- First quarter GAAP revenue of $46.4 million; revenue under ASC 605 would have been $100.5 million
- First quarter GAAP royalty revenue of $21.4 million, royalty revenue under ASC 605 would have been $77.2 million and licensing billings of $75.9 million
- Record revenue for Memory and Interface IP Cores
- Launched CryptoManager Root-of-trust programmable secure processing core with custom RISC-V CPU to protect against vulnerabilities like Meltdown and Spectre
- Partnered with IBM to develop hybrid memory system architectures for future data centers
SUNNYVALE, Calif. — (BUSINESS WIRE) — May 7, 2018 — Rambus Inc. (NASDAQ: RMBS) today reported financial results for the first quarter ended March 31, 2018 under the newly adopted GAAP Accounting Standards Codification Topic 606 (“ASC 606” or “New Revenue Accounting Standard”), which superseded the revenue recognition requirements in ASC Topic 605, Revenue Recognition (“ASC 605”) that was previously applicable. Total revenue for the quarter under ASC 606 was $46.4 million, with GAAP diluted net loss per share of $0.36 and non-GAAP diluted net loss per share of $0.10.
Rambus also reported financial results as they would have been presented under ASC 605. This ASC 605 presentation is required under the modified retrospective transition method that Rambus has chosen to adopt under ASC 606. Rambus notes that this presentation allows a more relevant comparability with prior results, which were all reported under ASC 605. Total revenue for the quarter ended March 31, 2018 under ASC 605 would have been $100.5 million, 4% higher than a year ago excluding the impact of the Lighting Division, with GAAP diluted net income per share of $0.05 and non-GAAP diluted net income per share of $0.21.
“We delivered a solid first quarter and are making strong progress across all of our businesses as we maintain our growth trajectory, making data faster and safer for the data center and mobile edge markets,” said Dr. Ron Black, chief executive officer of Rambus. “We continue to gain traction with our products, services and licensing, while expanding partnerships with industry leaders to extend our reach to new technologies and market segments.”
Business Review
We had a very positive quarter in our Memory and Interfaces Division, with ongoing customer traction for our DIMM buffer chipset and record revenue for IP cores. We increased our market footprint for our DDR4 memory buffer chipset with further OEM and cloud customer qualifications leading to more design wins at our key customers. As we look to the next-generation, we maintain our leadership position, leveraging our head start in learnings for DDR5 memory buffer chips as the first and only supplier with working silicon for both the RCD and DB chips. For IP cores, we continue to grow our portfolio with new technologies and expand to new market segments. With the launch of our new GDDR6 memory PHY as part of a comprehensive solution alongside ecosystem partners Micron, Norwest Logic and Avery Design, we are the first IP supplier to offer a broadly available GGDR6 PHY and closed our first major design win for non-graphics applications.
Our Security Division, which consists of our Cryptography, Ticketing and Payments groups, had a solid quarter with the Cryptography team launching the CryptoManager Root of Trust core. Representing the next-generation of programmable secure processing, the core features a RISC-V CPU that has been customized by our security experts to go beyond a secure vault and enable the siloed execution of secure code within the core to help protect against vulnerabilities like Meltdown and Spectre. In addition, we expanded our DPA licensing program, signing agreements with Gemalto and Beijing Tongfang Microelectronics, our first licensee in China, to protect against side-channel attacks. Our Ticketing group remains a market leader in smart ticketing with ongoing deployments of our back-office software and services to train and bus operators across the UK. The Payments team continues to see ongoing traction for tokenization solutions for card payments and beyond with world-wide implementations of our Token Service Provider software and ongoing customer engagements for the Unified Payment Platform.
Lastly, as we look to further our innovation and IP development from our Emerging Solutions Division, we announced a partnership with IBM to develop hybrid memory system architectures for future data centers. As part of the collaboration, we will develop an architecture that combines the best attributes of DRAM and storage class memory to create a high-capacity solution at lower cost per bit, with performance levels comparable to that of DRAM.
| Financial Review - GAAP | Three Months Ended March 31, | |||||||||||||||
| (In millions, except for percentages and per share amounts) | 2018 | 2017 | ||||||||||||||
|
As Reported
|
Adjustments
|
ASC 605 (1) |
As Reported
|
|||||||||||||
| Revenue | ||||||||||||||||
| Royalties | $ | 21.4 | $ | 55.8 | $ | 77.2 | $ | 69.0 | ||||||||
| Product revenue | 7.3 | 0.3 | 7.6 | 10.9 | ||||||||||||
| Contract and other revenue | 17.7 | (2.0 | ) | 15.7 | 17.5 | |||||||||||
| Total revenue | $ | 46.4 | $ | 54.1 | $ | 100.5 | $ | 97.4 | ||||||||
| Total operating costs and expenses | $ | 90.0 | $ | — | $ | 90.0 | $ | 84.0 | ||||||||
| Operating income (loss) | $ | (43.6 | ) | $ | 54.1 | $ | 10.5 | $ | 13.4 | |||||||
| Operating margin | (94 |
)% |
104 | % | 10 | % | 14 | % | ||||||||
| Net income (loss) | $ | (38.9 | ) | $ | 45.0 | $ | 6.1 | $ | 3.0 | |||||||
| Diluted net income (loss) per share | $ | (0.36 | ) | $ | 0.41 | $ | 0.05 | $ | 0.03 | |||||||
| Licensing billings (1) | $ | 75.9 | $ | — | $ | 75.9 | $ | 68.6 | ||||||||
| Net cash provided by operating activities | $ | 16.5 | $ | — | $ | 16.5 | $ | 17.2 | ||||||||
| (1) | As noted above, Rambus is presenting the ASC 606 results together with the adjustments made to reconcile the ASC 606 presentation to the results that would have been applicable under ASC 605. The ASC 605 information should be considered in addition to, not as a substitute for, nor superior to or in isolation from, the financial information prepared in accordance with ASC 606. | |||
| (2) | Licensing billings is an operational metric that reflects amounts invoiced to our patent and technology licensing customers during the period, as adjusted for certain differences. | |||
| Financial Review - Non-GAAP (1) | Three Months Ended March 31, | |||||||||||||||
| (In millions, except for percentages and per share amounts) | 2018 | 2017 | ||||||||||||||
|
As Reported
|
Adjustments
|
ASC 605 (2) |
As Reported
|
|||||||||||||
| Revenue | ||||||||||||||||
| Royalties | $ | 21.4 | $ | 55.8 | $ | 77.2 | $ | 69.0 | ||||||||
| Product revenue | 7.3 | 0.3 | 7.6 | 10.9 | ||||||||||||
| Contract and other revenue | 17.7 | (2.0 | ) | 15.7 | 17.5 | |||||||||||
| Total revenue | $ | 46.4 | $ | 54.1 | $ | 100.5 | $ | 97.4 | ||||||||
| Total operating costs and expenses | $ | 68.7 | $ | — | $ | 68.7 | $ | 66.8 | ||||||||
| Operating income (loss) | $ | (22.3 | ) | $ | 54.1 | $ | 31.8 | $ | 30.6 | |||||||
| Operating margin | (48 | )% | 80 | % | 32 | % | 31 | % | ||||||||
| Net income (loss) | $ | (11.3 | ) | $ | 35.3 | $ | 24.0 | $ | 19.0 | |||||||
| Diluted net income (loss) per share | $ | (0.10 | ) | $ | 0.31 | $ | 0.21 | $ | 0.17 | |||||||
| (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) | See note (1) under “Financial Review-GAAP” above for a description of the Adjustments and ASC 605 presentations. | ||||
