Business and Financial Highlights:
- Generated quarterly revenue of $76.5
million
- Signed agreement to acquire Snowbush IP
assets to bolster position in SerDes IP and product offerings
- Signed agreement to acquire Inphi
Memory Interconnect Business to create instant position in memory
chipset market
- Signed agreement with Dish TV India to
protect pay TV content for leading in-field provider
- Quarterly GAAP diluted net income per
share of $0.03; quarterly non-GAAP diluted net income per share of
$0.15
Rambus Inc. (NASDAQ:RMBS) today reported financial results for
the second quarter ended June 30, 2016.
GAAP Financial Results:
Revenue for the second quarter of 2016 was $76.5 million, which
was up 5% from the first quarter of 2016 primarily due to higher
revenue from security technology development projects, including
revenue from the acquisition of SCS. As compared to the second
quarter of 2015, revenue was up 5% primarily due to higher revenue
from security technology development projects, including revenue
from the acquisition of SCS, offset by lower royalty revenue from
various customers.
Revenue for the six months ended June 30, 2016 was $149.2
million, which was up 2% over the prior year period, primarily due
to higher revenue from security technology development projects,
offset by lower royalty revenue from various customers.
Total operating costs and expenses for the second quarter of
2016 were $64.5 million, 2% higher than the previous quarter and
13% higher than the second quarter of 2015. Second quarter
operating costs and expenses 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.
In comparison, total operating costs and expenses for the first
quarter of 2016 of $63.4 million included $4.9 million of
stock-based compensation expenses, $7.7 million of amortization
expenses and $1.8 million of acquisition-related transaction costs.
Total operating costs and expenses for the second quarter of 2015
were $57.3 million which included $4.4 million of stock-based
compensation expenses and $6.3 million of amortization expenses.
The change in total operating costs and expenses in the second
quarter of 2016 as compared to the first quarter of 2016 was
primarily due to higher consulting costs, higher prototyping costs,
higher headcount related costs, higher amortization expense due to
the SCS acquisition in the first quarter of 2016 and lower gain
from settlement, partially offset by lower bonus accrual expense
and lower acquisition-related transaction costs. The change in
total operating costs and expenses in the second quarter of 2016 as
compared to the second quarter of 2015 was primarily due to higher
headcount related costs, higher amortization expense, higher
acquisition-related transaction costs and lower gain from sale of
intellectual property, partially offset by lower prototyping
costs.
Total operating costs and expenses for the six months ended June
30, 2016 were $127.9 million, 14% higher than the six months ended
June 30, 2015. The six months operating costs and expenses of
$127.9 million included $9.9 million of stock-based compensation
expenses, $15.9 million of amortization expenses and $2.6 million
of acquisition-related transaction costs. This is compared to total
operating costs and expenses for the six months ended June 30, 2015
of $112.3 million, which included $8.2 million of stock-based
compensation expenses and $12.6 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, 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 second quarter of 2016 was $3.9 million
as compared to net income of $1.9 million in the first quarter of
2016 and net income of $6.9 million in the second quarter of 2015.
Diluted net income per share for the second quarter of 2016 was
$0.03 as compared to diluted net income per share of $0.02 in the
first quarter of 2016 and diluted net income per share of $0.06 in
the second quarter of 2015, respectively.
Net income for the six months ended June 30, 2016 was $5.8
million as compared to a net income of $16.4 million for the same
period of 2015. Diluted net income per share for the six months
ended June 30, 2016 was $0.05 as compared to a diluted net income
per share of $0.14 for the same period of 2015.
Non-GAAP Financial Results (1):
Total non-GAAP operating costs and expenses in the second
quarter of 2016 were $50.5 million, which was 3% higher than the
previous quarter, and 9% higher than the second quarter of
2015.
Total non-GAAP operating costs and expenses for the six months
ended June 30, 2016 were $99.5 million as compared to $91.5 million
in the same period of 2015 due primarily to higher headcount
related costs, lower gain from sale of intellectual property and
higher expenses related to software design tools offset by lower
prototyping costs.
Non-GAAP net income in the second quarter of 2016 was $16.7
million, 14% higher than the prior quarter and 4% higher than the
second quarter of 2015. Non-GAAP diluted net income per share was
$0.15 in the second quarter of 2016 as compared to $0.13 in the
prior quarter and $0.13 in the second quarter of 2015.
Non-GAAP net income for the six months ended June 30, 2016 was
$31.3 million as compared to $33.0 million in the same period of
2015. Non-GAAP diluted net income per share was $0.28 for the six
months ended June 30, 2016 as compared to non-GAAP diluted net
income per share of $0.28 in the same period of 2015.
Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of June 30,
2016 were $259.3 million, an increase of $33.8 million from
March 31, 2016. The increase in cash was primarily due to cash
generated from operating activities.
During the second quarter of 2016, the Company recorded an
income tax provision of approximately $6.1 million.
Third Quarter 2016 Outlook:
For the third quarter of 2016, the Company expects revenue to be
between $75 million and $80 million. Achieving revenue in this
range will require that the Company sign new customer agreements
for mobile payments software and solutions licensing among other
matters.
Conference Call:
The Company will host a conference call at 2:00 p.m. PT today to
discuss its financial results. The call, audio and slides will be
available online at investor.rambus.com. A replay will be available
following the call as a webcast on the Rambus Investor Relations
website and for one week at the following numbers: (855) 859-2056
(domestic) or (404) 537-3406 (international) with ID# 46588543.
(1) Non-GAAP Financial Information:
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 income (loss) and net income (loss). 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, 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.
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 periods in 2016 and 36 percent
for periods in 2015, 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
impairments and 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.
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 revenue for the third
quarter of 2016, 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.
About Rambus Inc.
Rambus creates cutting-edge semiconductor and IP products,
spanning memory and interfaces to security, smart sensors and
lighting. Our chips, customizable IP cores, architecture licenses,
tools, 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. For more
information, visit www.rambus.com.
RMBSFN
Rambus Inc.
Condensed Consolidated Balance
Sheets
(In thousands)
(Unaudited)
June 30, 2016 December 31, 2015 ASSETS
Current assets: Cash and cash equivalents $ 188,011 $ 143,764
Marketable securities 71,320 143,942 Accounts receivable 11,326
16,408 Prepaids and other current assets 12,993 11,476 Total
current assets 283,650 315,590 Intangible assets, net 100,900
64,266 Goodwill 162,715 116,899 Property, plant and equipment, net
55,056 56,616 Deferred taxes 159,097 162,485 Other assets 4,365
2,165 Total assets $ 765,783 $ 718,021
LIABILITIES & STOCKHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 6,269 $ 4,096 Accrued salaries and
benefits 10,040 12,278 Deferred revenue 10,347 5,780 Other current
liabilities 17,326 6,212 Total current liabilities 43,982
28,366 Long-term liabilities: Convertible notes, long-term 122,744
119,418 Long-term imputed financing obligation 38,355 38,625 Other
long-term liabilities 18,340 5,079 Total long-term
liabilities 179,439 163,122 Total stockholders’ equity
542,362 526,533 Total liabilities and stockholders’ equity $
765,783 $ 718,021
Rambus Inc.
Condensed Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2016 2015 2016 2015
Revenue: Royalties $ 62,835 $ 62,387 $ 125,712 $ 129,350
Contract and other revenue 13,666 10,425 23,471
16,376 Total revenue 76,501 72,812
149,183 145,726 Operating costs and expenses: Cost of
revenue (1) 14,089 12,137 26,296 22,893 Research and development
(1) 28,753 29,188 57,280 57,722 Sales, general and administrative
(1) 21,789 17,339 44,884 35,841 Gain from sale of intellectual
property — (896 ) — (3,156 ) Gain from settlement (138 ) (510 )
(579 ) (1,020 ) Total operating costs and expenses 64,493
57,258 127,881 112,280 Operating income 12,008
15,554 21,302 33,446 Interest income and other income (expense),
net 1,138 203 1,380 335 Interest expense (3,163 ) (3,091 ) (6,304 )
(6,174 ) Interest and other income (expense), net (2,025 ) (2,888 )
(4,924 ) (5,839 ) Income before income taxes 9,983 12,666 16,378
27,607 Provision for income taxes 6,107 5,805 10,624
11,244 Net income $ 3,876 $ 6,861 $
5,754 $ 16,363 Net income per share: Basic $ 0.04
$ 0.06 $ 0.05 $ 0.14 Diluted $ 0.03
$ 0.06 $ 0.05 $ 0.14 Weighted average
shares used in per share calculation Basic 109,904 116,027
109,818 115,683 Diluted 112,061 120,939
112,202 119,225
_________
(1) Total stock-based compensation expense for the three and six
months ended June 30, 2016 and 2015 is presented as follows:
Three Months EndedJune
30,
Six Months EndedJune 30,
2016 2015 2016 2015 Cost of revenue $
14 $ 27 $ 28 $ 39 Research and development $ 2,109 $ 1,988 $ 4,189
$ 3,755 Sales, general and administrative $ 2,926 $ 2,400 $ 5,696 $
4,387
Rambus Inc.
Supplemental Reconciliation of GAAP to
Non-GAAP Results
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, 2016 March 31, 2016 June
30, 2015 June 30, 2016 June 30, 2015
Operating costs and expenses $ 64,493 $ 63,388 $ 57,258 $
127,881 $ 112,280 Adjustments: Stock-based compensation expense
(5,049 ) (4,864 ) (4,415 ) (9,913 ) (8,181 ) Acquisition-related
transaction costs and retention bonus expense (789 ) (1,808 ) —
(2,597 ) (2 ) Amortization expense (8,152 ) (7,719 ) (6,323 )
(15,871 ) (12,646 )
Non-GAAP operating costs and expenses
$ 50,503 $ 48,997
$ 46,520 $ 99,500
$ 91,451 Operating income $ 12,008 $
9,294 $ 15,554 $ 21,302 $ 33,446 Adjustments: Stock-based
compensation expense 5,049 4,864 4,415 9,913 8,181
Acquisition-related transaction costs and retention bonus expense
789 1,808 — 2,597 2 Amortization expense 8,152 7,719
6,323 15,871 12,646
Non-GAAP operating
income $ 25,998 $ 23,685
$ 26,292 $ 49,683
$ 54,275 Income before income taxes $
9,983 $ 6,395 $ 12,666 $ 16,378 $ 27,607 Adjustments: Stock-based
compensation expense 5,049 4,864 4,415 9,913 8,181
Acquisition-related transaction costs and retention bonus expense
789 1,808 — 2,597 2 Amortization expense 8,152 7,719 6,323 15,871
12,646 Non-cash interest expense on convertible notes 1,675
1,651 1,581 3,326 3,140 Non-GAAP income
before income taxes $ 25,648 $ 22,437 $ 24,985 $ 48,085 $ 51,576
GAAP provision for income taxes 6,107 4,517 5,805 10,624 11,244
Adjustment to GAAP provision for income taxes 2,870 3,336
3,190 6,206 7,324 Non-GAAP provision
for income taxes 8,977 7,853 8,995 16,830
18,568
Non-GAAP net income $
16,671 $ 14,584 $
15,990 $ 31,255 $
33,008 Non-GAAP basic net income per
share $ 0.15 $ 0.13 $ 0.14 $ 0.28 $ 0.29
Non-GAAP diluted
net income per share $ 0.15 $ 0.13 $ 0.13 $ 0.28 $ 0.28
Weighted average shares used in non-GAAP per share calculation:
Basic 109,904 109,733 116,027 109,818 115,683 Diluted 112,061
112,252 120,939 112,202 119,225
Supplemental Reconciliation of GAAP to
Non-GAAP Effective Tax Rate (1)
Three Months Ended Six Months Ended
June 30, 2016 March 31, 2016 June
30, 2015 June 30, 2016 June 30, 2015
GAAP effective tax rate 61
%
71
%
46
%
65
%
41
%
Adjustment to GAAP effective tax rate (26 )% (36 )% (10 )% (30 )%
(5 )% Non-GAAP effective tax rate 35
%
35
%
36
%
35
%
36
%
(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 periods in 2016 and 36 percent
for periods in 2015, 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160718006275/en/
Rambus Inc.Linda Ashmore, 408-462-8411Corporate
Communicationslashmore@rambus.comorRambus Inc.Nicole Noutsios,
408-462-8050Investor Relationsnnoutsios@rambus.com
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