For the Memory and Interface division, Q3 was a positive quarter with broad OEM and cloud customer qualifications ongoing in chips and steady revenue for IP cores. Our DDR4 server DIMM chip business continues to hit its revenue targets with steady market growth in market share and remains on track to meet our targets for 2018. For the next-generation DDR5 memory buffer chips, we maintain our leadership position as the first and only supplier with working silicon that supports the top-end speeds for both the Register Clock Driver (RCD) and Data Buffer (DB) chips, and we continue to engage with our customers and the ecosystem. Following the record revenue from our high-speed IP Cores in the first half, we continue our leadership with further development of high-end and high-bandwidth SerDes and memory IP cores in advanced process nodes. We see increased traction from a growing number of customers across multiple high-performance applications including AI, automotive, data center and networking.
Our Security Division, which consists of our Cryptography, Ticketing and Payments groups, had a solid quarter with new customer, partner and product announcements across the groups. The Cryptography group systematically increased its product portfolio as part of the ongoing effort to make it simple and fast for our customers to implement security by design. We now offer the general availability of our RISC-V-based programmable CryptoManager Hardware Root of Trust, a full suite of DPA-resistant crypto cores for commercial and government applications, and an enhanced DPA Workstation with expanded side-channel attack testing capabilities through partnership with Riscure. For the Ticketing and Payments groups, market traction and product development for tokenization continue to progress. We have expanded our tokenization solutions from mobile payments and retail, to account-based payments, e-commerce and now the blockchain. This quarter saw announcements from both groups, introducing new customers, partners and products including ScotRail for mobile ticketing, and Coles, Visa and American Express for Payments, and the launch of Vaultify Trade, providing bank-grade tokenization for blockchain.
Our strategy of leveraging innovation and IP to develop differentiated products for high-growth markets remains. While we are pleased with the progress in our software-based Payments and Ticketing programs and see increasing market traction for tokenization solutions, we acknowledge that these businesses are far from our core in the semiconductor space. With that, we are exploring strategic options to maximize the market opportunity and success of these businesses.
| Financial Review - GAAP | Three Months Ended September 30, | |||||||||||||||
| (In millions, except for percentages and per share amounts) | 2018 | 2017 | ||||||||||||||
|
As Reported
|
Adjustments
|
ASC 605 (1) |
As Reported
|
|||||||||||||
| Revenue | ||||||||||||||||
| Royalties | $ | 33.6 | $ | 42.1 | $ | 75.7 | $ | 72.8 | ||||||||
| Product revenue | 11.8 | (0.1 | ) | 11.7 | 8.7 | |||||||||||
| Contract and other revenue | 14.4 | (2.0 | ) | 12.4 | 17.6 | |||||||||||
| Total revenue | $ | 59.8 | $ | 40.0 | $ | 99.8 | $ | 99.1 | ||||||||
| Total operating costs and expenses | $ | 78.9 | $ | — | $ | 78.9 | $ | 82.1 | ||||||||
| Operating income (loss) | $ | (19.1 | ) | $ | 40.0 | $ | 20.9 | $ | 17.0 | |||||||
| Operating margin | (32 |
)% |
53 | % | 21 | % | 17 | % | ||||||||
| Net income (loss) | $ | (104.2 | ) | $ | 33.5 | $ | (70.7 | ) | $ | 7.7 | ||||||
| Diluted net income (loss) per share | $ | (0.97 | ) | $ | 0.32 | $ | (0.65 | ) | $ | 0.07 | ||||||
| Licensing billings (2) | $ | 75.4 | $ | — | $ | 75.4 | $ | 71.5 | ||||||||
| Net cash provided by operating activities | $ | 31.6 | $ | — | $ | 31.6 | $ | 15.1 | ||||||||
| (1) | As noted above, Rambus is presenting the ASC 606 results together with the adjustments made to reconcile the ASC 606 presentation to the results that would have been applicable under ASC 605. The ASC 605 information should be considered in addition to, not as a substitute for, nor superior to or in isolation from, the financial information prepared in accordance with ASC 606. | ||||||
| (2) | Licensing billings is an operational metric that reflects amounts invoiced to our licensing customers during the period, as adjusted for certain differences. | ||||||
| Financial Review - Non-GAAP (1) | Three Months Ended September 30, | |||||||||||||||
| (In millions, except for percentages and per share amounts) | 2018 | 2017 | ||||||||||||||
|
As Reported
|
Adjustments
|
ASC 605 (2) |
As Reported
|
|||||||||||||
| Revenue | ||||||||||||||||
| Royalties | $ | 33.6 | $ | 42.1 | $ | 75.7 | $ | 72.8 | ||||||||
| Product revenue | 11.8 | (0.1 | ) | 11.7 | 8.7 | |||||||||||
| Contract and other revenue | 14.4 | (2.0 | ) | 12.4 | 17.6 | |||||||||||
| Total revenue | $ | 59.8 | $ | 40.0 | $ | 99.8 | $ | 99.1 | ||||||||
| Total operating costs and expenses | $ | 67.6 | $ | — | $ | 67.6 | $ | 64.6 | ||||||||
| Operating income (loss) | $ | (7.8 | ) | $ | 40.0 | $ | 32.2 | $ | 34.5 | |||||||
| Operating margin | (13 | )% | 45 | % | 32 | % | 35 | % | ||||||||
| Net income (loss) | $ | (1.3 | ) | $ | 25.5 | $ | 24.2 | $ | 21.6 | |||||||
| Diluted net income (loss) per share | $ | (0.01 | ) | $ | 0.23 | $ | 0.22 | $ | 0.19 | |||||||
| (1) | See “Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates” tables included below. Note that the applicable non-GAAP measures are presented and that revenue is solely presented on a GAAP basis. | ||||||
| (2) | See note (1) under “Financial Review-GAAP” above for a description of the Adjustments and ASC 605 presentations. | ||||||
