PR Newswire | Nov 1, 2021 04:06PM EDT

11/01 15:05 CDT

Rambus Reports Third Quarter 2021 Financial Results- Delivered Q3 revenue and profitability in line with guidance- Generated $46.0 million in cash provided by operating activities- Delivered record product revenue of $36.7 million, consisting mainly of memory interface chips- Closed the acquisitions of AnalogX and PLDA, bolstering Silicon IP business and CXL Memory Interconnect Initiative SAN JOSE, Calif., Nov. 1, 2021

SAN JOSE, Calif., Nov. 1, 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 third quarter ended September 30, 2021. GAAP revenue for the third quarter was $81.3 million; licensing billings were $66.1 million, product revenue was $36.7 million, and contract and other revenue was $11.5 million. The Company also generated $46.0 million in cash provided by operating activities.

"Rambus delivered a strong third quarter, supported by great execution from the team," said Luc Seraphin, chief executive officer of Rambus. "We are well positioned for continued profitable growth as demonstrated by this quarter's record product revenue from memory interface chips. Strategically, we continue to scale the business as the integrations of AnalogX and PLDA are well underway with the new teams already contributing new products and design wins."

Three Months Ended Quarterly Financial Review - GAAP September 30,

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

Revenue

Product revenue $36.7 $29.8

Royalties 33.1 16.6

Contract and other revenue 11.5 10.5

Total revenue 81.3 56.9

Cost of product revenue 13.1 9.7

Cost of contract and other revenue 1.5 1.3

Amortization of acquired intangible assets (included in total cost of revenue)3.8 4.3

Total operating expenses ^(1) 58.2 54.1

Operating income (loss) $4.7 $(12.5)

Operating margin 6 %(22) %

Net income (loss) $3.7 $(12.7)

Diluted net income (loss) per share $0.03 $(0.11)

Net cash provided by operating activities $46.0 $44.1

_________________________________________

^ Includes amortization of acquired intangible assets of approximately(1) $0.4 million and $0.2 million for the three months ended September 30, 2021 and 2020, respectively.

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

(In millions) 2021 2020

Licensing billings ^(2) $66.1 $63.1

Product revenue $36.7 $29.8

Contract and other revenue $11.5 $10.5

Cost of product revenue $13.1 $9.7

Cost of contract and other revenue $1.5 $1.3

Total operating expenses $48.2 $45.8

Interest and other income (expense), net $(0.2)$(0.6)

Diluted share count 114 116

_________________________________________

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 $81.3 million, in line with the Company's expectations. The Company also had licensing billings of $66.1 million, product revenue of $36.7 million, and contract and other revenue of $11.5 million. The Company had GAAP cost of revenue of $18.4 million and operating expenses of $58.2 million. The Company also had total non-GAAP operating expenses of $62.8 million (which includes non-GAAP cost of revenue), in line with the Company's expectations. The Company had GAAP diluted net income per share of $0.03. The Company's diluted share count was 114 million shares. Due to the Company's strong performance and focus on operational efficiency, the Company delivered strong results in the third quarter, with revenue and profitability in line with expectations.

Cash, cash equivalents, and marketable securities as of September 30, 2021 were $419.7 million, a decrease of $57.4 million from June 30, 2021, mainly due to approximately $97.1 million paid in connection with the acquisitions of AnalogX Inc. and PLDA Group, net of cash acquired of approximately $8.6 million, partially offset by cash provided by operating activities of approximately $46.0 million.

2021 Fourth Quarter Outlook

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

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

Licensing billings ^(2) $62 - $68$62 - $68

Product revenue $40 - $46$40 - $46

Contract and other revenue $12 - $18$12 - $18

Total operating costs and expenses $80 - $76$68 - $64

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

Diluted share count 115 115

_________________________________________

^ See "Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP(1) Forward-Looking Estimates" table included below. Note that the applicable 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 fourth quarter of 2021, the Company expects licensing billings to be between $62 million and $68 million. The Company also expects royalty revenue to be between $26 million and $32 million, product revenue to be between $40 million and $46 million and contract and other revenue to be between $12 million and $18 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 $80 million and $76 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $68 million and $64 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 115 million, and exclude stock-based compensation expense ($8 million), amortization expense ($4 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# 9537075.

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, 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.

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, the successful integrations of AnalogX and PLDA, product and investment strategies, and the Company's outlook and financial guidance for the fourth 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) September 30, December 31, 2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 151,871 $ 128,967

Marketable securities 267,857 373,682

Accounts receivable 46,674 27,903

Unbilled receivables 138,281 138,813

Inventories 8,085 14,466

Prepaids and other current assets 11,991 15,881

Total current assets 624,759 699,712

Intangible assets, net 62,431 36,487

Goodwill 279,091 183,222

Property, plant and equipment, net 51,516 57,693

Operating lease right-of-use assets 25,202 28,708

Deferred tax assets 3,846 4,353

Unbilled receivables 151,462 236,699

Other assets 4,359 4,535

Total assets $ 1,202,666 $ 1,251,409

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 13,281 $ 8,993

Accrued salaries and benefits 15,331 23,326

Deferred revenue 20,324 10,198

Income taxes payable 20,443 20,064

Operating lease liabilities 6,501 4,724

Other current liabilities 19,295 18,559

Total current liabilities 95,175 85,864

Long-term liabilities:

Convertible notes 161,733 156,031

Long-term operating lease liabilities 30,400 34,305

Long-term income taxes payable 25,797 41,333

Deferred tax liabilities 23,888 14,276

Other long-term liabilities 17,830 6,894

Total long-term liabilities 259,648 252,839

Total stockholders' equity 847,843 912,706

Total liabilities and stockholders' equity $ 1,202,666 $ 1,251,409

Rambus Inc. Condensed Consolidated Statements of Operations (Unaudited)



Three Months Ended Nine Months Ended September 30, September 30,

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

Revenue:

Product revenue $36,710$29,769 $98,661$92,222

Royalties 33,044 16,602 103,813 56,828

Contract and other revenue 11,528 10,544 34,049 35,359

Total revenue 81,282 56,915 236,523 184,409

Cost of revenue:

Cost of product revenue 13,157 9,661 35,989 30,281

Cost of contract and other revenue 1,456 1,267 4,029 4,000

Amortization of acquired intangible assets 3,813 4,336 12,638 13,016

Total cost of revenue 18,426 15,264 52,656 47,297

Gross profit 62,856 41,651 183,867 137,112

Operating expenses:

Research and development 35,592 33,733 99,415 105,085

Sales, general and administrative 22,210 20,182 67,956 65,209

Amortization of acquired intangible assets 359 236 817 832

Restructuring charges - - 368 836

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

Total operating expenses 58,161 54,151 168,556 170,162

Operating income (loss) 4,695 (12,500) 15,311 (33,050)

Interest income and other income (expense), net 2,726 3,554 8,088 14,685

Interest expense (2,672) (2,586) (7,969) (7,721)

Interest and other income (expense), net 54 968 119 6,964

Income (loss) before income taxes 4,749 (11,532) 15,430 (26,086)

Provision for income taxes 1,073 1,205 3,201 2,330

Net income (loss) $3,676 $(12,737)$12,229$(28,416)

Net income (loss) per share:

Basic $0.03 $(0.11) $0.11 $(0.25)

Diluted $0.03 $(0.11) $0.11 $(0.25)

Weighted average shares used in per share calculation

Basic 108,989 113,828 111,103 113,437

Diluted 113,661 113,828 114,954 113,437

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



Three Months Ended September 30,

(In thousands) 2021 2020

Cost of product revenue $13,157$9,661

Adjustment:

Stock-based compensation expense (101) -

Non-GAAP cost of product revenue $13,056$9,661



Total operating expenses $58,161$54,151

Adjustments:

Stock-based compensation expense (7,381) (6,834)

Acquisition-related costs and retention bonus expense (1,658) (1,327)

Amortization of acquired intangible assets (359) (236)

Expense on abandoned operating leases (521) -

Non-GAAP total operating expenses $48,242$45,754



Interest and other income (expense), net $54 $968

Adjustments:

Interest income related to significant financing component from fixed-fee patent and (2,163) (3,379) technology licensing arrangements

Non-cash interest expense on convertible notes 1,927 1,823

Non-GAAP interest and other income (expense), net $(182) $(588)



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



Three Months Ended2021 Fourth Quarter Outlook December 31, 2021

(In millions) Low High

Forward-looking operating costs and expenses $79.9 $75.9

Adjustments:

Stock-based compensation expense (8.0) (8.0)

Amortization of acquired intangible assets (3.9) (3.9)

Forward-looking Non-GAAP operating costs and expenses $68.0 $64.0



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

Adjustments:

Interest income related to significant financing component from fixed-fee patent and (1.9) (1.9) 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)

View original content to download multimedia: https://www.prnewswire.com/news-releases/rambus-reports-third-quarter-2021-financial-results-301413283.html

SOURCE Rambus Inc.