Rambus Reports Third Quarter 2024 Financial Results

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 (recoveries). These charges (recoveries) may consist of severance, contractual retention payments, exit costs and other charges and are excluded because such charges (recoveries) 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.

Gain on divestiture. Reflects the gain on the sale of the Company's PHY IP business. The Company excludes these charges (benefits) because such charges (benefits) are not directly related to ongoing business results and do not reflect expected future operating expenses (benefits).

Impairment of assets. These charges primarily consist of non-cash charges to property, plant and equipment assets, which are excluded because such charges are non-recurring and do not reduce the Company’s liquidity.

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.

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 fourth 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)	September 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	113,980	$	94,767
Marketable securities		318,717		331,077
Accounts receivable		87,198		82,925
Unbilled receivables		30,778		50,872
Inventories		48,905		36,154
Prepaids and other current assets		12,435		34,850
Total current assets		612,013		630,645
Intangible assets, net		19,389		28,769
Goodwill		286,812		286,812
Property, plant and equipment, net		73,374		67,808
Operating lease right-of-use assets		21,039		21,497
Deferred tax assets		129,348		127,892
Income taxes receivable		104,270		88,768
Other assets		5,325		6,036
Total assets	$	1,251,570	$	1,258,227

LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	20,365	$	18,074
Accrued salaries and benefits		13,966		17,504
Deferred revenue		18,404		17,393
Income taxes payable		1,114		5,099
Operating lease liabilities		5,397		4,453
Other current liabilities		14,881		26,598
Total current liabilities		74,127		89,121
Long-term liabilities:
Long-term operating lease liabilities		24,794		26,255
Long-term income taxes payable		101,350		78,947
Other long-term liabilities		12,314		25,803
Total long-term liabilities		138,458		131,005
Total stockholders’ equity		1,038,985		1,038,101
Total liabilities and stockholders’ equity	$	1,251,570	$	1,258,227

Rambus Inc. Condensed Consolidated Statements of Operations (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except per share amounts)		2024			2023			2024			2023
Revenue:
Product revenue	$	66,394		$	52,181		$	173,446		$	170,934
Royalties		64,105			28,857			167,961			97,698
Contract and other revenue		15,014			24,260			54,115			70,260
Total revenue		145,513			105,298			395,522			338,892
Cost of revenue:
Cost of product revenue		24,554			19,388			67,381			64,554
Cost of contract and other revenue		752			1,295			2,307			4,280
Amortization of acquired intangible assets		2,796			3,349			8,904			10,472
Total cost of revenue		28,102			24,032			78,592			79,306
Gross profit		117,411			81,266			316,930			259,586
Operating expenses (benefits):
Research and development		41,299			37,368			119,183			120,842
Sales, general and administrative		25,867			25,333			76,096			82,484
Amortization of acquired intangible assets		94			258			476			1,022
Restructuring and other charges (recoveries)		—			(100	)		—			9,394
Gain on divestiture		—			(90,843	)		—			(90,843	)
Impairment of assets		—			10,045			1,071			10,045
Change in fair value of earn-out liability		(4,544	)		(5,666	)		(5,044	)		8,134
Total operating expenses (benefits)		62,716			(23,605	)		191,782			141,078
Operating income		54,695			104,871			125,148			118,508
Interest income and other income (expense), net		4,667			2,715			13,654			7,112
Loss on fair value adjustment of derivatives, net		—			—			—			(240	)
Interest expense		(327	)		(356	)		(1,064	)		(1,113	)
Interest and other income (expense), net		4,340			2,359			12,590			5,759
Income before income taxes		59,035			107,230			137,738			124,267
Provision for (benefit from) income taxes		10,370			4,032			20,119			(151,092	)
Net income	$	48,665		$	103,198		$	117,619		$	275,359
Net income per share:
Basic	$	0.45		$	0.95		$	1.09		$	2.54
Diluted	$	0.45		$	0.93		$	1.08		$	2.48
Weighted average shares used in per share calculation
Basic		107,235			108,317			107,681			108,412
Diluted		108,474			110,775			109,318			111,179

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

	Three Months Ended September 30,
(In thousands)		2024			2023
Cost of product revenue	$	24,554		$	19,388
Adjustment:
Stock-based compensation expense		(117	)		(149	)
Non-GAAP cost of product revenue	$	24,437		$	19,239

Total operating expenses (benefits)	$	62,716		$	(23,605	)
Adjustments:
Stock-based compensation expense		(11,881	)		(9,889	)
Acquisition-related costs and retention bonus expense		(17	)		(37	)
Amortization of acquired intangible assets		(94	)		(258	)
Restructuring and other recoveries		—			100
Expense on abandoned operating leases		—			(40	)
Facility restoration costs		—			3
Severance costs		—			(373	)
Gain on divestiture		—			90,843
Impairment of assets		—			(10,045	)
Change in fair value of earn-out liability		4,544			5,666
Non-GAAP total operating expenses	$	55,268		$	52,365

Interest and other income (expense), net	$	4,340		$	2,359
Adjustment:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(163	)		(426	)
Non-GAAP interest and other income (expense), net	$	4,177		$	1,933

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

2024 Fourth Quarter Outlook	Three Months Ended December 31, 2024
(In millions)	Low			High
Forward-looking operating costs and expenses	$	101.0		$	97.0
Adjustments:
Stock-based compensation expense		(13.0	)		(13.0	)
Amortization of acquired intangible assets		(2.0	)		(2.0	)
Forward-looking Non-GAAP operating costs and expenses	$	86.0		$	82.0

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