Acquisition-related costs and retention bonus expense. These expenses include all direct costs of certain acquisitions and the current period’s 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.
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.
Gain on sale of equity security. The Company has excluded gain on sale of equity security as this is not a reflection of the Company’s ongoing operations.
Loss on extinguishment of debt. The Company has excluded loss on extinguishment of debt as this represents a cost of repurchasing its existing convertible notes and is not a reflection of the Company’s ongoing operations.
Loss on fair value adjustment of derivatives, net. The Company has excluded its loss on fair value adjustment of derivatives, net, as this represents cost and benefits of repurchasing its convertible notes and is not a reflection of the Company's ongoing operations.
Realized loss on sale of marketable securities sold for the purpose of notes repurchase. The Company has excluded its realized loss on sale of marketable securities sold for the purpose of repurchasing its convertible notes as this is not a reflection of the Company's ongoing operations.
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 2022 and 2021, 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, product and investment strategies, and the Company’s outlook and financial guidance for the fourth quarter of 2022 and related drivers, and the Company’s ability to effectively manage supply chain shortages. 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 COVID-19 and its variants. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.
Rambus Inc. Condensed Consolidated Balance Sheets (Unaudited) |
||||||
(In thousands) |
|
September 30,
|
|
December 31,
|
||
ASSETS |
|
|
|
|
||
Current assets: |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
141,559 |
|
$ |
107,891 |
Marketable securities |
|
|
123,289 |
|
|
377,718 |
Accounts receivable |
|
|
38,547 |
|
|
44,065 |
| Unbilled receivables |
|
|
142,037 |
|
|
135,608 |
| Inventories |
|
|
14,161 |
|
|
8,482 |
| Prepaids and other current assets |
|
|
14,584 |
|
|
10,600 |
| Total current assets |
|
|
474,177 |
|
|
684,364 |
| Intangible assets, net |
|
|
54,856 |
|
|
58,420 |
| Goodwill |
|
|
292,038 |
|
|
278,810 |
| Property, plant and equipment, net |
|
|
78,563 |
|
|
56,035 |
| Operating lease right-of-use assets |
|
|
25,232 |
|
|
23,712 |
| Deferred tax assets |
|
|
2,803 |
|
|
4,047 |
| Unbilled receivables |
|
|
37,914 |
|
|
123,018 |
| Other assets |
|
|
3,473 |
|
|
4,240 |
| Total assets |
|
$ |
969,056 |
|
$ |
1,232,646 |
|
|
|
|
|
|
||
| LIABILITIES & STOCKHOLDERS’ EQUITY |
|
|
|
|
||
| Current liabilities: |
|
|
|
|
||
| Accounts payable |
|
$ |
20,405 |
|
$ |
11,279 |
| Accrued salaries and benefits |
|
|
16,654 |
|
|
20,945 |
| Convertible notes |
|
|
10,368 |
|
|
163,687 |
| Deferred revenue |
|
|
23,460 |
|
|
24,755 |
| Income taxes payable |
|
|
20,024 |
|
|
20,607 |
| Operating lease liabilities |
|
|
5,435 |
|
|
5,992 |
| Other current liabilities |
|
|
20,085 |
|
|
20,002 |
| Total current liabilities |
|
|
116,431 |
|
|
267,267 |
| Long-term liabilities: |
|
|
|
|
||
| Long-term operating lease liabilities |
|
|
30,093 |
|
|
29,099 |
| Long-term income taxes payable |
|
|
7,818 |
|
|
21,424 |
| Deferred tax liabilities |
|
|
25,746 |
|
|
23,985 |
| Other long-term liabilities |
|
|
39,084 |
|
|
28,475 |
| Total long-term liabilities |
|
|
102,741 |
|
|
102,983 |
| Total stockholders’ equity |
|
|
749,884 |
|
|
862,396 |
| Total liabilities and stockholders’ equity |
|
$ |
969,056 |
|
$ |
1,232,646 |
| Rambus Inc. Condensed Consolidated Statements of Operations (Unaudited) |
||||||||||||||||
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
| (In thousands, except per share amounts) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
| Revenue: |
|
|
|
|
|
|
|
|
||||||||
| Product revenue |
|
$ |
58,619 |
|
|
$ |
36,710 |
|
|
$ |
159,890 |
|
|
$ |
98,661 |
|
| Royalties |
|
|
29,878 |
|
|
|
33,044 |
|
|
|
108,380 |
|
|
|
103,813 |
|
| Contract and other revenue |
|
|
23,747 |
|
|
|
11,528 |
|
|
|
64,156 |
|
|
|
34,049 |
|
| Total revenue |
|
|
112,244 |
|
|
|
81,282 |
|
|
|
332,426 |
|
|
|
236,523 |
|
| Cost of revenue: |
|
|
|
|
|
|
|
|
||||||||
| Cost of product revenue |
|
|
21,953 |
|
|
|
13,157 |
|
|
|
60,767 |
|
|
|
35,989 |
|
| Cost of contract and other revenue |
|
|
1,455 |
|
|
|
1,456 |
|
|
|
3,053 |
|
|
|
4,029 |
|
| Amortization of acquired intangible assets |
|
|
3,576 |
|
|
|
3,813 |
|
|
|
10,375 |
|
|
|
12,638 |
|
| Total cost of revenue |
|
|
26,984 |
|
|
|
18,426 |
|
|
|
74,195 |
|
|
|
52,656 |
|
| Gross profit |
|
|
85,260 |
|
|
|
62,856 |
|
|
|
258,231 |
|
|
|
183,867 |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
| Research and development |
|
|
39,295 |
|
|
|
35,592 |
|
|
|
118,648 |
|
|
|
99,415 |
|
| Sales, general and administrative |
|
|
26,198 |
|
|
|
22,210 |
|
|
|
79,409 |
|
|
|
67,956 |
|
| Amortization of acquired intangible assets |
|
|
433 |
|
|
|
359 |
|
|
|
1,259 |
|
|
|
817 |
|
| Restructuring charges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
368 |
|
| Change in fair value of earn-out liability |
|
|
2,411 |
|
|
|
— |
|
|
|
(1,889 |
) |
|
|
— |
|
| Total operating expenses |
|
|
68,337 |
|
|
|
58,161 |
|
|
|
197,427 |
|
|
|
168,556 |
|
| Operating income |
|
|
16,923 |
|
|
|
4,695 |
|
|
|
60,804 |
|
|
|
15,311 |
|
| Interest income and other income (expense), net |
|
|
6,385 |
|
|
|
2,726 |
|
|
|
10,483 |
|
|
|
8,088 |
|
| Loss on extinguishment of debt |
|
|
(17,129 |
) |
|
|
— |
|
|
|
(83,626 |
) |
|
|
— |
|
| Loss on fair value adjustment of derivatives, net |
|
|
(2,302 |
) |
|
|
— |
|
|
|
(10,585 |
) |
|
|
— |
|
| Interest expense |
|
|
(437 |
) |
|
|
(2,672 |
) |
|
|
(1,390 |
) |
|
|
(7,969 |
) |
| Interest and other income (expense), net |
|
|
(13,483 |
) |
|
|
54 |
|
|
|
(85,118 |
) |
|
|
119 |
|
| Income (loss) before income taxes |
|
|
3,440 |
|
|
|
4,749 |
|
|
|
(24,314 |
) |
|
|
15,430 |
|
| Provision for income taxes |
|
|
2,501 |
|
|
|
1,073 |
|
|
|
5,945 |
|
|
|
3,201 |
|
| Net income (loss) |
|
$ |
939 |
|
|
$ |
3,676 |
|
|
$ |
(30,259 |
) |
|
$ |
12,229 |
|
| Net income (loss) per share: |
|
|
|
|
|
|
|
|
||||||||
| Basic |
|
$ |
0.01 |
|
|
$ |
0.03 |
|
|
$ |
(0.27 |
) |
|
$ |
0.11 |
|
| Diluted |
|
$ |
0.01 |
|
|
$ |
0.03 |
|
|
$ |
(0.27 |
) |
|
$ |
0.11 |
|
| Weighted average shares used in per share calculation |
|
|
|
|
|
|
|
|
||||||||
| Basic |
|
|
109,968 |
|
|
|
108,989 |
|
|
|
110,102 |
|
|
|
111,103 |
|
| Diluted |
|
|
111,962 |
|
|
|
113,661 |
|
|
|
110,102 |
|
|
|
114,954 |
|
| Rambus Inc. Supplemental Reconciliation of GAAP to Non-GAAP Results (Unaudited) |
||||||||
|
|
|
Three Months Ended
|
||||||
| (In thousands) |
|
|
2022 |
|
|
|
2021 |
|
| Cost of product revenue |
|
$ |
21,953 |
|
|
$ |
13,157 |
|
| Adjustment: |
|
|
|
|
||||
| Stock-based compensation expense |
|
|
(142 |
) |
|
|
(101 |
) |
| Non-GAAP cost of product revenue |
|
$ |
21,811 |
|
|
$ |
13,056 |
|
|
|
|
|
|
|
||||
| Total operating expenses |
|
$ |
68,337 |
|
|
$ |
58,161 |
|
| Adjustments: |
|
|
|
|
||||
| Stock-based compensation expense |
|
|
(8,730 |
) |
|
|
(7,381 |
) |
| Acquisition-related costs and retention bonus expense |
|
|
(1,627 |
) |
|
|
(1,658 |
) |
| Amortization of acquired intangible assets |
|
|
(433 |
) |
|
|
(359 |
) |
| Expense on abandoned operating leases |
|
|
(520 |
) |
|
|
(521 |
) |
| Change in fair value of earn-out liability |
|
|
(2,411 |
) |
|
|
— |
|
| Non-GAAP total operating expenses |
|
$ |
54,616 |
|
|
$ |
48,242 |
|
|
|
|
|
|
|
||||
| Interest and other income (expense), net |
|
$ |
(13,483 |
) |
|
$ |
54 |
|
| Adjustments: |
|
|
|
|
||||
| Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements |
|
|
(1,248 |
) |
|
|
(2,163 |
) |
| Non-cash interest expense on convertible notes |
|
|
33 |
|
|
|
1,927 |
|
| Gain on sale of equity security |
|
|
(3,547 |
) |
|
|
— |
|
| Loss on extinguishment of debt |
|
|
17,129 |
|
|
|
— |
|
| Loss on fair value adjustment of derivatives, net |
|
|
2,302 |
|
|
|
— |
|
| Realized loss on sale of marketable securities sold for the purpose of notes repurchase |
|
|
450 |
|
|
|
— |
|
| Non-GAAP interest and other income (expense), net |
|
$ |
1,636 |
|
|
$ |
(182 |
) |
| Rambus Inc. Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates (Unaudited) |
||||||||
| 2022 Fourth Quarter Outlook |
|
Three Months Ended
|
||||||
| (In millions) |
|
Low |
|
High |
||||
| Forward-looking operating costs and expenses |
|
$ |
100.3 |
|
|
$ |
96.3 |
|
| Adjustments: |
|
|
|
|
||||
| Stock-based compensation expense |
|
|
(10.3 |
) |
|
|
(10.3 |
) |
| Amortization of acquired intangible assets |
|
|
(4.0 |
) |
|
|
(4.0 |
) |
| Forward-looking Non-GAAP operating costs and expenses |
|
$ |
86.0 |
|
|
$ |
82.0 |
|
|
|
|
|
|
|
||||
| Forward-looking interest and other income (expense), net |
|
$ |
0.4 |
|
|
$ |
0.4 |
|
| Adjustments: |
|
|
|
|
||||
| Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements |
|
|
(1.0 |
) |
|
|
(1.0 |
) |
| Non-cash interest expense |
|
|
0.1 |
|
|
|
0.1 |
|
| Forward-looking Non-GAAP interest and other income (expense), net |
|
$ |
(0.5 |
) |
|
$ |
(0.5 |
) |
