SAN JOSE, Calif., Nov. 2, 2020 /PRNewswire/ -- Rambus Inc.
(NASDAQ:RMBS), a premier silicon IP and chip provider making data
faster and safer, today reported financial results for the third
quarter ended September 30, 2020.
GAAP revenue for the third quarter was $56.9
million; licensing billings were $63.1 million, product revenue was $29.8 million, and contract and other revenue was
$10.5 million. The Company also
generated $44.1 million in cash
provided by operating activities.
"With our sustained focus on cloud and data center markets,
Rambus had a very solid third quarter driven by great execution
across our businesses," said Luc
Seraphin, chief executive officer of Rambus. "Our proven
track record of cash generation and ability to deliver on revenue
and profit makes us well positioned for strong top-line growth in
2021."
Business Review
The Company's memory interface chip business had a solid
quarter, continuing to significantly outpace market growth with a
39% increase in quarterly revenue year over year. This growth is
driven by ongoing increases in market share in DDR4 and continued
demand in cloud and data center. For the industry transition to
DDR5, Rambus is in a leading position for qualification with the
memory ecosystem and CPU partners in next-generation
systems.
Growing complexity in SoC design across data center, AI and 5G
markets continues to drive customer engagement for the Rambus
Silicon IP business, with an increasing number of design wins in
interface and security IP. Designed to meet the needs of the most
demanding data center AI/ML workloads, Rambus leads the industry
with the fastest, silicon-demonstrated HBM2E memory interface
solution capable of running up to 4 Gbps.
Lastly, Rambus extended its DRAM license agreement with Micron
for an additional four years. The extension maintains the existing
financial terms of the agreement, providing Micron with a license
to the Company's extensive portfolio of memory interface patents
through December of 2024.
Quarterly
Financial Review - GAAP
|
Three Months
Ended
September
30,
|
(In millions, except
for percentages and per share amounts)
|
2020
|
|
2019
|
Revenue
|
|
|
|
Royalties
|
$
|
16.6
|
|
|
$
|
19.4
|
|
Product
revenue
|
29.8
|
|
|
21.4
|
|
Contract and other
revenue
|
10.5
|
|
|
16.6
|
|
Total
revenue
|
$
|
56.9
|
|
|
$
|
57.4
|
|
Cost of product
revenue
|
$
|
9.7
|
|
|
$
|
7.1
|
|
Cost of contract and
other revenue
|
$
|
1.3
|
|
|
$
|
2.5
|
|
Amortization of
acquired intangible assets (included in total cost of
revenue)
|
$
|
4.3
|
|
|
$
|
3.0
|
|
Total operating
expenses (1)
|
$
|
54.2
|
|
|
$
|
67.7
|
|
Operating
loss
|
$
|
(12.5)
|
|
|
$
|
(22.9)
|
|
Operating
margin
|
(22)
|
%
|
|
(40)
|
%
|
Net loss
|
$
|
(12.8)
|
|
|
$
|
(17.3)
|
|
Diluted net loss per
share
|
$
|
(0.11)
|
|
|
$
|
(0.16)
|
|
Net cash provided by
operating activities
|
$
|
44.1
|
|
|
$
|
25.6
|
|
|
|
(1)
|
Includes
amortization of acquired intangible assets of approximately $0.2
million for each of the three months ended
September 30, 2020 and 2019.
|
Quarterly
Financial Review - Non-GAAP (including operational metric)
(1)
|
Three Months
Ended
September
30,
|
(In
millions)
|
2020
|
|
2019
|
Licensing billings
(2)
|
$
|
63.1
|
|
|
$
|
63.1
|
|
Product
revenue
|
$
|
29.8
|
|
|
$
|
21.4
|
|
Contract and other
revenue
|
$
|
10.5
|
|
|
$
|
16.6
|
|
Cost of product
revenue
|
$
|
9.7
|
|
|
$
|
7.1
|
|
Cost of contract and
other revenue
|
$
|
1.3
|
|
|
$
|
2.5
|
|
Total operating
expenses
|
$
|
45.7
|
|
|
$
|
57.5
|
|
Interest and other
income (expense), net
|
$
|
(0.6)
|
|
|
$
|
1.0
|
|
Diluted share
count
|
116
|
|
|
114
|
|
|
|
(1)
|
See "Supplemental
Reconciliation of GAAP to Non-GAAP Results" table included below.
Note that the applicable
non-GAAP measures are presented and that revenue, cost of product
revenue and cost of contract and other
revenue are solely presented on a GAAP basis.
|
(2)
|
Licensing billings is
an operational metric that reflects amounts invoiced to our
licensing customers during the
period, as adjusted for certain differences.
|
GAAP revenue for the quarter was $56.9
million, in line with expectations. The Company also had
licensing billings of $63.1 million,
product revenue of $29.8 million, and
contract and other revenue of $10.5
million. Rambus had total GAAP cost of revenue of
$15.3 million and operating expenses
of $54.2 million. The Company also
had total non-GAAP operating expenses of $56.7 million (which includes non-GAAP cost of
revenue), below the low end of its expectations through its cost
management actions. Due to the Company's strong performance and
cost management actions, its revenue was in line with expectations
and its profit was at the high end of its expectations. The Company
had GAAP diluted net loss per share of $0.11. The Company's basic share count was 114
million shares and its diluted share count would have been 116
million shares.
Cash, cash equivalents, and marketable securities as of
September 30, 2020 were $520.2 million, an increase of $34.1 million from June
30, 2020, mainly due to $44.1
million in cash provided by operating activities.
2020 Fourth Quarter Outlook
The Company will discuss its full revenue guidance for the
fourth quarter of 2020 during its upcoming conference call. The
following table sets forth fourth quarter outlook for other
measures.
(In
millions)
|
GAAP
|
|
Non-GAAP
(1)
|
Licensing billings
(2)
|
$61 - $67
|
|
$61 - $67
|
Product
revenue
|
$18 - $24
|
|
$18 - $24
|
Contract and other
revenue
|
$9 - $15
|
|
$9 - $15
|
Total operating costs
and expenses
|
$71 - $67
|
|
$59 - $55
|
Interest and other
income (expense), net
|
$0
|
|
($1)
|
Diluted share
count
|
117
|
|
117
|
|
|
(1)
|
See "Reconciliation
of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking
Estimates" table included
below. Note that the applicable non-GAAP measures are presented,
and that revenue is solely presented on a GAAP
basis.
|
(2)
|
Licensing billings is
an operational metric that reflects amounts invoiced to our
licensing customers during the period,
as adjusted for certain differences. This metric is the same for
both GAAP and non-GAAP presentations.
|
For the fourth quarter of 2020, the Company expects licensing
billings to be between $61 million
and $67 million. The Company also
expects royalty revenue to be between $12
million and $18 million,
product revenue to be between $18
million and $24 million and
contract and other revenue to be between $9
million and $15 million.
Revenue is not without risk and achieving revenue in this range
will require that the Company sign customer agreements for various
product sales, solutions licensing among other matters.
The Company also expects operating costs and expenses to be
between $71 million and $67 million. Additionally, the Company expects
non-GAAP operating costs and expenses to be between $59 million and $55
million. These expectations also assume non-GAAP interest
and other income (expense), net, of ($1
million), tax rate of 24% and diluted share count of 117
million, and exclude stock-based compensation expense ($7 million), amortization expense ($5 million), non-cash interest expense on
convertible notes ($2 million) and
interest income related to the significant financing component from
fixed-fee patent and technology licensing arrangements
($3 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# 2281104.
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 expenses
and interest and other income (expense), net. In computing
each of these non-GAAP financial measures, the following items were
considered as discussed below: stock-based compensation expense,
acquisition-related costs and retention bonus expense,
restructuring charges, impairment (recovery) of assets held for
sale, amortization expense, 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 costs and retention bonus expense.
These expenses include all direct costs of certain acquisitions and
the reported 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.
Restructuring 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.
Impairment (recovery) of assets held for sale. These
charges consist of non-cash charges (recoveries) to assets held for
sale and are excluded because such charges are non-recurring and do
not reduce the Company's liquidity.
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 24 percent for both 2020 and
2019, 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 premier Silicon IP and chip provider that makes data
faster and safer. With 30 years of innovation, we continue to
develop the foundational technology for all modern computing
systems. Leveraging our semiconductor expertise, Rambus solutions
speed performance, expand capacity and improve security for today's
most demanding applications. From data center and edge to
artificial intelligence and automotive, our interface and security
IP, and memory interface chips enable SoC and system designers to
deliver their vision of the future. 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 operating results and
business opportunities, growth in product and service offerings and
product revenue, expected benefits of our merger, acquisition and
divestiture activity and related integration, and financial
guidance for the fourth quarter of 2020, including licensing
billings and revenue estimates, operating costs and expenses,
interest and other income (expense), net and estimated, fixed,
long-term projected tax rates on a GAAP and non-GAAP basis, as
appropriate. 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, as well
as the potential adverse impacts related to, or arising from, the
Novel Coronavirus (COVID-19). Rambus undertakes no obligation to
update forward-looking statements to reflect events or
circumstances after the date hereof.
Contact
Rahul Mathur
Senior Vice President, Finance and Chief Financial Officer
Rambus Inc.
(408) 462-8000
rmathur@rambus.com
Rambus
Inc. Condensed Consolidated Balance Sheets (In
thousands) (Unaudited)
|
|
|
September
30,
2020
|
|
December
31,
2019
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
89,475
|
|
|
$
|
102,176
|
|
Marketable
securities
|
430,746
|
|
|
305,488
|
|
Accounts
receivable
|
33,025
|
|
|
44,039
|
|
Unbilled
receivables
|
141,341
|
|
|
184,366
|
|
Inventories
|
14,218
|
|
|
10,086
|
|
Prepaids and other
current assets
|
16,229
|
|
|
18,524
|
|
Total current
assets
|
725,034
|
|
|
664,679
|
|
Intangible assets,
net
|
41,052
|
|
|
54,900
|
|
Goodwill
|
183,222
|
|
|
183,465
|
|
Property, plant and
equipment, net
|
59,425
|
|
|
44,714
|
|
Operating lease
right-of-use assets
|
29,961
|
|
|
37,020
|
|
Deferred tax
assets
|
5,249
|
|
|
4,574
|
|
Unbilled receivables,
long-term
|
260,404
|
|
|
343,703
|
|
Other
assets
|
4,671
|
|
|
5,931
|
|
Total
assets
|
$
|
1,309,018
|
|
|
$
|
1,338,986
|
|
|
|
|
|
LIABILITIES &
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
13,323
|
|
|
$
|
9,549
|
|
Accrued salaries and
benefits
|
15,719
|
|
|
20,291
|
|
Deferred
revenue
|
14,950
|
|
|
11,947
|
|
Income taxes payable,
short-term
|
20,008
|
|
|
19,142
|
|
Operating lease
liabilities
|
4,576
|
|
|
6,357
|
|
Other current
liabilities
|
22,306
|
|
|
18,893
|
|
Total current
liabilities
|
90,882
|
|
|
86,179
|
|
Long-term
liabilities:
|
|
|
|
Convertible notes,
long-term
|
154,182
|
|
|
148,788
|
|
Long-term operating
lease liabilities
|
35,973
|
|
|
39,889
|
|
Long-term income
taxes payable
|
45,882
|
|
|
60,094
|
|
Deferred tax
liabilities
|
15,139
|
|
|
13,846
|
|
Other long-term
liabilities
|
8,714
|
|
|
19,272
|
|
Total long-term
liabilities
|
259,890
|
|
|
281,889
|
|
Total stockholders'
equity
|
958,246
|
|
|
970,918
|
|
Total liabilities and
stockholders' equity
|
$
|
1,309,018
|
|
|
$
|
1,338,986
|
|
Rambus
Inc. Condensed Consolidated Statements of
Operations (In thousands, except per share
amounts) (Unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue:
|
|
|
|
|
|
|
|
Royalties
|
$
|
16,602
|
|
|
$
|
19,448
|
|
|
$
|
53,253
|
|
|
$
|
71,351
|
|
Product
revenue
|
29,769
|
|
|
21,377
|
|
|
92,222
|
|
|
46,372
|
|
Contract and other
revenue
|
10,544
|
|
|
16,574
|
|
|
35,359
|
|
|
46,357
|
|
Total
revenue
|
56,915
|
|
|
57,399
|
|
|
180,834
|
|
|
164,080
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
Cost of product
revenue
|
9,661
|
|
|
7,108
|
|
|
30,281
|
|
|
17,845
|
|
Cost of contract and
other revenue
|
1,267
|
|
|
2,450
|
|
|
4,000
|
|
|
8,268
|
|
Amortization of
acquired intangible assets
|
4,336
|
|
|
3,016
|
|
|
13,016
|
|
|
10,686
|
|
Total cost of
revenue
|
15,264
|
|
|
12,574
|
|
|
47,297
|
|
|
36,799
|
|
Gross profit
|
41,651
|
|
|
44,825
|
|
|
133,537
|
|
|
127,281
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
33,733
|
|
|
41,486
|
|
|
105,085
|
|
|
119,995
|
|
Sales, general and
administrative
|
20,182
|
|
|
26,521
|
|
|
64,387
|
|
|
76,835
|
|
Amortization of
acquired intangible assets
|
236
|
|
|
170
|
|
|
832
|
|
|
2,409
|
|
Restructuring
charges
|
—
|
|
|
1,374
|
|
|
836
|
|
|
4,233
|
|
Change in fair value
of earn-out liability
|
—
|
|
|
—
|
|
|
(1,800)
|
|
|
—
|
|
Impairment (recovery)
of assets held for sale
|
—
|
|
|
(1,853)
|
|
|
—
|
|
|
15,137
|
|
Total operating
expenses
|
54,151
|
|
|
67,698
|
|
|
169,340
|
|
|
218,609
|
|
Operating
loss
|
(12,500)
|
|
|
(22,873)
|
|
|
(35,803)
|
|
|
(91,328)
|
|
Interest income and
other income (expense), net
|
3,464
|
|
|
6,727
|
|
|
14,435
|
|
|
21,112
|
|
Interest
expense
|
(2,586)
|
|
|
(2,497)
|
|
|
(7,721)
|
|
|
(7,302)
|
|
Interest and other
income (expense), net
|
878
|
|
|
4,230
|
|
|
6,714
|
|
|
13,810
|
|
Loss before income
taxes
|
(11,622)
|
|
|
(18,643)
|
|
|
(29,089)
|
|
|
(77,518)
|
|
Provision for (benefit
from) income taxes
|
1,157
|
|
|
(1,312)
|
|
|
2,454
|
|
|
3,369
|
|
Net loss
|
$
|
(12,779)
|
|
|
$
|
(17,331)
|
|
|
$
|
(31,543)
|
|
|
$
|
(80,887)
|
|
Net loss per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.11)
|
|
|
$
|
(0.16)
|
|
|
$
|
(0.28)
|
|
|
$
|
(0.73)
|
|
Diluted
|
$
|
(0.11)
|
|
|
$
|
(0.16)
|
|
|
$
|
(0.28)
|
|
|
$
|
(0.73)
|
|
Weighted average shares
used in per share calculation
|
|
|
|
|
|
|
|
Basic
|
113,828
|
|
|
111,315
|
|
|
113,437
|
|
|
110,633
|
|
Diluted
|
113,828
|
|
|
111,315
|
|
|
113,437
|
|
|
110,633
|
|
Rambus
Inc. Supplemental Reconciliation of GAAP to Non-GAAP
Results (In
thousands) (Unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
2020
|
|
2019
|
Total operating
expenses
|
$
|
54,151
|
|
|
$
|
67,698
|
|
Adjustments:
|
|
|
|
Stock-based
compensation expense
|
(6,834)
|
|
|
(7,388)
|
|
Acquisition-related
costs and retention bonus expense
|
(1,327)
|
|
|
(3,052)
|
|
Amortization of
acquired intangible assets
|
(236)
|
|
|
(170)
|
|
Restructuring
charges
|
—
|
|
|
(1,374)
|
|
Recovery of assets
held for sale
|
—
|
|
|
1,853
|
|
Non-GAAP total
operating expenses
|
$
|
45,754
|
|
|
$
|
57,567
|
|
|
|
|
|
Interest and other
income (expense), net
|
$
|
878
|
|
|
$
|
4,230
|
|
Adjustments:
|
|
|
|
Interest income
related to significant financing component from fixed-fee patent
and technology
licensing arrangements
|
(3,289)
|
|
|
(4,925)
|
|
Non-cash interest
expense on convertible notes
|
1,823
|
|
|
1,725
|
|
Non-GAAP interest
and other income (expense), net
|
$
|
(588)
|
|
|
$
|
1,030
|
|
|
|
|
|
Rambus
Inc. Reconciliation of GAAP Forward-Looking Estimates to
Non-GAAP Forward-Looking Estimates (In
millions) (Unaudited)
|
|
2020 Fourth
Quarter Outlook
|
Three Months
Ended
December 31,
2020
|
|
Low
|
|
High
|
Forward-looking
operating costs and expenses
|
$
|
70.7
|
|
|
$
|
66.7
|
|
Adjustments:
|
|
|
|
Stock-based
compensation expense
|
(7.0)
|
|
|
(7.0)
|
|
Amortization of
acquired intangible assets
|
(4.6)
|
|
|
(4.6)
|
|
Forward-looking
Non-GAAP operating costs and expenses
|
$
|
59.1
|
|
|
$
|
55.1
|
|
|
|
|
|
Forward-looking
interest and other income (expense), net
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Adjustments:
|
|
|
|
Interest income
related to significant financing component from fixed-fee patent
and technology
licensing arrangements
|
(2.9)
|
|
|
(2.9)
|
|
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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SOURCE Rambus Inc.