- Exceeded Q1 guidance for revenue
- Delivered record quarterly product revenue of $48.0 million
driven by memory interface chips
- Strengthened balance sheet by retiring debt and generating
$42.6 million in cash from operations
Rambus Inc. (NASDAQ:RMBS), a provider of industry-leading chips
and IP making data faster and safer, today reported financial
results for the first quarter ended March 31, 2022. GAAP revenue
for the first quarter was $99.0 million, licensing billings were
$64.1 million, product revenue was $48.0 million, and contract and
other revenue was $20.6 million. The Company also generated $42.6
million in cash provided by operating activities in the first
quarter.
“Rambus delivered a strong first quarter with record product
revenue propelled by robust demand in the data center,” said Luc
Seraphin, chief executive officer of Rambus. “With our balanced and
diverse portfolio of offerings contributing at scale, we continue
to generate cash, execute on our strategy and invest in exciting
programs to accelerate the company’s profitable growth.”
Quarterly Financial Review -
GAAP
Three Months Ended
March 31,
(In millions, except for percentages
and per share amounts)
2022
2021
Revenue
Product revenue
$
48.0
$
30.8
Royalties
30.4
28.9
Contract and other revenue
20.6
10.7
Total revenue
99.0
70.4
Cost of product revenue
18.4
11.4
Cost of contract and other revenue
0.6
1.6
Amortization of acquired intangible assets
(included in total cost of revenue)
3.4
4.4
Total operating expenses (1)
68.3
56.5
Operating income (loss)
$
8.3
$
(3.5
)
Operating margin
8
%
(5
)%
Net loss
$
(66.2
)
$
(2.6
)
Diluted net loss per share
$
(0.60
)
$
(0.02
)
Net cash provided by operating
activities
$
42.6
$
39.5
_________________________________________
(1)
Includes amortization of acquired
intangible assets of approximately $0.4 million and $0.2 million
for the three months ended March 31, 2022 and 2021,
respectively.
Quarterly Financial Review -
Supplemental Information(1)
Three Months Ended
March 31,
(In millions)
2022
2021
Licensing billings (operational metric)
(2)
$
64.1
$
63.5
Product revenue (GAAP)
$
48.0
$
30.8
Contract and other revenue (GAAP)
$
20.6
$
10.7
Non-GAAP cost of product revenue
$
18.3
$
11.3
Cost of contract and other revenue
(GAAP)
$
0.6
$
1.6
Non-GAAP total operating expenses
$
56.0
$
45.3
Non-GAAP interest and other income
(expense), net
$
(0.3
)
$
(0.6
)
Diluted share count (GAAP)
113
116
_________________________________________
(1)
See “Supplemental Reconciliation of GAAP
to Non-GAAP Results” table included below.
(2)
Licensing billings is an operational
metric that reflects amounts invoiced to our licensing customers
during the period, as adjusted for certain differences relating to
advanced payments for variable licensing agreements.
GAAP revenue for the quarter was $99.0 million, exceeding the
Company’s guidance. The Company also had licensing billings of
$64.1 million, product revenue of $48.0 million, and contract and
other revenue of $20.6 million. The Company had GAAP cost of
revenue of $22.4 million and operating expenses of $68.3 million.
The Company also had total non-GAAP operating expenses of $74.9
million (which includes non-GAAP cost of revenue). The Company had
GAAP diluted net loss per share of $0.60. The Company's basic share
count was 110 million shares and its diluted share count would have
been 113 million shares.
Cash, cash equivalents, and marketable securities as of March
31, 2022 were $343.7 million, a decrease of $141.9 million from
December 31, 2021, mainly due to approximately $174.5 million paid
in connection with the repayment of 2023 senior notes, $55.1
million paid in connection with the settlement of warrants,
partially offset by proceeds of $72.4 million from the settlement
of senior convertible note hedges and $42.6 million cash generated
by operating activities.
2022 Second Quarter Outlook
The Company will discuss its full revenue guidance for the
second quarter of 2022 during its upcoming conference call. The
following table sets forth second quarter outlook for other
measures.
(In millions)
GAAP
Non-GAAP (1)
Licensing billings (operational metric)
(2)
$61 - $67
$61 - $67
Product revenue (GAAP)
$49 - $55
$49 - $55
Contract and other revenue (GAAP)
$18 - $24
$18 - $24
Total operating costs and expenses
$92 - $88
$79 - $75
Interest and other income (expense),
net
$1
($1)
Diluted share count
114
114
_________________________________________
(1)
See “Reconciliation of GAAP
Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates”
table included below.
(2)
Licensing billings is an operational
metric that reflects amounts invoiced to our licensing customers
during the period, as adjusted for certain differences relating to
advanced payments for variable licensing agreements.
For the second quarter of 2022, the Company expects licensing
billings to be between $61 million and $67 million. The Company
also expects royalty revenue to be between $42 million and $48
million, product revenue to be between $49 million and $55 million
and contract and other revenue to be between $18 million and $24
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 $92 million and $88 million. Additionally, the Company
expects non-GAAP operating costs and expenses to be between $79
million and $75 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 114 million, and exclude
stock-based compensation expense ($9 million), amortization expense
($4 million), non-cash interest expense on convertible notes ($0.1
million) and interest income related to the significant financing
component from fixed-fee patent and technology licensing
arrangements ($2 million).
Conference Call
The Company's management will discuss the results of the quarter
during a conference call scheduled for 2:00 p.m. 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# 6285426.
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: cost of product revenue,
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,
amortization of acquired intangible assets, expense on abandoned
operating leases, change in fair value of earn-out liability, loss
on extinguishment of debt, loss on fair value adjustment of
derivatives, net, 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
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 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.
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.
Restatement and shareholder activist costs. These charges
consist of costs associated with our restatement of our financial
statements and certain shareholder activist costs and are excluded
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.
Loss on extinguishment of debt. The Company has excluded loss on
extinguishment of debt as this represents a cost of repurchasing
its existing convertible notes and is not a reflection of the
Company's ongoing operations.
Loss on fair value adjustment of derivatives, net. The Company
has excluded its loss on fair value adjustment of derivatives, net,
as this represents cost and benefits of repurchasing its
convertible notes and is not a reflection of the Company's ongoing
operations.
Realized loss on sale of marketable securities sold for the
purpose of notes repurchase. The Company has excluded its realized
loss on sale of marketable securities sold for the purpose of notes
repurchase as this is not a reflection of the Company's ongoing
operations.
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 2022 and 2021, 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,
product and investment strategies, and the Company’s outlook and
financial guidance for the second 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)
March 31, 2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents
$
179,129
$
107,891
Marketable securities
164,562
377,718
Accounts receivable
51,232
44,065
Unbilled receivables
131,748
135,608
Inventories
6,164
8,482
Prepaids and other current assets
12,277
10,600
Total current assets
545,112
684,364
Intangible assets, net
57,634
58,420
Goodwill
279,793
278,810
Property, plant and equipment, net
54,965
56,035
Operating lease right-of-use assets
22,714
23,712
Deferred tax assets
3,986
4,047
Unbilled receivables
93,367
123,018
Other assets
3,304
4,240
Total assets
$
1,060,875
$
1,232,646
LIABILITIES &
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
15,540
$
11,279
Accrued salaries and benefits
17,402
20,945
Convertible notes
73,860
163,687
Deferred revenue
20,624
24,755
Income taxes payable
21,015
20,607
Operating lease liabilities
5,854
5,992
Other current liabilities
14,107
20,002
Total current liabilities
168,402
267,267
Long-term liabilities:
Long-term operating lease liabilities
27,939
29,099
Long-term income taxes payable
16,681
21,424
Deferred tax liabilities
24,572
23,985
Other long-term liabilities
30,155
28,475
Total long-term liabilities
99,347
102,983
Total stockholders’ equity
793,126
862,396
Total liabilities and stockholders’
equity
$
1,060,875
$
1,232,646
Rambus Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended
March 31,
(In thousands, except per share
amounts)
2022
2021
Revenue:
Product revenue
$
47,969
$
30,781
Royalties
30,464
28,859
Contract and other revenue
20,617
10,742
Total revenue
99,050
70,382
Cost of revenue:
Cost of product revenue
18,397
11,410
Cost of contract and other revenue
624
1,556
Amortization of acquired intangible
assets
3,378
4,386
Total cost of revenue
22,399
17,352
Gross profit
76,651
53,030
Operating expenses:
Research and development
39,815
32,354
Sales, general and administrative
26,906
23,562
Amortization of acquired intangible
assets
409
229
Restructuring charges
—
368
Change in fair value of earn-out
liability
1,200
—
Total operating expenses
68,330
56,513
Operating income (loss)
8,321
(3,483
)
Interest income and other income
(expense), net
1,360
2,981
Loss on extinguishment of debt
(66,497
)
—
Loss on fair value adjustment of
derivatives, net
(8,283
)
—
Interest expense
(605
)
(2,614
)
Interest and other income (expense),
net
(74,025
)
367
Loss before income taxes
(65,704
)
(3,116
)
Provision for (benefit from) income
taxes
514
(503
)
Net loss
$
(66,218
)
$
(2,613
)
Net loss per share:
Basic
$
(0.60
)
$
(0.02
)
Diluted
$
(0.60
)
$
(0.02
)
Weighted average shares used in per share
calculation
Basic
109,889
112,211
Diluted
109,889
112,211
Rambus Inc.
Supplemental Reconciliation of
GAAP to Non-GAAP Results
(Unaudited)
Three Months Ended
March 31,
(In thousands)
2022
2021
Cost of product revenue
$
18,397
$
11,410
Adjustment:
Stock-based compensation expense
(125
)
(89
)
Non-GAAP cost of product
revenue
$
18,272
$
11,321
Total operating expenses
$
68,330
$
56,513
Adjustments:
Stock-based compensation expense
(7,653
)
(6,412
)
Acquisition-related costs and retention
bonus expense
(2,575
)
(655
)
Amortization of acquired intangible
assets
(409
)
(229
)
Restructuring charges
—
(368
)
Expense on abandoned operating leases
(539
)
(521
)
Restatement and shareholder activist
costs
—
(2,956
)
Change in fair value of earn-out
liability
(1,200
)
—
Non-GAAP total operating
expenses
$
55,954
$
45,372
Interest and other income (expense),
net
$
(74,025
)
$
367
Adjustments:
Interest income related to significant
financing component from fixed-fee patent and technology licensing
arrangements
(1,827
)
(2,842
)
Non-cash interest expense on convertible
notes
105
1,874
Loss on extinguishment of debt
66,497
—
Loss on fair value adjustment of
derivatives, net
8,283
—
Realized loss on sale of marketable
securities sold for the purpose of notes repurchase
688
—
Non-GAAP interest and other income
(expense), net
$
(279
)
$
(601
)
Rambus Inc.
Reconciliation of GAAP
Forward-Looking Estimates to Non-GAAP Forward-Looking
Estimates
(Unaudited)
2022 Second Quarter Outlook
Three Months Ended
June 30, 2022
(In millions)
Low
High
Forward-looking operating costs and
expenses
$
91.7
$
87.7
Adjustments:
Stock-based compensation expense
(9.0
)
(9.0
)
Amortization of acquired intangible
assets
(3.7
)
(3.7
)
Forward-looking Non-GAAP operating
costs and expenses
$
79.0
$
75.0
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
(1.5
)
(1.5
)
Non-cash interest expense on convertible
notes
0.1
0.1
Forward-looking Non-GAAP interest and
other income (expense), net
$
(0.5
)
$
(0.5
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220502005600/en/
Keith Jones Vice President, Finance and Interim Chief Financial
Officer Rambus Inc. (408) 462-8000 kjones@rambus.com
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