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Rambus Reports Fourth Quarter and Fiscal Year 2021 Financial Results

SAN JOSE, Calif. — (BUSINESS WIRE) — February 7, 2022 — Rambus Inc. (NASDAQ: RMBS), a provider of industry-leading chips and IP making data faster and safer, today reported financial results for the fourth quarter ended December 31, 2021. GAAP revenue for the fourth quarter was $91.8 million; licensing billings were $66.6 million, product revenue was $45.3 million, and contract and other revenue was $13.6 million. The Company also generated $72.2 million in cash provided by operating activities in the fourth quarter, setting an annual record of $209.2 million for the full year 2021.

“Rambus delivered an outstanding fourth quarter contributing to an exceptionally good year, driven by excellent execution and record product revenue,” said Luc Seraphin, chief executive officer of Rambus. “The record cash generation fuels our ongoing strategic investment in scaling the business, returning value to stockholders, and extending our product roadmap to enable continued profitable growth.”

Quarterly Financial Review - GAAP

Three Months Ended
December 31,

(In millions, except for percentages and per share amounts)

2021

 

2020

Revenue

 

 

 

Product revenue

$

45.3

 

 

$

21.8

 

Royalties

 

32.9

 

 

 

27.7

 

Contract and other revenue

 

13.6

 

 

 

12.4

 

Total revenue

$

91.8

 

 

$

61.9

 

Cost of product revenue

$

13.4

 

 

$

7.5

 

Cost of contract and other revenue

$

0.7

 

 

$

1.6

 

Amortization of acquired intangible assets (included in total cost of revenue)

$

3.6

 

 

$

4.3

 

Total operating expenses (1)

$

65.1

 

 

$

59.5

 

Operating income (loss)

$

9.0

 

 

$

(11.0

)

Operating margin

 

10

%

 

 

(18

)%

Net income (loss)

$

6.1

 

 

$

(12.1

)

Diluted net income (loss) per share

$

0.05

 

 

$

(0.11

)

 

 

 

 

Net cash provided by operating activities

$

72.2

 

 

$

42.1

 

____________________________

(1)

Includes amortization of acquired intangible assets of approximately $0.4 million and $0.2 million for the three months ended December 31, 2021 and 2020, respectively.

Quarterly Financial Review - Non-GAAP (including operational metric) (1)

Three Months Ended
December 31,

(In millions)

2021

 

2020

Licensing billings (2)

$

66.6

 

 

$

64.2

 

Product revenue

$

45.3

 

 

$

21.8

 

Contract and other revenue

$

13.6

 

 

$

12.4

 

Cost of product revenue

$

13.3

 

 

$

7.5

 

Cost of contract and other revenue

$

0.7

 

 

$

1.6

 

Total operating expenses

$

51.4

 

 

$

46.7

 

Interest and other income (expense), net

$

(1.1

)

 

$

(0.6

)

Diluted share count

 

115

 

 

 

115

 

____________________________

(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 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 $91.8 million, exceeding the Company’s guidance. The Company also had licensing billings of $66.6 million, product revenue of $45.3 million, and contract and other revenue of $13.6 million. The Company had total GAAP cost of revenue of $17.7 million and operating expenses of $65.1 million. The Company also had total non-GAAP operating expenses of $65.4 million (which includes non-GAAP cost of revenue), at the low end of its expectations through its operational efficiency. The Company’s annual product revenue increased 26% year over year as the Company continues to gain market share. Due to the Company’s strong performance and operational efficiency, the Company delivered a strong fourth quarter, exceeding guidance for revenue and profitability. The Company had GAAP diluted net income per share of $0.05. The Company’s basic share count was 109 million shares and its diluted share count was 115 million shares.

Cash, cash equivalents, and marketable securities as of December 31, 2021 were $485.6 million, an increase of $65.9 million as compared to September 30, 2021, mainly due to cash provided by operating activities of approximately $72.2 million. Cash provided by operating activities for the year ended December 31, 2021 was $209.2 million, an increase of $23.7 million or 13%, from the same period in the prior year.

2022 First Quarter Outlook

The Company will discuss its full revenue guidance for the first quarter of 2022 during its upcoming conference call. The following table sets forth first quarter outlook for other measures.

(In millions)

GAAP

 

Non-GAAP (1)

Licensing billings (2)

$64 - $70

 

$64 - $70

Product revenue

$43 - $49

 

$43 - $49

Contract and other revenue

$12 - $18

 

$12 - $18

Total operating costs and expenses

$84 - $80

 

$73 - $69

Interest and other income (expense), net

($1)

 

($1)

Diluted share count

115

 

115

____________________________

(1)

See “Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates” tables 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 first quarter of 2022, the Company expects licensing billings to be between $64 million and $70 million. The Company also expects royalty revenue to be between $30 million and $36 million, product revenue to be between $43 million and $49 million and contract and other revenue to be between $12 million and $18 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 $84 million and $80 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $73 million and $69 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 115 million, and exclude stock-based compensation expense ($7 million), amortization expense ($4 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 ($2 million).

Conference Call

Rambus 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# 5264419.

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 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 expenses, acquisition-related costs and retention bonus expense, amortization of acquired intangible assets, restructuring and other charges, depreciation expense on unused Electronic Design Automation (“EDA”) software licenses, expense on abandoned operating leases, change in fair value of earn-out liability, 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 and other 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.

Depreciation expense on unused EDA software licenses. Reflects the accelerated depreciation expense on EDA software licenses 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.

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.

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.

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% for both 2021 and 2020, 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, industry growth rates, the successful integrations of AnalogX and PLDA, product and investment strategies, the long-term sustainability of the Company’s increased product revenue and cash generated from operating activities, the Company’s outlook and financial guidance for the first 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)

 

December 31,
2021

 

December 31,
2020

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

107,891

 

$

128,967

Marketable securities

 

 

377,718

 

 

373,682

Accounts receivable

 

 

44,065

 

 

27,903

Unbilled receivables

 

 

135,608

 

 

138,813

Inventories

 

 

8,482

 

 

14,466

Prepaids and other current assets

 

 

10,600

 

 

15,881

Total current assets

 

 

684,364

 

 

699,712

Intangible assets, net

 

 

58,420

 

 

36,487

Goodwill

 

 

278,810

 

 

183,222

Property, plant and equipment, net

 

 

56,035

 

 

57,693

Operating lease right-of-use assets

 

 

23,712

 

 

28,708

Deferred tax assets

 

 

4,047

 

 

4,353

Unbilled receivables, long-term

 

 

123,018

 

 

236,699

Other assets

 

 

4,240

 

 

4,535

Total assets

 

$

1,232,646

 

$

1,251,409

 

 

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

11,279

 

$

8,993

Accrued salaries and benefits

 

 

20,945

 

 

23,326

Deferred revenue

 

 

24,755

 

 

10,198

Income taxes payable, short-term

 

 

20,607

 

 

20,064

Convertible notes, short-term

 

 

163,687

 

 

Operating lease liabilities

 

 

5,992

 

 

4,724

Other current liabilities

 

 

20,002

 

 

18,559

Total current liabilities

 

 

267,267

 

 

85,864

Long-term liabilities:

 

 

 

 

Convertible notes, long-term

 

 

 

 

156,031

Long-term operating lease liabilities

 

 

29,099

 

 

34,305

Long-term income taxes payable

 

 

21,424

 

 

41,333

Deferred tax liabilities

 

 

23,985

 

 

14,276

Other long-term liabilities

 

 

28,475

 

 

6,894

Total long-term liabilities

 

 

102,983

 

 

252,839

Total stockholders’ equity

 

 

862,396

 

 

912,706

Total liabilities and stockholders’ equity

 

$

1,232,646

 

$

1,251,409

 

Rambus Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

Years Ended
December 31,

(In thousands, except per share amounts)

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

Product revenue

 

$

45,274

 

 

$

21,774

 

 

$

143,935

 

 

$

113,996

 

Royalties

 

 

32,893

 

 

 

27,732

 

 

 

136,706

 

 

 

84,560

 

Contract and other revenue

 

 

13,614

 

 

 

12,407

 

 

 

47,663

 

 

 

47,766

 

Total revenue

 

 

91,781

 

 

 

61,913

 

 

 

328,304

 

 

 

246,322

 

Cost of revenue:

 

 

 

 

 

 

 

 

Cost of product revenue

 

 

13,408

 

 

 

7,468

 

 

 

49,397

 

 

 

37,749

 

Cost of contract and other revenue

 

 

727

 

 

 

1,647

 

 

 

4,756

 

 

 

5,647

 

Amortization of acquired intangible assets

 

 

3,603

 

 

 

4,336

 

 

 

16,241

 

 

 

17,352

 

Total cost of revenue

 

 

17,738

 

 

 

13,451

 

 

 

70,394

 

 

 

60,748

 

Gross profit

 

 

74,043

 

 

 

48,462

 

 

 

257,910

 

 

 

185,574

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

36,263

 

 

 

34,752

 

 

 

135,678

 

 

 

139,837

 

Sales, general and administrative

 

 

23,101

 

 

 

21,232

 

 

 

91,057

 

 

 

86,441

 

Amortization of acquired intangible assets

 

 

409

 

 

 

229

 

 

 

1,226

 

 

 

1,061

 

Restructuring and other charges

 

 

 

 

 

3,253

 

 

 

368

 

 

 

4,089

 

Change in fair value of earn-out liability

 

 

5,300

 

 

 

 

 

 

5,300

 

 

 

(1,800

)

Total operating expenses

 

 

65,073

 

 

 

59,466

 

 

 

233,629

 

 

 

229,628

 

Operating income (loss)

 

 

8,970

 

 

 

(11,004

)

 

 

24,281

 

 

 

(44,054

)

Interest income and other income (expense), net

 

 

1,623

 

 

 

3,170

 

 

 

9,711

 

 

 

17,855

 

Interest expense

 

 

(2,737

)

 

 

(2,619

)

 

 

(10,706

)

 

 

(10,340

)

Interest and other income (expense), net

 

 

(1,114

)

 

 

551

 

 

 

(995

)

 

 

7,515

 

Income (loss) before income taxes

 

 

7,856

 

 

 

(10,453

)

 

 

23,286

 

 

 

(36,539

)

Provision for income taxes

 

 

1,751

 

 

 

1,602

 

 

 

4,952

 

 

 

3,932

 

Net income (loss)

 

$

6,105

 

 

$

(12,055

)

 

$

18,334

 

 

$

(40,471

)

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.06

 

 

$

(0.11

)

 

$

0.17

 

 

$

(0.36

)

Diluted

 

$

0.05

 

 

$

(0.11

)

 

$

0.16

 

 

$

(0.36

)

Weighted average shares used in per share calculation:

 

 

 

 

 

 

 

 

Basic

 

 

109,161

 

 

 

112,706

 

 

 

110,538

 

 

 

113,254

 

Diluted

 

 

114,534

 

 

 

112,706

 

 

 

114,865

 

 

 

113,254

 

 

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(Unaudited)

 

 

 

Three Months Ended

 

 

December 31,

(In thousands)

 

 

2021

 

 

 

2020

 

Cost of product revenue

 

$

13,408

 

 

$

7,468

 

Adjustment:

 

 

 

 

Stock-based compensation expense

 

 

(112

)

 

 

 

Non-GAAP cost of product revenue

 

$

13,296

 

 

$

7,468

 

 

 

 

 

 

Total operating expenses

 

$

65,073

 

 

$

59,466

 

Adjustments:

 

 

 

 

Stock-based compensation expense

 

 

(6,092

)

 

 

(6,165

)

Acquisition-related costs and retention bonus expense

 

 

(1,308

)

 

 

(781

)

Amortization of acquired intangible assets

 

 

(409

)

 

 

(229

)

Restructuring and other charges

 

 

 

 

 

(3,253

)

Depreciation expense on unused EDA software licenses

 

 

 

 

 

(2,183

)

Expense on abandoned operating leases

 

 

(559

)

 

 

(174

)

Change in fair value of earn-out liability

 

 

(5,300

)

 

 

 

Non-GAAP total operating expenses

 

$

51,405

 

 

$

46,681

 

 

 

 

 

 

Interest and other income (expense), net

 

$

(1,114

)

 

$

551

 

Adjustments:

 

 

 

 

Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements

 

 

(1,907

)

 

 

(2,984

)

Non-cash interest expense on convertible notes

 

 

1,954

 

 

 

1,849

 

Non-GAAP interest and other income (expense), net

 

$

(1,067

)

 

$

(584

)

 

Rambus Inc.

Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates

(Unaudited)

 

2022 First Quarter Outlook

 

Three Months Ended
March 31, 2022

(In millions)

 

Low

 

High

Forward-looking operating costs and expenses

 

$

83.8

 

 

$

79.8

 

Adjustments:

 

 

 

 

Stock-based compensation expense

 

 

(7.0

)

 

 

(7.0

)

Amortization of acquired intangible assets

 

 

(3.8

)

 

 

(3.8

)

Forward-looking Non-GAAP operating costs and expenses

 

$

73.0

 

 

$

69.0

 

 

 

 

 

 

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

 

 

(1.9

)

 

 

(1.9

)

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

)

 



Contact:

Keith Jones
Vice President, Finance and Interim Chief Financial Officer
Rambus Inc.
(408) 462-8000
kjones@rambus.com