Rambus Reports Third Quarter 2022 Financial Results

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.

Gain on sale of equity security. The Company has excluded gain on sale of equity security as this is not a reflection of the Company’s ongoing operations.

Loss on extinguishment of debt. The Company has excluded loss on extinguishment of debt as this represents a cost of repurchasing its existing convertible notes and is not a reflection of the Company’s ongoing operations.

Loss on fair value adjustment of derivatives, net. The Company has excluded its loss on fair value adjustment of derivatives, net, as this represents cost and benefits of repurchasing its convertible notes and is not a reflection of the Company's ongoing operations.

Realized loss on sale of marketable securities sold for the purpose of notes repurchase. The Company has excluded its realized loss on sale of marketable securities sold for the purpose of repurchasing its convertible notes as this is not a reflection of the Company's ongoing operations.

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 fourth 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)	September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	141,559	$	107,891
Marketable securities		123,289		377,718
Accounts receivable		38,547		44,065
Unbilled receivables		142,037		135,608
Inventories		14,161		8,482
Prepaids and other current assets		14,584		10,600
Total current assets		474,177		684,364
Intangible assets, net		54,856		58,420
Goodwill		292,038		278,810
Property, plant and equipment, net		78,563		56,035
Operating lease right-of-use assets		25,232		23,712
Deferred tax assets		2,803		4,047
Unbilled receivables		37,914		123,018
Other assets		3,473		4,240
Total assets	$	969,056	$	1,232,646

LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	20,405	$	11,279
Accrued salaries and benefits		16,654		20,945
Convertible notes		10,368		163,687
Deferred revenue		23,460		24,755
Income taxes payable		20,024		20,607
Operating lease liabilities		5,435		5,992
Other current liabilities		20,085		20,002
Total current liabilities		116,431		267,267
Long-term liabilities:
Long-term operating lease liabilities		30,093		29,099
Long-term income taxes payable		7,818		21,424
Deferred tax liabilities		25,746		23,985
Other long-term liabilities		39,084		28,475
Total long-term liabilities		102,741		102,983
Total stockholders’ equity		749,884		862,396
Total liabilities and stockholders’ equity	$	969,056	$	1,232,646

Rambus Inc. Condensed Consolidated Statements of Operations (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except per share amounts)		2022			2021			2022			2021
Revenue:
Product revenue	$	58,619		$	36,710		$	159,890		$	98,661
Royalties		29,878			33,044			108,380			103,813
Contract and other revenue		23,747			11,528			64,156			34,049
Total revenue		112,244			81,282			332,426			236,523
Cost of revenue:
Cost of product revenue		21,953			13,157			60,767			35,989
Cost of contract and other revenue		1,455			1,456			3,053			4,029
Amortization of acquired intangible assets		3,576			3,813			10,375			12,638
Total cost of revenue		26,984			18,426			74,195			52,656
Gross profit		85,260			62,856			258,231			183,867
Operating expenses:
Research and development		39,295			35,592			118,648			99,415
Sales, general and administrative		26,198			22,210			79,409			67,956
Amortization of acquired intangible assets		433			359			1,259			817
Restructuring charges		—			—			—			368
Change in fair value of earn-out liability		2,411			—			(1,889	)		—
Total operating expenses		68,337			58,161			197,427			168,556
Operating income		16,923			4,695			60,804			15,311
Interest income and other income (expense), net		6,385			2,726			10,483			8,088
Loss on extinguishment of debt		(17,129	)		—			(83,626	)		—
Loss on fair value adjustment of derivatives, net		(2,302	)		—			(10,585	)		—
Interest expense		(437	)		(2,672	)		(1,390	)		(7,969	)
Interest and other income (expense), net		(13,483	)		54			(85,118	)		119
Income (loss) before income taxes		3,440			4,749			(24,314	)		15,430
Provision for income taxes		2,501			1,073			5,945			3,201
Net income (loss)	$	939		$	3,676		$	(30,259	)	$	12,229
Net income (loss) per share:
Basic	$	0.01		$	0.03		$	(0.27	)	$	0.11
Diluted	$	0.01		$	0.03		$	(0.27	)	$	0.11
Weighted average shares used in per share calculation
Basic		109,968			108,989			110,102			111,103
Diluted		111,962			113,661			110,102			114,954

Rambus Inc. Supplemental Reconciliation of GAAP to Non-GAAP Results (Unaudited)

	Three Months Ended September 30,
(In thousands)		2022			2021
Cost of product revenue	$	21,953		$	13,157
Adjustment:
Stock-based compensation expense		(142	)		(101	)
Non-GAAP cost of product revenue	$	21,811		$	13,056

Total operating expenses	$	68,337		$	58,161
Adjustments:
Stock-based compensation expense		(8,730	)		(7,381	)
Acquisition-related costs and retention bonus expense		(1,627	)		(1,658	)
Amortization of acquired intangible assets		(433	)		(359	)
Expense on abandoned operating leases		(520	)		(521	)
Change in fair value of earn-out liability		(2,411	)		—
Non-GAAP total operating expenses	$	54,616		$	48,242

Interest and other income (expense), net	$	(13,483	)	$	54
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1,248	)		(2,163	)
Non-cash interest expense on convertible notes		33			1,927
Gain on sale of equity security		(3,547	)		—
Loss on extinguishment of debt		17,129			—
Loss on fair value adjustment of derivatives, net		2,302			—
Realized loss on sale of marketable securities sold for the purpose of notes repurchase		450			—
Non-GAAP interest and other income (expense), net	$	1,636		$	(182	)

Rambus Inc. Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates (Unaudited)

2022 Fourth Quarter Outlook	Three Months Ended December 31, 2022
(In millions)	Low			High
Forward-looking operating costs and expenses	$	100.3		$	96.3
Adjustments:
Stock-based compensation expense		(10.3	)		(10.3	)
Amortization of acquired intangible assets		(4.0	)		(4.0	)
Forward-looking Non-GAAP operating costs and expenses	$	86.0		$	82.0

Forward-looking interest and other income (expense), net	$	0.4		$	0.4
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(1.0	)		(1.0	)
Non-cash interest expense		0.1			0.1
Forward-looking Non-GAAP interest and other income (expense), net	$	(0.5	)	$	(0.5	)

« Previous Page 1 | 2 | 3 | 4 Next Page »