- Second quarter GAAP revenue of $56.5 million; revenue under ASC 605 would have been $98.8 million, in line with expectations
- Second quarter GAAP royalty revenue of $30.1 million, royalty revenue under ASC 605 would have been $73.6 million and licensing billings of $73.2 million
- Record number of licensing deals closed in Q2, including IBM and Socionext
SUNNYVALE, Calif. — (BUSINESS WIRE) — July 30, 2018 — Rambus Inc. (NASDAQ: RMBS) today reported financial results for the second quarter ended June 30, 2018 under GAAP Accounting Standards Codification Topic 606 (“ASC 606”), which superseded the revenue recognition requirements in ASC Topic 605, Revenue Recognition (“ASC 605”) that was previously applicable.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 $56.5 million, with GAAP diluted net loss per share of $0.14 and non-GAAP diluted net loss per share of $0.03.
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 June 30, 2018 under ASC 605 would have been $98.8 million, 9% higher than a year ago excluding the impact of the Lighting Division which was wound down in the first quarter, with GAAP diluted net income per share of $0.13 and non-GAAP diluted net income per share of $0.21.
“With a record number of licensing deals this quarter and record revenue in the first half of the year for our Memory and Interface IP Cores, we continue to execute on key strategic programs for the data center and mobile edge,” said Luc Seraphin, interim chief executive officer of Rambus. “We are also seeing growing traction for our Security products with recent customer announcements for our Unified Payment Platform and HCE Ticketing.”
Business Review
For the Memory and Interface division, Q2 was a positive quarter with broad OEM and cloud customer qualifications in chips and record first half revenue for IP cores. For server DIMM chipsets, our DDR4 memory buffer chip business continues to grow with steady gains in market share and revenue growth remains on track to meet our targets for 2018. For the next-generation DDR5 memory buffer chips, we maintain our leadership position as the first and only supplier with working silicon that supports the top-end speeds for both the Register Clock Driver (RCD) and Data Buffer (DB) chips, and we continue to engage with our customers and the ecosystem. We also continue our leadership in high-speed IP Cores, with multiple new customer wins for GDDR6 and HBM2 on advanced process nodes. As the first IP supplier to offer a broadly-available GDDR6 PHY, we continue to see traction from customers across multiple high-performance applications including AI, automotive and networking.
Our Security Division, which consists of our Cryptography, Ticketing and Payments groups, had a solid quarter with new customer announcements and the launch of the CryptoManager Root of Trust core. The CryptoManager Root of Trust builds upon our first-generation CryptoManager Security Engine by adding flexible and secure processing capabilities within the trust boundary of the core. Featuring a secure RISC-V CPU custom designed by our security experts, the core helps to address wide-reaching CPU vulnerabilities, like Meltdown and Spectre, in a broad range of applications including IoT, networking and automotive. As a market leader in smart ticketing solutions, we announced the implementation of our smart ticketing software with West Midlands, and have been selected to roll out our Host Card Emulation, or HCE, Ticket Wallet Service for mobile ticketing to passengers on Scotland’s national rail network. Finally, our Payment Product Group announced last week that the Unified Payment Platform has been selected by Coles, one of Australia’s largest retail groups, to secure its Digital Payments Solutions to enhance the customer buying journey and provide a hassle-free, omni-channel payment service.
Lastly, our Emerging Solutions Division which focuses on advanced research, innovation and IP development continues its partnerships with industry leaders like Microsoft and IBM to build our portfolio of advanced memory IP and develop technologies that help move the industry forward. Both our cold memory and hybrid memory programs continue to progress with each in varying stages of prototype development. By collaborating on research and development for the future memory architectures, which includes a growing list of ecosystem partners, we are also able to leverage our learnings to drive licensing and product engagements with our memory and security customers.
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Financial Review - GAAP |
Three Months Ended June 30, |
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|
(In millions, except for percentages and per share amounts) |
2018 |
2017 |
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|
As Reported
|
Adjustments
|
ASC 605 (1) |
As Reported
|
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| Revenue | ||||||||||||||||
| Royalties | $ | 30.1 | $ | 43.5 | $ | 73.6 | $ | 70.0 | ||||||||
| Product revenue | 8.1 | 0.1 | 8.2 | 8.4 | ||||||||||||
| Contract and other revenue | 18.3 | (1.3 | ) | 17.0 | 16.3 | |||||||||||
| Total revenue | $ | 56.5 | $ | 42.3 | $ | 98.8 | $ | 94.7 | ||||||||
| Total operating costs and expenses | $ | 76.4 | $ | — | $ | 76.4 | $ | 86.5 | ||||||||
| Operating income (loss) | $ | (19.9 | ) | $ | 42.3 | $ | 22.4 | $ | 8.2 | |||||||
| Operating margin | (35 |
)% |
58 | % | 23 | % | 9 | % | ||||||||
| Net income (loss) | $ | (15.4 | ) | $ | 29.6 | $ | 14.2 | $ | 2.6 | |||||||
| Diluted net income (loss) per share | $ | (0.14 | ) | $ | 0.27 | $ | 0.13 | $ | 0.02 | |||||||
| Licensing billings (2) | $ | 73.2 | $ | — | $ | 73.2 | $ | 72.9 | ||||||||
| Net cash provided by operating activities | $ | 3.6 | $ | — | $ | 3.6 | $ | 25.0 | ||||||||
| (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 licensing customers during the period, as adjusted for certain differences. | ||||||
| Financial Review - Non-GAAP (1) | Three Months Ended June 30, | |||||||||||||||
| (In millions, except for percentages and per share amounts) | 2018 | 2017 | ||||||||||||||
|
As Reported
|
Adjustments
|
ASC 605 (2) |
As Reported
|
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| Revenue | ||||||||||||||||
| Royalties | $ | 30.1 | $ | 43.5 | $ | 73.6 | $ | 70.0 | ||||||||
| Product revenue | 8.1 | 0.1 | 8.2 | 8.4 | ||||||||||||
| Contract and other revenue | 18.3 | (1.3 | ) | 17.0 | 16.3 | |||||||||||
| Total revenue | $ | 56.5 | $ | 42.3 | $ | 98.8 | $ | 94.7 | ||||||||
| Total operating costs and expenses | $ | 66.8 | $ | — | $ | 66.8 | $ | 69.3 | ||||||||
| Operating income (loss) | $ | (10.3 | ) | $ | 42.3 | $ | 32.0 | $ | 25.4 | |||||||
| Operating margin | (18 | )% | 50 | % | 32 | % | 27 | % | ||||||||
| Net income (loss) | $ | (3.1 | ) | $ | 26.9 | $ | 23.8 | $ | 15.6 | |||||||
| Diluted net income (loss) per share | $ | (0.03 | ) | $ | 0.24 | $ | 0.21 | $ | 0.14 | |||||||
| (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. | ||||||
