For the Rambus IP cores and Server DIMM chipset businesses, 2018 saw sustained technology leadership in the market, growing customer traction and record revenue. Our DDR4 server DIMM chip business met its revenue targets for the quarter and year and continues to gain market share. With an increasing number of OEM qualifications in the existing server platform and more than double for the upcoming advanced performance CPU refresh, the buffer chip remains poised for growth in 2019. In addition to the steady growth in DDR4, we maintain our leadership position for next-generation DDR5 memory buffer chips and are now shipping customer samples at the top-end speeds for both the RCD and DB chips.
Rambus high-speed IP cores business has been growing at an impressive compound annual growth rate of greater than 50% over the past four years. We continue to gain traction in high-growth, high-performance applications including artificial intelligence, machine learning, graphics, wired switches, and wireless infrastructure. We closed out the year with record revenue fueled by wins with Tier 1 customers in data center and communications segments worldwide. We continued our leadership position in high-end and high-bandwidth SerDes and memory IP cores in advanced process nodes with the tape out of the industry’s first GDDR6 memory PHY in a leading-edge process node. In Q4, we closed a substantial number of design wins with top tier customers worldwide, which sets us up nicely for healthy growth to continue in 2019.
Moving over to our Cryptography business, 2018 saw the importance of semiconductor device-level security grow in the industry, resulting in increased traction and opportunities for our embedded security cores and provisioning capabilities in market segments like IoT, automotive, networking and government. We launched the programmable CryptoManager Root of Trust, which combines our deep security expertise with a modern open architecture, RISC-V, to create an easy-to-consume, secure processing core and have numerous engagements in the semiconductor ecosystem. In Q4, we announced that our CryptoManager platform will be used to securely provision Micron Authenta™ based secure memory. This is a key milestone as it showcases our ability to combine our device-level provisioning solutions with 3rd-party cores to extend our market share and enable a new level of protection for connected devices.
| Quarterly Financial Review - GAAP | Three Months Ended December 31, | |||||||||||||||
| (In millions, except for percentages and per share amounts) | 2018 | 2017 | ||||||||||||||
|
As Reported
|
Adjustments
|
ASC 605 (1) |
As Reported
|
|||||||||||||
| Revenue | ||||||||||||||||
| Royalties | $ | 45.4 | $ | 31.3 | $ | 76.7 | $ | 77.9 | ||||||||
| Product revenue | 11.5 | 0.4 | 11.9 | 8.5 | ||||||||||||
| Contract and other revenue | 11.6 | 1.8 | 13.4 | 15.5 | ||||||||||||
| Total revenue | $ | 68.5 | $ | 33.5 | $ | 102.0 | $ | 101.9 | ||||||||
| Total operating costs and expenses | $ | 72.8 | $ | — | $ | 72.8 | $ | 86.2 | ||||||||
| Operating income (loss) | $ | (4.3 | ) | $ | 33.5 | $ | 29.2 | $ | 15.7 | |||||||
| Operating margin | (6 | )% | 35 | % | 29 | % | 15 | % | ||||||||
| Net income (loss) | $ | (2.0 | ) | $ | 27.2 | $ | 25.2 | $ | (36.2 | ) | ||||||
| Diluted net income (loss) per share | $ | (0.02 | ) | $ | 0.25 | $ | 0.23 | $ | (0.33 | ) | ||||||
| Licensing billings (2) | $ | 76.7 | $ | — | $ | 76.7 | $ | 76.6 | ||||||||
| Net cash provided by operating activities | $ | 35.1 | $ | — | $ | 35.1 | $ | 59.8 |
|
|||||||
| (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. | ||||
| Quarterly Financial Review - Non-GAAP (1) | Three Months Ended December 31, | |||||||||||||||
| (In millions, except for percentages and per share amounts) | 2018 | 2017 | ||||||||||||||
|
As Reported
|
Adjustments
|
ASC 605 (2) |
As Reported
|
|||||||||||||
| Revenue | ||||||||||||||||
| Royalties | $ | 45.4 | $ | 31.3 | $ | 76.7 | $ | 77.9 | ||||||||
| Product revenue | 11.5 | 0.4 | 11.9 | 8.5 | ||||||||||||
| Contract and other revenue | 11.6 | 1.8 | 13.4 | 15.5 | ||||||||||||
| Total revenue | $ | 68.5 | $ | 33.5 | $ | 102.0 | $ | 101.9 | ||||||||
| Total operating costs and expenses | $ | 61.6 | $ | — | $ | 61.6 | $ | 68.4 | ||||||||
| Operating income | $ | 6.9 | $ | 33.5 | $ | 40.4 | $ | 33.5 | ||||||||
| Operating margin | 10 | % | 30 | % | 40 | % | 33 | % | ||||||||
| Net income | $ | 9.6 | $ | 20.7 | $ | 30.3 | $ | 21.2 | ||||||||
| Diluted net income per share | $ | 0.09 | $ | 0.19 | $ | 0.28 | $ | 0.19 | ||||||||
| (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 “Quarterly Financial Review-GAAP” above for a description of the Adjustments and ASC 605 presentations. | ||||
