Net income for the nine months ended September 30, 2016 was $10.3 million as compared to a net income of $198.4 million for the same period of 2015. Diluted net income per share for the nine months ended September 30, 2016 was $0.09 as compared to a diluted net income per share of $1.67 for the same period of 2015.

Non-GAAP Financial Results (1):

Total non-GAAP operating costs and expenses in the third quarter of 2016 were $60.8 million, which was 20% higher than the previous quarter, and 31% higher than the third quarter of 2015. The change in total non-GAAP operating costs and expenses in the third quarter of 2016 as compared to the second quarter of 2016 was primarily due to higher headcount related costs, higher consulting costs and higher costs of goods sold related to memory and security products. These increases were primarily due to the business acquisitions during 2016. The change in total non-GAAP operating costs and expenses in the third quarter of 2016 as compared to the third quarter of 2015 was primarily due to higher headcount related costs, higher consulting costs, higher costs of goods sold related to memory and security products and lower gain from settlement. These increases were primarily due to the business acquisitions during 2016.

Total non-GAAP operating costs and expenses for the nine months ended September 30, 2016 were $160.3 million as compared to $137.8 million in the same period of 2015 due primarily to higher headcount related costs due to the business acquisitions during 2016, lower gain from sale of intellectual property and higher expenses related to software design tools offset by lower prototyping costs.

Non-GAAP net income in the third quarter of 2016 was $18.0 million, 8% higher than the prior quarter and 6% higher than the third quarter of 2015. Non-GAAP diluted net income per share was $0.16 in the third quarter of 2016 as compared to $0.15 in the prior quarter and $0.14 in the third quarter of 2015.

Non-GAAP net income for the nine months ended September 30, 2016 was $49.3 million as compared to $50.0 million in the same period of 2015. Non-GAAP diluted net income per share was $0.44 for the nine months ended September 30, 2016 as compared to non-GAAP diluted net income per share of $0.42 in the same period of 2015.

Other Financial Highlights:

Cash, cash equivalents, and marketable securities as of September 30, 2016 were $150.8 million, a decrease of $108.5 million from June 30, 2016. The decrease in cash was primarily due to cash used to acquire businesses of $122 million.

During the third quarter of 2016, the Company recorded an income tax provision of approximately $4.3 million.

Fourth Quarter 2016 Outlook:

For the fourth quarter of 2016, the Company expects revenue to be between $94 million and $98 million. Achieving revenue in this range will require that the Company sign new customer agreements for various product sales, mobile payments software and solutions licensing among other matters. The company also expects operating costs and expenses to be between $85 million and $88 million, and diluted net income per share to be between $0.03 and $0.07. The company also expects non-GAAP operating costs and expenses to be between $65 million and $68 million, and non-GAAP diluted net income per share to be between $0.14 and $0.18. These non-GAAP expectations assume non-GAAP interest expense of $1 million, tax rate of 35% (refer to non-GAAP financial information below - income tax adjustments) and share count of 114 million, and exclude stock-based compensation expense ($5.3 million), amortization expense ($11.3 million), purchase accounting adjustment for inventory fair value step-up ($1.2 million), and non-cash interest expense on convertible notes ($1.7 million).

Conference Call:

The Company will host a conference call at 2:00 p.m. PT today to discuss its financial results. The call, audio and slides will be available online at investor.rambus.com. A replay will be available following the call as a webcast on the Rambus Investor Relations website and for one week at the following numbers: (855) 859-2056 (domestic) or (404) 537-3406 (international) with ID# 95495228.

(1) Non-GAAP Financial Information:

In the commentary set forth above and in the financial statements included in this earnings release, the Company presents the following non-GAAP financial measures: operating costs and expenses, operating income (loss) and net income (loss). In computing each of these non-GAAP financial measures, the following items were considered as discussed below: stock-based compensation expenses, acquisition-related transaction costs and retention bonus expense, amortization expenses, non-cash interest expense and certain other one-time adjustments. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes the non-GAAP financial measures are appropriate for both its own assessment of, and to show investors, how the Company’s performance compares to other periods. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Reconciliation from GAAP to non-GAAP results is included in the financial statements contained in this release.