Rambus Reports Fourth Quarter and Fiscal Year 2021 Financial

Rambus Reports Fourth Quarter and Fiscal Year 2021 Financial Results

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.

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.

Depreciation expense on unused EDA software licenses. Reflects the accelerated depreciation expense on EDA software licenses 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.

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.

Change in fair value of earn-out liability. This change is due to adjustments of 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 incurs non-cash interest expense related to its convertible notes. 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% for both 2021 and 2020, 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, industry growth rates, the successful integrations of AnalogX and PLDA, product and investment strategies, the long-term sustainability of the Company’s increased product revenue and cash generated from operating activities, the Company’s outlook and financial guidance for the first quarter of 2022 and related drivers, and the Company’s ability to effectively manage supply chain shortages. 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 the potential adverse impacts related to, or arising from, the Novel Coronavirus (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)	December 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	107,891	$	128,967
Marketable securities		377,718		373,682
Accounts receivable		44,065		27,903
Unbilled receivables		135,608		138,813
Inventories		8,482		14,466
Prepaids and other current assets		10,600		15,881
Total current assets		684,364		699,712
Intangible assets, net		58,420		36,487
Goodwill		278,810		183,222
Property, plant and equipment, net		56,035		57,693
Operating lease right-of-use assets		23,712		28,708
Deferred tax assets		4,047		4,353
Unbilled receivables, long-term		123,018		236,699
Other assets		4,240		4,535
Total assets	$	1,232,646	$	1,251,409

LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	11,279	$	8,993
Accrued salaries and benefits		20,945		23,326
Deferred revenue		24,755		10,198
Income taxes payable, short-term		20,607		20,064
Convertible notes, short-term		163,687		—
Operating lease liabilities		5,992		4,724
Other current liabilities		20,002		18,559
Total current liabilities		267,267		85,864
Long-term liabilities:
Convertible notes, long-term		—		156,031
Long-term operating lease liabilities		29,099		34,305
Long-term income taxes payable		21,424		41,333
Deferred tax liabilities		23,985		14,276
Other long-term liabilities		28,475		6,894
Total long-term liabilities		102,983		252,839
Total stockholders’ equity		862,396		912,706
Total liabilities and stockholders’ equity	$	1,232,646	$	1,251,409

Rambus Inc. Condensed Consolidated Statements of Operations (Unaudited)

	Three Months Ended December 31,						Years Ended December 31,
(In thousands, except per share amounts)		2021			2020			2021			2020
Revenue:
Product revenue	$	45,274		$	21,774		$	143,935		$	113,996
Royalties		32,893			27,732			136,706			84,560
Contract and other revenue		13,614			12,407			47,663			47,766
Total revenue		91,781			61,913			328,304			246,322
Cost of revenue:
Cost of product revenue		13,408			7,468			49,397			37,749
Cost of contract and other revenue		727			1,647			4,756			5,647
Amortization of acquired intangible assets		3,603			4,336			16,241			17,352
Total cost of revenue		17,738			13,451			70,394			60,748
Gross profit		74,043			48,462			257,910			185,574
Operating expenses:
Research and development		36,263			34,752			135,678			139,837
Sales, general and administrative		23,101			21,232			91,057			86,441
Amortization of acquired intangible assets		409			229			1,226			1,061
Restructuring and other charges		—			3,253			368			4,089
Change in fair value of earn-out liability		5,300			—			5,300			(1,800	)
Total operating expenses		65,073			59,466			233,629			229,628
Operating income (loss)		8,970			(11,004	)		24,281			(44,054	)
Interest income and other income (expense), net		1,623			3,170			9,711			17,855
Interest expense		(2,737	)		(2,619	)		(10,706	)		(10,340	)
Interest and other income (expense), net		(1,114	)		551			(995	)		7,515
Income (loss) before income taxes		7,856			(10,453	)		23,286			(36,539	)
Provision for income taxes		1,751			1,602			4,952			3,932
Net income (loss)	$	6,105		$	(12,055	)	$	18,334		$	(40,471	)
Net income (loss) per share:
Basic	$	0.06		$	(0.11	)	$	0.17		$	(0.36	)
Diluted	$	0.05		$	(0.11	)	$	0.16		$	(0.36	)
Weighted average shares used in per share calculation:
Basic		109,161			112,706			110,538			113,254
Diluted		114,534			112,706			114,865			113,254

Rambus Inc. Supplemental Reconciliation of GAAP to Non-GAAP Results (Unaudited)

	Three Months Ended
	December 31,
(In thousands)		2021			2020
Cost of product revenue	$	13,408		$	7,468
Adjustment:
Stock-based compensation expense		(112	)		—
Non-GAAP cost of product revenue	$	13,296		$	7,468

Total operating expenses	$	65,073		$	59,466
Adjustments:
Stock-based compensation expense		(6,092	)		(6,165	)
Acquisition-related costs and retention bonus expense		(1,308	)		(781	)
Amortization of acquired intangible assets		(409	)		(229	)
Restructuring and other charges		—			(3,253	)
Depreciation expense on unused EDA software licenses		—			(2,183	)
Expense on abandoned operating leases		(559	)		(174	)
Change in fair value of earn-out liability		(5,300	)		—
Non-GAAP total operating expenses	$	51,405		$	46,681

Interest and other income (expense), net	$	(1,114	)	$	551
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1,907	)		(2,984	)
Non-cash interest expense on convertible notes		1,954			1,849
Non-GAAP interest and other income (expense), net	$	(1,067	)	$	(584	)

Rambus Inc. Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates (Unaudited)

2022 First Quarter Outlook	Three Months Ended March 31, 2022
(In millions)	Low			High
Forward-looking operating costs and expenses	$	83.8		$	79.8
Adjustments:
Stock-based compensation expense		(7.0	)		(7.0	)
Amortization of acquired intangible assets		(3.8	)		(3.8	)
Forward-looking Non-GAAP operating costs and expenses	$	73.0		$	69.0

Forward-looking interest and other income (expense), net	$	(0.9	)	$	(0.9	)
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1.9	)		(1.9	)
Non-cash interest expense on convertible notes		1.8			1.8
Forward-looking Non-GAAP interest and other income (expense), net	$	(1.0	)	$	(1.0	)

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