- Revenue of $99.1 million, up 10% year
over year
- GAAP diluted net income per share of
$0.07; non-GAAP diluted net income per share of $0.19
- Announced industry’s first
silicon-proven server DIMM buffer chipset capable of achieving the
speeds expected for next-generation DDR5
- Teamed up with eftpos domestic debit
card network in Australia to support roll out of Apple Pay with
tokenization software
Rambus Inc. (NASDAQ:RMBS) today reported financial results for
the third quarter ended September 30, 2017. Total revenue for the
quarter was $99.1 million, 10% higher than a year ago, with GAAP
diluted net income per share of $0.07 and non-GAAP diluted net
income per share of $0.19. Total revenue for the nine months ended
September 30, 2017 was $291.2 million, 22% higher than a year
ago.
“We continue to demonstrate our leadership and execution on
strategic programs with the industry’s first functional server DIMM
buffer chipset to reach the speeds targeted for next-generation
DDR5 and the integration of our Token Service Provider software at
eftpos to support the roll out of Apple Pay in Australia,” said Dr.
Ron Black, chief executive officer of Rambus. “We are excited by
our progress, with strong execution on strategic programs for the
data center and mobile edge markets, as we continue to deliver
profitable growth.”
Business Review
In our Memory and Interfaces Division, we continue to
demonstrate our technology leadership with the announcement of the
industry’s first functional silicon of a server DIMM buffer chipset
capable of achieving the speeds expected for next-generation DDR5.
This represented an important milestone for both the company and
the market, as it puts Rambus in a leadership position and provides
an early path to market readiness and adoption for future data
center solutions. The IP cores team extended its portfolio of
high-speed interfaces for data center and enterprise applications
with the addition of 16G and 30G SerDes IP cores on GLOBALFOUNDRIES
14nm FX-14™ ASIC platform. In addition, and as part of the ongoing
ecosystem development to ease integration and accelerate adoption,
we validated the interoperability of our memory PHYs with Northwest
Logic and ARM memory controllers.
Our Security Division, which consists of our cryptography,
mobile payments and smart ticketing businesses, had a strong
quarter with the Cryptography team demonstrating the CryptoManager
IoT Security Service on a leading cloud platform to enable secure
device connectivity, monitoring and provisioning. In addition, we
announced Cryptography will partner with SciFive to make our
cryptography technology available for the SciFive Freedom platform,
easing the path to designing innovative and cost-effective SoCs in
the open and growing RISC-V hardware ecosystem. For mobile
payments, we continue to gain traction for our tokenization
solutions, teaming with eftpos, a leading debit card network in
Australia, to support the roll out of Apple Pay to their debit card
users with our Token Service Provider software.
Financial Review GAAP
Non-GAAP(1) (In millions, except for percentages and per
share amounts)
Three Months Ended September 30, Three
Months Ended September 30, 2017 2016
2017 2016 Revenue $ 99.1 $ 89.9 $ 99.1 $ 89.9
Total operating costs and expenses $ 82.1 $ 78.1 $ 64.6 $ 60.8
Operating income $ 17.0 $ 11.8 $ 34.5 $ 29.1 Operating margin 17 %
13 % 35 % 32 % Net income $ 7.7 $ 4.5 $ 21.6 $ 18.0 Diluted net
income per share $ 0.07 $ 0.04 $ 0.19 $ 0.16 Total cash and
marketable securities $ 183.6 $ 150.8 $ 183.6 $ 150.8 Total assets
$ 824.1 $ 800.3 $ 824.1 $ 800.3 Total stockholders’ equity $ 589.5
$ 552.8 $ 589.5 $ 552.8
Financial Review
GAAP Non-GAAP(1) (In millions, except for
percentages and per share amounts)
Nine Months Ended September
30, Nine Months Ended September 30, 2017
2016 2017 2016 Revenue $ 291.2 $ 239.0
$ 291.2 $ 239.0 Total operating costs and expenses $ 252.5 $ 205.9
$ 200.7 $ 160.3 Operating income $ 38.7 $ 33.1 $ 90.5 $ 78.7
Operating margin 13 % 14 % 31 % 33 % Net income $ 13.3 $ 10.3 $
56.3 $ 49.3 Diluted net income per share $ 0.12 $ 0.09 $ 0.49 $
0.44 (1) See “Supplemental Reconciliation of
GAAP to Non-GAAP Results” and “Reconciliation of Other GAAP to
Non-GAAP Items” tables included below. Note that the applicable
non-GAAP measures are presented and that revenue and the balance
sheet items are solely presented on a GAAP basis.
Revenue for the quarter was $99.1 million due to execution in
our Security Division and continued strength in our licensing
program. As a result of our execution in both businesses, revenue
for our Memory and Interface Division was up 9% year over year and
revenue for our Security Division was up 17% year over year. GAAP
total operating costs and expenses were below the low end of our
expectations, yielding $0.07 of GAAP net income per share, at the
high end of our expectations. We had non-GAAP net income per share
of $0.19, at the high end of our expectations.
Cash, cash equivalents, and marketable securities as of
September 30, 2017 were $183.6 million, an increase of
$15.7 million from June 30, 2017, mainly due to cash generated
from operating activities of approximately $15 million. Adjusted
EBITDA for the quarter was $37.8 million.
2017 Fourth Quarter Outlook
(In millions, except per share amounts)
GAAP
Non-GAAP (1) Revenue $98 - $104 $98 - $104 Total
operating costs and expenses $88 - $83 $69 - $64 Operating income
$11 - $22 $29 - $40 Diluted net income per share $0.04 - $0.11
$0.16 - $0.22 (1) See “Reconciliation of GAAP
Forward Looking Estimates to Non-GAAP Forward Looking Estimates”
tables included below. Note that the applicable non-GAAP measures
are presented and that revenue is solely presented on a GAAP basis.
For the fourth quarter of 2017, the Company expects revenue to
be between $98 million and $104 million. Revenue is not without
risk and achieving revenue in this range will require that the
Company sign customer agreements for patent licensing, various
product sales, mobile payments software and solutions licensing
among other matters. The Company also expects operating costs and
expenses to be between $83 million and $88 million, and diluted net
income per share to be between $0.04 and $0.11. Additionally, the
Company expects non-GAAP operating costs and expenses to be between
$64 million and $69 million, and non-GAAP diluted net income per
share to be between $0.16 and $0.22. These non-GAAP
expectations assume non-GAAP interest and other income and expense
of $1.3 million, tax rate of 35% (refer to non-GAAP financial
information below - income tax adjustments) and diluted share count
of 114 million, and exclude stock-based compensation expense ($8
million), amortization expense ($11 million), and non-cash interest
expense on convertible notes ($2 million).
Conference Call:
Rambus management will discuss the results of the quarter during
a conference call scheduled for 2:00pm 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#98501879.
About Rambus Inc.
Rambus creates innovative hardware and software technologies,
driving advancements from the data center to the mobile edge. Our
chips, customizable IP cores, architecture licenses, tools,
software, services, training and innovations improve the
competitive advantage of our customers. We collaborate with the
industry, partnering with leading ASIC and SoC designers,
foundries, IP developers, EDA companies and validation labs. Our
products are integrated into tens of billions of devices and
systems, powering and securing diverse applications, including Big
Data, Internet of Things (IoT), mobile payments, and smart
ticketing. At Rambus, we are makers of better. 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 our new product and
service offerings, growth for 2017 and financial guidance for the
fourth quarter of 2017, including revenue, operating costs and
expenses, earnings per share and estimated, fixed, long-term
projected tax rates, both on a GAAP and non-GAAP basis as
appropriate. Such forward-looking statements are based on current
expectations, estimates and projections, management’s beliefs and
certain assumptions made by Rambus’ management. Actual results may
differ materially. Rambus’ 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. Rambus
undertakes no obligation to update forward-looking statements to
reflect events or circumstances after the date hereof.
Overview of Non-GAAP Results
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 costs and
expenses, operating margin, operating income (loss), net income
(loss), diluted net income (loss) per share and Adjusted
EBITDA. In computing each of these non-GAAP financial
measures, the following items were considered as discussed below:
stock-based compensation expenses, acquisition-related transaction
costs and retention bonus expense, amortization expenses, 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 transaction 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.
Purchase accounting adjustment for inventory fair value step-up.
These adjustments are the result of accounting for certain business
acquisitions and are excluded because such adjustments are
non-recurring. Additionally, the Company excludes these expenses in
order to provide better comparability between periods.
Amortization expense. 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.
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 35 percent for both 2017 and 2016, 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 for future periods. The
Company has provided below a reconciliation of its GAAP provision
for income taxes and GAAP effective tax rate to the assumed
non-GAAP provision for income taxes and non-GAAP effective tax
rate.
On occasion in the future, there may be other items, such as
impairments or 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.
Rambus Inc. Condensed Consolidated Balance
Sheets (In thousands) (Unaudited)
September 30, December 31, 2017
2016 ASSETS Current assets: Cash and cash
equivalents $ 182,345 $ 135,294 Marketable securities 1,287 36,888
Accounts receivable 49,799 21,099 Inventories 5,015 5,633 Prepaids
and other current assets 10,998 17,867 Total current assets 249,444
216,781 Intangible assets, net 102,545 132,388 Goodwill 209,318
204,794 Property, plant and equipment, net 54,035 58,442 Deferred
tax assets 206,503 168,342 Other assets 2,283 2,749 Total assets $
824,128 $ 783,496
LIABILITIES & STOCKHOLDERS’
EQUITY Current liabilities: Accounts payable $ 7,016 $
9,793 Accrued salaries and benefits 12,278 14,177 Deferred revenue
21,224 16,932 Convertible notes, short-term 131,490 — Other current
liabilities 10,731 10,399 Total current liabilities 182,739 51,301
Long-term liabilities: Convertible notes, long-term — 126,167
Long-term imputed financing obligation 37,471 38,029 Other
long-term liabilities 14,381 15,217 Total long-term liabilities
51,852 179,413 Total stockholders’ equity 589,537 552,782 Total
liabilities and stockholders’ equity $ 824,128 $ 783,496
Rambus Inc. Condensed Consolidated Statements of
Operations (In thousands, except per share amounts)
(Unaudited) Three Months Ended
Nine Months Ended September 30, September 30,
2017 2016 2017 2016
Revenue: Royalties $ 72,787 $ 68,298 $ 211,733 $ 194,010
Product revenue 8,661 7,092 27,966 14,306 Contract and other
revenue 17,686 14,465 51,506 30,722
Total revenue 99,134 89,855 291,205 239,038
Operating costs and expenses: Cost of product revenue (1)
5,152 7,031 17,882 12,581 Cost of contract and other revenue 14,456
12,393 43,274 33,139 Research and development (1) 36,196 33,820
109,718 91,100 Sales, general and administrative (1) 26,799 24,795
82,122 69,679 Gain from sale of intellectual property (479 ) — (479
) — Gain from settlement — — — (579 ) Total
operating costs and expenses 82,124 78,039 252,517
205,920 Operating income 17,010 11,816 38,688 33,118
Interest income and other income (expense), net 208 142 491 1,522
Interest expense (3,287 ) (3,193 ) (9,754 ) (9,497 ) Interest and
other income (expense), net (3,079 ) (3,051 ) (9,263 ) (7,975 )
Income before income taxes 13,931 8,765 29,425 25,143 Provision for
income taxes 6,236 4,254 16,119 14,878
Net income $ 7,695 $ 4,511 $ 13,306 $ 10,265
Net income per share: Basic $ 0.07 $ 0.04 $
0.12 $ 0.09 Diluted $ 0.07 $ 0.04 $
0.12 $ 0.09 Weighted average shares used in per share
calculation Basic 109,555 110,214 110,353
109,951 Diluted 113,119 113,723 113,861
112,805 _________
(1) Total stock-based compensation expense for the three and nine
months ended September 30, 2017 and 2016 is presented as follows:
Three Months Ended Nine Months
Ended September 30, September 30, 2017
2016 2017 2016 Cost of product
revenue $ 20 $ 14 $ 53 $ 42 Research and development $ 2,969 $
2,337 $ 9,048 $ 6,526 Sales, general and administrative $ 3,975 $
3,092 $ 11,068 $ 8,788
Rambus Inc. Supplemental
Reconciliation of GAAP to Non-GAAP Results (In
thousands) (Unaudited) Three Months
Ended Nine Months Ended September
June 30, September September
September 30, 2017 2017 30, 2016 30,
2017 30, 2016 Operating costs and expenses $
82,124 $ 86,476 $ 78,039 $ 252,517 $ 205,920 Adjustments:
Stock-based compensation expense (6,964 ) (6,609 ) (5,443 ) (20,169
) (15,356 ) Acquisition-related transaction costs and retention
bonus expense (47 ) (90 ) (441 ) (218 ) (3,038 ) Purchase
accounting adjustment for inventory fair value step-up — — (1,168 )
— (1,168 ) Amortization expense (10,498 ) (10,450 )
(10,174 ) (31,436 ) (26,045 )
Non-GAAP
operating costs and expenses $ 64,615
$ 69,327 $ 60,813
$ 200,694 $ 160,313
Operating income $ 17,010 $ 8,244 $ 11,816 $ 38,688 $ 33,118
Adjustments: Stock-based compensation expense 6,964 6,609 5,443
20,169 15,356 Acquisition-related transaction costs and retention
bonus expense 47 90 441 218 3,038 Purchase accounting adjustment
for inventory fair value step-up — — 1,168 — 1,168 Amortization
expense 10,498 10,450 10,174
31,436 26,045
Non-GAAP
operating income $ 34,519 $
25,393 $ 29,042 $
90,511 $ 78,725 Income
before income taxes $ 13,931 $ 5,112 $ 8,765 $ 29,425 $ 25,143
Adjustments: Stock-based compensation expense 6,964 6,609 5,443
20,169 15,356 Acquisition-related transaction costs and retention
bonus expense 47 90 441 218 3,038 Purchase accounting adjustment
for inventory fair value step-up — — 1,168 — 1,168 Amortization
expense 10,498 10,450 10,174 31,436 26,045 Non-cash interest
expense on convertible notes 1,801 1,774
1,700 5,324 5,026
Non-GAAP income before income taxes $ 33,241 $ 24,035 $ 27,691 $
86,572 $ 75,776 GAAP provision for income taxes 6,236 2,507 4,254
16,119 14,878 Adjustment to GAAP provision for income taxes
5,398 5,905 5,438 14,181
11,644 Non-GAAP provision for income taxes
11,634 8,412 9,692
30,300 26,522
Non-GAAP net income
$ 21,607 $ 15,623
$ 17,999 $ 56,272
$ 49,254 Non-GAAP basic net income
per share $ 0.20 $ 0.14 $ 0.16 $ 0.51 $ 0.45
Non-GAAP
diluted net income per share $ 0.19 $ 0.14 $ 0.16 $ 0.49 $ 0.44
Weighted average shares used in non-GAAP per share calculation:
Basic 109,555 110,060 110,214 110,353 109,951 Diluted 113,119
112,565 113,723 113,861 112,805
Supplemental Reconciliation of GAAP to
Non-GAAP Effective Tax Rate (1)
Three Months Ended Nine Months
Ended September 30, 2017 June 30, 2017
September 30, 2016 September 30, 2017
September 30, 2016 GAAP effective tax rate 45 % 49 %
49 % 55 % 59 % Adjustment to GAAP effective tax rate (10 )% (14 )%
(14 )% (20 )% (24 )% Non-GAAP effective tax rate 35 % 35 % 35 % 35
% 35 % (1) 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 35 percent for both 2017 and
2016, 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 year
to assist the Company’s planning for future periods.
Rambus Inc. Reconciliation of Other GAAP to Non-GAAP
Items (In thousands, except percentages)
(Unaudited) GAAP Non-GAAP
Three Months Ended Three Months Ended September
30, September 30, 2017
2016 2017
2016 Revenue (i) $ 99,134 $ 89,855 $ 99,134 $ 89,855
Operating income (ii) 17,010 11,816 34,519 29,042 Operating margin
(ii/i) 17 % 13 % 35 % 32 %
GAAP
Non-GAAP Nine Months Ended Nine Months Ended
September 30, September 30, 2017
2016 2017 2016 Revenue (i) $ 291,205 $
239,038 $ 291,205 $ 239,038 Operating income (ii) 38,688 33,118
90,511 78,725 Operating margin (ii/i) 13 % 14 % 31 % 33 %
Three Months Ended September 30, 2017
2016 Net income $ 7,695 $ 4,511 Add back: Interest
and other income (expense), net 3,079 3,051 Provision for income
taxes 6,236 4,254 Depreciation expense 3,249 3,423 Amortization
expense 10,498 10,174
EBITDA (1) $ 30,757 $ 25,413
Adjustments: Stock-based compensation expense 6,964 5,443
Acquisition-related transaction costs and retention bonus expense
47 441 Purchase accounting adjustment for inventory fair value
step-up — 1,168
Adjusted EBITDA (2) $
37,768 $ 32,465 (1) EBITDA is a
non-GAAP measure that management uses to evaluate the cash
generating capacity of the company. The most directly comparable
GAAP measure is net income. EBITDA is net income adjusted for net
interest expense, income taxes, and depreciation and amortization.
It should not be considered as an alternative to net income
computed under GAAP. (2) Adjusted EBITDA excludes the impact of
other non-GAAP adjustments indicated in the above tables.
Rambus Inc. Reconciliation of GAAP Forward Looking
Estimates to Non-GAAP Forward Looking Estimates (In
millions, except per share amounts) (Unaudited)
Three Months Ended December 31, 2017
Low High Forward-looking operating
costs and expenses $ 87.5 $ 82.5 Adjustments: Stock-based
compensation expense (7.5 ) (7.5 ) Amortization expense (11.0 )
(11.0 )
Forward-looking Non-GAAP operating costs and
expenses $ 69.0 $ 64.0
Forward-looking operating income $ 10.5 $ 21.5
Adjustments: Stock-based compensation expense 7.5 7.5 Amortization
expense 11.0 11.0
Forward-looking Non-GAAP
operating income $ 29.0 $
40.0 Forward-looking income before income
taxes $ 7.5 $ 18.5 Adjustments: Stock-based compensation expense
7.5 7.5 Amortization expense 11.0 11.0 Non-cash interest expense on
convertible notes 1.7 1.7 Forward-looking Non-GAAP
income before income taxes $ 27.7 $ 38.7 Forward-looking GAAP
provision for income taxes 2.6 6.5 Adjustment to Forward-looking
GAAP provision for income taxes 7.1 7.0
Forward-looking Non-GAAP provision for income taxes 9.7 13.5
Forward-looking Non-GAAP net income $
18.0 $ 25.2
Forward-looking Non-GAAP basic net income per share $ 0.16 $
0.23
Forward-looking Non-GAAP diluted net income per share $
0.16 $ 0.22 Weighted average shares used in forward-looking
Non-GAAP per share calculation: Basic 111.0 111.0 Diluted 114.0
114.0
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171023006376/en/
Rambus Inc.Rahul Mathur, 408-462-8000Senior Vice President,
Finance and Chief Financial Officerrmathur@rambus.com
Rambus (NASDAQ:RMBS)
Historical Stock Chart
From Apr 2024 to May 2024
Rambus (NASDAQ:RMBS)
Historical Stock Chart
From May 2023 to May 2024