Business and Financial Highlights:

• Generated quarterly revenue of $89.9 million; quarterly GAAP diluted net income per share of $0.04 and quarterly non-GAAP diluted net income per share of $0.16
• Signed license agreement with Xilinx, showcasing portfolio and ability to collaborate with leading FPGA provider
• Executing data center programs with SerDes IP cores now available at multiple foundries and shipping memory buffer chip products

SUNNYVALE, Calif. — (BUSINESS WIRE) — October 24, 2016 — Rambus Inc. (NASDAQ: RMBS) today reported financial results for the third quarter ended September 30, 2016.

Commenting on the quarter, chief executive officer Dr. Ron Black stated, “We turned in very positive results for the third quarter with a general uptick across our business showcasing growth, both organically and inorganically, to support our strategy and plan. Our licensing program continues to be strong with the signing of FPGA-leader Xilinx, which expands our footprint beyond DRAM and SoC sectors. We’ve also seen strong support in our security business within the mobile payments segment and believe we are well positioned to advance this technology further. We have steadily grown the business in terms of revenue, technologies, offerings and relevance, and expect a strong finish to the year.”

GAAP Financial Results:

Revenue for the third quarter of 2016 was $89.9 million, which was up 17% from the second quarter of 2016 primarily due to revenue from our licensing program and higher revenue from sales of memory products and security technology development projects, including revenue from the various acquisitions during the year. As compared to the third quarter of 2015, revenue was up 22% primarily due to higher revenue from sales of memory products and security technology development projects, including revenue from the various acquisitions during the year.

Revenue for the nine months ended September 30, 2016 was $239.0 million, which was up 9% over the prior year period, primarily due to higher revenue from memory products and security technology development projects, offset by lower royalty revenue from various customers.

Total operating costs and expenses for the third quarter of 2016 were $78.0 million, 21% higher than the previous quarter and 39% higher than the third quarter of 2015. Third quarter operating costs and expenses of $78.0 million included $5.4 million of stock-based compensation expenses, $10.2 million of amortization expenses, $1.2 million related to the purchase accounting adjustment for inventory fair value step-up and $0.4 million of acquisition-related transaction costs. In comparison, total operating costs and expenses for the second quarter of 2016 of $64.5 million included $5.0 million of stock-based compensation expenses, $8.2 million of amortization expenses and $0.8 million of acquisition-related transaction costs. Total operating costs and expenses for the third quarter of 2015 were $56.1 million which included $3.6 million of stock-based compensation expenses and $6.3 million of amortization expenses. The change in total operating costs and expenses in the third quarter of 2016 as compared to the second quarter of 2016 was primarily due to higher headcount related costs, higher consulting costs, higher amortization expense, higher costs of goods sold related to memory and security products and the purchase accounting adjustment for inventory fair value step-up. The change in total operating costs and expenses in the third quarter of 2016 as compared to the third quarter of 2015 was primarily due to higher headcount related costs, higher amortization expense, higher consulting costs, higher costs of goods sold related to memory and security products, the purchase accounting adjustment for inventory fair value step-up and lower gain from settlement. These increases were primarily due to the business acquisitions during 2016.

Total operating costs and expenses for the nine months ended September 30, 2016 were $205.9 million, 22% higher than the nine months ended September 30, 2015. The nine months operating costs and expenses of $205.9 million included $15.4 million of stock-based compensation expenses, $26.0 million of amortization expenses, $1.2 million related to the purchase accounting adjustment for inventory fair value step-up and $3.0 million of acquisition-related transaction costs. This is compared to total operating costs and expenses for the nine months ended September 30, 2015 of $168.4 million, which included $11.7 million of stock-based compensation expenses and $18.9 million of amortization expenses. The change in total operating costs and expenses was primarily attributable to higher headcount related costs, higher amortization expense, higher acquisition-related transaction costs and the purchase accounting adjustment for inventory fair value step-up. These increases were primarily due to the business acquisitions during 2016. Additionally, the change was due to lower gain from sale of intellectual property, higher stock-based compensation expense and higher expenses related to software design tools, offset by lower prototyping costs.

Net income for the third quarter of 2016 was $4.5 million as compared to net income of $3.9 million in the second quarter of 2016 and net income of $182.0 million in the third quarter of 2015. Diluted net income per share for the third quarter of 2016 was $0.04 as compared to diluted net income per share of $0.03 in the second quarter of 2016 and diluted net income per share of $1.52 in the third quarter of 2015, respectively.