
Contract and other
revenue
|
$8 - $14
|
|
$8 - $14
|
Total operating costs
and expenses
|
$77 - $73
|
|
$66 - $62
|
Interest and other
income (expense), net
|
$3
|
|
$1
|
Diluted share
count
|
116
|
|
116
|
|
|
(1)
|
See "Reconciliation
of GAAP Forward Looking Estimates to Non-GAAP Forward Looking
Estimates" 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. This metric is the same for both GAAP and non-GAAP
presentations.
|
For the second quarter of 2020, the Company expects licensing
billings to be between $57 million
and $63 million. The Company also
expects royalty revenue to be between $9
million and $15 million,
product revenue to be between $27
million and $33 million and
contract and other revenue to be between $8
million and $14 million.
Revenue is not without risk and achieving revenue in this range
will require that the Company sign customer agreements for various
product sales, solutions licensing among other matters.
The Company also expects operating costs and expenses to be
between $77 million and $73 million. Additionally, the Company expects
non-GAAP operating costs and expenses to be between $66 million and $62
million. These expectations also assume non-GAAP interest
and other income (expense), net, of $1
million, tax rate of 24% and diluted share count of 116
million, and exclude stock-based compensation expense ($6 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
($4 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# 9761889.
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 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 costs and retention bonus expense, amortization
expenses, restructuring charges, change in fair value of earn-out
liability, 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 costs and retention bonus expense.
These expenses include all direct costs of certain acquisitions and
the reported 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 have no direct correlation
to the Company's operations.
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.
Change in fair value of earn-out liability. This change
is due to a reduction of acquisition purchase consideration. This
is a non-recurring benefit that has no direct correlation to the
operation of the Company's business.
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 2020 and
2019, 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 operating results and
business opportunities, 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 second 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, as well
as the potential adverse impacts related to, or arising from, the
Novel Coronavirus (COVID-19). 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)
|
|
|
March 31,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
175,446
|
|
|
$
|
102,176
|
|
Marketable
securities
|
259,999
|
|
|
305,488
|
|
Accounts
receivable
|
44,364
|
|
|
44,039
|
|
Unbilled
receivables
|
172,042
|
|
|
184,366
|
|
Inventories
|
9,848
|
|
|
10,086
|
|
Prepaids and other
current assets
|
17,057
|
|
|
18,524
|
|
Total current
assets
|
678,756
|
|
|
664,679
|
|
Intangible assets,
net
|
50,208
|
|
|
54,900
|
|
Goodwill
|
183,465
|
|
|
183,465
|
|
Property, plant and
equipment, net
|
47,743
|
|
|
44,714
|
|
Operating lease
right-of-use assets
|
34,493
|
|
|
37,020
|
|
Deferred tax
assets
|
4,541
|
|
|
4,574
|
|
Unbilled receivables,
long-term
|
314,706
|
|
|
343,703
|
|
Other assets
|
5,579
|
|
|
5,931
|
|
Total
assets
|
$
|
1,319,491
|
|
|
$
|
1,338,986
|
|
|
|
|
|
LIABILITIES &
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
15,730
|
|
|
$
|
9,549
|
|
Accrued salaries and
benefits
|
12,411
|
|
|
20,291
|
|
Deferred
revenue
|
10,121
|
|
|
11,947
|
|
Income taxes payable,
short-term
|
19,892
|
|
|
19,142
|
|
Operating lease
liabilities
|
5,194
|
|
|
6,357
|
|
Other current
liabilities
|
16,715
|
|
|
18,893
|
|
Total current
liabilities
|
80,063
|
|
|
86,179
|
|
Long-term
liabilities:
|
|
|
|
Convertible notes,
long-term
|
150,561
|
|
|
148,788
|
|
Long-term operating
lease liabilities
|
38,074
|
|
|
39,889
|
|
Long-term income
taxes payable
|
55,163
|
|
|
60,094
|
|
Deferred tax
liabilities
|
14,140
|
|
|
13,846
|
|
Other long-term
liabilities
|
15,792
|
|
|
19,272
|
|
Total long-term
liabilities
|
273,730
|
|
|
281,889
|
|
Total stockholders'
equity
|
965,698
|
|
|
970,918
|
|
Total liabilities and
stockholders' equity
|
$
|
1,319,491
|
|
|
$
|
1,338,986
|
|
Rambus
Inc.
Condensed
Consolidated Statements of Operations
(In thousands,
except per share amounts)
(Unaudited)
|
|
|
Three Months
Ended March
31,
|
|
2020
|
|
2019
|
|
|
|
|
Revenue:
|
|
|
|
Royalties
|
$
|
19,694
|
|
|
$
|
24,853
|
|
Product
revenue
|
30,728
|
|
|
8,964
|
|
Contract and other
revenue
|
13,567
|
|
|
14,567
|
|
Total
revenue
|
63,989
|
|
|
48,384
|
|
Cost of
revenue:
|
|
|
|
Cost of product
revenue (1)
|
10,343
|
|
|
4,427
|
|
Cost of contract and
other revenue
|
1,198
|
|
|
2,908
|
|
Amortization of
acquired intangible assets
|
4,344
|
|
|
3,863
|
|
Total cost of
revenue
|
15,885
|
|
|
11,198
|
|
Gross
profit
|
48,104
|
|
|
37,186
|
|
Operating
expenses:
|
|
|
|
Research and
development (1)
|
36,664
|
|
|
40,619
|
|
Sales, general and
administrative (1)
|
22,895
|
|
|
26,520
|
|
Amortization of
acquired intangible assets
|
348
|
|
|
1,125
|
|
Restructuring
charges
|
836
|
|
|
331
|
|
Change in fair value
of earn-out liability
|
(1,800)
|
|
|
—
|
|
Total operating
expenses
|
58,943
|
|
|
68,595
|
|
Operating
loss
|
(10,839)
|
|
|
(31,409)
|
|
Interest income and
other income (expense), net
|
6,374
|
|
|
7,413
|
|
Interest
expense
|
(2,555)
|
|
|
(2,271)
|
|
Interest and other
income (expense), net
|
3,819
|
|
|
5,142
|
|
Loss before income
taxes
|
(7,020)
|
|
|
(26,267)
|
|
Provision for income
taxes
|
963
|
|
|
309
|
|
Net loss
|
$
|
(7,983)
|
|
|
$
|
(26,576)
|
|
Net loss per
share:
|
|
|
|
Basic
|
$
|
(0.07)
|
|
|
$
|
(0.24)
|
|
Diluted
|
$
|
(0.07)
|
|
|
$
|
(0.24)
|
|
Weighted average shares
used in per share calculation
|
|
|
|
Basic
|
112,907
|
|
|
109,692
|
|
Diluted
|
112,907
|
|
|
109,692
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Total stock-based
compensation expense for the three months ended March 31, 2020 and
2019 is presented as follows:
|
|
|
|
Three Months
Ended
March 31,
|
|
2020
|
|
2019
|
Cost of product
revenue
|
$
|
—
|
|
|
$
|
1
|
|
Research and
development
|
$
|
2,613
|
|
|
$
|
3,210
|
|
Sales, general and
administrative
|
$
|
3,459
|
|
|
$
|
3,978
|
|
Rambus
Inc.
Supplemental
Reconciliation of GAAP to Non-GAAP Results
(In
thousands)
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
|
|
|
|
Total operating
expenses
|
$
|
58,943
|
|
|
$
|
68,595
|
|
Adjustments:
|
|
|
|
Stock-based
compensation expense
|
(6,072)
|
|
|
(7,189)
|
|
Acquisition-related
costs and retention bonus expense
|
(1,577)
|
|
|
—
|
|
Amortization of
acquired intangible assets
|
(348)
|
|
|
(1,125)
|
|
Restructuring
charges
|
(836)
|
|
|
(331)
|
|
Change in fair value
of earn-out liability
|
1,800
|
|
|
—
|
|
Non-GAAP total
operating expenses
|
$
|
51,910
|
|
|
$
|
59,950
|
|
|
|
|
|
Interest and other
income (expense), net
|
$
|
3,819
|
|
|
$
|
5,142
|
|
Adjustments:
|
|
|
|
Interest income
related to significant financing component from fixed-fee patent
and technology licensing arrangements
|
(4,368)
|
|
|
(5,707)
|
|
Non-cash interest
expense on convertible notes
|
1,773
|
|
|
1,678
|
|
Non-GAAP interest
and other income (expense), net
|
$
|
1,224
|
|
|
$
|
1,113
|
|
|
|
|
|
Rambus
Inc.
Reconciliation of
GAAP Forward Looking Estimates to Non-GAAP Forward Looking
Estimates
(In
millions)
(Unaudited)
|
|
2020 Second
Quarter Outlook
|
Three Months
Ended
June 30, 2020
|
|
Low
|
|
High
|
|
|
|
|
Forward-looking
operating costs and expenses
|
$
|
76.9
|
|
|
$
|
72.9
|
|
Adjustments:
|
|
|
|
Stock-based
compensation expense
|
(6.1)
|
|
|
(6.1)
|
|
Amortization of
acquired intangible assets
|
(5.0)
|
|
|
(5.0)
|
|
Forward-looking
Non-GAAP operating costs and expenses
|
$
|
65.8
|
|
|
$
|
61.8
|
|
|
|
|
|
Forward-looking
interest and other income (expense), net
|
$
|
3.1
|
|
|
$
|
3.1
|
|
Adjustments:
|
|
|
|
Interest income
related to significant financing component from fixed-fee patent
and technology licensing arrangements
|
(3.7)
|
|
|
(3.7)
|
|
Non-cash interest
expense on convertible notes
|
1.8
|
|
|
1.8
|
|
Forward-looking
Non-GAAP interest and other income (expense), net
|
$
|
1.2
|
|
|
$
|
1.2
|
|
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SOURCE Rambus Inc.