PR Newswire | Aug 2, 2021 04:06PM EDT

08/02 15:05 CDT

Rambus Reports Second Quarter 2021 Financial Results- Exceeded Q2 guidance for revenue and profitability- Generated $51.6 million in cash provided by operating activities- Initiated $100 million accelerated share repurchase program- Accelerated data center solution roadmap with CXL Memory Interconnect Initiative- Announced the acquisitions of AnalogX and PLDA SAN JOSE, Calif., Aug. 2, 2021

SAN JOSE, Calif., Aug. 2, 2021 /PRNewswire/ -- 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, 2021. GAAP revenue for the second quarter was $84.9 million; licensing billings were $65.2 million, product revenue was $31.2 million, and contract and other revenue was $11.8 million. The Company also generated $51.6 million in cash provided by operating activities.

"Rambus had an exciting second quarter, making a number of strategic advancements to capture the next wave of semiconductor growth focused on next-generation data center architectures, and exceeding financial guidance for the top and bottom line," said Luc Seraphin, chief executive officer of Rambus. "Product revenue from memory interface chips remains strong, and we had record revenue from security and digital controller IP. The Company continues to scale, putting us in a great position for long-term profitable growth."

Three Months Ended Quarterly Financial Review - GAAP June 30,

(In millions, except for percentages and per share amounts) 2021 2020

Revenue

Product revenue $31.2 $31.7

Royalties 41.9 18.7

Contract and other revenue 11.8 11.3

Total revenue 84.9 61.7

Cost of product revenue 11.4 10.3

Cost of contract and other revenue 1.0 1.5

Amortization of acquired intangible assets (included in total cost of revenue)4.5 4.3

Total operating expenses ^(1) 53.9 56.7

Operating income (loss) $14.1 $(11.1)

Operating margin 17 %(18) %

Net income (loss) $11.2 $(9.1)

Diluted net income (loss) per share $0.10 $(0.08)

Net cash provided by operating activities $51.6 $62.0

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^ Includes amortization of acquired intangible assets of approximately(1) $0.2 million for each of the three months ended June 30, 2021 and 2020.

Three Months EndedQuarterly Financial Review - Non-GAAP (including operational metric) ^(1) June 30,

(In millions) 2021 2020

Licensing billings ^(2) $65.2 $60.7

Product revenue $31.2 $31.7

Contract and other revenue $11.8 $11.3

Cost of product revenue $11.4 $10.3

Cost of contract and other revenue $1.0 $1.5

Total operating expenses $43.7 $47.7

Interest and other income (expense), net $(0.8) $0.1

Diluted share count 115 115

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See "Supplemental Reconciliation of GAAP to Non-GAAP Results" table^ included below. Note that the applicable non-GAAP measures are presented(1) and that revenue and cost of contract and other revenue are solely presented on a GAAP basis.

^ Licensing billings is an operational metric that reflects amounts invoiced(2) to our licensing customers during the period, as adjusted for certain differences.

GAAP revenue for the quarter was $84.9 million, above the high end of the Company's expectations. The Company also had licensing billings of $65.2 million, product revenue of $31.2 million, and contract and other revenue of $11.8 million. The Company had total GAAP cost of revenue of $16.9 million and operating expenses of $53.9 million. The Company also had total non-GAAP operating expenses of $56.1 million (which includes non-GAAP cost of revenue), below the low end of its expectations. The Company had GAAP diluted net income per share of $0.10. The Company's diluted share count was 115 million shares. Due to the Company's strong performance and focus on operational efficiency, the Company delivered excellent results in the second quarter, exceeding its revenue and profitability guidance.

Cash, cash equivalents, and marketable securities as of June 30, 2021 were $477.1 million, a decrease of $52.0 million from March 31, 2021, mainly due to $100 million paid in connection with an accelerated share repurchase program, partially offset by cash provided by operating activities of approximately $51.6 million.

2021 Third Quarter Outlook

The Company will discuss its full revenue guidance for the third quarter of 2021 during its upcoming conference call. The following table sets forth third quarter outlook for other measures.

(In millions) GAAP Non-GAAP ^(1)

Licensing billings ^(2) $59 - $65$59 - $65

Product revenue $34 - $40$34 - $40

Contract and other revenue $11 - $17$11 - $17

Total operating costs and expenses $76 - $72$65 - $61

Interest and other income (expense), net($1) ($1)

Diluted share count 113 113

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See "Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP^ Forward-Looking Estimates" table included below. Note that the applicable(1) non-GAAP measures are presented, and that revenue is solely presented on a GAAP basis.

Licensing billings is an operational metric that reflects amounts invoiced^ to our licensing customers during the period, as adjusted for certain(2) differences. This metric is the same for both GAAP and non-GAAP presentations.

For the third quarter of 2021, the Company expects licensing billings to be between $59 million and $65 million. The Company also expects royalty revenue to be between $25 million and $31 million, product revenue to be between $34 million and $40 million and contract and other revenue to be between $11 million and $17 million. Revenue is not without risk and achieving revenue in this range will require that the Company sign customer agreements for various product sales, solutions licensing among other matters.

The Company also expects operating costs and expenses to be between $76 million and $72 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $65 million and $61 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 ($8 million), amortization expense ($3 million), non-cash interest expense on convertible notes ($2 million) and interest income related to the significant financing component from fixed-fee patent and technology licensing arrangements ($2 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: (855) 859-2056 (domestic) or (404) 537-3406 (international) with ID# 7478989.

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: 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, facility restoration costs, 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. 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 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 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.

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.

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 2021 and 2020, 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, and the Company's outlook and financial guidance for the third quarter of 2021 and related drivers. 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 Novel Coronavirus (COVID-19). The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

Contact

Rahul MathurSenior Vice President, Finance and Chief Financial OfficerRambus Inc.(408) 462-8000rmathur@rambus.com

Rambus Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands) June 30, December 31, 2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 204,731 $ 128,967

Marketable securities 272,382 373,682

Accounts receivable 38,730 27,903

Unbilled receivables 144,546 138,813

Inventories 8,052 14,466

Prepaids and other current assets 10,544 15,881

Total current assets 678,985 699,712

Intangible assets, net 27,203 36,487

Goodwill 183,222 183,222

Property, plant and equipment, net 50,058 57,693

Operating lease right-of-use assets 25,801 28,708

Deferred tax assets 3,907 4,353

Unbilled receivables 179,503 236,699

Other assets 4,306 4,535

Total assets $ 1,152,985 $ 1,251,409

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 8,975 $ 8,993

Accrued salaries and benefits 15,878 23,326

Deferred revenue 12,299 10,198

Income taxes payable 19,754 20,064

Operating lease liabilities 6,722 4,724

Other current liabilities 17,798 18,559

Total current liabilities 81,426 85,864

Long-term liabilities:

Convertible notes 159,806 156,031

Long-term operating lease liabilities 31,104 34,305

Long-term income taxes payable 31,853 41,333

Deferred tax liabilities 15,147 14,276

Other long-term liabilities 3,061 6,894

Total long-term liabilities 240,971 252,839

Total stockholders' equity 830,588 912,706

Total liabilities and stockholders' equity $ 1,152,985 $ 1,251,409

Rambus Inc. Condensed Consolidated Statements of Operations (Unaudited)



Three Months Ended Six Months Ended June 30, June 30,

(In thousands, except per share amounts) 2021 2020 2021 2020

Revenue:

Product revenue $31,170$31,725 $61,951$62,453

Royalties 41,910 18,744 70,769 40,226

Contract and other revenue 11,779 11,248 22,521 24,815

Total revenue 84,859 61,717 155,241 127,494

Cost of revenue:

Cost of product revenue 11,422 10,277 22,832 20,620

Cost of contract and other revenue 1,017 1,535 2,573 2,733

Amortization of acquired intangible assets 4,439 4,336 8,825 8,680

Total cost of revenue 16,878 16,148 34,230 32,033

Gross profit 67,981 45,569 121,011 95,461

Operating expenses:

Research and development 31,469 34,688 63,823 71,352

Sales, general and administrative 22,184 21,721 45,746 45,027

Amortization of acquired intangible assets 229 248 458 596

Restructuring charges - - 368 836

Change in fair value of earn-out liability - - - (1,800)

Total operating expenses 53,882 56,657 110,395 116,011

Operating income (loss) 14,099 (11,088) 10,616 (20,550)

Interest income and other income (expense), net 2,381 4,688 5,362 11,131

Interest expense (2,683) (2,580) (5,297) (5,135)

Interest and other income (expense), net (302) 2,108 65 5,996

Income (loss) before income taxes 13,797 (8,980) 10,681 (14,554)

Provision for income taxes 2,631 160 2,128 1,125

Net income (loss) $11,166$(9,140)$8,553 $(15,679)

Net income (loss) per share:

Basic $0.10 $(0.08) $0.08 $(0.14)

Diluted $0.10 $(0.08) $0.07 $(0.14)

Weighted average shares used in per share calculation

Basic 112,144 113,572 112,177 113,240

Diluted 114,931 113,572 115,358 113,240

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



Three Months Ended June 30,

(In thousands) 2021 2020

Cost of product revenue $11,422$10,277

Adjustment:

Stock-based compensation expense (70) -

Non-GAAP cost of product revenue $11,352$10,277



Total operating expenses $53,882$56,657

Adjustments:

Stock-based compensation expense (7,228) (6,707)

Acquisition-related costs and retention bonus expense (2,200) (1,577)

Amortization of acquired intangible assets (229) (248)

Expense on abandoned operating leases (521) -

Facility restoration costs - (411)

Non-GAAP total operating expenses $43,704$47,714



Interest and other income (expense), net $(302) $2,108

Adjustments:

Interest income related to significant financing component from fixed-fee patent and (2,382) (3,788) technology licensing arrangements

Non-cash interest expense on convertible notes 1,901 1,798

Non-GAAP interest and other income (expense), net $(783) $118



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



Three Months Ended2021 Third Quarter Outlook September 30, 2021

(In millions) Low High

Forward-looking operating costs and expenses $76.2 $72.2

Adjustments:

Stock-based compensation expense (8.0) (8.0)

Amortization of acquired intangible assets (3.2) (3.2)

Forward-looking Non-GAAP operating costs and expenses $65.0 $61.0



Forward-looking interest and other income (expense), net $(0.8)$(0.8)

Adjustments:

Interest income related to significant financing component from fixed-fee patent and (2.1) (2.1) technology licensing arrangements

Non-cash interest expense on convertible notes 1.9 1.9

Forward-looking Non-GAAP interest and other income (expense), net $(1.0)$(1.0)

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SOURCE Rambus Inc.