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.”
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 |
|(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 |
|(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) |
(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).
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.
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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.