Rambus(RMBS) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 was $178.5 million, exceeding expectations, with product revenue reaching a record $93.3 million, representing a 15% sequential increase and a 41% year-over-year growth [12][13] - Cash generation for the quarter was strong at $88 million, contributing to a total of $673.3 million in cash, cash equivalents, and marketable securities [12][14] - Non-GAAP net income for the quarter was $68.2 million, with an expected non-GAAP earnings per share range between $0.64 and $0.71 for Q4 [14][16] Business Line Data and Key Metrics Changes - The chip business saw significant growth, driven by DDR5 products and new product contributions, with expectations of over 40% full-year product revenue growth [6][12] - Silicon IP business is experiencing momentum due to AI demand, with key products like HBM4, GDDR7, and PCIe7 driving growth [7][12] Market Data and Key Metrics Changes - The market for servers and DIMMs is expected to grow mid to high single digits, with increasing demand driven by AI workloads and the need for higher memory bandwidth and capacity [8][51] - The total addressable market (TAM) for RCD is estimated at $800 million, with additional TAMs for companion chips and MRDIMM contributing to overall growth [46][48] Company Strategy and Development Direction - The company is focused on delivering complete solutions for high-performance memory subsystems, leveraging expertise in signal and power integrity [5][10] - The strategic roadmap includes capitalizing on the growing opportunities in data centers and AI, with a strong alignment to positive secular trends [10][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in ongoing success and long-term profitable growth, citing strong alignment with market trends in data centers and AI [10][16] - The economic environment remains dynamic, with careful monitoring of supply chain situations and inventory levels [36][56] Other Important Information - The company is not on leading-edge technology nodes, which has helped maintain a robust supply chain and support growth objectives [36] - The MRDIMM product is expected to ramp in large volumes towards the end of 2026 and into 2027, with a long-term market share goal similar to DDR5 [19][48] Q&A Session Summary Question: Can MRDIMM replicate DDR5 market share? - Management believes MRDIMM can achieve similar market share as DDR5, depending on the rollout of platforms from Intel and AMD, with expectations for ramping volumes towards late 2026 and 2027 [19] Question: Opportunities from Ethernet scale-up networking architecture? - The silicon IP portfolio is well-positioned for high-speed memory and interconnect, with accelerating demand for the latest technology like PCIe7 [21] Question: Supply chain considerations and order lead times? - The company has grown inventory to support Q4 demand and has not seen notable customer inventory buildup, maintaining a robust supply chain [36] Question: RCD market share and potential caps? - Current market share is in the early 40% range, with potential for growth towards 45-50% as the DDR5 cycle continues [38] Question: Update on total addressable market (TAM)? - The TAM for RCD is around $800 million, with additional contributions from companion chips and MRDIMM expected to grow the overall market [46] Question: Outlook for CXL and Rambus strategy? - Rambus is focusing on silicon IP for CXL, with a belief that memory expansion through MRDIMM is the most promising usage model [64] Question: MRDIMM qualifications and share capture? - The success of MRDIMM depends on collaboration with customers and platform providers, with a complete chipset enhancing interoperability [70] Question: Traction with PCIe7 and secured IP? - Security represents about 50% of the silicon IP business, with traction in PCIe7 and HBM being strong among large customers [71] Question: Evolution of RCD business and channel growth? - AI workloads are driving the need for more memory and bandwidth, with expectations for CPU vendors to announce 16-channel solutions [77]