Rambus (RMBS) 2 Nov 212021 Q3 Earnings call transcript

Welcome to the Rambus Third Quarter and Fiscal Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct 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 Desmond Lynch, Vice President of Finance and Investor Relations.

conference. your begin may You

with Thank you, XXXX VP Rambus quarter our the to Finance our Luc CEO; Rahul and conference call. welcome Mathur, call on results And Lynch, Investor the today I is; and Seraphin, third CFO; available Relations. operator me on The call am of and discussing filed been today Officer. for the Form-XK. replay results this press for SEC of A Jones, be at Keith Accounting that week the will has with release Chief XXX-XXX-XXXX. we be next the will Desmond

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

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

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

we In this XXXX, an effort using the no A in from X-Ks things. and we and to directly and the results, more including on are the page but during the related in on greater effects this to uncertainties file of update XXX of the the did acquisition documents using financials, XX-Qs are ongoing obligation at and will efforts, fourth Investor our Releases. are for not comparable and through expected These adoption reconciliation of which Financial Relations' included divestiture or forward-looking activity, quarter differ products our restate method, in of XX-Ks. described modified actual drivers, related of adopted COVID-XX prior and the and both progress. under presentations demand fully financial company's financials prior These other press and including our and balance growth, subject and with presentation the Our company's to retrospective discussions materially may under timing the opportunities non-GAAP revenue, opportunities, adverse Any to website profitable regarding adjustment. accurate the the been cumulative these statements serve, earnings acquired not with in are in XXX the track slide release launches, call measures and XXXX periods, beginning retained a clarity ASC our both and strategies, the statements company's between product on under We we ability growth contain ran we the guidance the expectations effect provide financial success ASC these ASC non-GAAP has the among under discussed for call. press is our benefits integration GAAP our rambus.com our results maybe risks SEC, today deliver reported of to merger, the markets on to outlook and most a to sheet potential risks GAAP technologies, in expected of our of our statements. XXX arising and from investment way and rather results business that as comparison an newly existing the various and impact XXX including statements, forward-looking ASC release,

will the I quarter. of will and an to the for will Luc? give an start overview end of Q&A. Rahul provide operational the today follows. better with will into license billings to operational performance. business; investors our such Keith will periods, financial to our continue turn will now provide will Luc we discuss results; future over our guidance be Luc overview The call order of insight metrics call the as discuss to We then with as

team. is million Interface Thank performance execution record the QX demand growth roughly and profitability. $XX.X And good from in and of line for everyone. generated global delivered record Chips by another expect great quarter-over-quarter with we expectations delivered high entire XX% you, XX% $XX million, $XX We up for was at cash Server driven There's that, revenue million, for revenue in with our Memory another from Des This targets quarter strong and year-over-year. quarter Memory. and which QX. further in was Rambus. afternoon, operations hit

All supply happening environment of of the context in these momentum across chain a very entire industry. are growth challenging the and semiconductor

challenges seen time experienced the and by same As shortages we've we peers. last our cycle mentioned quarter,

to proactively revenue continue Chip and quarter-over-quarter at year. managing demand products set support the closely chain we working satisfy stated the beginning QX. to ability and Despite We ensure our the are Interface Memory for in aggressive XX% grow our and these will partners supply to our customer the as with I delivered QX our earlier, challenges growing targets of growth we in

financial performance, also some exciting product this solid to we addition In achieved milestones. very

first is Interface our sample future rising shipping performance the of the data on and position first second generation is a DDRX DDRX DDRX in and an in we raised the Our bar production needs Chips. volume anticipation we customers. as centers, Memory to generation of ever important maintain to achievement In RCD. leadership RCD also This in are

overhead. engagements that and protects are in security we're Turning our cloud and by be our broader to datacenter wins. size the We future and markets me Controller our a including a across data we launched recently Interconnect for X.X feedback seeing will architectures. products This brings roadmap. IP the that across are of where IP and with to PLDA This key Silicon both ingredient joined high and growing the great team OEM needs our from no design getting including future the ecosystem, for new entire CXL progress business, was developed scale on DRAM, like the industry-leading functionality performance with initiative, customers integrated and players CXL and IT,

technologies team from total charge Silicon Through Verimatrix, IP in and We IP. CXL, Logic, HBM and are leading and areas, annually. IP Security the including Northwest Security performance, and of matters. continued focus AnalogX environmental on company's critical our million additions the our our now efforts, in development of rate internal a the run we of attention over $XXX increasing are In on PLDA, is the support bookings social our our business for

opportunities continued We our team sustainable growing well are industry-leading our disclosures. next-generation and revenue led focusing facing We and in drive in address is well. This product technology We structure number multiple operations and critical own improvements has across industry challenges on supply Overall, responsible, inclusive across as opportunities to on the data-intensive to architectures. the the record of practices achieved to very forefront and as remain businesses. ESG the milestones see brought a executing our chain. of

As team we what our can about accomplish. excited the journey continue a am I leading as Rambus very and product technology company,

call over Rahul, five turn well like to the his his take thank I next over to wish Before chapter the to years would of him past a moment for and career. I contributions him

outside As we to announced Rambus last the opportunity month, Rahul will of be pursue industry. semiconductor leaving an

the expertise, Keith call successful over to the Controller Accounting current Vice wealth Jones, as quarterly experience and confident With appointed discuss a lead financial and Rahul? Rahul a that, I Interim team to help Officer Corporate and Chief will results. brings Keith am he have turn through our the transition. the of CFO. President, We I'll

operations. begin third like from generated summary again, million X. solid financial cash I'd quarter product XX in with with Slide a Luc. we and revenues to a on results growing Thanks, $ Once of for delivered the quarter XX%

invest We strategic executed foundation free cash us our in to future years. have consistently on investors initiatives, many enabled profitable capital a return for growth. over growth flow. built cash and operations improve to the our past We've from This has strong and

to $XX.X IP demand the for was expense walk industry primarily at see [ph] consisting billings Revenue always pleased the of with of Total quarter. sold expense our million, same recognize quarter in X. report Slide revenue million. lower of difference $XX.X in business. operating business. despite Silicon $XX.X at primarily our timing, guidance was with third at we non-GAAP the customers. primarily on $XX.X Memory including expectations. licensing million customers. line relates variable don't of in report another such Silicon revenue company million. delighted revenue expenses Interface line our million as the business. business, Chip in closed and PLDA, had Interface all-time Contract record cost consisting to billings] to me associated quarter. company, Memory delighted the quarter $XX.X Royalty through we acquisition the from supply Let in high $X.X you million, our an were to million, revenue $XX.X We licensing were $XX.X and which were quarterly while goods and as we billings the The was seen our royalty with for Product for in in strong for to offset was Revenue the bill closed were quarter between statement was and challenges Security income Including Operating which IP our for by million record IP after for [Licensing PLDA, chain the products included we're was related higher quarter other provided we of expectations the came QX. our R&D the costs, our billings revenue

of We we than This licensing to we not primarily convertible quarters investments received offset associated long-term $X.X in fee interest related engineering recognized revenue, AnalogX over of income roadmap product and was yet XXX, adjusting other We times payment. drive expense ASC quarter with interest arrangement integrate with expense we of grow previous but total recorded our ended to income quarter continue the PLDA. After note. had the for to financing both XXX from interest quarter resulted for as for Under million with growth. in million investment XXX, the by fixed portfolio. which expect component, headcount incremental incurred cash $X.X the higher non-cash a our this talent interest non-GAAP coming interest the our note, the to in strong $X and expense this million. was the of third We convertible and on

$XX.X Excluding above XXX, million. related of we execution, quarter income focus again rate the Using to of for was profit expense. and pre-tax this net an - was interest the expectations. million on flat the assumed been delivered ASC disciplined for cost have and continued income With other interest financing that would non-GAAP non-GAAP XX% $X.X

let the on sheet me details to X. balance Now, Slide turn

of has drivers approximately quarter $XX return as million $XX.X PLDA end the quarter cash cash million, was $XXX.X cash The cash, growth generate of from us previous AnalogX equivalents down acquisitions totaled to in the shareholders. ability offset both securities of payments for million. capital Our by operations and marketable to of invest helped from and consistently net and

on As which which QX, future the contract has arrangements AR on deliver assets and deliver we end had $XXX.X worth expect operations million, of cash efficiency, licensing for obligations. execute no the reflects to future. continue to At in the we strong unbilled to related operational of top line value company performance present from net the the we

trend revenue entire value licensing of collect We number each to bill that us a expect to allows royalty-based agreements consistently these important It's we've doesn't that this to note to our down manner existing recognize for and as as the this metric agreements contracts. renewed we quarter. our in continue represent

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

$X roughly Looking fourth be expect to for forward, we million. CapEx the quarter

$XX roughly continue year for of We expect XXXX. to of the depreciation million full

go for Now, our the over call fourth let me will Keith, through to quarter. who hand the guidance

Rahul. Thanks,

turn me on X. guidance our Slide to Let the fourth quarter for

reflects at best the reminder, current estimates guidance our this time. a As forward-looking

what about from review. Our actual materially results I'm differ to could

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

million the we billings reported what quarter under expect XXX. closely $XX licensing million. Under had revenue revenue correlates as historically, we $XX between and have fourth As ASC in ASC historically royalty we reported with XXX,

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

this mentioned, business buffer total revenue chip represents As record billings at the the outlook company. another Luc for record for

continue We challenges supply actively our chain to industry. the in manage through

be to We and expect includes million. $XX $XX QX total non-GAAP million COGS operating costs, which between

million full of expense. we profit operating the for investment results As of million. ASC the expected $XX non-GAAP a and Under initiatives, quarter our is between increase fourth include the and impact strategic PLDA $XX XXX, a of in quarter

convertible expense, excludes and to of non-GAAP notes interest For income related expect interest which XXXX. during approximately XXX, related includes interest to other ASC income which expense $X we $XXX,XXX and of expense, million

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

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

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

We QX roughly range completed quarter. have share announced expect we as we $X.XX and basic share for quarter. program be non-GAAP between million and XXX we outstanding the a in the count to $X.XX second per the shares diluted Overall, profit repurchase anticipate

Let with Slide me X. finish on summary a

Over the have we strategically, and progress past several operationally substantial years, made financially.

We have long-term the in growth. portfolio opportunities and to support our realigned address the to datacenter

Our the long-term growth in market, in positioned product segment. are businesses anticipate well and each

shareholders share our the of products invest like AnalogX and to acquisitions return investments, to through make and our DDRX in continue organically PLDA, initiatives, repurchases. such We CXL and as inorganic value

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

first Keith. Deutsche question Sidney Instructions] Your Thank Ho [Operator from with you, comes Bank.

is open. line Your

questions. taking my Thank you for

First good is question Rahul, chain. help you the for the over first and on years thank supply But with adventure. of next the all, the my luck

parts done as products last have customers seen Have of chain pretty quarter You back job a holding guys the seems managing conversely, customers your like you quarter they good more purchases supply seen any ordering have parts indications the on the the you. worry because need, because it well. before you're get you And all they than getting they other What suppliers? at? from from looking are about can't

the Luc. is for this question. Sidney, Hi, Thanks

components. the do they On constraints not have other holding we potentially chain, see the with of back customers because the supply purchases

Cycles the to the middle ordering DDRX With we're are DDRX. bit we And So bit see a respect we difficulty] visibility. is happening what over lack [technical don't us. a environment longer. people in see times and of a a to longer there's and lead between of current in transition that also are

their they DDRX way. a So people in that sure make RAM correct into manage

don't the see to customers. any, and I managing behaviors But customers would to our from the worrying supporting from we that them DDRX we're say, our transition So DDRX are transition.

you very licensing and I'm given surprised QX is is typically see in up your quarters you seasonally stronger plus you have little Great, the on the here acquisition the a billings licensing basis Silicon my billing a you that's past IP nicely on and bit business QX? you little a Maybe question Can only helpful. expect coming follow-up for bit to a side. have know about dynamics slightly QX year the coming down sequential Thanks. going also in. few talk over

how we we see of What our have recorded. licensing Sidney. gets bit a billings, mix Sure, a and in little revenue their

business. our Silicon IP that's So

with end then ends in it and some that of and licensing on contract pieces amounts associated royalties see, see and event those that in part, really have any the you momentum with if in billings. do some any large will So there's But that in businesses. up agreements it up impact In to both do strong other reporting. that know the you we line the has we

So if you difficulty] see do [technical aggregate, you growth. take

very Okay, much. thank you

you, Thank Sidney.

line from Mehdi Your comes question with your open. is Hosseini SIG. next

looking too A what to question. product me Thanks couple an your calendar year have to for of I there you contract details, billing of Yeah, take taking revenue, my bit excuse at is When your for 'XX. expectation, guide little it me. guided given and a especially upside that seems follow-ups. licensing

- contribution the cost, but is the your despite PLD up forma growing have dialed pro the into is PLD. also cost you of lack your from EPS revenue that still Now

absorb right given my business revenue have what the highlight that from you I will your the little of So versus incremental question upside to that is, time about is a think core And trend acquired? to to take core generate business, that a have try to follow-up. costs to the enough the I that's acquisition, way bit the

the we core is Mehdi. for a chip growth forth Memory. you that strong, business demand you're just is for business seeing really put there see Server Thanks, what and can is guidance really The our steep

that So our of take we we stable has Luc and strong business and AnalogX, as licensing mentioned a that are we know see the do that for the is IP a as don't exiting It's is really on When business, at good And mentioned, revenue. story you fluctuation great year solid. PLDA pretty run billings Luc we patent not a see doing them a renewals. $XXX lot and business Silicon at a really I contributing. at last million look is rate but job and least, been

current the quarter in QX, So million contribute about of revenue. $X.X and they

looking to we're a at $X costs. similar a million QX, $X in about to out range particular, Looking of expect And million. amount of we

be So XXXX to for relatively at XXXX. in breakeven $XX before, be talked bottom revenues about well. contributing we and the But overall, the acquisitions line start to as will looking about there'll we're those increasing they as in then million

it, revenue the think of How Got DDRX Thank see I'm clear. bills end with and the out with from the associate there server And just the DDRX with traction do you the you DDRX. at all I for trend CPU, your introduction signals should contribution? and mixed the new drive looking about details. then how

a question. that's Mehdi, great Hi,

price orders QX. as shipping volume this do see almost QX. ago, production talked know quarter We DDRX rent in the about of happening we you So we coming a year had

growth QX. see to continue We in

that see do from a So industry expected confirmation ramp the the moves case better well, DDRX the pricing in starting a be to that to is this DDRX is DDRX, on for of of we seems when footprints look we as is what better that, And as DDRX. successive at we designing generations generation be what's our it in than finally, to really when generation. continues to us the had market, exciting

ramping we the share. expect market, continue So DDRX into to as grow our to

saw the as and that announced X.X XX.X. well in future of probably at is anticipation And the of faster of a chip You we processors. DDRX introduction this needs

we're introducing So this in to we so the of that to continuing lead market share. can product to continue the latest grow terms charge

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

open. line is Your

or of anticipation other In customers there's chain well as perhaps up have know with prepping a they spend are supply considerations and - kidding. know take to about working thanks so Thank fiscal wafer not you year great 'XX, lot. perhaps supply chain the words No, five allowing guys, feel in some servers that about you, the obligated and and outlook constraints maybe well to Can quarter-to-quarter somewhat share? some demand. of some DDRX? taking of last shipping of question. level dollar will of market you demand, and I as for product I'd you guess the in I'm the may demand Rahul any amounts, any uniformity on but perhaps Hey, missed. your based TSMC lined are I competitors maybe be inventory you us dealing their revenue you things may fill terms for like over you trend the at later year to inventory been in say nice much if the some it's years, ask just my some know I how be Rahul. help with with you of actual key it's determinants in set the the the supply with

it's Thanks, that's but you all know Gary. great questions. as a lot, Yes

highest in saying space. share. probably were, we in by I certainly that know share DDR the would continue in we gain to this in We XXXX, were market the You know, you start

gain continue be above market XX% know, we so we'll year You share, share. this to

call, the year-over-year, As single-digit. XX% third year, growth, we low a higher we of which in the market said is still is XX% this much than earlier in you the grew quarter which know, and quarter-over-quarter growth

to in have continue no that share demand. concerns whatsoever gain and So, market we about do the

would is and in daily whole work Regarding on our industry supply. record in of our chain a QX. almost with basis. what to on revenue of We something suppliers the working manage the say get the supply, support is facing with a This supply we're we're facing I our suppliers partners terms to

fundamentals think to it's that said, Deep lack after continue in our with said week we small. facing week we you remain plan difficult know, grow we QX. we As is working the of will But we're and in partners visibility. week as something what after to call very the visibility. early have, I It's inside,

share to expect as We into to XXXX. we move continue grow

watch know, have earlier, to as We see runs path. their may, see the and to transition that or DDRX longer people times we You to this as length as class - product want between sure they they going you this DDRX to people make said you're DDRX. lead need manage the

to In as we're with terms the mix basis. working suppliers of it's been with working as said, demand for so I a on products far on we're working filling daily And work customers and our our the well our of us.

QX. said I growth we a in As see in record quarter had QX, we

think I to tight. Absolutely out, that's very to and it. know to the at is the be going You continue be tight. we second we continue year the look going of half to Maybe evened way be QX are QX

the fourth to your or Luc other upper operating quarter, royalties range license Keith. I premier different ask either think Appreciate XX% for the the I might the operating about the or wanted to point mid in around. know, billings somewhere way for guidance color, - to margin margin substituting all adjusted the in Rahul your you

about so high operating And bogey think XX% Thank know of we new a you. you mid that's sort XXXX? I'm if wondering is to as margin

a question, Gary. That's great

So the math did is you accurate.

our that, change. mix XXXX, look we have we As will impacts the the of do that overall is into one

have margin. has margin to on percentage XX% product the XXX% we revenue, a will a has part of XX% of a which which licensing the opposed being more So to

revenue you grows relatively So We that do profitability where expect overall overall stable. be our be margins as it range. is overall could our should growth profit with

guys. Appreciate that. Thanks,

Pitzer John Suisse. comes question with next Credit from Your

Your line open. is

indirect a just you testing, letting back-end if there's results. on of lot guys. of me or afternoon, kind solid on packaging apologize out a hear Did Good either number, Yeah. in the I business know Luc, questions. for revenue gave ask on the one. constraints product or sort business. any didn't on curious constraints logistics? direct I you quarter see your Thanks wafer your I'm Congratulations of

course. Yeah, of

As I experience do week, said, experiencing. we partners know we competitors wafer do substrate you what and the do see we on Depending our constraints. constraints, see are industry

what our is, So customers. partners a on our weekly you basis do we weekly work a We basis. know our with we and supply replan we our on manage shipments how that's to

see supply on with So or collaboration impact months growth. across our our constraints couple can our minimize partners been on last would the customers impact we do pockets of the that But say, we've you of three directly. I then in for to working chain know us and months the potentially

product minus chewed the how product That's you gains? you like the share with And things And this revenue, up five market helpful. to about the with more in at this to especially importantly, that plus the guidance, this going in And some we the or then be at you as that business year that of continue cusp? that keeping that's know guess the about the a to midpoint the think year. revenue year But get last on company, up XX% inventory three CAGR kind to transformation DDRX year, growth had when more needed customer end implies about through. do of I should revenue your think of I feel XX% of the buffer you is product

Sure.

do design mostly from of generation the and from footprints see it's gain. earlier, we continued So coming growth And wins share we generation. increased to as said

generation are a the footprint to in translated market had we our last next And gaining as that the DDRX in DDRX. company RCD. DDRX the to DDRX. the and in first even DDRX. of of And basically We leading producing into said Lake, Ice as DDRX, production so position introducing So have are generation, first we were I volume we from earlier, orders we first information all than previous the of of have, the we customers generation generation in share

to with of So qualification into gain leads products in wins a leads footprint design quality high gains. - and good being terms first and very sharing that

what is happening. that what's So

second forward continue part we Going to question, answer see your to the gaining of us share.

DDRX is very, strong. our position very think, I

into to beyond You know, where go used once has growth see difficulty] than also working to on market on DDRX translate this the of companionships on XXXX. development second [technical and add oversupply the that going and that modules higher that, constraint in towards products, of half mean DDRX, we we will hit are CXL-based the to the we're we what as I revenue through the

to So and those we have products producing on introduced the a finally will market rollout of growth products fuel share side, those that we the product because with products.

So in we see continued growth the product space.

the the in product are publicly thank that started before one answer how answer, sort And then over DDR in Keith, you transition? the And the question, last this, What gross to today? - should of Keith. to XX% range. mentioned we in help all Is one wanted years. XX% the if also for about but for I have to they you Rahul think where quick should can sneak I I here that margin

That's okay.

our if margins So it's a what gross new for what product is you take have DDRX, look at we see introduction. today, we a that and

our But given bit you from those And are net-net a compressed product. we cycle, see a range bit a XX% basis, little at margins So, great doing cost. little do higher. job those that But as of its the pricing there being gross to manufacturing day are blended ASP for where teams on standard pressure. the standpoint bit are reduce see little a of on margins a the conversely at the in margin to and XX% is the end gross

Appreciate Perfect. Thanks, it. guys.

Thanks, John.

with Securities. Kevin [Operator Instructions] Cassidy question Your from comes Rosenblatt next

line Your is open.

question Thanks congratulations. letting ask and the me for

of I of of that The sorry, you get the - are what going standard? to you with - rate CXL is the into is dev idea designing with what server next-generation have Rahul. processors? didn't CXL, to the visibility your much, use Do And the adoption work an much the motherboards for that on you adoption how say can

Hi, Kevin, great question.

I offer as of our think of processors, AMD interface part the future or CXL capability their others, generation every interfaces. for we'll processor

So of that's is us memory extension. for several brought that CXL. is, interest CXL, special why we to cases a are use one sort There about

As you need will processor memory. know, more access use, to you whatever you

suit be compliant expander platform memory the that's So that expander to be CXL in going to the be positive able which to CXL first quarter CXL for memory develop to product used X.X will by be and any we're going is used be going datacenters. of is the

you mentioned on the great. a Can TAM components might picture give would module? DDRX level per modules increase other Okay, that we us you expect that your maybe there's the be you going would after. what of be And in had high

Sure.

the companion given of you know, and next module on development hit for First the will of know, you of they timing say, the offline second year. our schedule the half qualification all, on let's schedule three products market the the

monitoring introducing itself going you different onto revenue would So those the will that us. compared know time you probably for the to now. know XX% a contents to are that's products property market I the And the that, But where it's again, say we're to that, potential we increase module. add of

to going half of this that our be year. think second growth is revenue I will to the be in next something relevant

great. you. Okay, Thank

Thank you, Kevin.

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

with of again for years. thank over for soon. today We Thank few healthy. last all interest time. your help And great and the Thank Rahul we safe for speaking forward to you Thank you, day. continued everyone you and your Have to you a stay each you. look hope joining you. Well,

conference. Thank you. today's concludes now This

may disconnect. You now