Rambus (RMBS) 7 Feb 232022 Q4 Earnings call transcript

Welcome to the Rambus Fourth Quarter and Fiscal Year '22 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Desmond Lynch, Chief Financial Officer.

You may begin your conference.

Thank you, operator, and welcome to the Rambus fourth quarter 2022 results conference call. Chief me at our today Lynch, the and CEO. Desmond with call is am Financial Rambus; Officer on I Luc Seraphin,

discussing next A replay The we this call with the for available of (XXX)-XXX-XXXX. SEC today for be be the the X-K. press filed at have Form results on will been week release will that

of replay that call, audio, we the this addition, In we reference be our along will and accessed we A Pacific are at website simultaneously with today's during can call beginning portions webcasting of X:XX webcasting slides call. Time. this on are p.m. today

manage will Our supply the and of growth, today projected for chain financial ASC including financial effects reported revenue, XXX contain discussions effectively our items. demand expectations company's regarding amongst any forward-looking statements, the other our shortages market prospects, solutions, on results, to ability

documents and SEC, from XX-Ks. this statements statements materially fully our described to discussed no These subject may are obligation and statements. These are actual the under during file and uncertainties update be XX-Qs to we are differ and more our may X-Ks, these we that with call forward-looking risks results, in including the

GAAP we comparable page effort and in included press Relations presentations been most Releases. greater in an these our in are has the the website our this on of presentation non-GAAP measures at our non-GAAP and clarity In Financial call. release, to slide and using directly rambus.com financials under Investor press on on in the provide GAAP release financials, both our to financial both A reconciliation

under rather adoption the restate XXX XXX modified earnings an and results progress. sheet ASC is retrospective a through prior company's beginning Any not our cumulative using effect prior ASC adopted periods track which method the the results the between We did comparison in way retained adjustment. balance ASC accurate as under of to XXXX not run but XXX

to billings better into as provide metrics insights to operational continue give will our our operational such licensing We performance. investors

start end today order our with overview of call will The the of our financial will I discuss then will as business. results, we and Q&A. follows: with an Luc be will

I'll quarter. over call to of Luc? the now provide to the overview an turn Luc

and capped good for line with by performance an in a you, was in fourth excellent QX earnings Dave, year everyone. the afternoon, revenue XXXX off Thank the quarter, with company, and guidance. solid

chips, revenue outstanding of record macroeconomic able were challenging another extended to faster target the the strengthens delivered driven environment. licensing foundation. we relationship Through grow product silicon business year than market IP strategic long-term for annual our despite hit We our Samsung, memory interface and revenue execution, by which a with our

the In we million addition, of a the operations from course $XXX in cash generated record over year.

to strategic consistently value we As sheet have strengthened stockholders business, the investments grown have and retirement. our debt through returned share and repurchases, balance we

We talents growth to our initiatives. continue in investments our focused critical the technology and

a new we This As the details for $XX $XXX full significantly outpacing million, our XX% and the annual brought of at delivering revenue led record product the year chips with setting up million, revenue interface XX% way, of the performance, memory growth take quarter-over-quarter. QX to year-over-year. a market product look

market team by making the throughout and These with execution share DDRX qualification were expanding our footprint strong results XXXX, significant driven gains.

come. and per last well This DDRX continue years week's and of RCD of generation are X chip to family product the transfers the map of performance road RCD. of industry-leading ramp the our in We mega second for offering Gen future positioned our our X,XXX with latest our DDRX server supports to the extends announcement with generations leadership

of we as of to XXXX. memory. navigate Turning the through transition dynamics vigilant generation the industry a to We remain new

to year, leading the of at next-generation levels supply, have half expect the seeing visibility This we second While in some stronger but improved we are inventory is that elevated is first a with in now end softness ramping guidance, our memory half reflected of earnest. we customers. in

server transition production industry still of of from prepares memory which as crossover first The DDRX, a our with continue in the that, mix our interface is chip half from the be DDRX memory with quarter. is projected for early DDRX. XXXX, the view shipments consistent will to with And product dynamic industry last to for

believe are we customers continued in inventory adjustments positioned transition for DDRX, and to actively our manage and working growth XXXX. are with We the to well we

As memory are the applications memory for the we in center, Multiple to improved cost generations enabling total many opportunities. data longer-term CXL-enabled of evolution architectures ownership of to and the to deliver in look promised new tiers emerging, exciting attached higher CXL server data come. CXL center. brings performance

work continue OEM close and ecosystem with timing. the We to well DRAM with and in including collaboration makers cloud, the and aligned needs market are

IP. in team Finally, achieving XX% The silicon revenue well, executed over growth year-over-year. very

focus expect X throughout IP. of long-term in we and high for advanced performance both while Tier the opportunities. lead secure in security macro wins for confident We remain long-term to conditions, challenging year continue need well and demonstrated are address the interface And to our with strength areas and we SoCs. the growth highly IP in We positioned

the results. for In delivered a this and closing, The was well tremendous team company. consistently incredibly year executed

center. and delivering investments data to generational DDRX, the in overall in the performance to between resources and from solid committed environment While XXXX, address from stemming the first remain in see from innovations making essential economic We critical high-quality focused continue products transition that half the differentiated we processing opportunities memory. the growth now bottlenecks navigating currents are to DDRX we industry a and cross of to

confident partners and as an excellent And I'm support. us thank for of ongoing profitable long-term extremely our growth. I'm our in position the I'd to that and strategy their team, like for proud always, employees puts customers,

With to turn quarterly discuss that, call over results. Des? I'll to the financial Des the

the our delivered strong and year with on Luc. in you, line both Once we earnings quarter financial of to a with coupled continue make our our in summary and Slide excellent improvement year to a results like progress which and as strategy. with XXXX we the continual was positioned balance initiatives. we ended growth revenue excellent for well supports Thank on full long-term I'd performance had The for sheet, quarter results expectations. We in growth financial a XXXX, X. financial fourth our with the begin our again, very

year, our the record For $XXX up a at XXXX. $XXX operations million cash from in was from million,

in XX% we our existing strong of consistently using program, on million X.X share our XXXX, which to cash enabled we to repurchase return Our initiatives cash million executed ability debt to strategic us shareholders. accelerated our invest capital $XXX retired convertible has consistently and a flows generate retired hand. shares and In

look to we to strong As operations cash shareholder deliver expect continue the future, drive and to we from value.

statement Slide X. income non-GAAP our through you walk me on Let

not do delivered a same recognize $XX.X company. We for fourth million, bill of was while was difference we revenue licensing in The continue between million. $XX.X primarily we the billings revenue in as revenue and to for was for Product million, chips with full million, was line our the quarter the billings year, million, quarter we was as revenue revenue and timing, $XXX.X $XX.X the and our $XXX.X to royalty customers. licensing always Royalty which primarily memory record execute expectations. interface relates consisting

revenue consisting IP. and Contract was million, $XX.X primarily silicon of other

revenue IP is billings. remaining royalty the and well other As revenue revenue, portion reflected in a and contract reminder, as our only reported of silicon in a in as is portion licensing

record Total to sold to revenue. higher quarter end memory vigilant of of line goods towards high management. be million continue related with And our in the in of we a our expense sold Operating we interface the expense with $XX.X ended total operating million expectations was headcount $XX.X of as by quarter including cost expectations costs, goods employees. were cost XXX our the chip for at of driven

XXX, fee we the component ASC income $X yet exchanges of period. million have recognized Under in approximately during not foreign interest but which related received recorded $XXX,XXX licensing payment. revenue incurred fixed arrangements, we the currency of We financing adverse to for

and After of non-GAAP convertible income expense the for interest resulted the notes, on adjusting in this quarter noncash $XXX,XXX. for fourth interest other

this non-GAAP have XX% income the ASC income quarter to expense. been interest million. rate of $XX.X income, was related tax non-GAAP flat assumed net $XXX,XXX Excluding of the for an interest net XXX, financing for pretax Using would

licensing turn worth arrangements quarter, company of assets primarily for previous $XX.X cash X. obligations. We marketable sheet ended balance million. cash, of to the strong and to had from At the accounts reflects by the Slide end value up of the equivalents $XXX.X unbilled quarter million, which me QX, future from with the net related receivable present details million, driven performance let operations on no securities Now cash totaling has the $XXX.X we contract which

that our patent bill in manner this does continue agreements, renewal us We recognize to of licensing expect quarter. entire revenue as trend It contracts. collect and we these note agreements to we is represent allows for value not important our to that restructured this opportunity each as to number down metric each a existing the

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

differ about at reminder, results and materially forward-looking I'm our time, what a to the environment current As continue could the actively from and to actual guidance reflects our this review. estimates best we monitor macro

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

correlates closely what we under As historically we ASC historically, have billings as had revenue with royalty licensing reported reported XXX.

and Now on first $XXX first X. million revenue for XXX, Under in quarter $XXX Slide let ASC our quarter turn to million. the me expect the guidance between we

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

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

QX approximately expect million. CapEx $X to We be

quarter operating is million of the to ASC results and between for Under profit $XX non-GAAP $XX million. a first be XXX, expected

and of expense. other expect which to expense, we income approximately XXX, interest related $XXX,XXX non-GAAP For ASC interest income excludes and interest

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

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

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

expect and the between We count share quarter. shares outstanding. for diluted $X.XX share $X.XX basic earnings anticipate XXX per QX and range million be we to a non-GAAP Overall,

company's execution on with me microeconomic a our finish pleased Let in challenging and Slide environment. with results the X. excellent a XXXX I summary am

growth generating on are line top execution increasing financial our XXXX, In by maintaining record discipline. was while Our operations. and cash profitability from we focused achieved

fueling drive innovations portfolio, expanding revenue diversified a growth. Our and product

our We deliver to balance robust continue value a generation. cash sheet to and strong shareholders with

well growth executing plans. on continue positioned to are long-term We our strategic

first our like I'll to that, turn and With I employees the for their Q&A. Q&A, call back Could we execution. begin the to have our teamwork thank our would to call question? up operator Before I open to continued

the The from Instructions] Mobley of first [Operator Wells question comes Fargo. of line Gary

you're us taking as XXXX. and and we you the million question. you I first DDRX business in as flows $XX can the in revenue up your ebbs transition excess to share how product transition well this in which quarter, and to guiding ask wanted Luc, appreciate shape of you're if communicated you Maybe through that I uncertain, doesn't bad. inventories. different first may DDRX your about sound in for your how as of impact to view the paraphrase, terms transition with because the too might sort revenue product

to into they the related the DDRX, some was burn in that trends, to some And see of might after that you really pick built through their DDRX year? you started revenue? product quarter more up weakness see last inventory is have risk your perhaps order pocket then air So customers second

Thank question. for you, your Gary,

in pleased we XXXX. the First very year product of with revenue on had we're all, the

million, in And over was As million. $XXX a as year. good quarter $XX which last XX% said the remarks, quarter the last well, was growth

at look let's happened what Now year. last

the market. started pivot had DDRX the quickly the in the expected $XX because some in is to you of higher some million. out And the DDRX wish, QX of build we revenue, than to DDRX weight environment. inventory customers of some for supply-constrained procurement back of if they very platform, where advance delays a of in Our is launch the And reflected our that's DDRX what in to what

us. Now have customers what's to on these orders placed happening is some digest of that our have they

are we're transition guidance DDRX. manage have their scheduling year. for We the DDRX with explains that quarter also that orders. them cautious the first are of for they backlog these working as to this giving to in And They

part throughout of earnest, launch start grow pleased in going to the second But we're the with that very to of confident DDRX AMD launch continue We the the through mostly both of platforms Intel and to to announced year year. their DDRX. DDRX. is the

the So going from to be are adjust. as We're quarter the customers and quarter DDRX indicated last quarter, of and to the we're our this DDRX. adjust backlog to going second coming quarters to going transition

like to We the schedule DDRX. cancellations. level don't negotiating place shipments DDRX comfortable with DDRX. just that we and we would in I for the have of of order backlog parts, say are on inventories of these see We're

So we to just through transition. the have go

We will grow year. this

in We year, year. to this of will mostly will half happen the continue the gain but share that second

all Got color, it. Luc. the Appreciate

rate. my additional wanted $XXX of As seen the run growth business. silicon not follow-up, that quarter, still last it have million it on about I at Or Is ask If the rate annualized to I'm some was run at IP level? mistaken, that? we top

year. previous year IP last So XX% on we our nice very It business. about grew the silicon over had growth

a that environment. XXXX in that mid-single-digit with to given growth backdrop the number year continue I the to that opposed current to as a lower at low we we think in we And rate growth see but economic business of this the macroeconomic year, last environment. the saw business will the grow of

The the of Kevin from Rosenblatt. next comes Cassidy line of question

on the generation each those curve through introducing you're third distribution will what for Congratulations have an and idea of customers, speaking do speed congratulations you for of ranges, be as your also And bell X the with Gen results good the what Gen X? or one the DDRX.

and of on that RCD and a little ramp between this qualification DDRX the the Gen X RCD, you happening for Thank and chips, this 'XX. based they're bit memory background, our signal Sapphire that is on the we cycles to you, on of the happen on year based processors and Rapids will are Kevin. the platform in -- quite which integrity. September give interoperability and long complex, The year general the announced of is based And the chips performance the

will address right now we the again, address, 'XX, be follow-on X,XXX that XXXX. to of And it is to generation market the generation, in time products, transfers we going the in be and will announced second the market introduced per which of will following RCD, announced which ago, October The just some that third in the on second generation introduced mega XXXX.

processes that as share important for grow engage be our with go very continue complex customers to ahead to to always the It's us through to the of so with ecosystem market these we very move. our qualification we

X in production production, to Generation start is which going will one year, start will be year X this the our So production to we CD Generation be just to X, in of next be XXXX. in announced, in and Generation

DDRX, see. And temperature hub, SPD going -- on of the devices. I to other could the a the of clear. status us that Very your maybe are an status you give the the just on chips those update controller, if

Yes.

generating qualification last at end we of are, last status to this So where the start the our announced with year. products and of towards revenue ahead the we with and expect well That's same SPD as sensor we the in hub as quarter. temperature customers, we speak, July We're those year. the

line of SIG. The comes the Hosseini from of next question Mehdi

the to back second One Des. mix follow-up one slot and DIMM a for to where X.X change, opportunity Would how half for CXL Would be with And have follow-up. from wanted first the create there IP would you especially Luc controller? DDRX? kind that I of and use want a silicon and -- for especially to the go X.X, actually to opportunity existing memory I CXL as just with the the migrate can the understand we half. as I you, the to

Mehdi. you, Thank

market. year. X.X the to last of series we the IP Gen IPs PCIe CXL, X.X CXL of when a address CXL year well of announced our year announced CXL have January X. the as that in We it comes last We introduced So as end towards

So earnest will where, design start CXL we start build going the market to for SoC have The us, vendors in end to next wins That's space with for continue the of market. product see CXL the revenue. year. we're that CXL to SoCs towards in

have IP an digits standpoint, time. the point a that to this slots the our said, it's of grow this low as year from in because business mid-single we design IP to going view has accessed in been aggregate on we So at is lot

is year. to CXL last we a going see said, being slight to It's economic environment, related start. at will the the CXL rate of start but will year was Given IP general, than it this just next grow starts, end revenue we the a slowdown product in do business IP towards business see lower this, of year. the or design that to This

with clarification Okay. the Thanks for that.

you, Mehdi. Thank

And the exited Should buffer year? had should remember of gross you a of the for think follow-up you I -- XX%. margin XX% margin, margin chip gross buffer to chip guided our at gross had this throughout XX% product dip. but XXXX, How and Des about year I year chip the is question to for buffer -- calendar we progression

Thanks for question. your

and mentioned, growth continue the as has As revenue to Luc product grow execution been exceptional our business. we

margins I think our gross XX%. our XX% cycle product XXXX, as gross line of are shipping, we margins were we And if target and in what basis look which XX%, on long the see we where was are to When products our a around with look moving for full to long-term company, can you the around margins you year our manage gross product quarter-to-quarter. depending in term.

is that So QX. reflected in

were be product in XX%, to product gross Mehdi. expect of And mix similar in the improvements margins driven mix cost the margins we in mix we for reductions manufacturing continued as and Our expect a throughout to which range to XXXX long-term we do within below year, range, product product XX% go by the With product this see QX. quarter. entirely gross was do

Ho from question Sidney comes the Deutsche And Bank. of next

Just follow the just first with one gross margin is up question. to

mix between to Is also Just these -- versus that it other to mix understand it DDRX? headwinds I going the the will in about, way. specifically want -- terms when make DDRX try when color you're any of going sure is that around product to about the be talking think helpful just are start

Thanks question. for your

correct of expect a did of sort into that's in DDRX one. we higher from And there. see mix what on revenue exactly QX that going to see You're QX. our We

sort expect the remarks I prepared the the his DDRX year, with think in come year, to that by in see the our we do softness from sort in half And in line the Luc improve targeted the margins mainly with we've I've talked the which we XX% on to of driven what of of with that, range of the see mentioned revenue second about side, the and mentioned. is recovery that there. product XX% of half first will gross

to earlier Okay. also is, -- think That's QX about DDRX Maybe helpful companion I and expect be expect you from chips. well that question, quarter the clear. about be hear and there? correctly full year? a grow But I the Even follow-up between year-over-year. you think reference And as I revenue talked then you DDRX, in how growing and an in aggregate for guys to a you should some to your the maybe range the you will product start did question year exit trough mix as

limited the beyond transition. What sort sort of our Sidney, it's said thanks is QX, product question on visibility for we've your again.

think, there. back are I from is the with inventory I of the would of But we expect the that revenue to the it way in customers of transition sort overall, product do of sort in growth from year digesting half Your there. product describe grow our the advance

exceptional execution from and overall, side our growth the think in been product there. I has

DDRX, sort But I customers expect mix. think really the of DDRX our work grow overall, not the do I is the from visibility as to break out of transitions Again, limited through some these revenue. product going for our we're think year, we to here.

the should looking one macro it's up in goods guidance, think we your operating expenses, year sold, Okay. from how If the quick rest of at I one. -- could your in given the about the QX cost current environment? a excluding Maybe if the I sneak bit of level

That's a operating and Thanks. great be challenges. in expense continue to question, the our macro We'll disciplined management Sidney. vigilant given

which total our to For million. did QX, we QX of relatively costs, $XX operating goods be to cost includes flat at guide sold

million stable, per really specifically our you XXXX, If $XX million with look to million. $XX is $XX quarter in million expenses quarterly R&D million the million around per and at $XX $XX operating to expenses our operating to quarter, SG&A relatively $XX were roughly

we key of the will strike from and management we payroll from some the the to throughout keep QX, is so year, I we fund really maintain In our it continue seasonal ensure see expectation us, to half really And right positions seen sort our think But QX expense sort leverage was relatively balance year, increases, And will our to there. the expense that our flat that operating we'll right back investments looking to there. leadership discipline expenses increase that to basis which programs. the of of our a in cost ensure operating will nice in we at be from continue prudent QX. the you've

Gary The is follow-up a Fargo. Wells next Mobley question of from

DDRX, again, chipsets. shipped have You

order days commercial the the a view DDRX, chips, for as end How sensors. specifically volumes. the your to RCD data a the those initial share you increase versus And with the buffer of but share and buffer, your particular hub markets customers broader taking the -- knowing companion DDRX you respect And in a temperature set so companion more I'm know calibrate the for SPD sorry, chips? curious well not in the that those of would have in data in I'm vis-a-vis maybe then to and with magnitude maybe RCD of the price a DDRX

for question. Gary, your Thanks,

typically, as erode change pricing the we improve the the a reset over higher of earnest will time, half would small. believe, starting volumes by when But margin especially very generation, beginning year. year, at in generation when to And why year. This for towards XX% this our kind see we DDRX should earlier the see of is price of margin of of pricing, there's much a whole that's change. in the And second in Des when we level. Regarding are do that XX% see go the still a production we meeting that typical us throughout our targets indicated from we

transition how now we the see do that's respect in the from to companion With companionships DDRX So DDRX. to these with customers. qualification are chips,

expect towards these We to RCDs, qualification year. end cycles companion be of shorter customers them much with in production the are much The chips for for complex. they this are than less it is

So it's It's what market customers. to is, share earlier. market contracts gain good but a relationships, bit share have to with our our predict easier earlier we good

get introduce when expect from for chips some for revenue But are good what we So into they the shorter much the these chips, than cycles market. companion RCD much, example. qualification them are to we

There are registered time. this at additional currently no questions [Operator Instructions]

you Thank Have has interest with good again, very forward time. a too. to look for We you, day. speaking everyone, joined Thank and who your us today you.

participation. for you concludes the Thank That call. conference your

You may now disconnect.