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Rambus Reports Second Quarter 2022 Financial Results

SAN JOSE, Calif. — (BUSINESS WIRE) — August 1, 2022 — Rambus Inc. (NASDAQ: RMBS), a provider of industry-leading chips and IP making data faster and safer, today reported financial results for the second quarter ended June 30, 2022. GAAP revenue for the second quarter was $121.1 million, licensing billings were $66.1 million, product revenue was $53.3 million, and contract and other revenue was $19.8 million. The Company also generated $56.5 million in cash provided by operating activities in the second quarter.

“Rambus delivered a strong performance with another quarter of record product revenue from memory interface chips and sustained silicon IP momentum driving our results,” said Luc Seraphin, chief executive officer of Rambus. “We continue to address the growing needs of the data center with our diverse and expanding portfolio of offerings to fuel the company’s long-term profitable growth.”

Quarterly Financial Review - GAAP

 

Three Months Ended

June 30,

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

 

2022

 

2021

Revenue

 

 

 

 

Product revenue

 

$

53.3

 

 

$

31.2

 

Royalties

 

 

48.0

 

 

 

41.9

 

Contract and other revenue

 

 

19.8

 

 

 

11.8

 

Total revenue

 

 

121.1

 

 

 

84.9

 

Cost of product revenue

 

 

20.4

 

 

 

11.4

 

Cost of contract and other revenue

 

 

1.0

 

 

 

1.0

 

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

 

 

3.4

 

 

 

4.5

 

Total operating expenses (1)

 

 

60.8

 

 

 

53.9

 

Operating income

 

$

35.5

 

 

$

14.1

 

Operating margin

 

 

29

%

 

 

17

%

Net income

 

$

35.0

 

 

$

11.2

 

Diluted net income per share

 

$

0.31

 

 

$

0.10

 

Net cash provided by operating activities

 

$

56.5

 

 

$

51.6

 

_________________________________________

(1)

Includes amortization of acquired intangible assets of approximately $0.4 million and $0.2 million for the three months ended June 30, 2022 and 2021, respectively.

Quarterly Financial Review - Supplemental Information(1)

 

Three Months Ended

June 30,

(In millions)

 

2022

 

2021

Licensing billings (operational metric) (2)

 

$

66.1

 

 

$

65.2

 

Product revenue (GAAP)

 

$

53.3

 

 

$

31.2

 

Contract and other revenue (GAAP)

 

$

19.8

 

 

$

11.8

 

Non-GAAP cost of product revenue

 

$

20.3

 

 

$

11.4

 

Cost of contract and other revenue (GAAP)

 

$

1.0

 

 

$

1.0

 

Non-GAAP total operating expenses

 

$

54.9

 

 

$

43.7

 

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

 

$

1.0

 

$

(0.8

)

Diluted share count (GAAP)

 

 

113

 

 

 

115

 

_________________________________________

(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 $121.1 million, at the high end of the Company’s guidance. The Company also had licensing billings of $66.1 million, product revenue of $53.3 million, and contract and other revenue of $19.8 million. The Company had GAAP cost of revenue of $24.8 million and operating expenses of $60.8 million. The Company also had total non-GAAP operating expenses of $76.1 million (including non-GAAP cost of revenue). The Company had GAAP diluted net income per share of $0.31. The Company's basic share count was 110 million shares and its diluted share count was 113 million shares.

Cash, cash equivalents, and marketable securities as of June 30, 2022 were $351.6 million, an increase of $7.9 million from March 31, 2022, mainly due to $56.5 million in cash generated by operating activities, partially offset by $24.7 million paid in connection with the repayment of 2023 senior notes and $16.1 million paid in connection with the acquisition of Hardent, Inc.

2022 Third Quarter Outlook

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

(In millions)

 

GAAP

 

Non-GAAP (1)

Licensing billings (operational metric) (2)

 

$63 - $69

 

$63 - $69

Product revenue (GAAP)

 

$51 - $57

 

$51 - $57

Contract and other revenue (GAAP)

 

$18 - $24

 

$18 - $24

Total operating costs and expenses

 

$94 - $90

 

$81 - $77

Interest and other income (expense), net

 

$0

 

($1)

Diluted share count

 

113

 

113

_________________________________________

(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 third quarter of 2022, the Company expects licensing billings to be between $63 million and $69 million. The Company also expects royalty revenue to be between $29 million and $35 million, product revenue to be between $51 million and $57 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 and solutions licensing, among other matters.

The Company also expects operating costs and expenses to be between $94 million and $90 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $81 million and $77 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 113 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 ($1 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 (+44) 204-525-0658 (international) with ID# 092440.

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, 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. 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 costs and retention bonus expense. These expenses include all direct costs of certain acquisitions and the current period’s 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.

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 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.

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 third 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 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)

 

June 30,

2022

 

December 31,

2021

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

171,460

 

$

107,891

Marketable securities

 

 

180,175

 

 

 

377,718

 

Accounts receivable

 

 

63,602

 

 

 

44,065

 

Unbilled receivables

 

 

146,692

 

 

 

135,608

 

Inventories

 

 

9,238

 

 

 

8,482

 

Prepaids and other current assets

 

 

9,979

 

 

 

10,600

 

Total current assets

 

 

581,146

 

 

 

684,364

 

Intangible assets, net

 

 

58,866

 

 

 

58,420

 

Goodwill

 

 

291,995

 

 

 

278,810

 

Property, plant and equipment, net

 

 

81,735

 

 

 

56,035

 

Operating lease right-of-use assets

 

 

26,343

 

 

 

23,712

 

Deferred tax assets

 

 

2,686

 

 

 

4,047

 

Unbilled receivables

 

 

65,211

 

 

 

123,018

 

Other assets

 

 

2,931

 

 

 

4,240

 

Total assets

 

$

1,110,913

 

 

$

1,232,646

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

20,183

 

 

$

11,279

 

Accrued salaries and benefits

 

 

20,689

 

 

 

20,945

 

Convertible notes

 

 

49,248

 

 

 

163,687

 

Deferred revenue

 

 

22,165

 

 

 

24,755

 

Income taxes payable

 

 

20,846

 

 

 

20,607

 

Operating lease liabilities

 

 

5,873

 

 

 

5,992

 

Other current liabilities

 

 

22,440

 

 

 

20,002

 

Total current liabilities

 

 

161,444

 

 

 

267,267

 

Long-term liabilities:

 

 

 

 

Long-term operating lease liabilities

 

 

31,219

 

 

 

29,099

 

Long-term income taxes payable

 

 

12,220

 

 

 

21,424

 

Deferred tax liabilities

 

 

25,159

 

 

 

23,985

 

Other long-term liabilities

 

 

42,713

 

 

 

28,475

 

Total long-term liabilities

 

 

111,311

 

 

 

102,983

 

Total stockholders’ equity

 

 

838,158

 

 

 

862,396

 

Total liabilities and stockholders’ equity

 

$

1,110,913

 

 

$

1,232,646

 

Rambus Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

(In thousands, except per share amounts)

 

2022

 

2021

 

2022

 

2021

Revenue:

 

 

 

 

 

 

 

 

Product revenue

 

$

53,302

 

 

$

31,170

 

 

$

101,271

 

 

$

61,951

 

Royalties

 

 

48,038

 

 

 

41,910

 

 

 

78,502

 

 

 

70,769

 

Contract and other revenue

 

 

19,792

 

 

 

11,779

 

 

 

40,409

 

 

 

22,521

 

Total revenue

 

 

121,132

 

 

 

84,859

 

 

 

220,182

 

 

 

155,241

 

Cost of revenue:

 

 

 

 

 

 

 

 

Cost of product revenue

 

 

20,417

 

 

 

11,422

 

 

 

38,814

 

 

 

22,832

 

Cost of contract and other revenue

 

 

974

 

 

 

1,017

 

 

 

1,598

 

 

 

2,573

 

Amortization of acquired intangible assets

 

 

3,421

 

 

 

4,439

 

 

 

6,799

 

 

 

8,825

 

Total cost of revenue

 

 

24,812

 

 

 

16,878

 

 

 

47,211

 

 

 

34,230

 

Gross profit

 

 

96,320

 

 

 

67,981

 

 

 

172,971

 

 

 

121,011

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

39,538

 

 

 

31,469

 

 

 

79,353

 

 

 

63,823

 

Sales, general and administrative

 

 

26,305

 

 

 

22,184

 

 

 

53,211

 

 

 

45,746

 

Amortization of acquired intangible assets

 

 

417

 

 

 

229

 

 

 

826

 

 

 

458

 

Restructuring charges

 

 

 

 

 

 

 

 

 

 

 

368

 

Change in fair value of earn-out liability

 

 

(5,500

)

 

 

 

 

 

(4,300

)

 

 

 

Total operating expenses

 

 

60,760

 

 

 

53,882

 

 

 

129,090

 

 

 

110,395

 

Operating income

 

 

35,560

 

 

 

14,099

 

 

 

43,881

 

 

 

10,616

 

Interest income and other income (expense), net

 

 

2,738

 

 

 

2,381

 

 

 

4,098

 

 

 

5,362

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

(66,497

)

 

 

 

Loss on fair value adjustment of derivatives, net

 

 

 

 

 

 

 

 

(8,283

)

 

 

 

Interest expense

 

 

(348

)

 

 

(2,683

)

 

 

(953

)

 

 

(5,297

)

Interest and other income (expense), net

 

 

2,390

 

 

 

(302

)

 

 

(71,635

)

 

 

65

 

Income (loss) before income taxes

 

 

37,950

 

 

 

13,797

 

 

 

(27,754

)

 

 

10,681

 

Provision for income taxes

 

 

2,930

 

 

 

2,631

 

 

 

3,444

 

 

 

2,128

 

Net income (loss)

 

$

35,020

 

 

$

11,166

 

 

$

(31,198

)

 

$

8,553

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.32

 

 

$

0.10

 

 

$

(0.28

)

 

$

0.08

 

Diluted

 

$

0.31

 

 

$

0.10

 

 

$

(0.28

)

 

$

0.07

 

Weighted average shares used in per share calculation

 

 

 

 

 

 

 

 

Basic

 

 

110,447

 

 

 

112,144

 

 

 

110,170

 

 

 

112,177

 

Diluted

 

 

112,715

 

 

 

114,931

 

 

 

110,170

 

 

 

115,358

 

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(Unaudited)

 

 

 

Three Months Ended

June 30,

(In thousands)

 

2022

 

2021

Cost of product revenue

 

$

20,417

 

 

$

11,422

 

Adjustment:

 

 

 

 

Stock-based compensation expense

 

 

(132

)

 

 

(70

)

Non-GAAP cost of product revenue

 

$

20,285

 

 

$

11,352

 

 

 

 

 

 

Total operating expenses

 

$

60,760

 

 

$

53,882

 

Adjustments:

 

 

 

 

Stock-based compensation expense

 

 

(8,504

)

 

 

(7,228

)

Acquisition-related costs and retention bonus expense

 

 

(1,949

)

 

 

(2,200

)

Amortization of acquired intangible assets

 

 

(417

)

 

 

(229

)

Expense on abandoned operating leases

 

 

(531

)

 

 

(521

)

Change in fair value of earn-out liability

 

 

5,500

 

 

 

 

Non-GAAP total operating expenses

 

$

54,859

 

 

$

43,704

 

 

 

 

 

 

Interest and other income (expense), net

 

$

2,390

 

 

$

(302

)

Adjustments:

 

 

 

 

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

 

 

(1,455

)

 

 

(2,382

)

Non-cash interest expense on convertible notes

 

 

45

 

 

 

1,901

 

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

 

$

980

 

 

$

(783

)

Rambus Inc.

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

(Unaudited)

 

2022 Third Quarter Outlook

 

Three Months Ended

September 30, 2022

(In millions)

 

Low

 

High

Forward-looking operating costs and expenses

 

$

94.0

 

 

$

90.0

 

Adjustments:

 

 

 

 

Stock-based compensation expense

 

 

(9.0

)

 

 

(9.0

)

Amortization of acquired intangible assets

 

 

(4.0

)

 

 

(4.0

)

Forward-looking Non-GAAP operating costs and expenses

 

$

81.0

 

 

$

77.0

 

 

 

 

 

 

Forward-looking interest and other income (expense), net

 

$

0.1

 

 

$

0.1

 

Adjustments:

 

 

 

 

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

 

 

(1.2

)

 

 

(1.2

)

Non-cash interest expense on convertible notes

 

 

0.1

 

 

 

0.1

 

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

 

$

(1.0

)

 

$

(1.0

)

 



Contact:

Nicole Noutsios
Rambus Investor Relations
(510) 315-1003
rambus@nmnadvisors.com