Rambus Reports Fourth Quarter and Fiscal Year 2023 Financial

Rambus Reports Fourth Quarter and Fiscal Year 2023 Financial Results

Acquisition/divestiture-related costs and retention bonus expense. These expenses include all direct costs of certain acquisitions, divestitures 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 divestitures 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 (benefits). These charges (benefits) 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.

(Gain) loss on divestiture. Reflects the (gain) loss 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).

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 non-marketable equity security. The Company has excluded gain on sale of non-marketable equity security 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 first quarter of 2024 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. 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, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	94,767	$	125,334
Marketable securities		331,077		187,892
Accounts receivable		82,925		55,368
Unbilled receivables		50,872		125,698
Inventories		36,154		20,900
Prepaids and other current assets		34,850		12,022
Total current assets		630,645		527,214
Intangible assets, net		28,769		50,880
Goodwill		286,812		292,040
Property, plant and equipment, net		67,808		86,255
Operating lease right-of-use assets		21,497		24,143
Unbilled receivables		4,423		25,222
Deferred tax assets		130,268		3,031
Income tax receivable		84,298		1,064
Other assets		1,613		2,745
Total assets	$	1,256,133	$	1,012,594

LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,074	$	24,815
Accrued salaries and benefits		17,504		20,502
Convertible notes		—		10,378
Deferred revenue		17,393		23,861
Income taxes payable		5,099		18,137
Operating lease liabilities		4,453		5,024
Other current liabilities		26,598		23,992
Total current liabilities		89,121		126,709
Long-term operating lease liabilities		26,255		29,079
Long-term income taxes payable		76,853		5,892
Deferred tax liabilities		4,462		24,964
Other long-term liabilities		21,341		46,653
Total liabilities		218,032		233,297
Total stockholders’ equity		1,038,101		779,297
Total liabilities and stockholders’ equity	$	1,256,133	$	1,012,594

Rambus Inc. Condensed Consolidated Statements of Operations (Unaudited)

	Three Months Ended December 31,						Years Ended December 31,
(In thousands, except per share amounts)		2023			2022			2023			2022
Revenue:
Product revenue	$	53,698		$	67,178		$	224,632		$	227,068
Royalties		52,412			31,436			150,110			139,816
Contract and other revenue		16,115			23,753			86,375			87,909
Total revenue		122,225			122,367			461,117			454,793
Cost of revenue:
Cost of product revenue		19,941			28,209			84,495			88,976
Cost of contract and other revenue		1,123			1,615			5,403			4,668
Amortization of acquired intangible assets		3,052			3,560			13,524			13,935
Total cost of revenue		24,116			33,384			103,422			107,579
Gross profit		98,109			88,983			357,695			347,214
Operating expenses:
Research and development		35,985			40,121			156,827			158,769
Sales, general and administrative		25,665			27,309			108,149			106,718
Amortization of acquired intangible assets		195			415			1,217			1,674
Restructuring and other charges (benefits)		(26	)		—			9,368			—
(Gain) loss on divestiture		59			—			(90,784	)		—
Impairment of assets		—			—			10,045			—
Change in fair value of earn-out liability		1,100			5,000			9,234			3,111
Total operating expenses		62,978			72,845			204,056			270,272
Operating income		35,131			16,138			153,639			76,942
Interest income and other income (expense), net		4,215			835			11,327			7,771
Gain on fair value of equity security		—			—			—			3,547
Loss on extinguishment of debt		—			—			—			(83,626	)
Loss on fair value adjustment of derivatives, net		—			—			(240	)		(10,585	)
Gain on sale of non-marketable equity security		23,924			—			23,924			—
Interest expense		(377	)		(484	)		(1,490	)		(1,874	)
Interest and other income (expense), net		27,762			351			33,521			(84,767	)
Income (loss) before income taxes		62,893			16,489			187,160			(7,825	)
Provision for (benefit from) income taxes		4,348			540			(146,744	)		6,485
Net income (loss)	$	58,545		$	15,949		$	333,904		$	(14,310	)
Net income (loss) per share:
Basic	$	0.54		$	0.15		$	3.09		$	(0.13	)
Diluted	$	0.53		$	0.14		$	3.01		$	(0.13	)
Weighted average shares used in per share calculation:
Basic		107,703			107,603			108,183			109,472
Diluted		110,065			110,820			110,889			109,472

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

	Three Months Ended
	December 31,
(In thousands)		2023			2022
Cost of product revenue	$	19,941		$	28,209
Adjustment:
Stock-based compensation expense		(145	)		(144	)
Non-GAAP cost of product revenue	$	19,796		$	28,065

Total operating expenses	$	62,978		$	72,845
Adjustments:
Stock-based compensation expense		(10,389	)		(10,122	)
Acquisition/divestiture-related costs and retention bonus expense		(285	)		(1,028	)
Amortization of acquired intangible assets		(195	)		(415	)
Restructuring and other benefits		26			—
Loss on divestiture		(59	)		—
Expense on abandoned operating leases		(3	)		(521	)
Change in fair value of earn-out liability		(1,100	)		(5,000	)
Non-GAAP total operating expenses	$	50,973		$	55,759

Interest and other income (expense), net	$	27,762		$	351
Adjustments:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements		(246	)		(1,029	)
Gain on sale of non-marketable equity security		(23,924	)		—
Non-cash interest expense on convertible notes		—			10
Non-GAAP interest and other income (expense), net	$	3,592		$	(668	)

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

2024 First Quarter Outlook	Three Months Ended March 31, 2024
(In millions)	Low			High
Forward-looking operating costs and expenses	$	89.1		$	85.1
Adjustments:
Stock-based compensation expense		(11.0	)		(11.0	)
Amortization of acquired intangible assets		(3.1	)		(3.1	)
Forward-looking Non-GAAP operating costs and expenses	$	75.0		$	71.0

Forward-looking interest and other income (expense), net	$	3.2		$	3.2
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	$	3.0		$	3.0

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