Rambus Reports First Quarter 2024 Financial Results
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Rambus Reports First Quarter 2024 Financial Results

SAN JOSE, Calif. — (BUSINESS WIRE) — April 29, 2024 — 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

 

 



Contact:

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