- Delivered $66.4 million in product revenue, up 17% sequentially
and 27% year over year
- Achieved strong sequential earnings growth and generated
excellent cash from operations of $62.1 million
- Unveiled industry-first complete chipsets for next-generation,
industry-standard DDR5 MRDIMMs and RDIMMs for the data center and
AI
Rambus Inc. (NASDAQ:RMBS), a provider of industry-leading chips
and IP making data faster and safer, today reported financial
results for the third quarter ended September 30, 2024. GAAP
revenue for the third quarter was $145.5 million, licensing
billings were $65.4 million, product revenue was $66.4 million, and
contract and other revenue was $15.0 million. The Company also
generated $62.1 million in cash provided by operating activities in
the third quarter.
“We delivered strong sequential growth in Q3, fueled by a
double-digit increase in product revenue, and generated excellent
cash from operations,” said Luc Seraphin, chief executive officer
of Rambus. “Building on our strong execution and strategic
investment in new leadership products, we introduced the industry’s
first complete chipsets for industry-standard DDR5 MRDIMM 12800 and
RDIMM 8000 to address the rising performance needs of the data
center and AI. These new chips represent a significant expansion of
our addressable market and support the company’s long-term
growth.”
Quarterly Financial Review -
GAAP
Three Months Ended
September 30,
(In millions, except for percentages
and per share amounts)
2024
2023
Revenue
Product revenue
$
66.4
$
52.2
Royalties
64.1
28.9
Contract and other revenue
15.0
24.2
Total revenue
145.5
105.3
Cost of product revenue
24.6
19.4
Cost of contract and other revenue
0.8
1.3
Amortization of acquired intangible assets
(included in total cost of revenue)
2.8
3.3
Total operating expenses (benefits)
(1)
62.7
(23.6
)
Operating income
$
54.6
$
104.9
Operating margin
38
%
100
%
Net income
$
48.7
$
103.2
Diluted net income per share
$
0.45
$
0.93
Net cash provided by operating
activities
$
62.1
$
51.6
_________________________________________
(1)
Includes amortization of acquired
intangible assets of approximately $0.1 million and $0.3 million
for the three months ended September 30, 2024 and 2023,
respectively.
Quarterly Financial Review -
Supplemental Information(1)
Three Months Ended
September 30,
(In millions)
2024
2023
Licensing billings (operational metric)
(2)
$
65.4
$
57.9
Product revenue (GAAP)
$
66.4
$
52.2
Contract and other revenue (GAAP)
$
15.0
$
24.2
Non-GAAP cost of product revenue
$
24.4
$
19.2
Cost of contract and other revenue
(GAAP)
$
0.8
$
1.3
Non-GAAP total operating expenses
$
55.3
$
52.4
Non-GAAP interest and other income
(expense), net
$
4.2
$
1.9
Diluted share count (GAAP)
108
111
_________________________________________
(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 $145.5 million. The Company
also had licensing billings of $65.4 million, product revenue of
$66.4 million, and contract and other revenue of $15.0 million. The
Company had total GAAP cost of revenue of $28.1 million and
operating expenses of $62.7 million. The Company also had total
non-GAAP operating expenses of $80.5 million (including non-GAAP
cost of revenue of $25.2 million). The Company had GAAP diluted net
income per share of $0.45. The Company’s basic share count was 107
million shares and its diluted share count was 108 million
shares.
Cash, cash equivalents, and marketable securities as of
September 30, 2024 were $432.7 million, which remained flat from
June 30, 2024, mainly due to $62.1 million in cash provided by
operating activities, offset by $50 million paid in connection with
a share repurchase program and $9.9 million paid to acquire
property, plant and equipment.
2024 Fourth Quarter Outlook
The Company will discuss its full revenue guidance for the
fourth quarter of 2024 during its upcoming conference call. The
following table sets forth the fourth quarter outlook for other
measures.
(In millions)
GAAP
Non-GAAP (1)
Licensing billings (operational metric)
(2)
$57 - $63
$57 - $63
Product revenue (GAAP)
$72 - $78
$72 - $78
Contract and other revenue (GAAP)
$22 - $28
$22 - $28
Total operating costs and expenses
$101 - $97
$86 - $82
Interest and other income (expense),
net
$4
$4
Diluted share count
108
108
_________________________________________
(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 fourth quarter of 2024, the Company expects licensing
billings to be between $57 million and $63 million. The Company
also expects royalty revenue to be between $54 million and $60
million, product revenue to be between $72 million and $78 million,
and contract and other revenue to be between $22 million and $28
million. Revenue is not without risk and achieving revenue in this
range will require that the Company sign customer agreements for
various product sales and solutions licensing, among other
matters.
The Company also expects operating costs and expenses to be
between $101 million and $97 million. Additionally, the Company
expects non-GAAP operating costs and expenses to be between $86
million and $82 million. These expectations also assume a tax rate
of 22% and a diluted share count of 108 million, and exclude
stock-based compensation expense of $13 million and amortization of
acquired intangible assets of $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: (866) 813-9403 (domestic) or (+1)
929-458-6194 (international) with ID# 719712.
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/divestiture costs and retention bonus
expense, amortization of acquired intangible assets, restructuring
and other charges (benefits), expense on abandoned operating
leases, facility restoration costs, gain on divestiture, change in
fair value of earn-out liability, impairment of assets, 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. A 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/divestiture costs and retention bonus
expense. These expenses include all direct costs of certain
acquisitions, divestitures 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 divestitures 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 and other charges (recoveries). These charges
(recoveries) may consist of severance, contractual retention
payments, exit costs and other charges and are excluded because
such charges (recoveries) 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.
Facility restoration costs. These charges consist of exit costs
associated with our leased office space and are excluded because
such charges are not directly related to ongoing business results
and do not reflect expected future operating expenses.
Gain on divestiture. Reflects the gain on the sale of the
Company's PHY IP business. The Company excludes these charges
(benefits) because such charges (benefits) are not directly related
to ongoing business results and do not reflect expected future
operating expenses (benefits).
Impairment of assets. These charges primarily consist of
non-cash charges to property, plant and equipment assets, which are
excluded because such charges are non-recurring and do not reduce
the Company’s liquidity.
Change in fair value of earn-out liability. This change is due
to adjustments to 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.
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 22 percent and 24 percent for 2024 and 2023,
respectively, 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 solutions 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 fourth quarter of 2024 and related
drivers, and the Company’s ability to effectively manage market
challenges. 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. 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)
September 30,
2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
113,980
$
94,767
Marketable securities
318,717
331,077
Accounts receivable
87,198
82,925
Unbilled receivables
30,778
50,872
Inventories
48,905
36,154
Prepaids and other current assets
12,435
34,850
Total current assets
612,013
630,645
Intangible assets, net
19,389
28,769
Goodwill
286,812
286,812
Property, plant and equipment, net
73,374
67,808
Operating lease right-of-use assets
21,039
21,497
Deferred tax assets
129,348
127,892
Income taxes receivable
104,270
88,768
Other assets
5,325
6,036
Total assets
$
1,251,570
$
1,258,227
LIABILITIES &
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
20,365
$
18,074
Accrued salaries and benefits
13,966
17,504
Deferred revenue
18,404
17,393
Income taxes payable
1,114
5,099
Operating lease liabilities
5,397
4,453
Other current liabilities
14,881
26,598
Total current liabilities
74,127
89,121
Long-term liabilities:
Long-term operating lease liabilities
24,794
26,255
Long-term income taxes payable
101,350
78,947
Other long-term liabilities
12,314
25,803
Total long-term liabilities
138,458
131,005
Total stockholders’ equity
1,038,985
1,038,101
Total liabilities and stockholders’
equity
$
1,251,570
$
1,258,227
Rambus Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands, except per share
amounts)
2024
2023
2024
2023
Revenue:
Product revenue
$
66,394
$
52,181
$
173,446
$
170,934
Royalties
64,105
28,857
167,961
97,698
Contract and other revenue
15,014
24,260
54,115
70,260
Total revenue
145,513
105,298
395,522
338,892
Cost of revenue:
Cost of product revenue
24,554
19,388
67,381
64,554
Cost of contract and other revenue
752
1,295
2,307
4,280
Amortization of acquired intangible
assets
2,796
3,349
8,904
10,472
Total cost of revenue
28,102
24,032
78,592
79,306
Gross profit
117,411
81,266
316,930
259,586
Operating expenses (benefits):
Research and development
41,299
37,368
119,183
120,842
Sales, general and administrative
25,867
25,333
76,096
82,484
Amortization of acquired intangible
assets
94
258
476
1,022
Restructuring and other charges
(recoveries)
—
(100
)
—
9,394
Gain on divestiture
—
(90,843
)
—
(90,843
)
Impairment of assets
—
10,045
1,071
10,045
Change in fair value of earn-out
liability
(4,544
)
(5,666
)
(5,044
)
8,134
Total operating expenses (benefits)
62,716
(23,605
)
191,782
141,078
Operating income
54,695
104,871
125,148
118,508
Interest income and other income
(expense), net
4,667
2,715
13,654
7,112
Loss on fair value adjustment of
derivatives, net
—
—
—
(240
)
Interest expense
(327
)
(356
)
(1,064
)
(1,113
)
Interest and other income (expense),
net
4,340
2,359
12,590
5,759
Income before income taxes
59,035
107,230
137,738
124,267
Provision for (benefit from) income
taxes
10,370
4,032
20,119
(151,092
)
Net income
$
48,665
$
103,198
$
117,619
$
275,359
Net income per share:
Basic
$
0.45
$
0.95
$
1.09
$
2.54
Diluted
$
0.45
$
0.93
$
1.08
$
2.48
Weighted average shares used in per share
calculation
Basic
107,235
108,317
107,681
108,412
Diluted
108,474
110,775
109,318
111,179
Rambus Inc.
Supplemental Reconciliation of
GAAP to Non-GAAP Results
(Unaudited)
Three Months Ended
September 30,
(In thousands)
2024
2023
Cost of product revenue
$
24,554
$
19,388
Adjustment:
Stock-based compensation expense
(117
)
(149
)
Non-GAAP cost of product
revenue
$
24,437
$
19,239
Total operating expenses (benefits)
$
62,716
$
(23,605
)
Adjustments:
Stock-based compensation expense
(11,881
)
(9,889
)
Acquisition-related costs and retention
bonus expense
(17
)
(37
)
Amortization of acquired intangible
assets
(94
)
(258
)
Restructuring and other recoveries
—
100
Expense on abandoned operating leases
—
(40
)
Facility restoration costs
—
3
Severance costs
—
(373
)
Gain on divestiture
—
90,843
Impairment of assets
—
(10,045
)
Change in fair value of earn-out
liability
4,544
5,666
Non-GAAP total operating
expenses
$
55,268
$
52,365
Interest and other income (expense),
net
$
4,340
$
2,359
Adjustment:
Interest income related to significant
financing component from fixed-fee patent and technology licensing
arrangements
(163
)
(426
)
Non-GAAP interest and other income
(expense), net
$
4,177
$
1,933
Rambus Inc.
Reconciliation of GAAP
Forward-Looking Estimates to Non-GAAP Forward-Looking
Estimates
(Unaudited)
2024 Fourth Quarter Outlook
Three Months Ended
December 31, 2024
(In millions)
Low
High
Forward-looking operating costs and
expenses
$
101.0
$
97.0
Adjustments:
Stock-based compensation expense
(13.0
)
(13.0
)
Amortization of acquired intangible
assets
(2.0
)
(2.0
)
Forward-looking Non-GAAP operating
costs and expenses
$
86.0
$
82.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241028486548/en/
Desmond Lynch Senior Vice President, Finance and Chief Financial
Officer (408) 462-8000 dlynch@rambus.com
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