- Revenue of $97.4 million, up 34% year
over year
- GAAP diluted net income per share of
$0.03; non-GAAP diluted net income per share of $0.17
- Licensed Western Digital for memory and
security innovations
- Launched Unified Payment Platform,
extending mobile OEM pay to retailers
Rambus Inc. (NASDAQ:RMBS) today reported financial results for
the first quarter ended March 31, 2017. Total revenue for the
quarter was $97.4 million, which is 34% higher than a year ago,
with GAAP diluted net income per share of $0.03 representing a 50%
increase over Q1 of 2016 and non-GAAP diluted net income per share
of $0.17 representing a 31% increase over Q1 of 2016.
“We continue to see strong support for our technologies and
innovations beyond the traditional DRAM market with the signing of
the license agreement with Western Digital for our Flash-based
memory designs,” said Dr. Ron Black, chief executive officer of
Rambus. “In addition, we introduced our Unified Payment Platform
that enhances security, reduces costs for retailers, and delivers a
seamless shopping experience for the consumer. Our execution in Q1
sets the foundation for growth for the remainder of 2017.”
Business Review
In our Memory and Interfaces Division, we introduced our High
Bandwidth Memory (HBM) PHY solution, available on GLOBALFOUNDRIES
process technology, targeting networking and data center
applications and designed for systems that require low latency and
high bandwidth memory. Also this quarter, as part of a
multi-company collaboration, Samsung taped out a 14nm network
processor with our high-speed 28G SerDes solution. We also
introduced the availability of our industry-leading 56G SerDes
PHY and partnered with Samsung to develop it in their latest
process technology. These solutions are designed to meet the
growing demands of communications and data center applications. Our
server DIMM chipset continues to supply the server market, shipping
to the key customers in the data center market and we have extended
the value of our portfolio beyond the DRAM market with our
agreement with Western Digital to utilize our memory and security
technologies.
Our Security Division, which consists of our cryptography,
mobile payments and smart ticketing groups, had an important
quarter with the launch of the Rambus Unified Payment Platform.
This platform enhances payment security and reduces costs for
retailers by easily integrating payment cards, gift cards, loyalty
points, and coupons into a seamless shopping experience for
consumers. It securely converts and manages digital value to enable
consumers to pay with credit, points and coupons in a single
transaction, and transform how they shop and pay.
Finally, our Emerging Solutions Division continues to make
exciting progress with the announcement of our expanded
collaboration with Microsoft on cryogenic memory. This joint effort
focuses on enhancing memory capabilities, reducing energy
consumption and improving overall system performance for future
high-performance super computers (HPC) and quantum computers
operating at cryogenic temperatures.
Financial Review GAAP
Non-GAAP(1) (In millions, except for percentages and per
share amounts)
Three Months Ended March 31, Three Months
Ended March 31, 2017
2016 2017
2016 Revenue $ 97.4 $ 72.7 $ 97.4 $ 72.7 Total
operating costs and expenses $ 84.0 $ 63.4 $ 66.8 $ 49.0 Operating
income $ 13.4 $ 9.3 $ 30.6 $ 23.7 Operating margin 14 % 13 % 31 %
33 % Net income $ 3.0 $ 1.9 $ 19.0 $ 14.6 Diluted net income per
share $ 0.03 $ 0.02 $ 0.17 $ 0.13 Total cash and marketable
securities $ 187.6 $ 225.6 $ 187.6 $ 225.6 Total assets $ 826.2 $
752.8 $ 826.2 $ 752.8 Total stockholders’ equity $ 601.6 $ 534.7 $
601.6 $ 534.7
(1)
See “Supplemental Reconciliation of GAAP
to Non-GAAP Results” and “Reconciliation of Other GAAP to Non-GAAP
Items” tables included below. Note that the applicable non-GAAP
measures are presented and that revenue and the balance sheet items
are solely presented on a GAAP basis.
Revenue for the quarter was $97.4 million as execution in our
Memory and Interfaces Division and our Security Division offset the
anticipated seasonality of our Lighting Division. As a result of
our execution on acquisitions, revenue for our Memory and Interface
Division was up 32% year over year and revenue for the Security
Division was up 65% year over year. GAAP total operating costs and
expenses were lower than our expected range, yielding $0.03 of GAAP
net income per share and in line with our expectations. We had
non-GAAP net income per share of $0.17, at the high end of our
expectations.
Cash, cash equivalents, and marketable securities as of March
31, 2017 were $187.6 million, an increase of $15.4 million
from December 31, 2016, mainly due to cash generated from operating
activities of $17.2 million. Adjusted EBITDA for the quarter was
$34.0 million.
2017 Second Quarter Outlook
(In millions, except per share amounts)
GAAP
Non-GAAP (1) Revenue $90 - $96
$90 - $96
Total operating costs and expenses $86 - $90 $67 - $71 Operating
income $0.4 - $10 $19 - $29 Diluted net income per share ($0.01) -
$0.04 $0.10 - $0.16
(1)
See “Reconciliation of GAAP Forward
Looking Estimates to Non-GAAP Forward Looking Estimates” tables
included below.
For the second quarter of 2017, the Company expects revenue to
be between $90 million and $96 million, reflecting our typical
seasonality. Revenue is not without risk and achieving revenue in
this range will require that the Company sign customer agreements
for patent licensing, various product sales, mobile payments
software and solutions licensing among other matters. The Company
also expects operating costs and expenses to be between $86 million
and $90 million, and diluted net income (loss) per share to be
between ($0.01) and $0.04. The Company also expects non-GAAP
operating costs and expenses to be between $67 million and $71
million, and non-GAAP diluted net income per share to be between
$0.10 and $0.16. These non-GAAP expectations assume non-GAAP
interest and other income and expense of $1 million, tax rate of
35% (refer to non-GAAP financial information below - income tax
adjustments) and diluted share count of 115 million, and exclude
stock-based compensation expense ($8 million), amortization expense
($11 million), and non-cash interest expense on convertible notes
($2 million).
Conference Call:
Rambus management will discuss the results of the quarter during
a conference call scheduled for 2:00pm 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: (855) 859-2056 (domestic) or (404) 537-3406
(international) with ID#99301279.
About Rambus Inc.
Rambus creates innovative hardware and software technologies,
driving advancements from the data center to the mobile edge. Our
chips, customizable IP cores, architecture licenses, tools,
software, services, training and innovations improve the
competitive advantage of our customers. We collaborate with the
industry, partnering with leading ASIC and SoC designers,
foundries, IP developers, EDA companies and validation labs. Our
products are integrated into tens of billions of devices and
systems, powering and securing diverse applications, including Big
Data, Internet of Things (IoT), mobile payments, and smart
ticketing. At Rambus, we are makers of better. 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 our new product and
service offering, growth for 2017 and financial guidance for the
second quarter of 2017, including revenue, operating costs and
expenses, earnings per share and estimated, fixed, long-term
projected tax rates. Such forward-looking statements are based on
current expectations, estimates and projections, management’s
beliefs and certain assumptions made by Rambus’ management. Actual
results may differ materially. Rambus’ 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. Rambus undertakes no obligation to update
forward-looking statements to reflect events or circumstances after
the date hereof.
Overview of Non-GAAP Results
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: operating costs and
expenses, operating margin, operating income (loss), net income
(loss), diluted net income (loss) per share and Adjusted
EBITDA. In computing each of these non-GAAP financial
measures, the following items were considered as discussed below:
stock-based compensation expenses, acquisition-related transaction
costs and retention bonus expense, impairment charges, amortization
expenses, non-cash interest expense 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. 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 transaction 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.
Purchase accounting adjustment for inventory fair value step-up.
These adjustments are the result of accounting for certain business
acquisitions and are excluded because such adjustments are
non-recurring. Additionally, the Company excludes these expenses in
order to provide better comparability between periods.
Impairment of long-lived assets. These charges consist of
non-cash charges to long-lived assets and are excluded because such
charges are non-recurring and do not reduce the Company’s
liquidity.
Change in contingent consideration. This change is due to a
reduction of acquisition purchase consideration. This is a
non-recurring benefit that has no direct correlation to the
operation of the Company's business and no cash flow impact.
Amortization expense. 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.
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 35 percent for both 2017 and 2016, 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 for future periods. The
Company has provided below a reconciliation of its GAAP provision
for income taxes and GAAP effective tax rate to the assumed
non-GAAP provision for income taxes and non-GAAP effective tax
rate.
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.
RMBSFN
Rambus Inc. Condensed Consolidated Balance
Sheets (In thousands) (Unaudited)
March 31, December 31, 2017 2016
ASSETS Current assets: Cash and cash equivalents $
177,455 $ 135,294 Marketable securities 10,170 36,888 Accounts
receivable 27,353 21,099 Prepaids and other current assets 12,676
17,867 Inventories 5,840 5,633 Total current assets 233,494 216,781
Intangible assets, net 121,355 132,388 Goodwill 206,085 204,794
Property, plant and equipment, net 56,468 58,442 Deferred tax
assets 206,075 168,342 Other assets 2,733 2,749 Total assets $
826,210 $ 783,496
LIABILITIES & STOCKHOLDERS’
EQUITY Current liabilities: Accounts payable $ 8,437 $
9,793 Accrued salaries and benefits 10,576 14,177 Deferred revenue
15,658 16,932 Other current liabilities 9,453 10,399 Total current
liabilities 44,124 51,301 Long-term liabilities: Convertible notes,
long-term 127,916 126,167 Long-term imputed financing obligation
37,859 38,029 Other long-term liabilities 14,754 15,217 Total
long-term liabilities 180,529 179,413 Total stockholders’ equity
601,557 552,782 Total liabilities and stockholders’ equity $
826,210 $ 783,496
Rambus Inc. Condensed
Consolidated Statements of Operations (In thousands, except
per share amounts) (Unaudited) Three
Months Ended March 31, 2017
2016 Revenue: Royalties $ 68,956 $
62,877 Contract and other revenue 28,395 9,805
Total revenue 97,351 72,682
Operating costs and expenses: Cost of revenue (1) 19,731 12,207
Research and development (1) 36,000 28,527 Sales, general and
administrative (1) 28,186 23,095 Gain from settlement —
(441 ) Total operating costs and expenses
83,917 63,388 Operating income 13,434 9,294
Interest income and other income (expense), net 154 242 Interest
expense (3,206 ) (3,141 ) Interest and other income
(expense), net (3,052 ) (2,899 ) Income before income
taxes 10,382 6,395 Provision for income taxes 7,376
4,517 Net income $ 3,006 $ 1,878 Net
income per share: Basic $ 0.03 $ 0.02 Diluted $ 0.03
$ 0.02 Weighted average shares used in per share
calculation Basic 111,464 109,733
Diluted 115,325 112,252 __________
(1) Total stock-based compensation expense for the
three months ended March 31, 2017 and 2016 is presented as follows:
Three Months Ended March 31,
2017 2016 Cost of revenue $ 14 $ 14 Research
and development $ 3,012 $ 2,080 Sales, general and administrative $
3,570 $ 2,770
Rambus Inc. Supplemental
Reconciliation of GAAP to Non-GAAP Results (In
thousands) (Unaudited) Three Months
Ended March 31,
December 31,
March 31, 2017
2016
2016 Operating costs and
expenses $ 83,917 $ 97,035 $ 63,388 Adjustments: Stock-based
compensation expense (6,596 ) (5,657 ) (4,864 ) Acquisition-related
transaction costs and retention bonus expense (81 ) (197 ) (1,808 )
Purchase accounting adjustment for inventory fair value step-up —
(1,136 ) — Amortization expense (10,488 ) (11,093 ) (7,719 )
Impairment of long-lived assets — (18,300 ) — Change in contingent
consideration — 6,845 —
Non-GAAP operating costs and expenses $ 66,752
$ 67,497 $ 48,997
Operating income $ 13,434 $ 524 $ 9,294 Adjustments:
Stock-based compensation expense 6,596 5,657 4,864
Acquisition-related transaction costs and retention bonus expense
81 197 1,808 Purchase accounting adjustment for inventory fair
value step-up — 1,136 — Amortization expense 10,488 11,093 7,719
Impairment of long-lived assets — 18,300 — Change in contingent
consideration — (6,845 ) —
Non-GAAP operating income $ 30,599
$ 30,062 $ 23,685
Income (loss) before income taxes $ 10,382 $ (2,506 ) $ 6,395
Adjustments: Stock-based compensation expense 6,596 5,657 4,864
Acquisition-related transaction costs and retention bonus expense
81 197 1,808 Purchase accounting adjustment for inventory fair
value step-up — 1,136 — Amortization expense 10,488 11,093 7,719
Impairment of long-lived assets — 18,300 — Change in contingent
consideration — (6,845 ) — Non-cash interest expense on convertible
notes 1,749 1,723 1,651
Non-GAAP income before income taxes $ 29,296 $ 28,755 $ 22,437 GAAP
provision for income taxes 7,376 939 4,517 Adjustment to GAAP
provision for income taxes 2,878 9,125
3,336 Non-GAAP provision for income taxes
10,254 10,064 7,853
Non-GAAP
net income $ 19,042 $ 18,691
$ 14,584 Non-GAAP basic net
income per share $ 0.17 $ 0.17 $ 0.13
Non-GAAP diluted net
income per share $ 0.17 $ 0.16 $ 0.13 Weighted average shares
used in non-GAAP per share calculation: Basic 111,464 110,788
109,733 Diluted 115,325 114,060 112,252
Supplemental Reconciliation of GAAP to
Non-GAAP Effective Tax Rate (1)
Three Months Ended March 31,
December 31,
March 31, 2017
2016
2016 GAAP effective tax rate 71 % (38 )% 71 %
Adjustment to GAAP effective tax rate (36 )% 73 % (36 )% Non-GAAP
effective tax rate 35 % 35 % 35 %
(1)
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 35 percent for both 2017 and 2016, 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 year
to assist the Company’s planning for future periods.
Rambus Inc. Reconciliation of Other GAAP to
Non-GAAP Items (In thousands, except percentages)
(Unaudited) GAAP Non-GAAP
Three Months Ended
Three Months Ended
March 31,
March 31,
2017 2016
2017 2016 Revenue (i) $
97,351 $ 72,682 $ 97,351 $ 72,682 Operating income (ii) 13,434
9,294 30,599 23,685 Operating margin (ii/i) 14 % 13 % 31 % 33 %
Three Months Ended March 31, 2017
2016 Net income $ 3,006 $ 1,878 Add back:
Interest and other income (expense), net 3,052 2,899 Provision for
income taxes 7,376 4,517 Depreciation expense 3,392 2,969
Amortization expense 10,488 7,719
EBITDA (1) $
27,314 $ 19,982 Adjustments: Stock-based compensation expense 6,596
4,864 Acquisition-related transaction costs and retention bonus
expense 81 1,808
Adjusted EBITDA (2) $
33,991 $ 26,654 (1) EBITDA is a
non-GAAP measure that management uses to evaluate the cash
generating capacity of the company. The most directly comparable
GAAP measure is net income. EBITDA is net income adjusted for net
interest expense, income taxes, and depreciation and amortization.
It should not be considered as an alternative to net income
computed under GAAP. (2) Adjusted EBITDA excludes the impact of
other non-GAAP adjustments indicated in the above tables.
Rambus Inc. Reconciliation of GAAP Forward Looking
Estimates to Non-GAAP Forward Looking Estimates (In
millions, except per share amounts) (Unaudited)
Three Months Ended June 30, 2017 Low
High Forward-looking operating costs and
expenses $ 89.6 $ 85.6 Adjustments: Stock-based compensation
expense (7.5 ) (7.5 ) Amortization expense (11.1 )
(11.1 )
Forward-looking Non-GAAP operating costs and
expenses $ 71.0 $ 67.0
Forward-looking operating income $ 0.4 $ 10.4
Adjustments: Stock-based compensation expense 7.5 7.5 Amortization
expense 11.1 11.1
Forward-looking
Non-GAAP operating income $ 19.0 $
29.0 Forward-looking income (loss) before
income taxes $ (2.3 ) $ 7.7 Adjustments: Stock-based compensation
expense 7.5 7.5 Amortization expense 11.1 11.1 Non-cash interest
expense on convertible notes 1.7 1.7
Forward-looking Non-GAAP income before income taxes $ 18.0 $ 28.0
Forward-looking GAAP provision for (benefit from) income taxes (0.8
) 2.7 Adjustment to Forward-looking GAAP provision for income taxes
7.1 7.1 Forward-looking Non-GAAP
provision for income taxes 6.3 9.8
Forward-looking Non-GAAP net income $ 11.7
$ 18.2 Forward-looking
Non-GAAP basic net income per share $ 0.10 $ 0.16
Forward-looking Non-GAAP diluted net income per share $ 0.10
$ 0.16 Weighted average shares used in forward-looking Non-GAAP per
share calculation: Basic 112.0 112.0 Diluted 115.0 115.0
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170424006485/en/
Rambus Inc.Rahul Mathur, 408-462-8000Senior Vice President,
Finance and Chief Financial Officerrmathur@rambus.com
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