- Excellent quarter, exceeding expectations for revenue and profit: GAAP revenue of $64.0 million; licensing billings of $67.1 million, product revenue of $30.7 million, and contract and other revenue of $13.6 million
SUNNYVALE, Calif., May 4, 2020 — (PRNewswire) — Rambus Inc. (NASDAQ: RMBS), a premier silicon IP and chip provider making data faster and safer, today reported financial results for the first quarter ended March 31, 2020. GAAP revenue for the first quarter was above expectations at $64.0 million; licensing billings were $67.1 million, product revenue was $30.7 million, and contract and other revenue was $13.6 million. The Company also generated $37.3 million in cash provided by operating activities.
"Rambus had an exceptional first quarter with record revenue from both our silicon IP and chip businesses, driven by excellent execution and continued gains in market share," said Luc Seraphin, chief executive officer of Rambus. "The dedication of our team and resilience of our business model under the current circumstances, combined with accelerated demand for our products across the critical markets of data center, networking and 5G, give us confidence in our ongoing ability to generate cash, further strengthen our balance sheet and emerge a stronger company."
Business Review
The dramatic global shift towards working from home and virtual collaboration caused by COVID-19 has put an enormous strain on global data infrastructure, increasing demands for bandwidth, capacity and security in data center, cloud and 5G applications to rapidly scale remote access. As a result, customer demand remains strong in these critical markets, despite significant uncertainty in the macro environment. The Company's focus on our core strength in semiconductor, emphasis on operational efficiency and strong cash generation have built an enduring foundation for growth that enables our product teams to provide uninterrupted delivery on our commitments to customers. With predictable patent licensing and a strong balance sheet, the Rambus business model is naturally resilient to the economic uncertainty resulting from COVID-19, and our innovations and products are well aligned to both near and long-term customer demand.
The Rambus silicon IP business delivered record revenue in the first quarter, augmented by multiple tier-1 SoC design wins and strong execution from last year's acquisitions. The Company strengthened its position in the critical markets of data center, cloud, communications, HPC, AI and 5G, with additions to both the high-speed interface and security IP portfolios. Our industry-leading, silicon-proven 112G XSR die-to-die and chiplet interface and complete HBM2E memory solution, featuring an integrated PHY and digital controller, provide the critical interconnects for moving data in next-generation high-performance applications. The tremendous growth in the amount of data being generated is also increasing requirements to secure data while at-rest and in-motion. The team continues to drive growth in security with multiple tier-1 SoC design wins for root of trust and secure protocol solutions. We extended our industry leadership with the recent launch of an 800G MACsec solution to protect data in motion in cloud, networking, AI and 5G applications.
The Company's memory interface chip business delivered record revenue for the fourth consecutive quarter, driven by continued gains in market share and bolstered by the increased demand for memory in data center and cloud. Emphasizing excellence in quality and delivery, data center and OEM qualifications continue to increase for the DDR4 memory interface chipset, and the Company remains well positioned as a first mover for the industry transition to DDR5.
Quarterly Financial Review - GAAP | Three Months Ended
| ||||||
(In millions, except for percentages and per share amounts) | 2020 |
| 2019 | ||||
Revenue |
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|
| ||||
Royalties | $ | 19.7 |
|
| $ | 24.8 |
|
Product revenue | 30.7 |
|
| 9.0 |
| ||
Contract and other revenue | 13.6 |
|
| 14.6 |
| ||
Total revenue | $ | 64.0 |
|
| $ | 48.4 |
|
Cost of product revenue | $ | 10.3 |
|
| $ | 4.4 |
|
| Cost of contract and other revenue | $ | 1.2 |
|
| $ | 2.9 |
|
| Amortization of acquired intangible assets (included in total cost of revenue) | $ | 4.4 |
|
| $ | 3.9 |
|
| Total operating expenses (1) | $ | 58.9 |
|
| $ | 68.6 |
|
| Operating loss | $ | (10.8) |
|
| $ | (31.4) |
|
| Operating margin | (17) | % |
| (65) | % | ||
| Net loss | $ | (8.0) |
|
| $ | (26.6) |
|
| Diluted net loss per share | $ | (0.07) |
|
| $ | (0.24) |
|
| Net cash provided by operating activities | $ | 37.3 |
|
| $ | 28.8 |
|
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|
|
| (1) | Includes amortization of acquired intangible assets of approximately $0.3 million and $1.1 million for the three months ended March 31, 2020 and 2019, respectively. |
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|
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| Quarterly Financial Review - Non-GAAP (including operational metric) (1) | Three Months Ended
| ||||||
| (In millions) | 2020 |
| 2019 | ||||
| Licensing billings (2) | $ | 67.1 |
|
| $ | 75.4 |
|
| Product revenue | $ | 30.7 |
|
| $ | 9.0 |
|
| Contract and other revenue | $ | 13.6 |
|
| $ | 14.6 |
|
| Cost of product revenue | $ | 10.3 |
|
| $ | 4.4 |
|
| Cost of contract and other revenue | $ | 1.2 |
|
| $ | 2.9 |
|
| Total operating expenses | $ | 51.9 |
|
| $ | 60.0 |
|
| Interest and other income (expense), net | $ | 1.2 |
|
| $ | 1.1 |
|
| Diluted share count | 115 |
|
| 111 |
| ||
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| (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, cost of product revenue and cost of contract and other revenue are solely presented on a GAAP basis. |
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| (2) | Licensing billings is an operational metric that reflects amounts invoiced to our licensing customers during the period, as adjusted for certain differences. |
