RAMBUS REPORTS THIRD QUARTER 2024 FINANCIAL RESULTS Form 8 K

RAMBUS REPORTS THIRD QUARTER 2024 FINANCIAL RESULTS

•Delivered $66.4 million in product revenue, up 17% sequentially and 27% year over year

•Achieved strong sequential earnings growth and generated excellent cash from operations of $62.1 million

•Unveiled industry-first complete chipsets for next-generation, industry-standard DDR5 MRDIMMs and RDIMMs for the data center and AI

SAN JOSE, Calif. - October 28, 2024 - 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, 2024. GAAP revenue for the third quarter was $145.5 million, licensing billings were $65.4 million, product revenue was $66.4 million, and contract and other revenue was $15.0 million. The Company also generated $62.1 million in cash provided by operating activities in the third quarter.

"We delivered strong sequential growth in Q3, fueled by a double-digit increase in product revenue, and generated excellent cash from operations," said Luc Seraphin, chief executive officer of Rambus. "Building on our strong execution and strategic investment in new leadership products, we introduced the industry's first complete chipsets for industry-standard DDR5 MRDIMM 12800 and RDIMM 8000 to address the rising performance needs of the data center and AI. These new chips represent a significant expansion of our addressable market and support the company's long-term growth."

Quarterly Financial Review - GAAP	Three Months Ended September 30,
(In millions, except for percentages and per share amounts)	2024	2023
Revenue
Product revenue	$	66.4	$	52.2
Royalties	64.1	28.9
Contract and other revenue	15.0	24.2
Total revenue	145.5	105.3
Cost of product revenue	24.6	19.4
Cost of contract and other revenue	0.8	1.3
Amortization of acquired intangible assets (included in total cost of revenue)	2.8	3.3
Total operating expenses (benefits) (1)	62.7	(23.6)
Operating income	$	54.6	$	104.9
Operating margin	38	%	100	%
Net income	$	48.7	$	103.2
Diluted net income per share	$	0.45	$	0.93
Net cash provided by operating activities	$	62.1	$	51.6

_________________________________________

(1) Includes amortization of acquired intangible assets of approximately $0.1 million and $0.3 million for the three months ended September 30, 2024 and 2023, respectively.

Quarterly Financial Review - Supplemental Information(1)	Three Months Ended September 30,
(In millions)	2024	2023
Licensing billings (operational metric) (2)	$	65.4	$	57.9
Product revenue (GAAP)	$	66.4	$	52.2
Contract and other revenue (GAAP)	$	15.0	$	24.2
Non-GAAP cost of product revenue	$	24.4	$	19.2
Cost of contract and other revenue (GAAP)	$	0.8	$	1.3
Non-GAAP total operating expenses	$	55.3	$	52.4
Non-GAAP interest and other income (expense), net	$	4.2	$	1.9
Diluted share count (GAAP)	108	111

_________________________________________

(1) See "Supplemental Reconciliation of GAAP to Non-GAAP Results" table included below.

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

GAAP revenue for the quarter was $145.5 million. The Company also had licensing billings of $65.4 million, product revenue of $66.4 million, and contract and other revenue of $15.0 million. The Company had total GAAP cost of revenue of $28.1 million and operating expenses of $62.7 million. The Company also had total non-GAAP operating expenses of $80.5 million (including non-GAAP cost of revenue of $25.2 million). The Company had GAAP diluted net income per share of $0.45. The Company's basic share count was 107 million shares and its diluted share count was 108 million shares.

Cash, cash equivalents, and marketable securities as of September 30, 2024 were $432.7 million, which remained flat from June 30, 2024, mainly due to $62.1 million in cash provided by operating activities, offset by $50 million paid in connection with a share repurchase program and $9.9 million paid to acquire property, plant and equipment.

2024 Fourth Quarter Outlook

The Company will discuss its full revenue guidance for the fourth quarter of 2024 during its upcoming conference call. The following table sets forth the fourth quarter outlook for other measures.

(In millions)	GAAP	Non-GAAP (1)
Licensing billings (operational metric) (2)	$57 - $63	$57 - $63
Product revenue (GAAP)	$72 - $78	$72 - $78
Contract and other revenue (GAAP)	$22 - $28	$22 - $28
Total operating costs and expenses	$101 - $97	$86 - $82
Interest and other income (expense), net	$4	$4
Diluted share count	108	108

_________________________________________

(1) See "Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates" table included below.

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

For the fourth quarter of 2024, the Company expects licensing billings to be between $57 million and $63 million. The Company also expects royalty revenue to be between $54 million and $60 million, product revenue to be between $72 million and $78 million, and contract and other revenue to be between $22 million and $28 million. Revenue is not without risk and achieving revenue in this range will require that the Company sign customer agreements for various product sales and solutions licensing, among other matters.

The Company also expects operating costs and expenses to be between $101 million and $97 million. Additionally, the Company expects non-GAAP operating costs and expenses to be between $86 million and $82 million. These expectations also assume a tax rate of 22% and a diluted share count of 108 million, and exclude stock-based compensation expense of $13 million and amortization of acquired intangible assets of $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: (866) 813-9403 (domestic) or (+1) 929-458-6194 (international) with ID# 719712.

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: cost of product revenue, 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/divestiture costs and retention bonus expense, amortization of acquired intangible assets, restructuring and other charges (benefits), expense on abandoned operating leases, facility restoration costs, gain on divestiture, change in fair value of earn-out liability, impairment of assets, 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. A 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/divestiture 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 (recoveries). These charges (recoveries) may consist of severance, contractual retention payments, exit costs and other charges and are excluded because such charges (recoveries) are not directly related to ongoing business results and do not reflect expected future operating expenses.

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.

Gain on divestiture. Reflects the gain 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).

Impairment of assets. These charges primarily consist of non-cash charges to property, plant and equipment assets, which are excluded because such charges are non-recurring and do not reduce the Company's liquidity.

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.

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 22 percent and 24 percent for 2024 and 2023, respectively, 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 fourth quarter of 2024 and related drivers, and the Company's ability to effectively manage 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.

Contact

Desmond Lynch

Senior Vice President, Finance and Chief Financial Officer

(408) 462-8000

[email protected]

Source: Rambus Inc.

Rambus Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)	September 30, 2024	December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	113,980	$	94,767
Marketable securities	318,717	331,077
Accounts receivable	87,198	82,925
Unbilled receivables	30,778	50,872
Inventories	48,905	36,154
Prepaids and other current assets	12,435	34,850
Total current assets	612,013	630,645
Intangible assets, net	19,389	28,769
Goodwill	286,812	286,812
Property, plant and equipment, net	73,374	67,808
Operating lease right-of-use assets	21,039	21,497
Deferred tax assets	129,348	127,892
Income taxes receivable	104,270	88,768
Other assets	5,325	6,036
Total assets	$	1,251,570	$	1,258,227
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	20,365	$	18,074
Accrued salaries and benefits	13,966	17,504
Deferred revenue	18,404	17,393
Income taxes payable	1,114	5,099
Operating lease liabilities	5,397	4,453
Other current liabilities	14,881	26,598
Total current liabilities	74,127	89,121
Long-term liabilities:
Long-term operating lease liabilities	24,794	26,255
Long-term income taxes payable	101,350	78,947
Other long-term liabilities	12,314	25,803
Total long-term liabilities	138,458	131,005
Total stockholders' equity	1,038,985	1,038,101
Total liabilities and stockholders' equity	$	1,251,570	$	1,258,227

Rambus Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended September 30,	Nine Months Ended September 30,
(In thousands, except per share amounts)	2024	2023	2024	2023
Revenue:
Product revenue	$	66,394	$	52,181	$	173,446	$	170,934
Royalties	64,105	28,857	167,961	97,698
Contract and other revenue	15,014	24,260	54,115	70,260
Total revenue	145,513	105,298	395,522	338,892
Cost of revenue:
Cost of product revenue	24,554	19,388	67,381	64,554
Cost of contract and other revenue	752	1,295	2,307	4,280
Amortization of acquired intangible assets	2,796	3,349	8,904	10,472
Total cost of revenue	28,102	24,032	78,592	79,306
Gross profit	117,411	81,266	316,930	259,586
Operating expenses (benefits):
Research and development	41,299	37,368	119,183	120,842
Sales, general and administrative	25,867	25,333	76,096	82,484
Amortization of acquired intangible assets	94	258	476	1,022
Restructuring and other charges (recoveries)	-	(100)	-	9,394
Gain on divestiture	-	(90,843)	-	(90,843)
Impairment of assets	-	10,045	1,071	10,045
Change in fair value of earn-out liability	(4,544)	(5,666)	(5,044)	8,134
Total operating expenses (benefits)	62,716	(23,605)	191,782	141,078
Operating income	54,695	104,871	125,148	118,508
Interest income and other income (expense), net	4,667	2,715	13,654	7,112
Loss on fair value adjustment of derivatives, net	-	-	-	(240)
Interest expense	(327)	(356)	(1,064)	(1,113)
Interest and other income (expense), net	4,340	2,359	12,590	5,759
Income before income taxes	59,035	107,230	137,738	124,267
Provision for (benefit from) income taxes	10,370	4,032	20,119	(151,092)
Net income	$	48,665	$	103,198	$	117,619	$	275,359
Net income per share:
Basic	$	0.45	$	0.95	$	1.09	$	2.54
Diluted	$	0.45	$	0.93	$	1.08	$	2.48
Weighted average shares used in per share calculation
Basic	107,235	108,317	107,681	108,412
Diluted	108,474	110,775	109,318	111,179

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(Unaudited)

Three Months Ended September 30,
(In thousands)	2024	2023
Cost of product revenue	$	24,554	$	19,388
Adjustment:
Stock-based compensation expense	(117)	(149)
Non-GAAP cost of product revenue	$	24,437	$	19,239
Total operating expenses (benefits)	$	62,716	$	(23,605)
Adjustments:
Stock-based compensation expense	(11,881)	(9,889)
Acquisition-related costs and retention bonus expense	(17)	(37)
Amortization of acquired intangible assets	(94)	(258)
Restructuring and other recoveries	-	100
Expense on abandoned operating leases	-	(40)
Facility restoration costs	-	3
Severance costs	-	(373)
Gain on divestiture	-	90,843
Impairment of assets	-	(10,045)
Change in fair value of earn-out liability	4,544	5,666
Non-GAAP total operating expenses	$	55,268	$	52,365
Interest and other income (expense), net	$	4,340	$	2,359
Adjustment:
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements	(163)	(426)
Non-GAAP interest and other income (expense), net	$	4,177	$	1,933

Rambus Inc.

Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates

(Unaudited)

2024 Fourth Quarter Outlook	Three Months Ended December 31, 2024
(In millions)	Low	High
Forward-looking operating costs and expenses	$	101.0	$	97.0
Adjustments:
Stock-based compensation expense	(13.0)	(13.0)
Amortization of acquired intangible assets	(2.0)	(2.0)
Forward-looking Non-GAAP operating costs and expenses	$	86.0	$	82.0