- $62.0 million in cash provided by operating activities, the highest quarterly cash generation in over 10 years
- Fifth consecutive quarter of record revenue from memory interface chips driven by strong demand in data center
SAN JOSE, Calif., Aug. 3, 2020 /PRNewswire/ -- Rambus Inc. (NASDAQ: RMBS), a premier silicon IP and chip provider making data faster and safer, today reported financial results for the second quarter ended June 30, 2020. GAAP revenue for the second quarter was $59.9 million; licensing billings were $60.7 million, product revenue was $31.7 million, and contract and other revenue was $11.2 million. The Company also generated $62.0 million in cash provided by operating activities.
"Rambus had a superb second quarter with cash generated from operations at a 10-year high and our chip business delivering its fifth consecutive quarter of record revenue," said Luc Seraphin, chief executive officer of Rambus. "This tremendous performance was enabled by our sustained focus on quality and execution, demonstrating our ability to consistently deliver."
Business Review
The need for increased bandwidth, capacity and security across all data-centric applications continues to create strong sustained demand for products and solutions that improve the performance of the global data infrastructure and drive Rambus growth.
The Company's memory interface chip business continued its growth trajectory, with a fifth consecutive quarter of record revenue. This performance was driven by a combination of increased data center and OEM qualifications, and an overall increase in market demand. With the recent industry publication of the DDR5 memory specification, Rambus remains poised as a market leader to support our customers' next-generation systems.
The Rambus Silicon IP business maintained its momentum with design wins for interface and security IP at tier-1 SoC makers across data center, AI and 5G. With the availability of the cutting-edge 112G XSR SerDes for chiplets and co-packaged optics, the Company continues to deliver solutions that enable leading-edge architectures and capabilities for high-performance systems.
|
Quarterly Financial Review - GAAP
|
Three Months Ended
June 30,
|
|
(In millions, except for percentages and per share amounts)
|
2020
|
|
2019
|
|
Revenue
|
|
|
|
|
Royalties
|
$
|
17.0
|
|
|
$
|
27.1
|
|
|
Product revenue
|
31.7
|
|
|
16.0
|
|
|
Contract and other revenue
|
11.2
|
|
|
15.2
|
|
|
Total revenue
|
$
|
59.9
|
|
|
$
|
58.3
|
|
|
Cost of product revenue
|
$
|
10.3
|
|
|
$
|
6.3
|
|
|
Cost of contract and other revenue
|
$
|
1.5
|
|
|
$
|
2.9
|
|
|
Amortization of acquired intangible assets (included in total cost of revenue)
|
$
|
4.3
|
|
|
$
|
3.8
|
|
|
Total operating expenses (1)
|
$
|
56.2
|
|
|
$
|
82.3
|
|
|
Operating loss
|
$
|
(12.5)
|
|
|
$
|
(37.0)
|
|
|
Operating margin
|
(21)
|
%
|
|
64
|
%
|
|
Net loss
|
$
|
(10.8)
|
|
|
$
|
(37.0)
|
|
|
Diluted net loss per share
|
$
|
(0.09)
|
|
|
$
|
(0.33)
|
|
|
Net cash provided by operating activities
|
$
|
62.0
|
|
|
$
|
38.7
|
|
|
(1)
|
Includes amortization of acquired intangible assets of approximately $0.2 million and $1.1 million for the three months ended June 30, 2020 and 2019, respectively.
|
|
Quarterly Financial Review - Non-GAAP (including operational metric) (1)
|
Three Months Ended
June 30,
|
|
(In millions)
|
2020
|
|
2019
|
|
Licensing billings (2)
|
$
|
60.7
|
|
|
$
|
64.9
|
|
|
Product revenue
|
$
|
31.7
|
|
|
$
|
16.0
|
|
|
Contract and other revenue
|
$
|
11.2
|
|
|
$
|
15.2
|
|
|
Cost of product revenue
|
$
|
10.3
|
|
|
$
|
6.3
|
|
|
Cost of contract and other revenue
|
$
|
1.5
|
|
|
$
|
2.9
|
|
|
Total operating expenses
|
$
|
47.7
|
|
|
$
|
54.9
|
|
|
Interest and other income (expense), net
|
$
|
0.1
|
|
|
$
|
0.9
|
|
|
Diluted share count
|
115
|
|
|
113
|
|
|
(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 $59.9 million, at the high end of expectations due to the Company's strong performance in its memory interface chip business. The Company also had licensing billings of $60.7 million, product revenue of $31.7 million, and contract and other revenue of $11.2 million. Rambus had total GAAP cost of revenue of $16.1 million and operating expenses of $56.2 million. The Company also had total non-GAAP operating expenses of $59.5 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 and profit were at the high end of its expectations. The Company had GAAP diluted net loss per share of $0.09. The Company's basic share count was 114 million shares and its diluted share count would have been 115 million shares.
Cash, cash equivalents, and marketable securities as of June 30, 2020 were $486.1 million, an increase of $50.7 million from March 31, 2020, mainly due to $62.0 million in cash provided by operating activities, the highest quarterly cash generation in over 10 years.
2020 Third Quarter Outlook
The Company will discuss its full revenue guidance for the third quarter of 2020 during its upcoming conference call. The following table sets forth third quarter outlook for other measures.
|
(In millions)
|
GAAP
|
|
Non-GAAP (1)
|
|
Licensing billings (2)
|
$55 - $61
|
|
$55 - $61
|
|
Product revenue
|
$29 - $35
|
|
$29 - $35
|
|
Contract and other revenue
|
$10 - $16
|
|
$10 - $16
|
|
Total operating costs and expenses
|
$76 - $72
|
|
$64 - $60
|
|
Interest and other income (expense), net
|
$2
|
|
$0
|
|
Diluted share count
|
116
|
|
116
|
|
(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 third quarter of 2020, the Company expects licensing billings to be between $55 million and $61 million. The Company also expects royalty revenue to be between $9 million and $15 million, product revenue to be between $29 million and $35 million and contract and other revenue to be between $10 million and $16 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 $76 million and $72 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $64 million and $60 million. These expectations also assume non-GAAP interest and other income (expense), net, of $0 million, tax rate of 24% and diluted share count of 116 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# 1788075.
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 of assets held for sale, amortization expense, escrow settlement refund, 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 of assets held for sale. These charges consist of non-cash charges 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.
Escrow settlement refund. The Company received a refund from an escrow settlement related to a prior acquisition. The Company excludes these items because these receipts are not reflective of ongoing operating results. 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 third 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)
|
|
|
June 30,
2020
|
|
December 31,
2019
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
103,275
|
|
|
$
|
102,176
|
|
|
Marketable securities
|
382,802
|
|
|
305,488
|
|
|
Accounts receivable
|
35,198
|
|
|
44,039
|
|
|
Unbilled receivables
|
155,448
|
|
|
184,366
|
|
|
Inventories
|
11,554
|
|
|
10,086
|
|
|
Prepaids and other current assets
|
17,970
|
|
|
18,524
|
|
|
Total current assets
|
706,247
|
|
|
664,679
|
|
|
Intangible assets, net
|
45,624
|
|
|
54,900
|
|
|
Goodwill
|
183,222
|
|
|
183,465
|
|
|
Property, plant and equipment, net
|
50,858
|
|
|
44,714
|
|
|
Operating lease right-of-use assets
|
31,407
|
|
|
37,020
|
|
|
Deferred tax assets
|
5,350
|
|
|
4,574
|
|
|
Unbilled receivables, long-term
|
289,044
|
|
|
343,703
|
|
|
Other assets
|
4,895
|
|
|
5,931
|
|
|
Total assets
|
$
|
1,316,647
|
|
|
$
|
1,338,986
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
$
|
14,016
|
|
|
$
|
9,549
|
|
|
Accrued salaries and benefits
|
16,170
|
|
|
20,291
|
|
|
Deferred revenue
|
10,841
|
|
|
11,947
|
|
|
Income taxes payable, short-term
|
20,044
|
|
|
19,142
|
|
|
Operating lease liabilities
|
4,463
|
|
|
6,357
|
|
|
Other current liabilities
|
17,924
|
|
|
18,893
|
|
|
Total current liabilities
|
83,458
|
|
|
86,179
|
|
|
Long-term liabilities:
|
|
|
|
|
Convertible notes, long-term
|
152,359
|
|
|
148,788
|
|
|
Long-term operating lease liabilities
|
37,626
|
|
|
39,889
|
|
|
Long-term income taxes payable
|
50,472
|
|
|
60,094
|
|
|
Deferred tax liabilities
|
14,724
|
|
|
13,846
|
|
|
Other long-term liabilities
|
12,818
|
|
|
19,272
|
|
|
Total long-term liabilities
|
267,999
|
|
|
281,889
|
|
|
Total stockholders' equity
|
965,190
|
|
|
970,918
|
|
|
Total liabilities and stockholders' equity
|
$
|
1,316,647
|
|
|
$
|
1,338,986
|
|
|
Rambus Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Royalties
|
$
|
16,957
|
|
|
$
|
27,050
|
|
|
$
|
36,651
|
|
|
$
|
51,903
|
|
|
Product revenue
|
31,725
|
|
|
16,031
|
|
|
62,453
|
|
|
24,995
|
|
|
Contract and other revenue
|
11,248
|
|
|
15,216
|
|
|
24,815
|
|
|
29,783
|
|
|
Total revenue
|
59,930
|
|
|
58,297
|
|
|
123,919
|
|
|
106,681
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
Cost of product revenue (1)
|
10,277
|
|
|
6,310
|
|
|
20,620
|
|
|
10,737
|
|
|
Cost of contract and other revenue
|
1,535
|
|
|
2,910
|
|
|
2,733
|
|
|
5,818
|
|
|
Amortization of acquired intangible assets
|
4,336
|
|
|
3,807
|
|
|
8,680
|
|
|
7,670
|
|
|
Total cost of revenue
|
16,148
|
|
|
13,027
|
|
|
32,033
|
|
|
24,225
|
|
|
Gross profit
|
43,782
|
|
|
45,270
|
|
|
91,886
|
|
|
82,456
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development (1)
|
34,688
|
|
|
37,890
|
|
|
71,352
|
|
|
78,509
|
|
|
Sales, general and administrative (1)
|
21,310
|
|
|
23,794
|
|
|
44,205
|
|
|
50,314
|
|
|
Amortization of acquired intangible assets
|
248
|
|
|
1,114
|
|
|
596
|
|
|
2,239
|
|
|
Restructuring charges
|
—
|
|
|
2,528
|
|
|
836
|
|
|
2,859
|
|
|
Change in fair value of earn-out liability
|
—
|
|
|
—
|
|
|
(1,800)
|
|
|
—
|
|
|
Impairment of assets held for sale
|
—
|
|
|
16,990
|
|
|
—
|
|
|
16,990
|
|
|
Total operating expenses
|
56,246
|
|
|
82,316
|
|
|
115,189
|
|
|
150,911
|
|
|
Operating loss
|
(12,464)
|
|
|
(37,046)
|
|
|
(23,303)
|
|
|
(68,455)
|
|
|
Interest income and other income (expense), net
|
4,597
|
|
|
6,972
|
|
|
10,971
|
|
|
14,385
|
|
|
Interest expense
|
(2,580)
|
|
|
(2,534)
|
|
|
(5,135)
|
|
|
(4,805)
|
|
|
Interest and other income (expense), net
|
2,017
|
|
|
4,438
|
|
|
5,836
|
|
|
9,580
|
|
|
Loss before income taxes
|
(10,447)
|
|
|
(32,608)
|
|
|
(17,467)
|
|
|
(58,875)
|
|
|
Provision for income taxes
|
334
|
|
|
4,372
|
|
|
1,297
|
|
|
4,681
|
|
|
Net loss
|
$
|
(10,781)
|
|
|
$
|
(36,980)
|
|
|
$
|
(18,764)
|
|
|
$
|
(63,556)
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.09)
|
|
|
$
|
(0.33)
|
|
|
$
|
(0.17)
|
|
|
$
|
(0.58)
|
|
|
Diluted
|
$
|
(0.09)
|
|
|
$
|
(0.33)
|
|
|
$
|
(0.17)
|
|
|
$
|
(0.58)
|
|
|
Weighted average shares used in per share calculation
|
|
|
|
|
|
|
|
|
Basic
|
113,572
|
|
|
110,875
|
|
|
113,240
|
|
|
110,287
|
|
|
Diluted
|
113,572
|
|
|
110,875
|
|
|
113,240
|
|
|
110,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Total stock-based compensation expense for the three and six months ended June 30, 2020 and 2019 is presented as follows:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Cost of product revenue
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
Research and development
|
$
|
2,515
|
|
|
$
|
3,058
|
|
|
$
|
5,128
|
|
|
$
|
6,268
|
|
|
Sales, general and administrative
|
$
|
4,192
|
|
|
$
|
4,021
|
|
|
$
|
7,651
|
|
|
$
|
7,999
|
|
|
Rambus Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Results
(In thousands)
(Unaudited)
|
|
|
Three Months Ended June 30,
|
|
2020
|
|
2019
|
|
Total operating expenses
|
$
|
56,246
|
|
|
$
|
82,316
|
|
|
Adjustments:
|
|
|
|
|
Stock-based compensation expense
|
(6,707)
|
|
|
(7,080)
|
|
|
Acquisition-related costs and retention bonus expense
|
(1,577)
|
|
|
—
|
|
|
Amortization of acquired intangible assets
|
(248)
|
|
|
(1,114)
|
|
|
Restructuring charges
|
—
|
|
|
(2,528)
|
|
|
Impairment of assets held for sale
|
—
|
|
|
(16,990)
|
|
|
Escrow settlement refund
|
—
|
|
|
296
|
|
|
Non-GAAP total operating expenses
|
$
|
47,714
|
|
|
$
|
54,900
|
|
|
|
|
|
|
Interest and other income (expense), net
|
$
|
2,017
|
|
|
$
|
4,438
|
|
|
Adjustments:
|
|
|
|
|
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements
|
(3,697)
|
|
|
(5,288)
|
|
|
Non-cash interest expense on convertible notes
|
1,798
|
|
|
1,702
|
|
|
Non-GAAP interest and other income (expense), net
|
$
|
118
|
|
|
$
|
852
|
|
|
|
|
|
|
Rambus Inc.
Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates
(In millions)
(Unaudited)
|
|
|
2020 Third Quarter Outlook
|
Three Months Ended
September 30, 2020
|
|
Low
|
|
High
|
|
Forward-looking operating costs and expenses
|
$
|
75.6
|
|
|
$
|
71.6
|
|
|
Adjustments:
|
|
|
|
|
Stock-based compensation expense
|
(7.0)
|
|
|
(7.0)
|
|
|
Amortization of acquired intangible assets
|
(4.5)
|
|
|
(4.5)
|
|
|
Forward-looking Non-GAAP operating costs and expenses
|
$
|
64.1
|
|
|
$
|
60.1
|
|
|
|
|
|
|
Forward-looking interest and other income (expense), net
|
$
|
1.5
|
|
|
$
|
1.5
|
|
|
Adjustments:
|
|
|
|
|
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements
|
(3.3)
|
|
|
(3.3)
|
|
|
Non-cash interest expense on convertible notes
|
1.8
|
|
|
1.8
|
|
|
Forward-looking Non-GAAP interest and other income (expense), net
|
$
|
0.0
|
|
|
$
|
0.0
|
|
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SOURCE Rambus Inc.