Rambus Reports First Quarter 2019 Financial Results

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 product and service offerings, future profit and growth and financial guidance for the second quarter of 2019, including operating costs and expenses, and estimated, fixed, long-term projected tax rates, both 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. Rambus undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

   

Rambus Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

March 31,
2019
December 31,
2018
ASSETS
 
Current assets:
Cash and cash equivalents $ 143,016 $ 115,924
Marketable securities 162,850 161,840
Accounts receivable 43,810 50,863
Unbilled receivables 170,287 176,613
Inventories 8,192 6,772
Prepaids and other current assets 16,857   15,738
Total current assets 545,012 527,750
Intangible assets, net 55,507 59,936
Goodwill 207,828 207,178
Property, plant and equipment, net 22,637 57,028
Operating lease right-of-use assets 19,458
Deferred tax assets 4,411 4,435
Unbilled receivables, long-term 459,148 497,003
Other assets 7,419   7,825
Total assets $ 1,321,420   $ 1,361,155
 
LIABILITIES & STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 8,274 $ 7,392
Accrued salaries and benefits 13,666 16,938
Deferred revenue 15,774 19,374
Income taxes payable, short-term 16,364 16,390
Operating lease liabilities 9,351
Other current liabilities 5,847   9,191
Total current liabilities 69,276 69,285
Long-term liabilities:
Convertible notes, long-term 143,612 141,934
Long-term imputed financing obligation 36,297
Long-term operating lease liabilities 12,308
Long-term income taxes payable 73,365 77,280
Other long-term liabilities 22,972   24,247
Total long-term liabilities 252,257   279,758
Total stockholders’ equity 999,887   1,012,112
Total liabilities and stockholders’ equity $ 1,321,420   $ 1,361,155
 
 

Rambus Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended
March 31,

2019   2018
 
Revenue:
Royalties $ 24,853 $ 21,374
Product revenue 8,964 7,313
Contract and other revenue   14,567     17,739  
Total revenue   48,384     46,426  
Operating costs and expenses:
Cost of product revenue (1) $ 4,427 $ 4,357
Cost of contract and other revenue 6,771 12,122
Research and development (1) 40,619 40,117
Sales, general and administrative (1) 27,645 30,198
Restructuring charges   331     3,245  
Total operating costs and expenses   79,793     90,039  
Operating loss (31,409 ) (43,613 )
Interest income and other income (expense), net 7,413 9,116
Interest expense   (2,271 )   (4,421 )
Interest and other income (expense), net   5,142     4,695  
Loss before income taxes (26,267 ) (38,918 )
Provision for (benefit from) income taxes   309     (3,229 )
Net loss $ (26,576 ) $ (35,689 )
Net loss per share:
Basic $ (0.24 ) $ (0.33 )
Diluted $ (0.24 ) $ (0.33 )
Weighted average shares used in per share calculation
Basic   109,692     109,358  
Diluted   109,692     109,358  
 

_________

(1) Total stock-based compensation expense for the three months ended March 31, 2019 and 2018 is presented as follows:

 

Three Months Ended
March 31,

2019 2018
Cost of product revenue $ 1 $ 3
Research and development $ 3,210 $ 3,192
Sales, general and administrative $ 3,978 $ 4,319
 
 

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(In thousands)

(Unaudited)

 
Three Months Ended March 31,
2019   2018
 
Operating costs and expenses $ 79,793 $ 90,039
Adjustments:
Stock-based compensation expense (7,189 ) (7,514 )
Acquisition-related transaction costs and retention bonus expense (30 )
Amortization expense (4,988 ) (10,531 )
Restructuring charges (331 ) (3,245 )
Non-GAAP operating costs and expenses $ 67,285   $ 68,719  
 
Operating loss $ (31,409 ) $ (43,613 )
Adjustments:
Stock-based compensation expense 7,189 7,514
Acquisition-related transaction costs and retention bonus expense 30
Amortization expense 4,988 10,531
Restructuring charges 331   3,245  
Non-GAAP operating loss $ (18,901 ) $ (22,293 )
 
Loss before income taxes $ (26,267 ) $ (38,918 )
Adjustments:
Stock-based compensation expense 7,189 7,514
Acquisition-related transaction costs and retention bonus expense 30
Amortization expense 4,988 10,531
Restructuring charges 331 3,245
Non-cash interest expense on convertible notes 1,678   2,679  
Non-GAAP loss before income taxes $ (12,081 ) $ (14,919 )
GAAP provision for (benefit from) income taxes 309 (3,229 )
Adjustment to GAAP provision for (benefit from) income taxes (3,208 ) (352 )
Non-GAAP benefit from income taxes (2,899 ) (3,581 )
Non-GAAP net loss $ (9,182 ) $ (11,338 )
 
Non-GAAP basic net loss per share $ (0.08 ) $ (0.10 )
Non-GAAP diluted net loss per share $ (0.08 ) $ (0.10 )
Weighted average shares used in non-GAAP per share calculation:
Basic 109,692 109,358
Diluted 109,692 109,358
 
 

Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1)

 

Three Months Ended
March 31,

2019   2018
GAAP effective tax rate (1)% 8%
Adjustment to GAAP effective tax rate

25 %

16%
Non-GAAP effective tax rate

24 %

24%
 
          (1)   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 2019 and 2018, 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 year to assist the Company’s planning for future periods.
 
   

Rambus Inc.

Reconciliation of Other GAAP to Non-GAAP Items

(In thousands, except percentages)

(Unaudited)

 
GAAP Non-GAAP

Three Months Ended
March 31,

Three Months Ended
March 31,

2019   2018 2019   2018
Revenue (i) $ 48,384 $ 46,426 $ 48,384 $ 46,426
Operating loss (ii) (31,409 ) (43,613 ) (18,901 ) (22,293 )
Operating margin (ii/i) (65 )% (94 )% (39 )% (48 )%
 
 

Rambus Inc.

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

(In millions)

(Unaudited)

 
2019 Second Quarter Outlook

Three Months Ended
June 30, 2019

Low   High
 
Forward-looking operating costs and expenses $ 81.1 $ 77.1
Adjustments:
Stock-based compensation expense (7.2 ) (7.2 )
Amortization expense (5.0 ) (5.0 )
Forward-looking Non-GAAP operating costs and expenses $ 68.9   $ 64.9  
 
Forward-looking interest and other income (expense), net $ 4.8 $ 4.8
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements (5.7 ) (5.7 )
Non-cash interest expense on convertible notes 1.7   1.7  
Forward-looking Non-GAAP interest and other income (expense), net $ 0.8   $ 0.8  
 
 

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