Rambus Q2 Earnings Miss Estimates, Revenues Increase Y/Y

Core Insights - Rambus Inc. reported second-quarter 2025 non-GAAP earnings of 60 cents per share, missing the Zacks Consensus Estimate by one cent, but showing a year-over-year increase of 30.4% [1][9] - Revenues for the second quarter reached $172.2 million, a 30.4% increase year-over-year, surpassing the Zacks Consensus Estimate by 3.1%, driven by strong demand across all segments [1][9] Revenue Breakdown - Product revenues amounted to $81.3 million, representing 47.2% of total revenues, and increased by 43.4% year-over-year, primarily due to growth in memory products, particularly DDR5 [2] - Royalties generated $68.6 million, accounting for 39.8% of total revenues, up 21.6% year-over-year, driven by increased recurring revenues from licensing Rambus patents by semiconductor companies [2] - Revenues from Contract and Other reached $22.3 million, making up 12.9% of total revenues, and increased by 16.8% year-over-year, mainly due to growth in Silicon IP [3] Profitability Metrics - Rambus reported a gross profit of $137.4 million for the second quarter, up from $105.3 million in the same quarter last year, with a gross margin of 79.8%, an improvement of 10 basis points year-over-year [3] - Non-GAAP operating expenses were $60.4 million, while non-GAAP operating income rose 43.4% year-over-year to $79 million, resulting in an operating margin of 45.9% [4] Balance Sheet and Cash Flow - As of June 30, 2025, Rambus had cash and marketable securities totaling $594.8 million, up from $514.4 million at the end of the previous quarter, with no debt on the balance sheet [5] - The company generated an operating cash flow of $94.4 million in the second quarter and reported free cash flow of $84 million [5] Guidance for Q3 - Rambus provided guidance for Q3 2025, projecting non-GAAP product revenues between $87 million and $93 million, Contract & Other revenues in the range of $22 million to $28 million, and Licensing Billings between $58 million and $64 million [6][7] - The Zacks Consensus Estimates for Rambus' top line is $172 million, indicating a year-over-year growth of 17.2% [6] - Expected non-GAAP earnings per share for Q3 are projected to be between 58 cents and 66 cents, with the consensus estimate at 61 cents per share, reflecting a year-over-year growth of 22% [7]