RMBS Rambus Inc

• Achieved solid Q2 results in line with expectations and generated outstanding cash from operations of $70.4 million
• Delivered $56.7 million in product revenue, up 13% sequentially
• Continued product portfolio expansion with DDR5 server PMICs, Client Clock Driver, and PCIe 7 IP solutions

Rambus Inc. (NASDAQ:RMBS), a provider of industry-leading chips and IP making data faster and safer, today reported financial results for the second quarter ended June 30, 2024. GAAP revenue for the second quarter was $132.1 million, licensing billings were $61.5 million, product revenue was $56.7 million, and contract and other revenue was $19.0 million. The Company also generated $70.4 million in cash provided by operating activities in the second quarter.

“We delivered solid second quarter results with robust growth in product revenue and excellent cash from operations,” said Luc Seraphin, chief executive officer of Rambus. “Through continued execution and ongoing investment in our industry-leading product roadmap for data center and AI, we expect a strong third quarter driven again by double-digit sequential chip growth.”

Quarterly Financial Review - GAAP

Three Months Ended June 30,

(In millions, except for percentages and per share amounts)

 

2024

 

 

 

2023

 

Revenue

 

 

 

Product revenue

$

56.7

 

 

$

55.0

 

Royalties

 

56.4

 

 

 

40.7

 

Contract and other revenue

 

19.0

 

 

 

24.1

 

Total revenue

 

132.1

 

 

 

119.8

 

Cost of product revenue

 

22.8

 

 

 

18.7

 

Cost of contract and other revenue

 

1.0

 

 

 

1.3

 

Amortization of acquired intangible assets (included in total cost of revenue)

 

3.0

 

 

 

3.6

 

Total operating expenses (1)

 

65.0

 

 

 

84.5

 

Operating income

$

40.3

 

 

$

11.7

 

Operating margin

 

31

%

 

 

10

%

Net income

$

36.1

 

 

$

168.9

 

Diluted net income per share

$

0.33

 

 

$

1.51

 

Net cash provided by operating activities

$

70.4

 

 

$

50.4

 

_________________________________ (1)

Includes amortization of acquired intangible assets of approximately $0.2 million and $0.4 million for the three months ended June 30, 2024 and 2023, respectively.

  Quarterly Financial Review - Supplemental Information(1)

Three Months Ended June 30,

(In millions)

2024

 

2023

Licensing billings (operational metric) (2)

$

61.5

 

$

60.2

Product revenue (GAAP)

$

56.7

 

$

55.0

Contract and other revenue (GAAP)

$

19.0

 

$

24.1

Non-GAAP cost of product revenue

$

22.7

 

$

18.6

Cost of contract and other revenue (GAAP)

$

1.0

 

$

1.3

Non-GAAP total operating expenses

$

53.4

 

$

55.9

Non-GAAP interest and other income (expense), net

$

3.9

 

$

1.2

Diluted share count (GAAP)

 

109

 

 

112

_________________________________________

(1)

See “Supplemental Reconciliation of GAAP to Non-GAAP Results” table included below.

(2)

Licensing billings is an operational metric that reflects amounts invoiced to our licensing customers during the period, as adjusted for certain differences relating to advanced payments for variable licensing agreements.

GAAP revenue for the quarter was $132.1 million. The Company also had licensing billings of $61.5 million, product revenue of $56.7 million, and contract and other revenue of $19.0 million. The Company had total GAAP cost of revenue of $26.8 million and operating expenses of $65.0 million. The Company also had total non-GAAP operating expenses of $77.1 million (including non-GAAP cost of revenue of $23.7 million). The Company had GAAP diluted net income per share of $0.33. The Company’s basic share count was 108 million shares and its diluted share count was 109 million shares.

Cash, cash equivalents, and marketable securities as of June 30, 2024 were $432.9 million, an increase of $41.8 million from March 31, 2024, mainly due to $70.4 million in cash provided by operating activities, offset by $12.5 million paid in connection with a share repurchase program and $11.3 million paid to acquire property, plant and equipment.

2024 Third Quarter Outlook

The Company will discuss its full revenue guidance for the third quarter of 2024 during its upcoming conference call. The following table sets forth the third quarter outlook for other measures.

(In millions)

GAAP

 

Non-GAAP (1)

Licensing billings (operational metric) (2)

$60 - $66

 

$60 - $66

Product revenue (GAAP)

$62 - $68

 

$62 - $68

Contract and other revenue (GAAP)

$17 - $23

 

$17 - $23

Total operating costs and expenses

$97 - $93

 

$82 - $78

Interest and other income (expense), net

$4

 

$4

Diluted share count

109

 

109

_________________________________________

(1)

See “Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates” table included below.

(2)

Licensing billings is an operational metric that reflects amounts invoiced to our licensing customers during the period, as adjusted for certain differences relating to advanced payments for variable licensing agreements.

For the third quarter of 2024, the Company expects licensing billings to be between $60 million and $66 million. The Company also expects royalty revenue to be between $59 million and $65 million, product revenue to be between $62 million and $68 million, and contract and other revenue to be between $17 million and $23 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 $97 million and $93 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $82 million and $78 million. These expectations also assume a tax rate of 22% and a diluted share count of 109 million, and exclude stock-based compensation expense of $12 million and amortization of acquired intangible assets of $3 million.

Conference Call

The Company’s management will discuss the results of the quarter during a conference call scheduled for 2:00 p.m. 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: (866) 813-9403 (domestic) or (+1) 929-458-6194 (international) with ID# 295037.

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: cost of product revenue, 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 expense, acquisition-related costs and retention bonus expense, amortization of acquired intangible assets, restructuring and other charges, expense on abandoned operating leases, facility restoration costs, change in fair value of earn-out liability, impairment of assets, 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. A 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 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 have no direct correlation to the Company’s operations.

Amortization of acquired intangible assets. 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.

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.

Expense on abandoned operating leases. Reflects the expense on building leases that were abandoned. The Company excludes these charges because such charges are not directly related to ongoing business results and do not reflect expected future operating expenses.

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.

Change in fair value of earn-out liability. This change is due to adjustments to acquisition purchase consideration. The Company excludes these adjustments because such adjustments are not directly related to ongoing business results and do not reflect expected future operating expenses.

Impairment of assets. These charges primarily consist of non-cash charges to property, plant and equipment assets, which are excluded because such charges are non-recurring and do not reduce the Company’s liquidity.

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 22 percent and 24 percent for 2024 and 2023, respectively, 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 provider of industry-leading chips and silicon IP making data faster and safer. With over 30 years of advanced semiconductor experience, we are a pioneer in high-performance memory solutions that solve the bottleneck between memory and processing for data-intensive systems. Whether in the cloud, at the edge or in your hand, real-time and immersive applications depend on data throughput and integrity. Rambus products and innovations deliver the increased bandwidth, capacity and security required to meet the world’s data needs and drive ever-greater end-user experiences. 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 business opportunities, the Company’s ability to deliver long-term, profitable growth, product and investment strategies, and the Company’s outlook and financial guidance for the third quarter of 2024 and related drivers, and the Company’s ability to effectively manage market challenges. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by the Company’s management. Actual results may differ materially. The Company’s 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. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

Rambus Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(In thousands)

June 30, 2024

 

December 31, 2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

124,578

 

$

94,767

Marketable securities

 

308,306

 

 

331,077

Accounts receivable

 

83,210

 

 

82,925

Unbilled receivables

 

29,493

 

 

50,872

Inventories

 

52,596

 

 

36,154

Prepaids and other current assets

 

11,975

 

 

34,850

Total current assets

 

610,158

 

 

630,645

Intangible assets, net

 

22,279

 

 

28,769

Goodwill

 

286,812

 

 

286,812

Property, plant and equipment, net

 

74,916

 

 

67,808

Operating lease right-of-use assets

 

21,760

 

 

21,497

Unbilled receivables

 

4,391

 

 

4,423

Deferred tax assets

 

130,163

 

 

127,892

Income taxes receivable

 

98,683

 

 

88,768

Other assets

 

1,461

 

 

1,613

Total assets

$

1,250,623

 

$

1,258,227

 

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

26,970

 

$

18,074

Accrued salaries and benefits

 

15,880

 

 

17,504

Deferred revenue

 

15,385

 

 

17,393

Income taxes payable

 

1,005

 

 

5,099

Operating lease liabilities

 

5,033

 

 

4,453

Other current liabilities

 

20,761

 

 

26,598

Total current liabilities

 

85,034

 

 

89,121

Long-term liabilities:

 

 

 

Long-term operating lease liabilities

 

25,780

 

 

26,255

Long-term income taxes payable

 

92,728

 

 

78,947

Deferred tax liabilities

 

3,949

 

 

4,462

Other long-term liabilities

 

14,240

 

 

21,341

Total long-term liabilities

 

136,697

 

 

131,005

Total stockholders’ equity

 

1,028,892

 

 

1,038,101

Total liabilities and stockholders’ equity

$

1,250,623

 

$

1,258,227

 

Rambus Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

(In thousands, except per share amounts)

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenue:

 

 

 

 

 

 

 

Product revenue

$

56,692

 

 

$

54,978

 

 

$

107,052

 

 

$

118,753

 

Royalties

 

56,380

 

 

 

40,672

 

 

 

103,856

 

 

 

68,841

 

Contract and other revenue

 

19,066

 

 

 

24,182

 

 

 

39,101

 

 

 

46,000

 

Total revenue

 

132,138

 

 

 

119,832

 

 

 

250,009

 

 

 

233,594

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of product revenue

 

22,779

 

 

 

18,743

 

 

 

42,827

 

 

 

45,166

 

Cost of contract and other revenue

 

1,000

 

 

 

1,294

 

 

 

1,555

 

 

 

2,985

 

Amortization of acquired intangible assets

 

3,052

 

 

 

3,561

 

 

 

6,108

 

 

 

7,123

 

Total cost of revenue

 

26,831

 

 

 

23,598

 

 

 

50,490

 

 

 

55,274

 

Gross profit

 

105,307

 

 

 

96,234

 

 

 

199,519

 

 

 

178,320

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

40,525

 

 

 

41,576

 

 

 

77,884

 

 

 

83,474

 

Sales, general and administrative

 

24,402

 

 

 

26,187

 

 

 

50,229

 

 

 

57,151

 

Amortization of acquired intangible assets

 

187

 

 

 

382

 

 

 

382

 

 

 

764

 

Restructuring and other charges

 

—

 

 

 

9,494

 

 

 

—

 

 

 

9,494

 

Impairment of assets

 

1,071

 

 

 

—

 

 

 

1,071

 

 

 

—

 

Change in fair value of earn-out liability

 

(1,200

)

 

 

6,900

 

 

 

(500

)

 

 

13,800

 

Total operating expenses

 

64,985

 

 

 

84,539

 

 

 

129,066

 

 

 

164,683

 

Operating income

 

40,322

 

 

 

11,695

 

 

 

70,453

 

 

 

13,637

 

Interest income and other income (expense), net

 

4,400

 

 

 

2,236

 

 

 

8,987

 

 

 

4,397

 

Loss on fair value adjustment of derivatives, net

 

—

 

 

 

—

 

 

 

—

 

 

 

(240

)

Interest expense

 

(371

)

 

 

(376

)

 

 

(737

)

 

 

(757

)

Interest and other income (expense), net

 

4,029

 

 

 

1,860

 

 

 

8,250

 

 

 

3,400

 

Income before income taxes

 

44,351

 

 

 

13,555

 

 

 

78,703

 

 

 

17,037

 

Provision for (benefit from) income taxes

 

8,295

 

 

 

(155,325

)

 

 

9,749

 

 

 

(155,124

)

Net income

$

36,056

 

 

$

168,880

 

 

$

68,954

 

 

$

172,161

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.33

 

 

$

1.55

 

 

$

0.64

 

 

$

1.59

 

Diluted

$

0.33

 

 

$

1.51

 

 

$

0.63

 

 

$

1.55

 

Weighted average shares used in per share calculation

 

 

 

 

 

 

 

Basic

 

107,721

 

 

 

109,039

 

 

 

107,906

 

 

 

108,561

 

Diluted

 

109,047

 

 

 

111,601

 

 

 

109,628

 

 

 

111,373

 

 

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(Unaudited)

 

 

Three Months Ended June 30,

(In thousands)

 

2024

 

 

 

2023

 

Cost of product revenue

$

22,779

 

 

$

18,743

 

Adjustment:

 

 

 

Stock-based compensation expense

 

(122

)

 

 

(151

)

Non-GAAP cost of product revenue

$

22,657

 

 

$

18,592

 

 

 

 

 

Total operating expenses

$

64,985

 

 

$

84,539

 

Adjustments:

 

 

 

Stock-based compensation expense

 

(11,528

)

 

 

(11,224

)

Acquisition-related costs and retention bonus expense

 

(12

)

 

 

(478

)

Amortization of acquired intangible assets

 

(187

)

 

 

(382

)

Restructuring and other charges

 

—

 

 

 

(9,494

)

Expense on abandoned operating leases

 

—

 

 

 

(195

)

Facility restoration costs

 

—

 

 

 

(10

)

Impairment of assets

 

(1,071

)

 

 

—

 

Change in fair value of earn-out liability

 

1,200

 

 

 

(6,900

)

Non-GAAP total operating expenses

$

53,387

 

 

$

55,856

 

 

 

 

 

Interest and other income (expense), net

$

4,029

 

 

$

1,860

 

Adjustments:

 

 

 

Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements

 

(118

)

 

 

(627

)

Non-GAAP interest and other income (expense), net

$

3,911

 

 

$

1,233

 

 

Rambus Inc.

Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates

(Unaudited)

 

2024 Third Quarter Outlook

 

Three Months Ended September 30, 2024

(In millions)

 

Low

 

High

Forward-looking operating costs and expenses

 

$

97.0

 

 

$

93.0

 

Adjustments:

 

 

 

 

Stock-based compensation expense

 

 

(12.0

)

 

 

(12.0

)

Amortization of acquired intangible assets

 

 

(3.0

)

 

 

(3.0

)

Forward-looking Non-GAAP operating costs and expenses

 

$

82.0

 

 

$

78.0

 

 

 

 

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240729986257/en/

Desmond Lynch Senior Vice President, Finance and Chief Financial Officer (408) 462-8000 dlynch@rambus.com