Rambus Reports Third Quarter 2023 Financial Results

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.

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 long-lived assets and other assets resulting from the divestiture of the Company's PHY IP business, and 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.

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 incurred non-cash interest expense related to its convertible notes through the first quarter of 2023, at which point the remaining convertible notes matured. 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 2023 and 2022, 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 2023 and related drivers, and the Company’s ability to effectively manage supply chain and other 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, as well as potential adverse impacts related to, or arising from, 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,

2023

 

December 31,

2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

131,957

 

$

125,334

Marketable securities

 

243,588

 

 

 

187,892

 

Accounts receivable

 

65,101

 

 

 

55,368

 

Unbilled receivables

 

64,252

 

 

 

125,698

 

Inventories

 

34,615

 

 

 

20,900

 

Prepaids and other current assets

 

11,112

 

 

 

12,022

 

Total current assets

 

550,625

 

 

 

527,214

 

Intangible assets, net

 

32,015

 

 

 

50,880

 

Goodwill

 

286,812

 

 

 

292,040

 

Property, plant and equipment, net

 

73,466

 

 

 

86,255

 

Operating lease right-of-use assets

 

20,964

 

 

 

24,143

 

Deferred tax assets

 

131,020

 

 

 

3,031

 

Unbilled receivables

 

3,479

 

 

 

25,222

 

Income taxes receivable

 

84,487

 

 

 

1,064

 

Other assets

 

1,463

 

 

 

2,745

 

Total assets

$

1,184,331

 

 

$

1,012,594

 

 

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

15,682

 

 

$

24,815

 

Accrued salaries and benefits

 

13,076

 

 

 

20,502

 

Convertible notes

 

 

 

 

10,378

 

Deferred revenue

 

17,459

 

 

 

23,861

 

Income taxes payable

 

8,638

 

 

 

18,137

 

Operating lease liabilities

 

4,174

 

 

 

5,024

 

Other current liabilities

 

25,167

 

 

 

23,992

 

Total current liabilities

 

84,196

 

 

 

126,709

 

Long-term liabilities:

 

 

 

Long-term operating lease liabilities

 

26,117

 

 

 

29,079

 

Long-term income taxes payable

 

77,655

 

 

 

5,892

 

Deferred tax liabilities

 

5,819

 

 

 

24,964

 

Other long-term liabilities

 

34,978

 

 

 

46,653

 

Total long-term liabilities

 

144,569

 

 

 

106,588

 

Total stockholders’ equity

 

955,566

 

 

 

779,297

 

Total liabilities and stockholders’ equity

$

1,184,331

 

 

$

1,012,594

 

Rambus Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

(In thousands, except per share amounts)

2023

 

2022

 

2023

 

2022

Revenue:

 

 

 

 

 

 

 

Product revenue

$

52,181

 

 

$

58,619

 

 

$

170,934

 

 

$

159,890

 

Royalties

 

28,857

 

 

 

29,878

 

 

 

97,698

 

 

 

108,380

 

Contract and other revenue

 

24,260

 

 

 

23,747

 

 

 

70,260

 

 

 

64,156

 

Total revenue

 

105,298

 

 

 

112,244

 

 

 

338,892

 

 

 

332,426

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of product revenue

 

19,388

 

 

 

21,953

 

 

 

64,554

 

 

 

60,767

 

Cost of contract and other revenue

 

1,295

 

 

 

1,455

 

 

 

4,280

 

 

 

3,053

 

Amortization of acquired intangible assets

 

3,349

 

 

 

3,576

 

 

 

10,472

 

 

 

10,375

 

Total cost of revenue

 

24,032

 

 

 

26,984

 

 

 

79,306

 

 

 

74,195

 

Gross profit

 

81,266

 

 

 

85,260

 

 

 

259,586

 

 

 

258,231

 

Operating expenses (benefits):

 

 

 

 

 

 

 

Research and development

 

37,368

 

 

 

39,295

 

 

 

120,842

 

 

 

118,648

 

Sales, general and administrative

 

25,333

 

 

 

26,198

 

 

 

82,484

 

 

 

79,409

 

Amortization of acquired intangible assets

 

258

 

 

 

433

 

 

 

1,022

 

 

 

1,259

 

Restructuring and other charges (recoveries)

 

(100

)

 

 

 

 

 

9,394

 

 

 

 

Gain on divestiture

 

(90,843

)

 

 

 

 

 

(90,843

)

 

 

 

Impairment of assets

 

10,045

 

 

 

 

 

 

10,045

 

 

 

 

Change in fair value of earn-out liability

 

(5,666

)

 

 

2,411

 

 

 

8,134

 

 

 

(1,889

)

Total operating expenses (benefits)

 

(23,605

)

 

 

68,337

 

 

 

141,078

 

 

 

197,427

 

Operating income

 

104,871

 

 

 

16,923

 

 

 

118,508

 

 

 

60,804

 

Interest income and other income (expense), net

 

2,715

 

 

 

2,838

 

 

 

7,112

 

 

 

6,936

 

Gain on fair value of equity security

 

 

 

 

3,547

 

 

 

 

 

 

3,547

 

Loss on extinguishment of debt

 

 

 

 

(17,129

)

 

 

 

 

 

(83,626

)

Loss on fair value adjustment of derivatives, net

 

 

 

 

(2,302

)

 

 

(240

)

 

 

(10,585

)

Interest expense

 

(356

)

 

 

(437

)

 

 

(1,113

)

 

 

(1,390

)

Interest and other income (expense), net

 

2,359

 

 

 

(13,483

)

 

 

5,759

 

 

 

(85,118

)

Income (loss) before income taxes

 

107,230

 

 

 

3,440

 

 

 

124,267

 

 

 

(24,314

)

Provision for (benefit from) income taxes

 

4,032

 

 

 

2,501

 

 

 

(151,092

)

 

 

5,945

 

Net income (loss)

$

103,198

 

 

$

939

 

 

$

275,359

 

 

$

(30,259

)

Net income (loss) per share:

 

 

 

 

 

 

 

Basic

$

0.95

 

 

$

0.01

 

 

$

2.54

 

 

$

(0.27

)

Diluted

$

0.93

 

 

$

0.01

 

 

$

2.48

 

 

$

(0.27

)

Weighted average shares used in per share calculation

 

 

 

 

 

 

 

Basic

 

108,317

 

 

 

109,968

 

 

 

108,412

 

 

 

110,102

 

Diluted

 

110,775

 

 

 

111,962

 

 

 

111,179

 

 

 

110,102

 

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(Unaudited)

 

 

Three Months Ended

September 30,

(In thousands)

2023

 

2022

Cost of product revenue

$

19,388

 

 

$

21,953

 

Adjustment:

 

 

 

Stock-based compensation expense

 

(149

)

 

 

(142

)

Non-GAAP cost of product revenue

$

19,239

 

 

$

21,811

 

 

 

 

 

Total operating expenses (benefits)

$

(23,605

)

 

$

68,337

 

Adjustments:

 

 

 

Stock-based compensation expense

 

(9,889

)

 

 

(8,730

)

Acquisition-related costs and retention bonus expense

 

(37

)

 

 

(1,627

)

Amortization of acquired intangible assets

 

(258

)

 

 

(433

)

Restructuring and other recoveries

 

100

 

 

 

 

Expense on abandoned operating leases

 

(40

)

 

 

(520

)

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

 

5,666

 

 

 

(2,411

)

Non-GAAP total operating expenses

$

52,365

 

 

$

54,616

 

 

 

 

 

Interest and other income (expense), net

$

2,359

 

 

$

(13,483

)

Adjustments:

 

 

 

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

 

(426

)

 

 

(1,248

)

Non-cash interest expense on convertible notes

 

 

 

 

33

 

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

$

1,933

 

 

$

1,636

 

Rambus Inc.

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

(Unaudited)

 

2023 Fourth Quarter Outlook

 

Three Months Ended

December 31, 2023

(In millions)

 

Low

 

High

Forward-looking operating costs and expenses

 

$

87.5

 

 

$

83.5

 

Adjustments:

 

 

 

 

Stock-based compensation expense

 

 

(11.0

)

 

 

(11.0

)

Amortization of acquired intangible assets

 

 

(3.5

)

 

 

(3.5

)

Forward-looking Non-GAAP operating costs and expenses

 

$

73.0

 

 

$

69.0

 

 

 

 

 

 

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

 

$

2.2

 

 

$

2.2

 

Adjustments:

 

 

 

 

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

 

 

(0.2

)

 

 

(0.2

)

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

 

$

2.0

 

 

$

2.0

 


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