Rambus (RMBS) 2 Nov 202020 Q3 Earnings call transcript

Welcome to the Rambus Third Quarter and Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Rahul Mathur, Chief Financial Officer.

conference. your begin may You

will our Thank that you, X-K. furnished XXXX the Form discussing today and Rambus replay quarter next available for Luc to the release and conference call. welcome of Seraphin, is this week for to results we today have CFO; with the The I'm SEC XXX-XXX-XXXX. press the the be call results be third at me on A been operator call CEO. will Rahul on Mathur,

the can number You the when dialing and then replay hear by you the entering prompt. XXXXXXX toll-free ID number hear

addition, audio, webcasting we're In reference this the that slides along we will with today's simultaneously are webcasting of during call. we portion And call.

conference the of to P.M. may at via So, accessed Pacific call, can you webcast today the replay A even our access if this presentation. call on X:XX Time. slide be want joining beginning with you're website us

will of of forward-looking demand guidance discussion risks for Our materially non-GAAP and no using These has are launches; both including clarity been provide to and call, the included activity the call. potential forward-looking presentations of financial the in our from and newly directly we the to investment our periods; GAAP release these Relations differ of overview Investor as benefits existing on of this of page product of SEC, product the The with and Luc slide under the reported reconciliation Financial documents release file in to we're XXX order XX-Ks. the X-Ks, serve; on and our may an subject presentation results, growth call call fully we then may and ASC I'll to success financial press and comparable uncertainties revenue, risks with will these discussed integration the results on future quarter. effort most this will our or financial our both and we're will actual for Releases. the acquired our turn Coronavirus contain in timing rambus.com described expected effects and things. Luc update financials, A now I financials In statements. novel website technologies; periods, discuss in today future an on strategies; be press business; more with under our start of to provide opportunities the statements statements our non-GAAP the the other These for related to our at divestiture over greater and from today Q&A. Luc? our in statements COVID-XX or arising that our obligation efforts; adverse and including amongst also guidance during merger, and our overview impacts our an various the we end the of including be are GAAP markets acquisition will expected follows: and to including measures XX-Qs

company already year continues. The last This continued for with for of performance entirety as product discipline had total million, strong million on very operations. excellent line. another It our We total which from generation the cash $XXX was significantly the brings to great everyone. another quarter our over exceeds cash this Thanks, with afternoon, bottom on the $XX.X in growth of expectations profitability very year. for the $XX.X Rahul of and good exceeded and revenue solid million delivered quarter,

and corporations significant the in Cloud third growth businesses. activity poised skyrocketed returned Data for line the a market consumers more and As to the product key across growth our increase quarter. has we of the track first proven strategic XXXX. half, remains by top all our generation in driven cash initiatives continue, in of and rates growth from record demand progress normal online center on in healthy are

We improve data continued quarter, Memory delivered investment in performance to see of quarterly sustained help the year-over-year. with that from chips global infrastructure. up the security and and interface solutions our a XX% products customers and solid revenue will

We another track XXXX. growth have product to in business over with record are our on year, XX% versus

quarter about share, we While DDRX of market in we cautioned inventory previous to the short-term beginning gain calls. continue digestion third the saw center data the

in we occur return guidance year. We expect next normal the the to XXXX. a levels full significantly still adjustment of above and We this anticipate early provided bulk consumption the end in quarter XXXX year to fourth to

DDRX XXXX, to share footprint a qualification should which transition, larger forward server we drive Looking gains. upcoming have platform market in the further

position a leading and now For chips memory in are DRAM partners. modules are DDRX, with companies. CPU DDRX qualification customers our system sampling for with our we to suppliers

subsystems. position leadership chips This our Looking additional strengthen for will of further architectures come. forward, well investing we new memory are DDRX years in to the for and IP development in platforms, memory as novel the as

to from Logic ability in teams, these revenue. edge. rate the Turning future both increasing with greater hitting IP. gives the to this acquisitions. center, supported with We Verimatrix performance Northwest and our of former across the a execution for strong confidence teams XG value Silicon data as targeted successful year's create was by with win acquisitions, This and delighted momentum excellent I'm quarter had design run from integration us last

most with graphics. machine gigabit for training the at Our latest solutions and memory center speed, continued example including running highest our HBMXE our to demanding comprehensive interface, lead second. world's AI, At X delivers silicon data high-end learning of to fastest being this the solution up per bandwidth applications, demonstration the the industry, the

financial a renewal repurchase very additional their SK call. ongoing we an that This four in us licensing ongoing beyond a return the under absolute address our our we multiple that, are expand investors. to Rahul to cash testament XXXX. and existing pleased also extension, Micron. to The program turn to Through in and portfolio, well-positioned have will which new With roadmap our the agreement in generation our on technology to this product be the streams the businesses. relevance build announced Rahul applications. extended we value Rahul? our the terms. after QX, us of growing program, strength growing our commitment for solidified I'll execution, years call sustained their generation stock that, Hynix stockholders our agreement ongoing cash our Micron and dates as we and financial license later confidence step-downs the With to direction of a us Samsung as most growth demonstrates allows extends program the license significant detail well With the and foundation underscores discuss the quarterly Lastly, to this in for Board's behind great will and flexibility is patent company, with next on our from more afternoon, revenue invest strategic data-centric and discuss Strong structural across with we our focus results. partnership have gives for

like Luc. begin the Thanks, our third to I'd with quarter. financial for results

some Let highlights slide five. on me start with

company's XXX while our long-term of growth strategy. progress the We solid high-end delivered in ASC using restate of in earnings continuing under of and periods, our initiatives, Luc ASC number the as retained make expectations, progress. XXX balance We've cumulative rather under modified delivered as between to with the on adopted XXX method, and line As ASC not our accurate track results Any comparison we through sheet expectations sheet did XXXX way at prior strengthen a balance revenue as results not prior adoption a which an financial but earnings our the beginning business quarter. runs and a retrospective results our mentioned, adjustment. effect our is well to

million provide licensing billings our to operational into generating flows. insight operational our cash $XX.X licensing strength as metrics, million to of of expectations. model such of give We The investors proved billings performance. in record line and continue our will our better with of strong reflects delivered revenue our $XX.X We

strong $XX.X up quarter the from primarily million, and securities cash, operations of very cash year's above nine previous million. well due cash in and year-to-date total of last current ended cash This from from $XXX.X year. balance the another quarter, $XXX.X with year the $XXX.X for a quarter million, months sheet with operations remaining have to brings million full to nicely the equivalents marketable of We

and Our results balance continued flexibility to solid execution on that our us affords yielded a strategy and financial strong operational discipline our strategic our have initiatives. sheet support

offset years, past known the growth in licensing. us Over our in step-downs businesses has enabled patent product to the

year our scheduled next step-down significant with final We well-positioned licensing for for are QX.

our products in growth drive will XXXX, and line. top overall Our improving company both bottom

primarily was our $XX.X Now for third million the let you Royalty on revenue in quarter the Revenue million, through $XX.X as details slide we me The third billings royalty quarter $XX.X customers. while and was relates revenue bill for licensing timing as with some in billings between expected quarter revenue range. we always talk line six. was recognize don't difference to our the million. licensing same revenue

was detail, revenue our Going into our additional chip $XX.X million, of buffer consisting product business. primarily

million, and $XX.X of business. consisting primarily our contract other was revenue Our IP Silicon

a excellent million our at what meet IP Analyst IP This in in revenue enabled we year twice is represent to Silicon being our our For the These expected almost of in Day year, there's year-over-year. expectations security Strength business, roughly that's reflected results our our QX. particular $XX billings. business ago. in us licensing growth

invest our revenue million expenses, our lower prior non-GAAP slide over in Total business. us performance on XXX quarterly profitability variable with of facility offset past expenses. for QX, headcount exceeded $XX.X revenue we our the ended to income years. now many with slightly enabled than me $XX.X streams our at in other expenses Let hither the were in through related in in than have to quarter including quarter million. you component XXX, headquarter a and particular to non-GAAP but we for COGS recognized related convertible expense as for any the the of by We Multiple investment Along with variances yet statement came lower Operating quarter our portfolio. targets due primarily the seven. received adjusting expenses walk in notes. incurred done in of consistently our we we again operating non-cash quarter revenue, $X.X to on interest million. recorded interest note, on we ASC our $X.X to income the expense arrangement financing of fixed interest this associated our other interest of return the We of and previous resulted XXX, million not payment. cash related the to fee continue product program. was offset interest income $X.X incremental as and Under quarter which have This million for licensing convertible After income

to expense. other of and Excluding would the been have financing interest to significant million XXX, ASC this related income the related component interest $X.X

on focus cost rate the flat disciplined nicely delivered quarter pretax a was XX% $X.X non-GAAP expectations. execution, With of we Assuming and for that our for income above net was continued profit non-GAAP million. income,

Now turn let balance the eight. me to details slide on sheet

Cash, significantly several past operations totaled we've securities marketable and strong million, of a previous cash the balance the from quarter, years, sheet. primarily cash from million. built Over through $XX.X $XXX.X equivalents up very

million, operations $XXX.X mentioned of year's previously, remaining for I nine another well year-to-date the As million was above months with quarter last the in current cash from $XXX.X year. total

we us down number million, As top on unbilled to this revenue arrangements customers the It's which execute as to to value future each have assets represent present line AR related agreements as these net the cash no several the contract expect note XXX. continue expect has of metric ASC to strong which value licensing I existing continue to had we royalty-based QX, for that the doesn't deliver worth trend this deliver we we bill the to company to for agreements continue contracts. of $XXX.X end efficiency, licensing operations into and entire the future. obligations. our important to recognize At allow of collect and under reflects quarter on from that performance operational

worth extension our announced XXXX a period financial previously, basis as in our to a addition from chip step-down to years portfolio. to first expect we specified. and quarterly buffer through QX, noting, the QX contract. September our pleased to this at effect the QX It's XXXX. XXX for growth to to the agreement this in perspective, were and to relevance account corresponding $X.X Micron four our longer growth, We is as recognize we licensing quarter strong then we back original XXX into initially When one-time ASC expect Instead, in the quarter comes From we of terms, do will starting expect the recognized not patent million we demonstrating a of contract revenue in nor variable XXXX. As ASC revenue assets. for existing year. in extension in than agreement, this step also and agreement up for to our unbilled revenue extend strength existing $XX be with impact on agreement of renewed QX poised extension billings Between Micron next million the licensing contract negotiated our the

partnership Over transition to extensions a extensions strong to that time, bodes and upcoming revenue XXX. for take to time partners. renewals have with us We agreements our and as this and allow other renewals could with ASC to our endeavor well variable we opposed Micron upfront under over

CapEx quarter. depreciation delivered was $X.X flow in free and cash $XX.X million quarter was the $XX.X We Third million of million.

relocation also XX% XXXX, the million I quarter. our roughly which Looking $XX represents $XX for fourth and for depreciation the million forward, full I roughly quarter of expect the headquarters roughly related fourth the roughly is of This million expect of the to year for of CapEx $XX facility. of full year of for XXXX. million $X

let for the quarter our turn to Now, me fourth on nine. guidance slide

As about review. to guidance a reminder, our could our that reflects our results actual best what differ estimates from materially current I'm forward-looking

the been to during invoiced ASC addition that metric period billings, differences. which an is financial on for providing licensing XXX, adjusted information customers operational we've certain amounts licensing In the outlook reflects also our to under

the the correlates between expect Under XX in reported fourth had what ASC you've supplemental million. billings we million on revenue royalty provided As as slide quarter licensing earnings see $XX XXX. deck, we in and of XXX, we $XX under information historically revenue ASC our with closely

$XX We and expect million. royalty between $XX million revenue

our we're also licensing teams progress The on integrated the We've steady pleased the $XX million. and expect trajectory at very between expectations we each year. execution our acquisition. business time our We a on billings last Similarly, with into acquisitions and have million the financial $XX been making well on initiatives. and of nearing company made

of I well Our guidance licensing potential impacting as chip patent digestion inventory buffer reflects Micron, business. the with as terms the contract the previously, mentioned our

been we change doesn't build As competitive market confident monitoring year, position the we're saw we've and the reflect share. inventory pause discussing, at any we've in or of the been our this beginning

to we be through As Luc expect in this mentioned, early XXXX.

year's our on buffer and annual Day. Analyst than guidance guidance at In reflects growth year-over-year QX over Our chip what better almost of total, is XX% XX% we QX anticipated last better last XXXX COVID-XX. Day financial reflects for and what Analyst despite bottom the line, than top at results that unprecedented on substantially are presented we the year's expected both challenges by

$XX costs We invest operating between expect be we expenses, quarter to and and the loss. non-GAAP are expected XXX, and be include $XX million million to for QX which between a programs. non-GAAP ASC to fourth million continue total results million Under operating $XX as $X COGS, in

income be XXXX. expense, includes and due XXX, For of non-GAAP to notes expense, interest related of we interest this interest in which income which $X.X expense to to related expect other excludes $X million million and the ASC approximately

our to roughly The our tax rate consistent primarily than We our XX%. statutory XXXX with forma pro in is tax XX%, rate expect in higher rates to of the jurisdictions. remain foreign higher forma XXXX pro XX% due tax of rate

As million primarily a in with reminder, paid cash year, we of each our licensing by our roughly taxes driven partners Korea. $XX agreements

$X We be to benefit expect million of taxes between $X and million in QX. non-GAAP a

and basic This per diluted for loss you $X.XX QX $X.XX share XXX between of leads a to non-GAAP the count shares our to roughly quarter. million expect and be We outstanding. share

transition over growth the of structural strong have successful divestiture in resulted has patent transition operational product ticketing our licensing, the focus. our from back semiconductor past lighting We to in top line, and has payments and offset a our through growth step-downs resulted however, roughly fantastic flat as this several years discipline core shutdown in the Through gone and business. transformation we the of This in our operations. cash

to expect As forward, And of stabilize XXXX. we to patent years, in licensing scheduled the patent same be us. see the we look will level step-down we coming the at behind licensing expect in

beyond will our XXXX. quarter with growth and I analyst line comfortable provide we're earlier, As line XXXX. estimates at QX, translate guidance bottom we mentioned consensus into the while top said, don't for each growth in that product the profitable With of

difficult near-term are be to in line significantly with any currently are continues for consensus us that broader strategy long-term the to estimates macroeconomic While of growth conditions reflecting the predict, better than our industry. semiconductor product

in today. million confidence that our we is the repurchase Our long-term in Board earlier reflected prospects authorization from $XX our new announced share

on summary finish XX. with me a Let slide

proud to strategic the continue long-term performance are growth. drive to the macroeconomic and We of against by team unpredictable in profitable we make excellent our initiatives progress this environment

that understand reporting, strong. to financial we it's ASC strength XXX complexity underlying that remains financial of important business the level our reiterate our While a to added of

predictable a base have revenue We to a demonstrated generate cash. ability of and

portfolio refocused product base around the revenue and Rambus' semiconductor our across and with in industry have core company. a We strength licensing streams well-positioned are our multiple product predictable

continued have and solid operations. operational cash to discipline We yielded from has our execute

balance sheet continue to We our leverage strategic strong support our to initiatives.

families. to our the begin yourself continued our Before employees take operator again open question? Q&A. for execution teamwork and I safe call of up the turn care like and our Could I to please uncertain back Everyone, stay thank to that, times. your to first call would With resilience I'll we and have their during please Q&A, once these

Thank Desilva Suji question [Operator with Instructions] you, Your Rahul. Capital. ROTH first from comes

your ask now may You question.

EPS. what good wanted and out Does Rahul, Congratulations might the that ASC affected to like? -- revenue I XQ XXX cash be it like The a here. model Luc $X.XX $XXX I just to of check. on million my the seems The Rahul. strong sign of very numbers, and a look Hi, and generation turnaround sound XXX. ASC

report is for are I as for we what you are revenue. royalty billings think licensing doing what Suji, substituting you So,

kind of there, So, look of it you and I some math, at making at that's it ourselves. company. have. look generally, how how And that's understand a the and that get I if think you investors yes, lot you're that to analysts we oranges do but numbers were I our same apples our But

more Okay. reasonable or like And just step-down product it million to XQ, and that to the check with the Does revenue, $XX think in sound the it's well? the seems drop on as guidance $X.XX. I like

to we I are you do get I'd Again, that results. But you math, it's numbers can't company-specific math do. doing that were that publish, Yeah. non-GAAP because the same if

couple and starting. on Good. Okay. quick financial a questions, perhaps of And

said XQ license You the what see I quarter-wise. that XXXX the expected think in you the normalize without early, one any you Is is the future year XXXX step-down step-downs, the that last correct? were saying? near is more

Yes. right. That's

is this just talking So, for about we've quarters, think something I that not been year. but for a

said full very were we'll very XXXX, next Just over is positive years, what time instead fairly to was that and upfront billings. several year what then payments the the we we're the to We of advantage fewer XXXX, the in be we should for XXXX, more our rate the three. that of some excited with allowed past industry, the that years. at that signed for years our in be for agreements a several contractually Micron agreement the think structured partners XXXX, way roughly consistently four But we take extend

of Samsung So as then we Hynix middle up coming the comes you in that in at of XXXX. extension XXXX then and have end know, also XXXX the back up and

patent years, million we roughly that rolls licensing remarks, up licensing expect Silicon IP with business. to I DRAM that I next licensing prepared cases, with we that with And business And expect That's our billings three because really and have associated the is I XXXX. had the billings So, several some one in said billings. think, about don't partners XXXX. there's licensing flat the just until associated several XXXX for mentioned in billings flat there caveat to $XX in also to IP is our and now large probably that also the what our in base be next businesses. we our XXXX. show are as business, in related of big we But extensions for be The we basis roughly have Silicon the with years,

And for Rahul more Okay. perhaps Luc. then maybe and question one

before? appreciate [ph] target size to or can And cash But areas confidence burgeoning you in memory success the up go beef the to buyback what the amount, you the for with I acquisitions, the acquisition perhaps security? talk similarly now, of of With and recent further about as are willing place. to acquisitions similar

Suji. This Yeah. Thanks. Hi, Luc. Yeah. is

quarter We acquisitions. cash continue continue grow. and We with to like would at buyback. to to this We we're confidently pleased look generate every

at lot going that's think acquisition, the strategically better. the in business centered larger our no of our But forward. to We anything good our at regularly. the or be that We grow infrastructure offering we're say would So, acquisitions. look for are through to data going financially, to that looking very to not the acquisitions complement but us a this we strategy

maybe perhaps And for few Okay. Luc. a more

platforms center in Perhaps the resumption XXXX that spending your XXXX data is center data opportunity? Or center it about share Intel cycles? back ending memory your data buffer by share calendar what side, the or the opportunity driven shares talk versus gains? visibility calendar brings you is On of XXXX, can a the

Yeah.

share XXXX. So, we in gain continue to

the more market the of front-end probably we digesting the consequences inventory. heavily But in that on the plan and people was generate the COVID-XX. profile phase tiers growth half a last a the less are grew the through year market in half. the the XX% We half, in year are XX% about It second overall, first ordered over ecosystem that last winding only over was going in heavily grew X%. grew of down loaded As to first in Rahul loaded year said, because X%. about Those

to share. So, continue gain we

launched from is are we things processes is be to processing this us. said, we we are Now the are in tailwind digestion -- look XXXX, Intel to early One next And a as at the that in from believe few independent. there we going inventory The are the over. market. processes when that to year next-generation going be

-- long So, between AMD share with Intel and grow them. the the market grow, we whatever as as

we Now coming upside in the have the longer run, from DDRX.

having today DDRX our placed CMDBs. orders We customers all have DRAM sample of for or

that So of to to to companion we nice nice the companies. start next go next And inventory as upside us run, -- the few the an new to we years, from gain well are after the that's potential emerge going very where year. going this that share that for shifts especially required growth ramp to at we That's all going be on think going the longer tailwind digestion into believe is showing a to are only in cloud for DDRX architecture business just that's see going for be we very the that, need end us, invest But platforms, a to We over as the to QX us. [ph]. happen. is

Okay. it I'll Rambus? Hynix quick to along. Luc, and on Last implication pass question, the Any the NAND divestiture for thoughts Intel

implications any us. doesn't for really have It

industry of this I is the think part consolidation.

see what's a of in is think I happening consolidations. we the lot industry that

think, are data platforms, coming and domain-specific the like people deal and video, an forth. have to work-from-home, to of growth develop AI so workloads from so I on exponential because with they new going applications to start

that some the of So, consolidation happening industry. we in now see

to And For to that our being track to spend it what as see well. that wins, security going we benefits, everyone faster, at design means access this and you I have we that's of translated us, because it's in look requiring where the think, more data need all record. investment is And it's money. more record track security if going be to is

good have for impact. SK all is us. But this So a going direct of increase, is doesn't Hynix to

Wells comes Securities. Mobley line question Gary Fargo the of next Your with from

You may ask your question.

strong Thanks for look finish into year. my I taking year. product next Congrats ask wanted guys. business for cycles the about to chip to we as question. buffer a Hey, to the

you selling your opinion And wonder who of first when I First, give prices how on be with then take modules. will DDRX hyperscalers? X. be your to content me channels adopt moving memory Intel's from that to Ice can in on relate and X will to might Lake, respect the the XX-nanometer sort to if memory your a these get average you

These are Yes. Thanks, Gary. questions. really good

first that to to channels X ability the from more is to X to the give all, DDRXprocessor processor. And will move per -- So, of the DDRX version before populate DDRX happen of next Intel. their memory in customers going

in going Ice because decide to And growth channels to DDRX So be their stay platform, not they realize memory whether to to DDRX up with all in potential an going that's so customers channels. When moved customers that's X their a or to from from of move X growth the platform. Lake that X market. X on we to have we're channel

that of capacity will continue. potentially memory processor So more

opportunity a Lake. next and to was footprint Ice And see we footprint. the better know us, the a Ice have we to design there's our And a is for every what is that [ph] have For us fact couple it of an One triggers for Lake better year. move Lake. Comet that time you for than for a platform, new

that first is the thing that's So happening.

there well. is us the When the is They we when For for of the memory guys are say the whole some have from DDRX, ample it will and purchase as But news guys really is ramp I them. different development. of stages processor orders at ecosystem do good all down ready.

into these the into and system very companies. early centers modular shipping are We in shipping modules

signs. And swaps. position everyone good think nice are share to is these be on strong very we're these in a enjoy of to I a going all when So, ready,

your buyback. past, buyback Raul, about you, accelerate to your ask wanted timeframe To Luc. you've that, for the for I In done share the Thanks and repurchases.

right, more, methodical count And the approach or income. offsetting by am time math lower offset could so, with slower basis. This I'm just wondering be doing accretive I $X.XX I potentially the annual a if go you guess, an approach? at this sort share of on can And lower interest given

the $XX last authorization an put accelerated XXXX, also We time million $XX in we million I the for $XXX bit question. in repurchase a did activity XXXX. another XXXX. was was for actual a perspective, think, share we million did thanks did share context, repurchase from about of shares. To in Gary, of So, and million then And XX little in and XXXX that another,

So that to million that one. authorization, years that's on history the how the the with in we we future. which new canceled look the this you at something several get previous is is was $X.X I reason provide for that The

believe think, from company our I Board we long-term very our and signal of our the from a it's strong company. value that in

said, taking it because repurchase very we're market. in accelerated out And a in have of opportunistic But past, shares also the it's we think when act. that signal. Now of done terms gives surety positive actually we of the share I then us

course, of be can't non-public whenever possession material of Now information be in the choose to in market. any we we

So, you look as over the our if XX% at that of guidelines flow next to at what typically to is But to we have what cash the XX% past, about three we've of refers or look done those years. four in expected well. some free

look So Hopefully, how to we that's how that's we I size at you. think that amount. helpful

But give consensus an of sort to trend I sits view currently which of course, was OpEx fiscal level commentary that year current $XXX.X million I is adjusted into revenue perspective appreciate I Sure. with number. from respect a at your for sort your if us of any you XXXX, can against comfort preliminary believe, the with wondering revenue backdrop? which

Sure. Sure.

a at an have couple business, We our to OpEx So, job cost is taking past we going look we're think, of fantastic company. what out of of look at to in from done years over our continue just investing the right? trend, I

program. total in a because what it'd in invest would to you we XXXX, bit be continue So, is this go our we little perspective larger have see than a is year will OpEx from that

to our see to in XX% side, then Silicon high have continue of gross strong the in well. range. product as I to margins margins XX% kind IP be the think very expect business And also you I'd on the

well the So, each up consensus, line to adds I both XXXX. line as on of quarter our think the the that's what as comfort for top bottom on

of question -- next Bank. Your Sydney Deutsche Ho comes line the with from from

You may question. your ask now

Have DRAM. Chinese agreement escalations Congrats the year, the quarter. Earlier China on is And recent Sydney. forward? trade building announced market think impact This Rand you the on tensions on going this? Jeff about how in a patent nice any you do for had the in with the company

is say, partners happening a direct what like tensions royalty the in impact DRAM a build and I have in is patent is pure China licensing But devices these agreement. we agreement. allows on watch else. what's This a Luc. This that is Jeff. impact, an that China agreement Hi, Basically, this agreement. a -- would to legal we -- everyone This don’t

will revenue their when they our So ramp products. ramp,

their just products reasons. other DRAM would not say for could be direct This us. depending able a how impact. to be will it ramp for legal the on impact have But I for is them they build fast indirect, So, agreement to

agreement ship. a can just a just that a to the from impact be there's I as And add perspective expect places. about legal near-term, What allows significant talked that in little. we a to it is ramping. dollar mentioned, don't Luc Jeff, them technology It's the And just is transfer we as the in no partner

one of license usually think agreements my of longer. are the I benefits that is view from years or five license our the

for the our talks strength renewal timeframe beyond extension existing and relevance DRAM three the extended that it and big and the just of portfolio. manufacturers so And to

Commentary from about following being on-premise weak. just on-premise so impacts up. to Can then risk spending you And cloud IT point far still your business? spending pretty how earnings talk Great. spending

to spending You sorry? compared what, mean on-premise

to Yeah, Compared spending. cloud

it's Well, difficult to us spending? track that. Cloud for

to of cloud. kind either don't almost design of is share of client relative buffers. to done, modules of continuation share mostly cloud enterprise we are demand, from should the focus Intel and Our anything business gain the by enterprise not buffer growth of you chip and cloud. because token into We AMD, same from but share space. data of to to and indifferent a different cloud into continue or space it’s alike of need terms And We or sector, applications. goes gain products see in share in see just ship in terms We that in market shift that our we to we enterprise because on footprint, any memory types center a demand

Okay. you. Thank

with Your next from question comes Credit Suisse. John Pitzer

ask You may now question. your

see letting as importantly, customers flow. question only much ask about confident is because especially fourth congratulations too you the in coming this much free quarter have thanks that the they memory? the as fourth quantify the And of results, too one the that? the to have to expecting hit early in a because of I to digestion my you're because phenomenon? in back, data kind quarter, is data think you guess, on And Guys, it And center much that any solid the CPUs center me way visibility Yeah. they too there question. bought are you because why I on first Or the cash for calendar year? guess, is is quarter it's actually see

Rahul. commentary. It's very your Thanks John. for Sure, much

see if would Let like add. Luc me to I'll and start,

chip come channel in look of with at we in guidance for QX. And that QX, what's had our checks $XX year buffer you gave $XX the that is that to million said sometime business partners all we should this what in back QX from our we terms early about roughly of there. conversations next million our If dropping indicate and

I the is best really digestion. to think is phase use it inventory

manage And that they resilience now, been demand I go what chain face half perspective think right? China supply the mentioned that in see than how think the great you got the and of and we about of people chain a then terms are uncertainty the Luc first is something downstream inventories. as It’s to in just they're because have And year, under from much cautious really the being think our really We in going of very talking that all was of have I have to partners inventory was happen saw what COVID. hand. just year. better their trying do of supply I to more earlier, visibility in

see So, there's to there add. I'll want anything Luc if pause and

Yeah.

company were But these from downstream has I some disruptions upstream concerned the John, started in more it the it system the we supply earlier build at chain. think as level. happened, system to they because far about the year, is was understand, actually, what inventory us as buildup

digest level. these so starting concerns system away, people gone Now the at are the have inventory introduce

the great memory cycle. different [indiscernible], is a on question question. is the a that’s asked about You Because

clearly end thing the can they to gain modules also back our going platform other or the systems is their when of that what platforms during Again, for things track. is when at us are that runs the us populate who see is populate difficulty in late that’s early chances ecosystem, In based used current to the But They be go track of that's some to system very depending and in our QX memory process, there because we [ph] on see view flexibility digestion on the the players the one build again. in year the can memory related and up -- next their day, So if process. the with the picking to those in because going going on demand good the on go. view. transition we QX, ecosystem memory, last which the late -- going you're can share populated that this gives are track

think confirmable this consensus as you the we of come XXXX. on year's of that But for when next answered in year this were And to there you color. more this able next I then that year OpEx. front, COVID COVID am OpEx, quarters take with my was kind you because out about that expense curious conversely of OpEx follow-up, good year's into as commented much OpEx do kind you street an how the any feel were just That's driver, of cuts and kind impressively estimates how Rahul, just

we kind of how just that dynamic? about should I'm thinking So, be curious

fantastic earlier, out question. last seeking years mentioned several job over think we cost of the Yeah. John, that's as a great I company. And I have a done

guidance You in see on it terms our of overall and down operating SG&A. come you expenses in in particularly it see

I COVID travel. expenses that from had that's to And fewer year, this think helped impact, we think us. a related something actually particularly I

the company re-imagine to is use our we've company. well things think opportunity we the that with run kind very of how of COVID go done want One I to a as

we programs. company So, next in things the then things right? for them, the that to on that continue and in work had hybrid what have cost we take take that otherwise is to do And going our with are like definitely cost of So, facilities it infrastructure do our there think invest we're year. might can I to example, out back

program. I been delighted the our think in with growth I've product

question. over we've hope our year to next a our range little helps back earlier that more terms of I your efficient So, course become it's to work. something to back year seen Again, this with where -- the we're using the learnings of in OpEx. come see employees that answer COVID just of as

have bit on think SG&A coming a I down. see I'd year-over-year, the increase, you R&D little specifically of but should side flatter

guys. Thanks, Perfect. appreciate I it.

Thank you, John.

Thank you.

question next comes [Operator with Jefferies. Mark Instructions] Your from Lipacis

now ask your question. You may

for on want Thanks I Hi. I was to taking my clear this. just make questions. And sure

that is renewed standpoint. before under and same that the -- an terms recognitions as no the change ASC XXX in contract, for Micron properly? Is So there's from revenue did this I understand

the because is. When on it confusing a adopted and ASC could time it can we this, XXXX, let me sound little reason it is spend because if Mark, So, in that be we nature essentially because the the agreement, at with agreement had look have this through contract of associated that the you Micron, with of everything of even end the existing year. we earned XXX

XXXX, ASC the adopted part contract. the of entire of we XXX as was when earnings, So, entire the balance in adjusted retained value

signed renewal QX. by Now $X.X when from effect in contractually, have us the comes into actually doesn’t down perspective, then contract for that QX. we that what a come in happening renewal until next that million billings that up QX, ends quarter And we in is

quarter a our should years. the XXXX be it in four why you QX. from see comes XXXX And delta next QX up a to And of of $XX a of in back and expected kind QX that’s through million to quarter results way QX from terms so $XX million the that

XXXX. So, QX of

and recognize XX will contract ASC that for a as extension, it because revenue $XX an variable an starting quarters. signed XXX the quarter ASC we've QX essentially -- a on be perspective, from agreement billings an Now just I from million From next a XXXX. treat quarterly basis, of that do a to in perspective expect able we'll ASC XXX be

I I our do massive effect, remarks, to revenue that expect QX license mentioned massive contract to us contract as expect revenue as to XXXX I through to is takes one-time from see I'd entry So, your increase in prepared for XXX see see nor don't a my when helps that in unbilled expect in what ratably essentially asset question. or that hope ASC recognize answer able that I rather asset XXXX.

Gotcha.

I understand. think, I

a a revenue wouldn't took billings you On this And previously, you would -- have recognize then but revenues recognized. -- you ASC --you billings, basis, have get you ... we adopted you'd on XXX, XXX revenues. one-time So, just when one-time

of because -- Mark, the contract of our able time adoption Mark sorry the the one-time was because one the adjustment to [ph] recognize It reflect it’s never XXX, to -- actually XXX. if revenue. retain -- could ASC before I was grades earnings Actually, signed -- of A we were to of that, a so

according now to So, revenues going are you to XXX? recognize quarterly ASC

of QX in XXXX. Starting

Gotcha.

Okay.

think is for with do up And -- great. they renewal? future come expect That's what this Okay. you would happen to as contract you

what been trying to exactly that's Mark, So, we've do.

is we agreements are as have or friendly XXX from renewals contracts that perspective. extensions or more a to new As sign we sign

in also going to been But trying do. get we've yes, our that's we we're what not straightforward very and accounting. give have up extensions, economic value in slightly to So that been rules to order better

All Okay. right. Understand.

cash to on revenues recognized forward expenses and going fair? Micron Is going closely more your are So your resemble flows? recognized that

but in really to as a of increase revenues ASC versus well given as Micron remarks of XXXX with And in that associated chip, Yes. expected Micron, We my our will don't treatment XXX significant buffer it’s see XXXX. the prepared in one extension I have fairly that associated in things I variable specific mentioned better. expect growth is expenses with the be the

Right. Gotcha.

for All reviewing again. Okay. for right. Thanks that me

this of way is repurchase, throw guys you a that off think Now on the the about to share cash. lot

think thing your You well, for the to you this look say you manifest for way to build return okay, about Is cash If that to opportunities. inorganic none do and pile opportunities right ammo? and up is shareholders. a the look right -- of you

the return shareholders. So, of of we capital at Mark, look organic cash. we think, investment organic We allocation. have been and very then quarter million terms with, And to in $XXX consistent ended I in

see we job our do that in investing continue it, particularly and product in places growing you a are to organically growth. great So, the

cash consolidation have industry of also as active it been then return invest continue have and participate look We the have that two well. the also shows progress balance an we opportunistic on what inorganically. the kind I'm then pleased what from made continue hand, at on with organically is been our acquisitions is we done to And in last inorganic as to very year. in cash When enough we perspective terms well. of we capital

So, over to M&A. is return somewhere XX% our also been shareholders. I is back XX% share the mentioned target flow past free And just cash think clear, thing shareholders. to we good from as us not as be cash to the our job that our is, company and commitment preclude the of what years. I we've repurchase of returning One the a several right to pretty And between doing doing continues earlier, it as part

year. What a about add debt. more areas did remind to security. our of business about terms talked in last earlier have of to and we is our also we little bit center constantly our some relatively Luc size, and think opportunities very for I you focus we're little for looking data And memory like successfully I'd

issue one due, call that in spread there. early There We I XXXX. comes is convertible think, a have

are we us So, it’s dilutive turning $XX.XX. at to not until

unusually us think see both ourselves And for size. unusual our is certainly, company firepower that -- level continue organically to inorganically. I of it gives like a a So, grow to high and for we'd

that. Very helpful. Thank you, Rahul. Appreciate

Most Thank Mark. welcome, you.

would the back now there conference further concludes this This no I Luc time, At questions. turn are to question-and-answer session. Seraphin. over the to like

to healthy, today us day. a joined hope Thank speaking soon. with safe forward you for great your interest time. each you. your and stay has continued who everyone and We to look to you you Have of again for and Thank

now This Thank you. concludes today's conference.