EX-99.1 2 exhibit991earningsrele.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1

rambuslogonewa01.gif
News Release
RAMBUS REPORTS FOURTH QUARTER AND FISCAL YEAR 2019 FINANCIAL RESULTS

Excellent quarter, exceeding expectations; GAAP revenue of $59.9 million; with licensing billings of $63.8 million, product revenue of $26.6 million, and contract and other revenue of $13.9 million
Record Q4 and full-year revenue for both the Memory Interface Chips and Silicon IP businesses
$35.4 million in cash provided by operating activities in Q4 and $128.5 million for the full year 2019, up 48% year over year
Expanded product portfolio with acquisition of Secure Silicon IP and Protocols business from Verimatrix

SUNNYVALE, Calif. - January 27, 2020 Rambus Inc. (NASDAQ:RMBS) today reported financial results for the fourth quarter ended December 31, 2019. Total revenue for the fourth quarter was towards the high end of guidance at $59.9 million; licensing billings were $63.8 million, product revenue was $26.6 million, and contract and other revenue was $13.9 million. The Company also generated $35.4 million in cash provided by operating activities in the fourth quarter, bringing the 2019 total to $128.5 million, up 48% year over year.

“Rambus had an excellent fourth quarter, concluding a very strong year that was propelled by robust cash from operations and record Q4 and annual revenue from memory interface chips and silicon IP,” said Luc Seraphin, chief executive officer of Rambus. “By realigning the Company around our core strengths in semiconductor and augmenting our product portfolio, we are well-positioned for continued success in 2020.”

Business Review

Guided by our strategic objectives, Rambus continues to focus on our core strength in semiconductor, optimize the Company for operational efficiency, and leverage our strong cash generation to re-invest for growth. Consistent with those priorities, we redefined our perimeter in 2019 with significant M&A activity throughout the year and focused the Company on Memory Interface Chips and Silicon IP solutions for the semiconductor market. The Company closed the sale of its Payments and Ticketing business to Visa and completed two silicon IP acquisitions, Northwest Logic for digital controllers, and the secure silicon IP and protocols businesses of Verimatrix, formerly Inside Secure.

Rambus continues to execute and demonstrate success across our product lines. We delivered the second consecutive year of record revenue from products, with combined results from our Memory Interface Chips and Silicon IP businesses achieving over 64% growth year over year from 2018.

Memory Interface Chips was the fastest growing business, with annual revenue almost doubling year over year. Driven by increased OEM and data center qualifications, we saw steady gains in our DDR4 memory interface chip market share in Q4 and delivered the third consecutive quarter of record revenue. The Company remains well positioned as a first mover for the industry transition to DDR5.

Silicon IP delivered record revenue in Q4 and drove sustained growth throughout the year with numerous design wins at tier-1 SoC customers across our target markets for both interface and security IP solutions. Most recently, Rambus announced that Enflame Technology has selected our HBM2 PHY and controller as part of their next-generation AI training chip. In addition, we expanded our portfolio of solutions addressing the fast-growing and demanding applications in AI, 5G and data center with the launch of a comprehensive PCIe 5 interface solution.






Quarterly Financial Review - GAAP
Three Months Ended December 31,
(In millions, except for percentages and per share amounts)
2019
 
2018
Revenue
 
 
 
Royalties
$
19.4

 
$
45.4

Product revenue
26.6

 
11.5

Contract and other revenue
13.9

 
11.6

Total revenue
$
59.9

 
$
68.5

Total operating costs and expenses
$
73.1

 
$
72.8

Operating loss
$
(13.2
)
 
$
(4.2
)
Operating margin
(22
)%
 
(6
)%
Net loss
$
(9.5
)
 
$
(2.0
)
Diluted net loss per share
$
(0.09
)
 
$
(0.02
)
 
 
 
 
Net cash provided by operating activities
$
35.4

 
$
35.1


Quarterly Financial Review - Non-GAAP (including operational metric) (1)
Three Months Ended December 31,
(In millions)
2019
 
2018
Licensing billings (2)
$
63.8

 
$
76.7

Product revenue
$
26.6

 
$
11.5

Contract and other revenue
$
13.9

 
$
11.6

Total operating costs and expenses
$
62.3

 
$
61.6

Interest and other income (expense), net
$
1.0

 
$
(0.5
)
Diluted share count
115

 
110


(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 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.

Revenue for the quarter was towards the high end of our guidance at $59.9 million, with licensing billings of $63.8 million, product revenue of $26.6 million, and contract and other revenue of $13.9 million. We had GAAP total operating costs and expenses of $73.1 million. We also had non-GAAP total operating costs and expenses of $62.3 million, reflecting higher cost of product revenue related to increased memory interface chip sales. We also recorded $0.9 million in revenue and $2.3 million in operating costs and expenses associated with our Payments and Ticketing business in the fourth quarter prior to the sale to Visa. With higher revenue we had profit towards the high end of our expectations, with GAAP diluted net loss per share of $0.09. Our basic share count was 112 million shares and our diluted share count would have been 115 million shares.

Cash, cash equivalents, and marketable securities as of December 31, 2019 were $407.7 million, an increase of $69.6 million as compared to September 30, 2019, mainly due to $83.6 million in cash received from the sale of our payments and ticketing business to Visa in the fourth quarter and $35.4 million in cash provided by operating activities, offset by $45.0 million in cash paid for the acquisition of the silicon IP, secure protocols and provisioning business from Verimatrix, formerly Inside Secure. Cash provided by operating activities for the year ended December 31, 2019 was $128.5 million, an increase of $41.4 million, or 48%, from the same period in the prior year.

2020 First Quarter Outlook

The Company will discuss its full revenue guidance for the first quarter of 2020 during its upcoming conference call. The following table sets forth first quarter outlook for other measures.






(In millions)
GAAP
 
Non-GAAP (1)
Licensing billings (2)
$60 - $66
 
$60 - $66
Product revenue
$18 - $24
 
$18 - $24
Contract and other revenue
$13 - $19
 
$13 - $19
Total operating costs and expenses
$80 - $76
 
$68 - $64
Interest and other income (expense), net
$5
 
$1
Diluted share count
115
 
115

(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.

(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 first quarter of 2020, the Company expects licensing billings to be between $60 million and $66 million. The Company also expects royalty revenue to be between $7 million and $13 million, product revenue to be between $18 million and $24 million and contract and other revenue to be between $13 million and $19 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 $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% (refer to non-GAAP financial information below - income tax adjustments) and diluted share count of 115 million, and exclude stock-based compensation expense ($7 million), amortization expense ($5 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 ($5 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# 3576589.

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 costs and 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 expenses, acquisition-related/divestiture costs and retention bonus expense, amortization expenses, impairment (recovery) of assets held for sale, 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/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.

Restructuring and other charges. These charges may consist of severance, contractual retention payments, exit costs and other charges and are excluded because such charges are not directly related to ongoing business results and do not reflect expected future operating expenses.

Impairment (recovery) of assets held for sale. These charges consist of non-cash charges (recoveries) to assets held for sale and are excluded because such charges (recoveries) are non-recurring and do not reduce the Company’s liquidity.

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.

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 24 percent for both 2019 and 2018, 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 premier Silicon IP and chip provider that makes data faster and safer. With 30 years of innovation, we continue to develop the foundational technology for all modern computing systems. Leveraging our semiconductor expertise, Rambus solutions speed performance, expand capacity and improve security for today’s most demanding applications. From data center and edge to artificial intelligence and automotive, our interface and security IP, and memory interface chips enable SoC and system designers to deliver their vision of the future. 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 growth in product and service offerings and product revenue, expected benefits of our merger, acquisition and divestiture activity and related integration, and financial guidance for the first quarter of 2020, including licensing billings and revenue estimates, operating costs and expenses, interest and other income (expense), net and estimated, fixed, long-term projected tax rates 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.






Contact:

Rahul Mathur
Senior Vice President, Finance and Chief Financial Officer
Rambus Inc.
(408) 462-8000
rmathur@rambus.com

Source: Rambus Inc.









Rambus Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

 
 
December 31, 2019
 
December 31, 2018
ASSETS
   
 
   
 
 
 
 
Current assets:
   
 
   
Cash and cash equivalents
$
102,176

 
$
115,924

Marketable securities
305,488

 
161,840

Accounts receivable
44,039

 
50,863

Unbilled receivables
184,366

 
176,613

Inventories
10,086

 
6,772

Prepaids and other current assets
18,524

 
15,738

Total current assets
664,679

 
527,750

Intangible assets, net
54,900

 
59,936

Goodwill
183,465

 
207,178

Property, plant and equipment, net
44,714

 
57,028

Operating lease right-of-use assets
37,020

 

Deferred tax assets
4,574

 
4,435

Unbilled receivables, long-term
343,703

 
497,003

Other assets
5,931

 
7,825

Total assets
$
1,338,986

 
$
1,361,155

 
 
 
 
LIABILITIES & STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
9,549

 
$
7,392

Accrued salaries and benefits
20,291

 
16,938

Deferred revenue
11,947

 
19,374

Income taxes payable, short-term
19,142

 
16,390

Operating lease liabilities
6,357

 

Other current liabilities
18,893

 
9,191

Total current liabilities
86,179

 
69,285

Long-term liabilities:
 
 
 
Convertible notes, long-term
148,788

 
141,934

Long-term imputed financing obligation

 
36,297

Long-term operating lease liabilities
39,889

 

Long-term income taxes payable
60,094

 
77,280

Deferred tax liabilities
13,846

 
18,960

Other long-term liabilities
19,272

 
5,287

Total long-term liabilities
281,889

 
279,758

Total stockholders’ equity
970,918

 
1,012,112

Total liabilities and stockholders’ equity
$
1,338,986

 
$
1,361,155








Rambus Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

 
 
Three Months Ended
December 31,
 
Year Ended
December 31,
 
2019
 
2018
 
2019
 
2018
 
 
Revenue:
 
 
 
 
 
 
 
Royalties
$
19,434

 
$
45,430

 
$
90,785

 
$
130,452

Product revenue
26,600

 
11,537

 
72,972

 
38,690

Contract and other revenue
13,913

 
11,596

 
60,270

 
62,059

Total revenue
59,947

 
68,563

 
224,027

 
231,201

Operating costs and expenses:
 
 
 
 
 
 
 
Cost of product revenue (1)
9,311

 
4,367

 
27,156

 
18,299

Cost of contract and other revenue
5,265

 
6,239

 
24,219

 
35,402

Research and development (1)
36,820

 
37,395

 
156,815

 
158,339

Sales, general and administrative (1)
24,872

 
24,768

 
104,116

 
103,911

Restructuring charges (recoveries)
4,588

 
(6
)
 
8,821

 
2,217

Impairment (recovery) of assets held for sale
(7,698
)
 

 
7,439

 

Total operating costs and expenses
73,158

 
72,763

 
328,566

 
318,168

Operating loss
(13,211
)
 
(4,200
)
 
(104,539
)
 
(86,967
)
Interest income and other income (expense), net
6,263

 
7,248

 
27,375

 
32,621

Interest expense
(2,550
)
 
(3,251
)
 
(9,852
)
 
(16,282
)
Interest and other income (expense), net
3,713

 
3,997

 
17,523

 
16,339

Loss before income taxes
(9,498
)
 
(203
)
 
(87,016
)
 
(70,628
)
Provision for income taxes
34

 
1,815

 
3,403

 
87,329

Net loss
$
(9,532
)
 
$
(2,018
)
 
$
(90,419
)
 
$
(157,957
)
Net loss per share:
   
 
   
 
   
 
   
Basic
$
(0.09
)
 
$
(0.02
)
 
$
(0.81
)
 
$
(1.46
)
Diluted
$
(0.09
)
 
$
(0.02
)
 
$
(0.81
)
 
$
(1.46
)
Weighted average shares used in per share calculation
   
 
   
 
   
 
   
Basic
111,883

 
108,826

 
110,948

 
108,450

Diluted
111,883

 
108,826

 
110,948

 
108,450

 
 
 
 
 
 
 
 
_________
(1) Total stock-based compensation expense for the three months and years ended December 31, 2019 and 2018 are presented as follows:
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended
December 31,
 
2019
 
2018
 
2019
 
2018
Cost of product revenue
$

 
$
1

 
$
4

 
$
8

Research and development
$
1,756

 
$
2,920

 
$
11,032

 
$
12,582

Sales, general and administrative
$
3,063

 
$
3,224

 
$
15,440

 
$
9,146







Rambus Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Results
(In thousands)
(Unaudited)
 
Three Months Ended
 
December 31,
 
2019
 
2018
 
 
 
 
Operating costs and expenses
$
73,158

 
$
72,763

Adjustments:
 
 
 
Stock-based compensation expense
(4,819
)
 
(6,145
)
Acquisition-related/divestiture costs and retention bonus expense
(4,250
)
 

Amortization expense
(3,962
)
 
(4,989
)
Restructuring and other charges (recoveries)
(4,588
)
 
6

Facility restoration costs
(959
)
 

Recovery of assets held for sale
7,698

 

Non-GAAP operating costs and expenses
$
62,278

 
$
61,635

 
 
 
 
Interest and other income (expense), net
$
3,713

 
$
3,997

Adjustments:
 
 
 
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements
(4,469
)
 
(6,147
)
Non-cash interest expense on convertible notes
1,749

 
1,655

Non-GAAP interest and other income (expense), net
$
993

 
$
(495
)
 
 
 
 














Rambus Inc.
Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates
(In millions)
(Unaudited)
2020 First Quarter Outlook
Three Months Ended March 31, 2020
 
Low
 
High
 
 
 
 
Forward-looking operating costs and expenses
$
80.0

 
$
76.0

Adjustments:
 
 
 
Stock-based compensation expense
(7.0
)
 
(7.0
)
Amortization expense
(5.0
)
 
(5.0
)
Forward-looking Non-GAAP operating costs and expenses
$
68.0

 
$
64.0

 
 
 
 
Forward-looking interest and other income (expense), net
$
4.6

 
$
4.6

Adjustments:
 
 
 
Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements
(5.3
)
 
(5.3
)
Non-cash interest expense on convertible notes
1.7

 
1.7

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

 
$
1.0