TechDogs-"Rambus Reports Second Quarter 2023 Financial Results"

Consumer Electronics Technology

Rambus Reports Second Quarter 2023 Financial Results

By Business Wire

Business Wire
Overall Rating
  • Delivered strong Q2 results with revenue in line and earnings at the high end of guidance
  • Generated $50.4 million in cash from operations
  • Produced quarterly product revenue of $55.0 million driven by memory interface chips

SAN JOSE, Calif.--(BUSINESS WIRE)--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, 2023. GAAP revenue for the second quarter was $119.8 million, licensing billings were $60.2 million, product revenue was $55.0 million, and contract and other revenue was $24.1 million. The Company also generated $50.4 million in cash provided by operating activities in the second quarter.

“Rambus delivered a strong second quarter with solid results and execution from the team as we continue to successfully navigate through challenging market conditions,” said Luc Seraphin, chief executive officer of Rambus. “By delivering the critical chips and IP that address the growing demand in data center fueled by AI, we are well positioned to drive the company’s long-term profitable growth."

Quarterly Financial Review - GAAP

Three Months Ended

June 30,

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

2023

2022

Revenue

Product revenue

$

55.0

$

53.3

Royalties

40.7

48.0

Contract and other revenue

24.1

19.8

Total revenue

119.8

121.1

Cost of product revenue

18.7

20.4

Cost of contract and other revenue

1.3

1.0

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

3.6

3.4

Total operating expenses (1)

84.5

60.8

Operating income

$

11.7

$

35.5

Operating margin

10

%

29

%

Net income

$

168.9

$

35.0

Diluted net income per share

$

1.51

$

0.31

Net cash provided by operating activities

$

50.4

$

56.5

_________________________________________

(1)

Includes amortization of acquired intangible assets of approximately $0.4 million for each of the three months ended June 30, 2023 and 2022.

Quarterly Financial Review - Supplemental Information(1)

Three Months Ended

June 30,

(In millions)

2023

2022

Licensing billings (operational metric) (2)

$

60.2

$

66.1

Product revenue (GAAP)

$

55.0

$

53.3

Contract and other revenue (GAAP)

$

24.1

$

19.8

Non-GAAP cost of product revenue

$

18.6

$

20.3

Cost of contract and other revenue (GAAP)

$

1.3

$

1.0

Non-GAAP total operating expenses

$

55.9

$

54.9

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

$

1.2

$

1.0

Diluted share count (GAAP)

112

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 $119.8 million. The Company also had licensing billings of $60.2 million, product revenue of $55.0 million, and contract and other revenue of $24.1 million. The Company had total GAAP cost of revenue of $23.6 million and operating expenses of $84.5 million. The Company also had total non-GAAP operating expenses of $75.7 million (including non-GAAP cost of revenue of $19.9 million). The Company had GAAP diluted net income per share of $1.51, largely driven by a net benefit from income taxes of $155.3 million from a release of the Company's valuation allowance in the second quarter. The Company’s basic share count was 109 million shares and its diluted share count was 112 million shares.

Cash, cash equivalents, and marketable securities as of June 30, 2023 were $332.6 million, an increase of $40.5 million from March 31, 2023, mainly due to $50.4 million in cash provided by operating activities.

2023 Third Quarter Outlook

The Company will discuss its full revenue guidance for the third quarter of 2023 during its upcoming conference call. The following table sets forth third quarter outlook for other measures.

(In millions)

GAAP

Non-GAAP (1)

Licensing billings (operational metric) (2)

$59 - $65

$59 - $65

Product revenue (GAAP)

$47 - $53

$47 - $53

Contract and other revenue (GAAP)

$17 - $23

$17 - $23

Total operating costs and expenses

$90 - $86

$75 - $71

Interest and other income (expense), net

$1

$1

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 third quarter of 2023, the Company expects licensing billings to be between $59 million and $65 million. The Company also expects royalty revenue to be between $26 million and $32 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 $90 million and $86 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 $1 million, a tax rate of 24% and diluted share count of 112 million, and exclude stock-based compensation expense of $12 million, amortization of acquired intangible assets of $3 million, and interest income related to the significant financing component from fixed-fee patent and technology licensing arrangements of $0 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# 439534.

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/divestiture 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. 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.

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 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 third quarter of 2023 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, as well as potential adverse impacts related to, or arising from, 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)

June 30,
2023

December 31,
2022

ASSETS

Current assets:

Cash and cash equivalents

$

122,190

$

125,334

Marketable securities

210,437

187,892

Accounts receivable

63,929

55,368

Unbilled receivables

94,553

125,698

Inventories

33,527

20,900

Prepaids and other current assets

11,829

12,022

Total current assets

536,465

527,214

Intangible assets, net

42,992

50,880

Goodwill

292,040

292,040

Property, plant and equipment, net

87,167

86,255

Operating lease right-of-use assets

21,598

24,143

Deferred tax assets

140,405

3,031

Unbilled receivables

3,298

25,222

Other assets

3,151

3,809

Total assets

$

1,127,116

$

1,012,594

LIABILITIES & STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

17,643

$

24,815

Accrued salaries and benefits

22,251

20,502

Convertible notes

10,378

Deferred revenue

16,779

23,861

Income taxes payable

12,942

18,137

Operating lease liabilities

4,098

5,024

Other current liabilities

27,731

23,992

Total current liabilities

101,444

126,709

Long-term liabilities:

Long-term operating lease liabilities

27,160

29,079

Long-term income taxes payable

1,973

5,892

Deferred tax liabilities

5,819

24,964

Other long-term liabilities

45,162

46,653

Total long-term liabilities

80,114

106,588

Total stockholders’ equity

945,558

779,297

Total liabilities and stockholders’ equity

$

1,127,116

$

1,012,594

Rambus Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

(In thousands, except per share amounts)

2023

2022

2023

2022

Revenue:

Product revenue

$

54,978

$

53,302

$

118,753

$

101,271

Royalties

40,672

48,038

68,841

78,502

Contract and other revenue

24,182

19,792

46,000

40,409

Total revenue

119,832

121,132

233,594

220,182

Cost of revenue:

Cost of product revenue

18,743

20,417

45,166

38,814

Cost of contract and other revenue

1,294

974

2,985

1,598

Amortization of acquired intangible assets

3,561

3,421

7,123

6,799

Total cost of revenue

23,598

24,812

55,274

47,211

Gross profit

96,234

96,320

178,320

172,971

Operating expenses:

Research and development

41,576

39,538

83,474

79,353

Sales, general and administrative

26,187

26,305

57,151

53,211

Amortization of acquired intangible assets

382

417

764

826

Restructuring and other charges

9,494

9,494

Change in fair value of earn-out liability

6,900

(5,500

)

13,800

(4,300

)

Total operating expenses

84,539

60,760

164,683

129,090

Operating income

11,695

35,560

13,637

43,881

Interest income and other income (expense), net

2,236

2,738

4,397

4,098

Loss on extinguishment of debt

(66,497

)

Loss on fair value adjustment of derivatives, net

(240

)

(8,283

)

Interest expense

(376

)

(348

)

(757

)

(953

)

Interest and other income (expense), net

1,860

2,390

3,400

(71,635

)

Income (loss) before income taxes

13,555

37,950

17,037

(27,754

)

Provision for (benefit from) income taxes

(155,325

)

2,930

(155,124

)

3,444

Net income (loss)

$

168,880

$

35,020

$

172,161

$

(31,198

)

Net income (loss) per share:

Basic

$

1.55

$

0.32

$

1.59

$

(0.28

)

Diluted

$

1.51

$

0.31

$

1.55

$

(0.28

)

Weighted average shares used in per share calculation

Basic

109,039

110,447

108,561

110,170

Diluted

111,601

112,715

111,373

110,170

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(Unaudited)

Three Months Ended

June 30,

(In thousands)

2023

2022

Cost of product revenue

$

18,743

$

20,417

Adjustment:

Stock-based compensation expense

(151

)

(132

)

Non-GAAP cost of product revenue

$

18,592

$

20,285

Total operating expenses

$

84,539

$

60,760

Adjustments:

Stock-based compensation expense

(11,224

)

(8,504

)

Acquisition-related costs and retention bonus expense

(478

)

(1,949

)

Amortization of acquired intangible assets

(382

)

(417

)

Restructuring and other charges

(9,494

)

Expense on abandoned operating leases

(195

)

(531

)

Facility restoration costs

(10

)

Change in fair value of earn-out liability

(6,900

)

5,500

Non-GAAP total operating expenses

$

55,856

$

54,859

Interest and other income (expense), net

$

1,860

$

2,390

Adjustments:

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

(627

)

(1,455

)

Non-cash interest expense on convertible notes

45

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

$

1,233

$

980

Rambus Inc.

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

(Unaudited)

2023 Third Quarter Outlook

Three Months Ended

September 30, 2023

(In millions)

Low

High

Forward-looking operating costs and expenses

$

90.1

$

86.1

Adjustments:

Stock-based compensation expense

(11.7

)

(11.7

)

Amortization of acquired intangible assets

(3.4

)

(3.4

)

Forward-looking Non-GAAP operating costs and expenses

$

75.0

$

71.0

Forward-looking interest and other income (expense), net

$

1.4

$

1.4

Adjustments:

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

(0.4

)

(0.4

)

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

$

1.0

$

1.0

Contacts

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

First published on Tue, Aug 1, 2023

Enjoyed what you've read so far? Great news - there's more to explore!

Stay up to date with the latest news, a vast collection of tech articles including introductory guides, product reviews, trends and more, thought-provoking interviews, hottest AI blogs and entertaining tech memes.

Plus, get access to branded insights such as informative white papers, intriguing case studies, in-depth reports, enlightening videos and exciting events and webinars from industry-leading global brands.

Dive into TechDogs' treasure trove today and Know Your World of technology!

Disclaimer - Reference to any specific product, software or entity does not constitute an endorsement or recommendation by TechDogs nor should any data or content published be relied upon. The views expressed by TechDogs’ members and guests are their own and their appearance on our site does not imply an endorsement of them or any entity they represent. Views and opinions expressed by TechDogs’ Authors are those of the Authors and do not necessarily reflect the view of TechDogs or any of its officials. All information / content found on TechDogs’ site may not necessarily be reviewed by individuals with the expertise to validate its completeness, accuracy and reliability.

Tags:

Rambus Data-intensive Systems Memory Interface Chips Semiconductor Manufacturing

References:

Join The Discussion

  • Dark
  • Light