Rambus(RMBS) - 2025 Q1 - Quarterly Results

Q1 2025 Financial Results Overview Rambus exceeded Q1 2025 revenue and earnings guidance, driven by strong operating cash flow and record product revenue from memory interface chips Key Highlights and CEO Commentary Rambus exceeded its Q1 2025 revenue and earnings guidance, driven by strong cash from operations and record product revenue from memory interface chips. The CEO highlighted the company's market leadership in DDR5 chip products and progress in new products, positioning it for long-term growth - Exceeded guidance for Q1 revenue and earnings[1] - Generated $77.4 million in cash provided by operating activities in Q1 2025[1][3] - Achieved record quarterly product revenue of $76.3 million, a 52% increase year over year[2][3] - CEO Luc Seraphin emphasized market leadership in core DDR5 chip products and progress in new products, aiming for long-term growth and stockholder value[2] Q1 2025 Financial Performance (GAAP & Supplemental) This section provides a detailed review of Rambus's Q1 2025 GAAP and supplemental financial performance, highlighting significant year-over-year growth in key metrics GAAP Quarterly Financial Review Rambus reported significant year-over-year growth in Q1 2025 GAAP financials, with total revenue increasing by 41.4%, operating income more than doubling, and net income rising by 83.9%. Product revenue was a key driver of this growth GAAP Quarterly Financial Review (Millions) | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | YoY Change (%) | | :-------------------------------- | :------------------ | :------------------ | :------------- | | Product revenue | $76.3 | $50.4 | 51.4% | | Royalties | $74.0 | $47.5 | 55.8% | | Contract and other revenue | $16.4 | $20.0 | -18.0% | | Total revenue | $166.7 | $117.9 | 41.4% | | Cost of product revenue | $30.6 | $20.0 | 53.0% | | Total operating expenses | $70.7 | $64.1 | 10.3% | | Operating income | $63.1 | $30.1 | 109.6% | | Operating margin | 38% | 26% | 12 pp | | Net income | $60.3 | $32.9 | 83.3% | | Diluted net income per share | $0.56 | $0.30 | 86.7% | | Net cash provided by operating activities | $77.4 | $39.1 | 97.9% | Supplemental Financial Information In Q1 2025, Rambus reported licensing billings of $73.3 million, an operational metric, alongside GAAP product and contract revenue. The company's cash, cash equivalents, and marketable securities increased to $514.4 million, primarily due to strong operating cash flow Supplemental Financial Information (Millions) | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | YoY Change (%) | | :-------------------------------- | :------------------ | :------------------ | :------------- | | Licensing billings (operational) | $73.3 | $63.2 | 16.0% | | Product revenue (GAAP) | $76.3 | $50.4 | 51.4% | | Contract and other revenue (GAAP) | $16.4 | $20.0 | -18.0% | | Non-GAAP cost of product revenue | $30.4 | $19.9 | 52.8% | | Non-GAAP total operating expenses | $59.4 | $53.7 | 10.6% | - Cash, cash equivalents, and marketable securities as of March 31, 2025, were $514.4 million, an increase of $32.6 million from December 31, 2024, driven by $77.4 million in operating cash flow[5] Condensed Consolidated Balance Sheets As of March 31, 2025, Rambus's total assets increased to $1,379.4 million from $1,343.1 million at the end of 2024, primarily driven by an increase in cash and cash equivalents. Total stockholders' equity also saw a healthy increase Condensed Consolidated Balance Sheets (Thousands) | Metric | March 31, 2025 (Thousands) | December 31, 2024 (Thousands) | QoQ Change (Thousands) | | :-------------------------- | :------------- | :---------------- | :--------- | | Cash and cash equivalents | $132,185 | $99,775 | +$32,410 | | Marketable securities | $382,204 | $382,023 | +$181 | | Total current assets | $719,456 | $690,257 | +$29,199 | | Total assets | $1,379,365 | $1,343,136 | +$36,229 | | Total current liabilities | $70,862 | $81,812 | -$10,950 | | Total liabilities | $219,528 | $222,444 | -$2,916 | | Total stockholders' equity | $1,159,837 | $1,120,692 | +$39,145 | Condensed Consolidated Statements of Income Rambus's Q1 2025 income statement shows robust growth across key revenue and profitability metrics compared to Q1 2024. Total revenue increased significantly, leading to a substantial rise in gross profit, operating income, and net income Condensed Consolidated Statements of Income (Thousands) | Metric | Q1 2025 (Thousands) | Q1 2024 (Thousands) | YoY Change (%) | | :-------------------------- | :------ | :------ | :------------- | | Product revenue | $76,309 | $50,360 | 51.5% | | Royalties | $73,975 | $47,476 | 55.8% | | Contract and other revenue | $16,380 | $20,035 | -18.2% | | Total revenue | $166,664 | $117,871 | 41.4% | | Total cost of revenue | $32,842 | $23,659 | 38.8% | | Gross profit | $133,822 | $94,212 | 42.0% | | Research and development | $42,620 | $37,359 | 14.1% | | Sales, general and administrative | $28,058 | $25,827 | 8.6% | | Total operating expenses | $70,678 | $64,081 | 10.3% | | Operating income | $63,144 | $30,131 | 109.6% | | Income before income taxes | $67,623 | $34,352 | 96.8% | | Provision for income taxes | $7,320 | $1,454 | 403.4% | | Net income | $60,303 | $32,898 | 83.3% | | Diluted net income per share | $0.56 | $0.30 | 86.7% | Q2 2025 Financial Outlook Rambus presents its Q2 2025 financial guidance, forecasting expected ranges for key revenue streams and operating expenses Second Quarter Guidance Rambus provided its Q2 2025 outlook, projecting continued strong performance with expected ranges for licensing billings, product revenue, and contract and other revenue. Operating costs and expenses are also forecasted for the quarter Second Quarter Guidance (Millions) | Metric | GAAP Range (Millions) | Non-GAAP Range (Millions) | | :-------------------------- | :--------- | :------------- | | Licensing billings (operational) | $64 - $70 | $64 - $70 | | Product revenue | $77 - $83 | $77 - $83 | | Contract and other revenue | $17 - $23 | $17 - $23 | | Total operating costs and expenses | $110 - $106 | $94 - $90 | | Interest and other income (expense), net | $4 | $4 | | Diluted share count | 109 | 109 | | Expected tax rate | 20% | 20% | - The outlook for operating costs and expenses excludes stock-based compensation expense of $14 million and amortization of acquired intangible assets of $2 million for non-GAAP calculations[8] Reconciliation of GAAP to Non-GAAP Forward-Looking Estimates The company provided a reconciliation for its Q2 2025 forward-looking estimates, detailing the adjustments made to GAAP operating costs and expenses to arrive at non-GAAP figures, primarily by excluding stock-based compensation and amortization of acquired intangible assets Reconciliation of GAAP to Non-GAAP Forward-Looking Estimates (Millions) | Metric | Low (Millions) | High (Millions) | | :------------------------------------------ | :-- | :--- | | Forward-looking operating costs and expenses (GAAP) | $110 | $106 | | Adjustments: | | | | Stock-based compensation expense | ($14) | ($14) | | Amortization of acquired intangible assets | ($2) | ($2) | | Forward-looking Non-GAAP operating costs and expenses | $94 | $90 | Non-GAAP Financial Measures This section explains Rambus's use of non-GAAP financial measures and provides a reconciliation of GAAP to non-GAAP results for Q1 2025 Explanation of Non-GAAP Adjustments Rambus utilizes non-GAAP financial measures to provide a clearer view of its ongoing operating results and to facilitate comparisons with peer companies. These measures exclude specific non-cash or non-recurring items that management believes are not reflective of core business operations - Non-GAAP financial measures are used to assess performance and provide investors with comparable information, excluding items not reflective of ongoing operating results[11] - Adjustments include: Stock-based compensation expense (non-cash, not reflective of ongoing operations)[12] - Adjustments include: Acquisition-related costs and retention bonus expense (related to acquisitions, no direct correlation to operations)[13] - Adjustments include: Amortization of acquired intangible assets (not reflective of ongoing operating results, from prior acquisitions)[14] - Adjustments include: Change in fair value of earn-out liability (not directly related to ongoing business results)[15] - Adjustments include: Income tax adjustments (fixed, long-term projected tax rate of 20% for 2025 for internal planning)[16] Supplemental Reconciliation of GAAP to Non-GAAP Results (Q1 2025) Rambus provided a detailed reconciliation for its Q1 2025 GAAP to non-GAAP results, showing the specific adjustments made to cost of product revenue and total operating expenses, primarily for stock-based compensation, acquisition-related costs, and amortization of acquired intangible assets Supplemental Reconciliation of GAAP to Non-GAAP Results (Q1 2025) (Thousands) | Metric | Q1 2025 (Thousands) | Q1 2024 (Thousands) | | :------------------------------------------ | :------ | :------ | | Cost of product revenue (GAAP) | $30,583 | $20,048 | | Adjustment: Stock-based compensation expense | ($162) | ($124) | | Non-GAAP cost of product revenue | $30,421 | $19,924 | | Total operating expenses (GAAP) | $70,678 | $64,081 | | Adjustments: | | | | Stock-based compensation expense | ($11,221) | ($9,372) | | Acquisition-related costs and retention bonus expense | ($21) | ($111) | | Amortization of acquired intangible assets | — | ($195) | | Change in fair value of earn-out liability | — | ($700) | | Non-GAAP total operating expenses | $59,436 | $53,703 | Company Information This section provides an overview of Rambus Inc., detailing its focus on memory and security solutions for data centers and AI About Rambus Inc. Rambus Inc. is a global semiconductor company with 35 years of experience, specializing in innovative memory and security solutions. The company focuses on enabling the future of data centers and AI by addressing challenges in data movement for data center, edge, and client markets - Rambus is a global semiconductor company focused on enabling the future of data centers and AI[18] - Delivers innovative memory and security solutions to accelerate and secure data movement in data center, edge, and client markets[18][19] - A pioneer with 35 years of advanced semiconductor design experience, leading in high-performance memory subsystems (chips and silicon IP)[18][19] Other Information This section includes details on the Q1 2025 conference call, forward-looking statements, and investor contact information Conference Call Rambus hosted a conference call on April 28, 2025, to discuss its Q1 2025 financial results, with audio and slides available online and a replay service provided - Conference call held on April 28, 2025, at 2:00 p.m. PT to discuss quarterly results[10] - Audio and slides available online at investor.rambus.com, with a replay service for one week[10] Forward-Looking Statements This release includes forward-looking statements regarding Rambus's business opportunities, growth, strategies, and Q2 2025 financial guidance. These statements are based on current expectations and are subject to risks, with actual results potentially differing materially - The release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995[20] - Statements relate to business opportunities, long-term growth, product/investment strategies, and Q2 2025 outlook[20] - Forward-looking statements are based on current expectations and are subject to risks, meaning actual results may differ materially[20] Contact Information Contact details for investor inquiries are provided, listing the Senior Vice President, Finance and Chief Financial Officer - Contact: Desmond Lynch, Senior Vice President, Finance and Chief Financial Officer[21] - Email: dlynch@rambus.com, Phone: (408) 462-8000[21]