Revenue Dependence and Predictability - The company's revenue is significantly dependent on licensing fees from patented technologies, which are subject to customer adoption and usage [55]. - The licensing cycle is lengthy and costly, with marketing and sales efforts potentially leading to delays in revenue generation [56]. - Future revenue predictions are challenging due to the unpredictability of license negotiations and customer sales volumes [58]. - A substantial portion of revenue is derived from a limited number of customers, increasing the risk of revenue decline if any major customer is lost [51]. - The company's revenue concentration is high, with the top five customers accounting for approximately 46% of total revenue in 2020 [61]. - Revenue from Micron and SK hynix each represented 10% or more of total revenue in 2020 [61]. - The company expects to continue experiencing significant revenue concentration in the foreseeable future [61]. - Licensing fees are subject to variations based on customer agreements and shipment volumes, affecting revenue predictability [63]. Risks and Challenges - The company faces risks related to international operations, which could impact revenue stability [51]. - The ongoing COVID-19 pandemic poses risks that could disrupt research, development, and sales operations [51]. - The company may face challenges in qualifying products with customers, which could delay sales and impede growth [71]. - The company faces risks related to customer pricing policies, which can adversely affect sales and operating results [64]. - Weak global economic conditions may adversely affect demand for the products and services of the company's customers, impacting royalty revenue [88]. - The company may incur impairment charges related to acquisitions or strategic investments, negatively impacting financial results and market value [81]. - Adverse litigation results could significantly impact the company's business and financial condition, including potential monetary damages and operational disruptions [115]. - The company may face challenges in protecting its intellectual property rights, which could lead to revenue declines and increased litigation costs [116]. - Patent expirations and the inability to continuously innovate could harm the company's financial condition and operating results [123]. Financial Management and Investments - The company has adopted the new revenue recognition standard (ASC 606), which may cause revenue to vary significantly from quarter to quarter [59]. - The company anticipates increased research and development expenses, which could negatively impact operating results [73]. - Financial leverage, including $172.5 million in outstanding 2023 Notes, could limit the company's ability to respond to competitive pressures and meet future funding needs [112]. - The company has outstanding senior convertible notes totaling $172.5 million, which may affect the trading price of its common stock due to their convertible nature [131]. - As of December 31, 2020, the company had an investment portfolio of fixed income marketable securities amounting to $441.2 million, including cash equivalents [278]. - If market interest rates were to increase immediately by 1.0%, the fair value of the investment portfolio would decline by approximately $2.3 million [278]. - The company limits exposure to any single non-U.S. Government issuer to $15.0 million or 10% of the portfolio, whichever is lower [277]. - The company is exposed to financial market risks primarily from interest rate fluctuations affecting its investment portfolio [277]. Regulatory and Compliance Issues - The company is subject to various government regulations that could affect its operations and revenue generation [51]. - The company is subject to various government regulations, including those related to encryption technology, which could impact its ability to license products in certain markets [92]. - The introduction of GDPR and CCPA may require modifications to data collection and usage practices, potentially increasing operational costs [94]. - Changes in tax laws and regulations could expose the company to additional income tax liabilities, affecting its operating results and financial condition [139]. Operational Dependencies - The company relies on third-party providers for data center hosting and services, and any issues with these providers could impede growth and customer retention [103]. - The company relies on third parties for manufacturing and supply chain services, which could impair product shipment and harm competitive position if not managed effectively [104]. - Warranty and product liability claims could lead to significant costs and adversely affect operating results and customer relationships [105]. - The company may face challenges in providing high-quality technical support, which is crucial for maintaining customer relationships and sales [106]. - The reliance on third-party licensed software may delay product development and incur additional expenses if licenses are not available on acceptable terms [107]. - Use of open source software could lead to legal challenges and unintended consequences that may adversely affect business operations and financial condition [108].

| --- | --- | --- | --- | --- | |------------------------------------------------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | Rambus Fourth Quarter 2020 Financial Results | | | | | | | | | | | Safe Harbor for Forward‐Looking Statements; Other Disclosures This presentation contains forward‐looking statements under the Private Securities Litigation Reform Act of 1995 including Rambus' financial guidance for future periods, product and investment strategies, timing of exp ...

Financial Data and Key Metrics Changes - In Q4 2020, the company reported revenue of $61.9 million, aligning with expectations and exceeding profitability targets [12][27] - Annual cash generation increased by 44%, totaling $185.5 million from operating activities [13] - The company ended the year with $502.6 million in cash after a $50 million share repurchase program [25][36] Business Line Data and Key Metrics Changes - Memory Interface Chips saw a 56% year-over-year increase in annual product revenue, significantly outpacing overall market growth [14] - The Silicon IP business experienced a 14% increase in annual revenue, supported by successful integration of acquired teams [18] Market Data and Key Metrics Changes - The cloud market continues to be the primary demand driver across all business lines, with sustained investments expected to grow [11] - The company is positioned to benefit from the ongoing shift to cloud and advancements in AI, 5G, automotive, and IoT [9][10] Company Strategy and Development Direction - The company is focused on addressing challenges in data infrastructure and is well-positioned for profitable growth in 2021 and beyond [26] - Continued investment in product development, particularly in DDR5 platforms and new architectures, is a strategic priority [17][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain strong margins and cash generation despite macroeconomic uncertainties [35][50] - The company anticipates continued growth in the buffer chip market and expects to gain market share in 2021 [60][61] Other Important Information - The company has signed multiple new patent license agreements and renewals, solidifying a foundation for sustained cash generation [20][40] - The company expects to recognize $10 million of revenue related to the Micron licensing extension on a quarterly basis starting in Q1 2021 [41] Q&A Session Summary Question: Outlook for buffer chip sales and DDR5 shipments - Management expects continued growth in buffer chip sales due to improved design wins and anticipates DDR5 shipments to start in volume towards the end of 2021 [58][60] Question: Gross margin trends for buffer chip sales - Management attributed the rising gross margins to operational discipline, high-quality products, and improved cost management [62][63] Question: Revenue expectations for 2021 by segment - Management is comfortable with consensus estimates for 2021, expecting growth primarily from the chip business and stable patent licensing revenue [71][73] Question: Competition and market share growth - Management believes that the company will continue to gain market share due to product quality and early engagement in product development [86] Question: Capital allocation strategy - The company plans to support organic growth, explore inorganic growth opportunities, and return capital to shareholders through share repurchase programs [93][95]

| --- | --- | --- | --- | --- | --- | |---------|-------|-------|-------|-------|-------| | | | | | | | | Q4 2020 | | | | | | Safe Harbor for Forward-Looking Statements; Other Disclosures This presentation contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 including Rambus' financial guidance for future periods, product and investment strategies, timing of expected product launches, demand for existing and newlyacquired technologies, the growth opportunities of th ...

Financial Performance - Rambus' Q3 2020 revenue was $56.9 million[9], within expectations - Royalty revenue in Q3 2020 was $16.6 million[9] - Licensing billings for Q3 2020 reached $63.1 million[9] - Cash from operations in Q3 2020 was $44.1 million[7, 9], bringing the year-to-date total to $143.4 million[7] Product Growth - Memory interface chip revenue increased by 39% year-over-year in Q3 2020 and is on track for over 50% growth for the full year[7] - Product revenue (chips) in Q3 2020 was up 39% over Q3 2019 to $29.8 million[11] - Contract & Other revenue (~Silicon IP) was $10.5 million in Q3 2020, up 43% over TTM Sep'19[11] Balance Sheet and Outlook - Total cash and marketable securities reached $520.2 million in Q3 2020[15] - Q4 2020 licensing billings outlook is $61 - $67 million[17] - Q4 2020 product revenue outlook is $18 - $24 million[17]