- Delivered strong Q4 results with revenue and earnings at the
high end of guidance
- Generated $54.8 million in cash from operations in Q4
- Produced quarterly product revenue of $53.7 million driven by
memory interface chips
- Launched industry’s first Gen4 DDR5 RCD for server memory
modules
Rambus Inc. (NASDAQ:RMBS), a provider of industry-leading chips
and IP making data faster and safer, today reported financial
results for the fourth quarter ended December 31, 2023. GAAP
revenue for the fourth quarter was $122.2 million; licensing
billings were $66.2 million, product revenue was $53.7 million, and
contract and other revenue was $16.1 million. The Company also
generated $54.8 million in cash provided by operating activities in
the fourth quarter.
“Through continued product leadership and outstanding execution
on our strategy, we delivered a strong fourth quarter and full-year
results that outpaced the overall semiconductor market,” said Luc
Seraphin, chief executive officer of Rambus. “With our focus on
high-performance solutions for the data center and AI, we are well
positioned to drive the long-term profitable growth of the company
and consistently return value to our stockholders.”
Quarterly Financial Review -
GAAP
Three Months Ended December
31,
(In millions, except for percentages
and per share amounts)
2023
2022
Revenue
Product revenue
$
53.7
$
67.2
Royalties
52.4
31.4
Contract and other revenue
16.1
23.8
Total revenue
122.2
122.4
Cost of product revenue
19.9
28.2
Cost of contract and other revenue
1.1
1.6
Amortization of acquired intangible assets
(included in total cost of revenue)
3.1
3.6
Total operating expenses (1)
63.0
72.8
Operating income
$
35.1
$
16.2
Operating margin
29
%
13
%
Net income
$
58.5
$
15.9
Diluted net income per share
$
0.53
$
0.14
Net cash provided by operating
activities
$
54.8
$
51.3
____________________________
(1)
Includes amortization of acquired
intangible assets of approximately $0.2 million and $0.4 million
for the three months ended December 31, 2023 and 2022,
respectively.
Quarterly Financial Review -
Supplemental Information(1)
Three Months Ended December
31,
(In millions)
2023
2022
Licensing billings (operational metric)
(2)
$
66.2
$
64.3
Product revenue (GAAP)
$
53.7
$
67.2
Contract and other revenue (GAAP)
$
16.1
$
23.8
Non-GAAP cost of product revenue
$
19.8
$
28.1
Cost of contract and other revenue
(GAAP)
$
1.1
$
1.6
Non-GAAP total operating expenses
$
51.0
$
55.8
Non-GAAP interest and other income
(expense), net
$
3.6
$
(0.7
)
Diluted share count (GAAP)
110
111
____________________________
(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 $122.2 million. The Company
also had licensing billings of $66.2 million, product revenue of
$53.7 million, and contract and other revenue of $16.1 million. The
Company had total GAAP cost of revenue of $24.1 million and
operating expenses of $63.0 million. The Company also had total
non-GAAP operating expenses of $71.9 million (including non-GAAP
cost of revenue). The Company had GAAP diluted net income per share
of $0.53. The Company’s basic share count was 108 million shares
and its diluted share count was 110 million shares.
Cash, cash equivalents, and marketable securities as of December
31, 2023 were $425.8 million, an increase of $50.3 million as
compared to September 30, 2023, mainly due to cash provided by
operating activities of approximately $54.8 million. Cash provided
by operating activities for the year ended December 31, 2023 was
$195.8 million.
2024 First Quarter Outlook
The Company will discuss its full revenue guidance for the first
quarter of 2024 during its upcoming conference call. The following
table sets forth first quarter outlook for other measures.
(In millions)
GAAP
Non-GAAP (1)
Licensing billings (operational metric)
(2)
$59 - $65
$59 - $65
Product revenue
$47 - $53
$47 - $53
Contract and other revenue
$17 - $23
$17 - $23
Total operating costs and expenses
$89 - $85
$75 - $71
Interest and other income (expense),
net
$3
$3
Diluted share count
110
110
____________________________
(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 first quarter of 2024, the Company expects licensing
billings to be between $59 million and $65 million. The Company
also expects royalty revenue to be between $43 million and $49
million, product revenue to be between $47 million and $53 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 $89 million and $85 million. Additionally, the Company
expects non-GAAP operating costs and expenses to be between $75
million and $71 million. These expectations also assume non-GAAP
interest and other income (expense), net, of ($3 million), tax rate
of 22% and diluted share count of 110 million, and exclude
stock-based compensation expense ($11 million), amortization
expense ($3 million), and interest income related to the
significant financing component from fixed-fee patent and
technology licensing arrangements ($0 million).
Conference Call
Rambus management will discuss the results of the quarter during
a conference call scheduled for 2:00 p.m. PT today. The call will
be webcast and can be accessed via Rambus’ website at
investor.rambus.com. A replay will be available following the call
on the Rambus Investor Relations website or for the next week at
the following numbers: (866) 813-9403 (domestic) or (+1)
929-458-6194 (international) with ID# 272129.
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/divestiture-related costs and retention bonus
expense, amortization of acquired intangible assets, restructuring
and other charges (benefits), (gain) loss on divestiture, expense
on abandoned operating leases, change in fair value of earn-out
liability, gain on sale of non-marketable equity security, non-cash
interest expense on convertible notes, 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/divestiture-related 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.
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 (benefits). These charges
(benefits) 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.
(Gain) loss on divestiture. Reflects the (gain) loss on the sale
of the Company's PHY IP business. The Company excludes these
charges (benefits) because such charges (benefits) are not directly
related to ongoing business results and do not reflect expected
future operating expenses (benefits).
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.
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.
Gain on sale of non-marketable equity security. The Company has
excluded gain on sale of non-marketable equity security as this is
not a reflection of the Company’s ongoing operations.
Non-cash interest expense on convertible notes. The Company
incurred non-cash interest expense related to its convertible notes
through the first quarter of 2023, at which point the remaining
convertible notes matured. 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 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 first quarter of 2024 and related
drivers, and the Company’s ability to effectively manage supply
chain and other 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)
December 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
94,767
$
125,334
Marketable securities
331,077
187,892
Accounts receivable
82,925
55,368
Unbilled receivables
50,872
125,698
Inventories
36,154
20,900
Prepaids and other current assets
34,850
12,022
Total current assets
630,645
527,214
Intangible assets, net
28,769
50,880
Goodwill
286,812
292,040
Property, plant and equipment, net
67,808
86,255
Operating lease right-of-use assets
21,497
24,143
Unbilled receivables
4,423
25,222
Deferred tax assets
130,268
3,031
Income tax receivable
84,298
1,064
Other assets
1,613
2,745
Total assets
$
1,256,133
$
1,012,594
LIABILITIES &
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
18,074
$
24,815
Accrued salaries and benefits
17,504
20,502
Convertible notes
—
10,378
Deferred revenue
17,393
23,861
Income taxes payable
5,099
18,137
Operating lease liabilities
4,453
5,024
Other current liabilities
26,598
23,992
Total current liabilities
89,121
126,709
Long-term operating lease liabilities
26,255
29,079
Long-term income taxes payable
76,853
5,892
Deferred tax liabilities
4,462
24,964
Other long-term liabilities
21,341
46,653
Total liabilities
218,032
233,297
Total stockholders’ equity
1,038,101
779,297
Total liabilities and stockholders’
equity
$
1,256,133
$
1,012,594
Rambus Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended
December 31,
Years Ended
December 31,
(In thousands, except per share
amounts)
2023
2022
2023
2022
Revenue:
Product revenue
$
53,698
$
67,178
$
224,632
$
227,068
Royalties
52,412
31,436
150,110
139,816
Contract and other revenue
16,115
23,753
86,375
87,909
Total revenue
122,225
122,367
461,117
454,793
Cost of revenue:
Cost of product revenue
19,941
28,209
84,495
88,976
Cost of contract and other revenue
1,123
1,615
5,403
4,668
Amortization of acquired intangible
assets
3,052
3,560
13,524
13,935
Total cost of revenue
24,116
33,384
103,422
107,579
Gross profit
98,109
88,983
357,695
347,214
Operating expenses:
Research and development
35,985
40,121
156,827
158,769
Sales, general and administrative
25,665
27,309
108,149
106,718
Amortization of acquired intangible
assets
195
415
1,217
1,674
Restructuring and other charges
(benefits)
(26
)
—
9,368
—
(Gain) loss on divestiture
59
—
(90,784
)
—
Impairment of assets
—
—
10,045
—
Change in fair value of earn-out
liability
1,100
5,000
9,234
3,111
Total operating expenses
62,978
72,845
204,056
270,272
Operating income
35,131
16,138
153,639
76,942
Interest income and other income
(expense), net
4,215
835
11,327
7,771
Gain on fair value of equity security
—
—
—
3,547
Loss on extinguishment of debt
—
—
—
(83,626
)
Loss on fair value adjustment of
derivatives, net
—
—
(240
)
(10,585
)
Gain on sale of non-marketable equity
security
23,924
—
23,924
—
Interest expense
(377
)
(484
)
(1,490
)
(1,874
)
Interest and other income (expense),
net
27,762
351
33,521
(84,767
)
Income (loss) before income taxes
62,893
16,489
187,160
(7,825
)
Provision for (benefit from) income
taxes
4,348
540
(146,744
)
6,485
Net income (loss)
$
58,545
$
15,949
$
333,904
$
(14,310
)
Net income (loss) per share:
Basic
$
0.54
$
0.15
$
3.09
$
(0.13
)
Diluted
$
0.53
$
0.14
$
3.01
$
(0.13
)
Weighted average shares used in per share
calculation:
Basic
107,703
107,603
108,183
109,472
Diluted
110,065
110,820
110,889
109,472
Rambus Inc.
Supplemental Reconciliation of
GAAP to Non-GAAP Results
(Unaudited)
Three Months Ended
December 31,
(In thousands)
2023
2022
Cost of product revenue
$
19,941
$
28,209
Adjustment:
Stock-based compensation expense
(145
)
(144
)
Non-GAAP cost of product
revenue
$
19,796
$
28,065
Total operating expenses
$
62,978
$
72,845
Adjustments:
Stock-based compensation expense
(10,389
)
(10,122
)
Acquisition/divestiture-related costs and
retention bonus expense
(285
)
(1,028
)
Amortization of acquired intangible
assets
(195
)
(415
)
Restructuring and other benefits
26
—
Loss on divestiture
(59
)
—
Expense on abandoned operating leases
(3
)
(521
)
Change in fair value of earn-out
liability
(1,100
)
(5,000
)
Non-GAAP total operating
expenses
$
50,973
$
55,759
Interest and other income (expense),
net
$
27,762
$
351
Adjustments:
Interest income related to significant
financing component from fixed-fee patent and technology licensing
arrangements
(246
)
(1,029
)
Gain on sale of non-marketable equity
security
(23,924
)
—
Non-cash interest expense on convertible
notes
—
10
Non-GAAP interest and other income
(expense), net
$
3,592
$
(668
)
Rambus Inc.
Reconciliation of GAAP
Forward-Looking Estimates to Non-GAAP Forward-Looking
Estimates
(Unaudited)
2024 First Quarter Outlook
Three Months Ended
March 31, 2024
(In millions)
Low
High
Forward-looking operating costs and
expenses
$
89.1
$
85.1
Adjustments:
Stock-based compensation expense
(11.0
)
(11.0
)
Amortization of acquired intangible
assets
(3.1
)
(3.1
)
Forward-looking Non-GAAP operating
costs and expenses
$
75.0
$
71.0
Forward-looking interest and other income
(expense), net
$
3.2
$
3.2
Adjustments:
Interest income related to significant
financing component from fixed-fee patent and technology licensing
arrangements
(0.2
)
(0.2
)
Forward-looking Non-GAAP interest and
other income (expense), net
$
3.0
$
3.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240205433005/en/
Desmond Lynch Senior Vice President, Finance and Chief Financial
Officer (408) 462-8000 dlynch@rambus.com
Rambus (NASDAQ:RMBS)
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