- Delivered solid Q1 results and expanded leadership offerings
for the data center
- Completed $50.0 million accelerated share repurchase
program
- Launched industry-leading family of DDR5 PMICs for AI and
traditional servers
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, 2024. GAAP revenue
for the first quarter was $117.9 million, licensing billings were
$63.2 million, product revenue was $50.4 million, and contract and
other revenue was $20.0 million. The Company also generated $39.1
million in cash provided by operating activities in the first
quarter.
“Through strong execution and strategic focus on data center and
AI, we delivered solid first quarter results,” said Luc Seraphin,
chief executive officer of Rambus. “We expanded our market
opportunity with the introduction of new leadership products, and
continue to drive the long-term profitable growth of the company
while consistently returning value to our stockholders, including a
total of $350 million in cash returned over the past three
years."
Quarterly Financial Review -
GAAP
Three Months Ended
March 31,
(In millions, except for percentages
and per share amounts)
2024
2023
Revenue
Product revenue
$
50.4
$
63.8
Royalties
47.5
28.2
Contract and other revenue
20.0
21.8
Total revenue
117.9
113.8
Cost of product revenue
20.0
26.4
Cost of contract and other revenue
0.6
1.7
Amortization of acquired intangible assets
(included in total cost of revenue)
3.1
3.6
Total operating expenses (1)
64.1
80.2
Operating income
$
30.1
$
1.9
Operating margin
26
%
2
%
Net income
$
32.9
$
3.3
Diluted net income per share
$
0.30
$
0.03
Net cash provided by operating
activities
$
39.1
$
38.9
_________________________________________
(1)
Includes amortization of acquired
intangible assets of approximately $0.2 million and $0.4 million
for the three months ended March 31, 2024 and 2023,
respectively.
Quarterly Financial Review -
Supplemental Information(1)
Three Months Ended
March 31,
(In millions)
2024
2023
Licensing billings (operational metric)
(2)
$
63.2
$
63.4
Product revenue (GAAP)
$
50.4
$
63.8
Contract and other revenue (GAAP)
$
20.0
$
21.8
Non-GAAP cost of product revenue
$
19.9
$
26.3
Cost of contract and other revenue
(GAAP)
$
0.6
$
1.7
Non-GAAP total operating expenses
$
53.7
$
58.3
Non-GAAP interest and other income
(expense), net
$
4.0
$
0.9
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 $117.9 million. The Company
also had licensing billings of $63.2 million, product revenue of
$50.4 million, and contract and other revenue of $20.0 million. The
Company had total GAAP cost of revenue of $23.7 million and
operating expenses of $64.1 million. The Company also had total
non-GAAP operating expenses of $74.2 million (including non-GAAP
cost of revenue of $20.5 million). The Company had GAAP diluted net
income per share of $0.30. 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 March
31, 2024 were $391.1 million, a decrease of $34.8 million from
December 31, 2023, mainly due to $50.0 million paid in connection
with an accelerated share repurchase program, $37.7 million in
payments of taxes on restricted stock units, offset by $39.1
million in cash provided by operating activities and $22.8 million
in proceeds from the sale of a non-marketable equity security.
2024 Second Quarter Outlook
The Company will discuss its full revenue guidance for the
second quarter of 2024 during its upcoming conference call. The
following table sets forth the second quarter outlook for other
measures.
(In millions)
GAAP
Non-GAAP (1)
Licensing billings (operational metric)
(2)
$61 - $67
$61 - $67
Product revenue (GAAP)
$52 - $58
$52 - $58
Contract and other revenue (GAAP)
$17 - $23
$17 - $23
Total operating costs and expenses
$95 - $91
$80 - $76
Interest and other income (expense),
net
$3
$3
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 second quarter of 2024, the Company expects licensing
billings to be between $61 million and $67 million. The Company
also expects royalty revenue to be between $55 million and $61
million, product revenue to be between $52 million and $58 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 $95 million and $91 million. Additionally, the Company
expects non-GAAP operating costs and expenses to be between $80
million and $76 million. These expectations also assume non-GAAP
interest and other income (expense), net, of $3 million, 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# 691469.
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 fair value adjustment of
derivatives, net, 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-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.
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 fair value adjustment of derivatives, net. The Company
has excluded its loss on fair value adjustment of derivatives, net,
as this represents the costs and benefits of repurchasing its
convertible notes and 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 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 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 second 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)
March 31, 2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
112,614
$
94,767
Marketable securities
278,443
331,077
Accounts receivable
86,940
82,925
Unbilled receivables
38,484
50,872
Inventories
47,599
36,154
Prepaids and other current assets
12,376
34,850
Total current assets
576,456
630,645
Intangible assets, net
25,518
28,769
Goodwill
286,812
286,812
Property, plant and equipment, net
67,277
67,808
Operating lease right-of-use assets
21,574
21,497
Unbilled receivables
3,980
4,423
Deferred tax assets
131,885
127,892
Income taxes receivable
93,926
88,768
Other assets
1,408
1,613
Total assets
$
1,208,836
$
1,258,227
LIABILITIES &
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
24,775
$
18,074
Accrued salaries and benefits
12,687
17,504
Deferred revenue
16,399
17,393
Income taxes payable
3,899
5,099
Operating lease liabilities
4,722
4,453
Other current liabilities
20,125
26,598
Total current liabilities
82,607
89,121
Long-term liabilities:
Long-term operating lease liabilities
25,899
26,255
Long-term income taxes payable
85,569
78,947
Deferred tax liabilities
4,205
4,462
Other long-term liabilities
18,964
21,341
Total long-term liabilities
134,637
131,005
Total stockholders’ equity
991,592
1,038,101
Total liabilities and stockholders’
equity
$
1,208,836
$
1,258,227
Rambus Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended
March 31,
(In thousands, except per share
amounts)
2024
2023
Revenue:
Product revenue
$
50,360
$
63,775
Royalties
47,476
28,169
Contract and other revenue
20,035
21,818
Total revenue
117,871
113,762
Cost of revenue:
Cost of product revenue
20,048
26,423
Cost of contract and other revenue
555
1,691
Amortization of acquired intangible
assets
3,056
3,562
Total cost of revenue
23,659
31,676
Gross profit
94,212
82,086
Operating expenses:
Research and development
37,359
41,898
Sales, general and administrative
25,827
30,964
Amortization of acquired intangible
assets
195
382
Change in fair value of earn-out
liability
700
6,900
Total operating expenses
64,081
80,144
Operating income
30,131
1,942
Interest income and other income
(expense), net
4,587
2,161
Loss on fair value adjustment of
derivatives, net
—
(240
)
Interest expense
(366
)
(381
)
Interest and other income (expense),
net
4,221
1,540
Income before income taxes
34,352
3,482
Provision for income taxes
1,454
201
Net income
$
32,898
$
3,281
Net income per share:
Basic
$
0.30
$
0.03
Diluted
$
0.30
$
0.03
Weighted average shares used in per share
calculation
Basic
108,090
108,277
Diluted
110,037
111,153
Rambus Inc.
Supplemental Reconciliation of
GAAP to Non-GAAP Results
(Unaudited)
Three Months Ended
March 31,
(In thousands)
2024
2023
Cost of product revenue
$
20,048
$
26,423
Adjustment:
Stock-based compensation expense
(124
)
(131
)
Non-GAAP cost of product
revenue
$
19,924
$
26,292
Total operating expenses
$
64,081
$
80,144
Adjustments:
Stock-based compensation expense
(9,372
)
(12,932
)
Acquisition-related costs and retention
bonus expense
(111
)
(825
)
Amortization of acquired intangible
assets
(195
)
(382
)
Expense on abandoned operating leases
—
(521
)
Facility restoration costs
—
(316
)
Change in fair value of earn-out
liability
(700
)
(6,900
)
Non-GAAP total operating
expenses
$
53,703
$
58,268
Interest and other income (expense),
net
$
4,221
$
1,540
Adjustments:
Interest income related to significant
financing component from fixed-fee patent and technology licensing
arrangements
(180
)
(919
)
Non-cash interest expense on convertible
notes
—
3
Loss on fair value adjustment of
derivatives, net
—
240
Non-GAAP interest and other income
(expense), net
$
4,041
$
864
Rambus Inc.
Reconciliation of GAAP
Forward-Looking Estimates to Non-GAAP Forward-Looking
Estimates
(Unaudited)
2024 Second Quarter Outlook
Three Months Ended
June 30, 2024
(In millions)
Low
High
Forward-looking operating costs and
expenses
$
95.0
$
91.0
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
$
80.0
$
76.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240429441811/en/
Desmond Lynch Senior Vice President, Finance and Chief Financial
Officer (408) 462-8000 dlynch@rambus.com
Rambus (NASDAQ:RMBS)
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