- Delivered strong Q1 results with revenue and earnings at the
high end of guidance
- Produced quarterly product revenue of $63.8 million driven by
memory interface chips, up 33% year over year
- Extended comprehensive patent license agreement with SK hynix
by 10 years through 2034
Rambus Inc. (NASDAQ:RMBS), a provider of industry-leading chips
and IP making data faster and safer, today reported financial
results for the first quarter ended March 31, 2023. GAAP revenue
for the first quarter was $113.8 million, licensing billings were
$63.4 million, product revenue was $63.8 million, and contract and
other revenue was $21.8 million. The Company also generated $38.9
million in cash provided by operating activities in the first
quarter.
“Rambus delivered a strong first quarter with revenue and
earnings at the high end of guidance, driven by continued execution
and industry-leading products as we successfully navigate the
near-term challenges in the market,” said Luc Seraphin, chief
executive officer of Rambus. “We are well positioned to address the
favorable secular trends in the data center, fueled by exciting
advancements in AI and other demanding workloads, and drive the
company’s long-term profitable growth.”
Quarterly Financial Review -
GAAP
Three Months Ended
March 31,
(In millions, except for percentages
and per share amounts)
2023
2022
Revenue
Product revenue
$
63.8
$
48.0
Royalties
28.2
30.4
Contract and other revenue
21.8
20.6
Total revenue
113.8
99.0
Cost of product revenue
26.4
18.4
Cost of contract and other revenue
1.7
0.6
Amortization of acquired intangible assets
(included in total cost of revenue)
3.6
3.4
Total operating expenses (1)
80.2
68.3
Operating income
$
1.9
$
8.3
Operating margin
2
%
8
%
Net income (loss)
$
3.3
$
(66.2
)
Diluted net income (loss) per share
$
0.03
$
(0.60
)
Net cash provided by operating
activities
$
38.9
$
42.6
_________________________________________
(1)
Includes amortization of acquired
intangible assets of approximately $0.4 million for each of the
three months ended March 31, 2023 and 2022.
Quarterly Financial Review -
Supplemental Information(1)
Three Months Ended
March 31,
(In millions)
2023
2022
Licensing billings (operational metric)
(2)
$
63.4
$
64.1
Product revenue (GAAP)
$
63.8
$
48.0
Contract and other revenue (GAAP)
$
21.8
$
20.6
Non-GAAP cost of product revenue
$
26.3
$
18.3
Cost of contract and other revenue
(GAAP)
$
1.7
$
0.6
Non-GAAP total operating expenses
$
58.3
$
56.0
Non-GAAP interest and other income
(expense), net
$
0.9
$
(0.3
)
Diluted share count (GAAP)
111
113
_________________________________________
(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 $113.8 million. The Company
also had licensing billings of $63.4 million, product revenue of
$63.8 million, and contract and other revenue of $21.8 million. The
Company had total GAAP cost of revenue of $31.7 million and
operating expenses of $80.2 million. The Company also had total
non-GAAP operating expenses of $86.3 million (including non-GAAP
cost of revenue). The Company had GAAP diluted net income per share
of $0.03. The Company’s basic share count was 108 million shares
and its diluted share count was 111 million shares.
Cash, cash equivalents, and marketable securities as of March
31, 2023 were $292.1 million, a decrease of $21.1 million from
December 31, 2022, mainly due to $30.7 million in payments of taxes
on restricted stock units, $10.7 million paid in connection with
the settlement of warrants associated with the 2023 senior notes,
$10.4 million paid in connection with the repayment of the 2023
senior notes, partially offset by $38.9 million in cash provided by
operating activities.
2023 Second Quarter Outlook
The Company will discuss its full revenue guidance for the
second quarter of 2023 during its upcoming conference call. The
following table sets forth second quarter outlook for other
measures.
(In millions)
GAAP
Non-GAAP (1)
Licensing billings (operational metric)
(2)
$61 - $67
$61 - $67
Product revenue (GAAP)
$50 - $56
$50 - $56
Contract and other revenue (GAAP)
$18 - $24
$18 - $24
Total operating costs and expenses
$97 - $93
$82 - $78
Interest and other income (expense),
net
$1
$0
Diluted share count
112
112
_________________________________________
(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 second quarter of 2023, the Company expects licensing
billings to be between $61 million and $67 million. The Company
also expects royalty revenue to be between $37 million and $43
million, product revenue to be between $50 million and $56 million
and contract and other revenue to be between $18 million and $24
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 non-GAAP
interest and other income (expense), net, of ($0 million), a tax
rate of 24% and diluted share count of 112 million, and exclude
stock-based compensation expense ($11 million), amortization of
acquired intangible assets ($4 million), and interest income
related to the significant financing component from fixed-fee
patent and technology licensing arrangements ($1 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# 547470.
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, expense on abandoned
operating leases, facility restoration costs, change in fair value
of earn-out liability, loss on extinguishment of debt, loss on fair
value adjustment of derivatives, net, realized loss on sale of
marketable securities sold for the purpose of notes repurchase,
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. 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 period’s 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.
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.
Loss on extinguishment of debt. The Company has excluded loss on
extinguishment of debt as this represents a cost of repurchasing
its existing convertible notes and is not a reflection of the
Company’s ongoing operations.
Loss on fair value adjustment of derivatives, net. The Company
has excluded its loss on fair value adjustment of derivatives, net,
as this represents cost and benefits of repurchasing its
convertible notes and is not a reflection of the Company's ongoing
operations.
Realized loss on sale of marketable securities sold for the
purpose of notes repurchase. The Company has excluded its realized
loss on sale of marketable securities sold for the purpose of
repurchasing its convertible notes as this is not a reflection of
the Company's ongoing operations.
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 2023 and 2022, 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 subsystems 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 second quarter of 2023 and related
drivers, and the Company’s ability to effectively manage supply
chain shortages. 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, as well as the potential adverse impacts
related to, or arising from, the COVID-19 and its variants. 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)
March 31, 2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
99,876
$
125,334
Marketable securities
192,261
187,892
Accounts receivable
59,408
55,368
Unbilled receivables
100,435
125,698
Inventories
26,180
20,900
Prepaids and other current assets
14,603
12,022
Total current assets
492,763
527,214
Intangible assets, net
46,936
50,880
Goodwill
292,040
292,040
Property, plant and equipment, net
89,393
86,255
Operating lease right-of-use assets
22,696
24,143
Deferred tax assets
2,623
3,031
Unbilled receivables
12,548
25,222
Other assets
3,631
3,809
Total assets
$
962,630
$
1,012,594
LIABILITIES &
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
18,117
$
24,815
Accrued salaries and benefits
15,906
20,502
Convertible notes
—
10,378
Deferred revenue
20,846
23,861
Income taxes payable
15,669
18,137
Operating lease liabilities
4,287
5,024
Other current liabilities
21,349
23,992
Total current liabilities
96,174
126,709
Long-term liabilities:
Long-term operating lease liabilities
28,127
29,079
Long-term income taxes payable
3,963
5,892
Deferred tax liabilities
26,658
24,964
Other long-term liabilities
45,979
46,653
Total long-term liabilities
104,727
106,588
Total stockholders’ equity
761,729
779,297
Total liabilities and stockholders’
equity
$
962,630
$
1,012,594
Rambus Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended
March 31,
(In thousands, except per share
amounts)
2023
2022
Revenue:
Product revenue
$
63,775
$
47,969
Royalties
28,169
30,464
Contract and other revenue
21,818
20,617
Total revenue
113,762
99,050
Cost of revenue:
Cost of product revenue
26,423
18,397
Cost of contract and other revenue
1,691
624
Amortization of acquired intangible
assets
3,562
3,378
Total cost of revenue
31,676
22,399
Gross profit
82,086
76,651
Operating expenses:
Research and development
41,898
39,815
Sales, general and administrative
30,964
26,906
Amortization of acquired intangible
assets
382
409
Change in fair value of earn-out
liability
6,900
1,200
Total operating expenses
80,144
68,330
Operating income
1,942
8,321
Interest income and other income
(expense), net
2,161
1,360
Loss on extinguishment of debt
—
(66,497
)
Loss on fair value adjustment of
derivatives, net
(240
)
(8,283
)
Interest expense
(381
)
(605
)
Interest and other income (expense),
net
1,540
(74,025
)
Income (loss) before income taxes
3,482
(65,704
)
Provision for income taxes
201
514
Net income (loss)
$
3,281
$
(66,218
)
Net income (loss) per share:
Basic
$
0.03
$
(0.60
)
Diluted
$
0.03
$
(0.60
)
Weighted average shares used in per share
calculation
Basic
108,277
109,889
Diluted
111,048
109,889
Rambus Inc.
Supplemental Reconciliation of
GAAP to Non-GAAP Results
(Unaudited)
Three Months Ended
March 31,
(In thousands)
2023
2022
Cost of product revenue
$
26,423
$
18,397
Adjustment:
Stock-based compensation expense
(131
)
(125
)
Non-GAAP cost of product
revenue
$
26,292
$
18,272
Total operating expenses
$
80,144
$
68,330
Adjustments:
Stock-based compensation expense
(12,932
)
(7,653
)
Acquisition-related costs and retention
bonus expense
(825
)
(2,575
)
Amortization of acquired intangible
assets
(382
)
(409
)
Expense on abandoned operating leases
(521
)
(539
)
Facility restoration costs
(316
)
—
Change in fair value of earn-out
liability
(6,900
)
(1,200
)
Non-GAAP total operating
expenses
$
58,268
$
55,954
Interest and other income (expense),
net
$
1,540
$
(74,025
)
Adjustments:
Interest income related to significant
financing component from fixed-fee patent and technology licensing
arrangements
(919
)
(1,827
)
Non-cash interest expense on convertible
notes
3
105
Loss on extinguishment of debt
—
66,497
Loss on fair value adjustment of
derivatives, net
240
8,283
Realized loss on sale of marketable
securities sold for the purpose of notes repurchase
—
688
Non-GAAP interest and other income
(expense), net
$
864
$
(279
)
Rambus Inc.
Reconciliation of GAAP
Forward-Looking Estimates to Non-GAAP Forward-Looking
Estimates
(Unaudited)
2023 Second Quarter Outlook
Three Months Ended
June 30, 2023
(In millions)
Low
High
Forward-looking operating costs and
expenses
$
97.1
$
93.1
Adjustments:
Stock-based compensation expense
(11.1
)
(11.1
)
Amortization of acquired intangible
assets
(4.0
)
(4.0
)
Forward-looking Non-GAAP operating
costs and expenses
$
82.0
$
78.0
Forward-looking interest and other income
(expense), net
$
0.6
$
0.6
Adjustments:
Interest income related to significant
financing component from fixed-fee patent and technology licensing
arrangements
(0.6
)
(0.6
)
Forward-looking Non-GAAP interest and
other income (expense), net
$
—
$
—
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230501005544/en/
Desmond Lynch Senior Vice President, Finance and Chief Financial
Officer (408) 462-8000 dlynch@rambus.com
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