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Rambus Reports Second Quarter 2021 Financial Results


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.”

Quarterly Financial Review – GAAP


Three Months Ended

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



_________________________________________

(1)

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

Quarterly Financial Review – Non-GAAP (including operational metric) (1)


Three Months Ended

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



_________________________________________

(1)

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



(2)

Licensing billings is an operational metric that reflects amounts invoiced 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

_________________________________________

(1)

See “Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP 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.



(2)

Licensing billings is an operational metric that reflects amounts invoiced to our licensing customers during the period, as adjusted for certain 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 Mathur
Senior Vice President, Finance and Chief Financial Officer
Rambus Inc.
(408) 462-8000
[email protected] 

Rambus Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(In thousands)


June 30,
2021


December 31,
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

June 30,


Six Months Ended

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
technology licensing arrangements


(2,382)



(3,788)


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)


2021 Third Quarter Outlook


Three Months Ended

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
technology licensing arrangements


(2.1)



(2.1)


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)


SOURCE Rambus Inc.

Related Links

https://www.rambus.com



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