Rambus (RMBS) 30 Oct 232023 Q3 Earnings call transcript

Welcome to the Rambus Third Quarter Fiscal Year 2023 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 Third Quarter 2023 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 The we with the for SEC today be the X-K. press filed has Form results on been release will that will call week available for this at of the XXX-XXXX. (XXX) replay be A next

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

including Our prospects, amongst expectations SEC, our ASC other XXX this discussed discussions and be These in today the file our items. to that will contain subject demand shortages documents more growth, described statements supply and projected during forward-looking uncertainties solutions, and to financial challenges fully including statements, reported and we on X-Ks, results, the revenue XX-Qs risks manage effects company's XX-Ks. market ability may our effectively the financial call are of and for are the regarding market chain other with

update These to statements. both forward-looking A Releases. slide Investor differ our website these has at financials non-GAAP page to on from results, of In we non-GAAP to financial we and presentation statements Relations call. rambus.com our directly in GAAP our reconciliation are in in obligation no an been included measures the under on both materially comparable and our most and Financial effort this the GAAP release press and clarity the press provide under release, on using greater actual financials, may these are in presentations our

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

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

as discuss we The call an will quarter. now results, order of Luc and our I overview overview will over will end with an financial the turn the of follows: with Q&A. business. of to then today to start call will the Luc Luc? I'll provide our be

navigate the and to we the in Thank stockholders, afternoon, above company as everyone. enabling in to strong industry recently delivered macro challenging million The with guidance accelerated value DDRX a environment. our generated most to of operations, return midpoint you, good We execute program. of another continue completion quarter revenue transition our of a $XXX the million and the cash share repurchase with of complexities $XX and successfully consistent on from Des, strategy earnings

GPUs rams This very most the large servers the multi-core for long-term landscape. models server provisioned computing language and We advanced alongside focus the capacity Currently, dedicated performance the of trend CPUs boosting with AI AI with IP digital drive the HBM to across workloads of demand is development memory for data in positive with also Rambus. our other a expand memory data-intensive increasing closed and for sale maximize differentiated market. the continue . Generative on training is DDRX our main center bandwidth business of to opportunities requirements memory. IP strengthening the and our that chips

growing requirements data demand enabled high-performance addition, computing DDRX meet In purpose AI the the general to pipeline. with of seeing infrastructure are servers increasing

With increases our family opportunity the interface for memory expanding chips. of

business. opportunities continued we as innovation forward as and in PCIe, The workload systems accelerators. critical. creates controller makes trend increasingly the of CXL, adoption to broadening ongoing builds look high-performance our HBM AI, the specialization well This out GVR optimized IP IP silicon our server also industry for As growth the computing and infrastructure of CPUs for

to In AI across advanced as application-specific by addition, systems. the attack silicon is and increased driven move data other distributed vulnerabilities workloads, to creates

increases advanced a we for trend an and the security IP long-term that, AI growth very for industry. the With catalyst where area strong need This positive a for is company. the demand driver lead

As portfolio I last quarter, we in our offerings. initiatives broaden mentioned are to investing of

top-end HBMX is week, IP X.X memory operations second, higher last Just transfers than we announced is giga per at supporting current controller now data XX% rates. which our

also collaboration ongoing and on the good years with close server progress evolution to client come. working make the high-performance systems in ecosystem for and of offering our We support to are expanding to continue chip

our to now Turning quarterly results.

invest We continue over product delivered In $XX areas of quarterly period By the midpoint executing in strong focus. well revenue environment the X% year. up above results memory our to chips with challenging with at in a of same and QX, year-to-date guidance lead interface results last million.

to continues we have In again this continue shipments in we QX, DDRX quarters, shipments As to industry pleased very the be transition of solutions, the which highlighted were quarter. are to volume unit dynamic. DDRX predominant past

with the We correction. ongoing customers to inventory manage continue through work DDRX to

As DDRX early on headwinds we and look We with partners to and remain in focus to in normalizing as ecosystem, of have outlook of work year, broader said execution we inventories on customers with line previously, the part forward through remainder the the for but positive actively the the continue transition. we through the expect DDRX XXXX.

of offer customers solutions pace the a rollout are of of partners to chips, our qualification range DDRX generations of shipping and multiple in With volume, accelerated memory interface platform with poised our we sampling.

demonstrating and memory, the map including developments ecosystem computing support which platforms, future the close to of In road for memory, continues addition, attached CXL publicly look we to forward novel our clocking collaboration solutions on this year. power management advanced later with

a closing, solid company strong was In the this quarter with results. for

conditions us and the execution profitable for position near investments in While we dynamic long-term our growth. term, navigate market strategic well focused

financial that, I'll As turn the results. with customers, quarterly And thank for our always, to I'd Des like to support. and their call Des? employees to over discuss the partners ongoing

like a we and Luc. strategic of accelerated with summary a execution begin for are Thank again, to initiatives with Slide very both results our results to shares. pleased We above repurchase expectations. third quarter, continued I'd the we on a quarter strong earnings on with executed share we the million you, million company's X. approximately our delivered Once financial $XXX growth. revenue and profitable long-term strong program, drive QX, our X.XX In retired financial which delivered

cash us generation consistently to Our allows continued return strong cash shareholders. to

areas completed IP. of we QX, . in to products and business, will discussed IP our growth Luc enable redeploy divestiture our PHY higher which the investments of digital into us As

X. quarter was our $XXX.X product the statement third walk the million, me expectations, quarter. Revenue for driven by Let you above income our Slide higher through non-GAAP in on revenue

divested timing approximately quarter while licensing billings and as revenue do to our always royalty in included September. Third relates was same revenue $XX.X business million, not bill that early customers. IP in by billings mainly revenue we Royalty difference licensing we revenue was $XX.X as revenue $X quarter recognize million. between million the The we in

$XX.X of revenue Contract other chips. $XX.X was million, silicon million, consisting interface of consisting memory predominantly primarily Product and IP. was revenue

to $X.X of as we a versus million in a disciplined IP Operating million sold including a other portion is $XX.X reported in our expense royalty the remaining licensing the QX well goods costs, with As revenue FYP were as from and cost contract operating $XX.X revenue result silicon of reflected down continue in Total portion down is expectations management. of the QX, quarter divestiture. total in billings. our and the of of a for million. be which and in we with reminder, line headcount quarter only ended revenue as expenses our And XXX, is were

the fixed related the fee GAAP interest other ASC we licensing $X.X component of quarter payment. and included third of million. arrangements, recognized have income but for was $XXX,XXX interest financing XXX yet for received revenue not income to which, This

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

from equivalents the $XXX.X marketable balance up This cash $XX.X Now program, X. through million, we on $XXX in turn the net ended totaling securities let quarter. details me from We $XXX.X with repurchase of from million. combination which generation to continued proceeds of and divestiture strong quarter share IP operations offset accelerated the million in the sheet cash of completed by a the cash QX partly Slide million is the

no At the value $XX.X present end assets worth future contract unveiled of to has QX, licensing we of related the reflects which had obligations. performance company million, the net receivable agreements for accounts which

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

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

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

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

the macro We our and to actual to from could materially differ environment what about continue actively monitor review. results I'm

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

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

PHY be for IP business on million expect $X ASC reminder, revenue million business, revenue, a the QX, quarter basis, with been between XXX, and million. offset As $XXX in our $XXX a in which at has to we divested quarter breakeven cost. approximately Under $X fourth in we the full million

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

that ASC Samsung basis. as year, The contract a on last reflects variable be revenue XXX recognized in was quarterly royalty licensing patent under extension the signed which a will increase go-forward

the pleased to business, progression continued our are profitable long-term are positioned on deliver interface memory our we well and in and execution We growth. market with chip

the earlier, transition Luc to continues to mentioned As be DDRX dynamic.

be of inventory through we digestion, the pleased are our impacted execution DDRX the remainder year. continue we to which will DDRX on by While shipments, with continue the

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

expect ASC million between to QX to and non-GAAP operating $XX $XX XXX, a We million. of Under is the $X expected CapEx profit be million. approximately for be fourth quarter results

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

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

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

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

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

am I challenging as and with X. Let Slide strategic initiatives. ongoing and execution macroeconomic against our unpredictable strong team's pleased make in results progress a to me continue this finish with summary on the our environment we

address by Our opportunities portfolio data growing the is AI. in center positioned fueled to well

continue profitably consistent generation We grow to the shareholders. to with balance and a sheet, cash robust capital which return has enabled business strong

up to their I Q&A, Before would and call teamwork I to open like execution. employees continued our for the thank

I'll that, call have we turn begin the With Q&A. our our Could to operator to back first question?

Gary with comes from Fargo. first Mobley Our Wells question

[Operator Instructions]

number start want be DDRX. by contrast third layer chipset out a related Can would DDRX? revenue RX you in top And DIMM undercurrents sequentially product quarter? of you in DDRX to the DDRX the gaining normalized the if for that between the for And what how low verify may an trended revenue eventually sales of on have and growth . that the in think grew appreciation shipment may quarterly quarter? I against your DDRX the

Gary, I'll take the answer.

the a was remarks, which a We've for And our with through pleased very down digits. his in think basis I product Luc thanks revenue up question. -- year-to-date X% XXXX. double as prepared execution is been in in Des mentioned on market

navigated in we've successfully solid posting a will our gains environment versus So year-over-year results, competitors. result share dynamic by which

really QX, at a minimal by in Looking DDRX comparing And from growth which shipped row, I QX the the down in QX, there. were in the out offset our product for shipments was second we DDRX. products versus quarter shipments were predominantly DDRX the DDRX mix modest in shipments quarter.

mix a to customers Going at posture into with expect year-end. product QX, we a quarter take management in in the continued DDRX DDRX in as do minimal to growth towards conservative continue similar inventory shipments see

pleased overall, to our with execution environment, for continuation of of shipments, in really which and sort this So is us. been we've the pleased positive in DDRX we're very challenging see growth

different quarter strong was to of speak the of to despite you performance product maybe the you the view, Okay. DDRX. negative the could prior I what, relative to why us pieces A And the just product or follow-up if a relative had there that long-term in mix. sales that quarter? the give XX%, higher DDRX? XX% noticed Maybe and second could gross DDRX sense moving the well variance off margin to just the you if of between mix

question. great Gary, Yes,

We gross our are communicated as are our manage margins in margins pleased product which to QX, very product at around XX%, gross we gross look gross And XX%. the a if margins XX% to of how with in line continue year-to-date company. at midpoint through products our you of again the is product the long-term margins

are company, in in to we're will were mainly shipping at were Again, gross offset product erosion the look in ASP line with pleased QX, long-term gross continue to on our how driven there. flat in QX. XX%. management, to you product at margin specifically any drive gross product relatively XX% to of been I line with expectations. the at as the would midpoint DDRX going gross very of the we've to a into as continue QX, erosion XX% products production. in product in XX% our as and roughly margins from XX%, performance, which be with able mix erosion mentioned margins be to ASP ASP If will high The expect anticipated we which QX, And earlier, similar of be disciplined And execute by range our in and now down the margin from cost savings volume we'll was ASP our the

Our SIG. Hosseini with Mehdi next question is from

have expecting Yes. with Can Can we're us where give is high-volume a I you update? we an update last mid-XX, with companionship. please by provide us an follow-up. that and qualification And are time manufacturing you I believe a correct?

in pleased our Yes, making rollout. the with companionship Thanks, Mehdi. we're investments we're

say, in actually have half these the second market. are And small more the to We you currently sensor our to from SPD XXXX. hub contribution as towards volumes, shipping and temperature believe we of products

client sampled should think these around customers good. announcement is products. to initial quarter from will also revenue data the the the a on customers And feedback these center, also are beyond. of not in starting power finally, power management contribute to half with which our products initial really, expect And XXXX working We the our to in I and clock or And will companionships chips space. into with our some really our have XXXX. next and although we're customers they management the second revenue space set and of contribute our in you again, XXXX

have ship these started we the XXXX. temperature sensor rollout And we're substantially of working half and of SPD We're pleased of all progress. in more with products. products. of contributing . a and to the on ample hubs rollout the should substantially second We start the So client with

And starts better buffer scaling understand what OpEx of $XX Great. Can the -- business you to the or manage midpoint. of chip for how And revenue OpEx should need about would OpEx revenue? $XX Or of implies the increase? grow want you guide million with the scale DDRX I is the your taking RC X million, think start QX shipping. the we to as $XX would follow-up million once OpEx to . that. once to

question. Thanks for your

macroeconomic QX, our a managing and done were come down we've very a In are . the right expenses. programs, is we opportunities were we've nice shows operating $XX $XX of I our OpEx managing some will about the we and Luc our about client for as the our beyond. think that million product spend company, IP quarter. around down when a earlier. revenue XXXX which outlook. million will in the say highlighted I What to you drive that focus given QX, the back $XX expenses expenses would R&D roughly to In of on in softer discipline from divested businesses million $XX talked job that PHY million talked which into some And reinvesting into QX,

short-term some from R&D as balance very there. spend our sort XXXX, prudent I to that inflationary see has disciplined leverage say increases long-term be within in And here. of the Looking nice our type the which going we've OpEx also opportunities sort would forward. revenue. expenses you to is XX% will to really very grow around and I continue invest In been an SG&A, continue we'll we would struck XX% overall, historically the to to I And and range expect with right be to from perspective, balancing what think of being the need at of of managed of, what our well, has

that's see OpEx the how Mehdi. we So playing out,

with is Our question Cassidy Kevin Rosenblatt next from Securities.

the on Congratulations quarter. strong

had next opportunity, Just on Is as sampling to reset DDRX, about about the generation. the you a it next Gen is there forth? does or the as ASP qualifying mentioned generation, X, go and think we ASP you and I you talk an with -- X are mentioned Gen there had so

Kevin, midpoint What to generation with reset we which when of of XX%, They XX% quicker. year, generations under we gross of is that thanks an our look ASP our question. sort going to of XX-month now XX to that to from your gross track sort XX%. the ahead will months we have producing see I as to around line disciplined been of ASP mentioned reset we're the to pricing sort on just compared to product we've DDRX DDRX in of good will of around in a be very margins next . What say product are range earlier, healthy cadence to and seem generation And approach each that would the is see with record margins. for offer we is long-term the a cadence XX% this of our that gross margin there. be I the product really coming of opportunity

Okay. is Great. recognize it part And that IP, you in -- are Or for of Or or quarter? the just revenue quarter on you recognizing the that? your . HBMX did revenue device December guidance? September

an made the tranfers the announcement just announced HBMX second. top of that we've per speeds is end in we've IP [at X.X-giga

quarter. to to this a So this It's contribute is revenue that a next quarter will future. not come has revenue the or in product that product generated

-- I customer see. sure was a I it Okay. developed. if already wasn't you had that if beta had

with Research. Our from next Kim Nam Arete is question

questions. to X you on think happening X expected. have versus PMIC PMIC latest also the crossover on demand Samsung, I Can I is some then question, such faster point with One, view And mentioned can also than Can qualification us seems recently. what's really suppliers market timing? your selling second give shift DDRX X. existing for picking up you Gen much DDRX others? the your the how Gen share DDRX compare on here you big as you DDRX MPS, color And TI,

you Thank questions. your for

the QX So to burn in far some slow a is happen as first are we we first happen crossover the is going half gaining We in our concerned, our has to it's That's of cost still the momentum. that DDRX burn. shipments market Gen Obviously, compared of point, still our DDRX for the inventory results, but half DDRX X but into the in point of a of XXXX. the the and see of at the as crossover XXXX market DDRX you in still QX servers. to our do slow market passed view noticed in see side, customer as

some to buy shipping them. as are volumes our customers they We

process are we in as the qualification previous through And will through People go the systems, X in believe PMIC, the generations. hiccups half in to of prebuild is market. second standard process. This of With for -- a general DDRX. and other Gen of first going those X. going your go That's to we're the Gen in that systems the the still to will for cadence We same start XXXX. been explained question regarding ramp generation. settle has respect with to of ecosystem this some has challenge the earnest PMIC

We a and ago. have months have PMIC some solution. team built on for a worked

in the sampled from feedback have at the our time. to point We very customers. positive customers solutions And this our is

-- the So the about I solution. and is feedback initial robustness think of quality the

through into we the working expect solution said Now standard of we the market of customers second remarks, the course, go I the but to And product, speak. hit that the as in XXXX with process to earlier actively towards we validating prepared that have half market. of with we're as

Our Bank. with next Sidney Deutsche from question is Ho

here, Great. Any points a that you the quarter what It to from sounds much DDRX really not follow-up a hasn't And share tangible look for but can in between you that the we entire DDRX of DDRX out? ago. the revenue split not think us? if for XXXX, and with that about digestion confidence product is can inventory the timing like timing should at data you looking guidance What is changed moving gives year?

for quarter, to down With your September row. question. the in our in regards thanks DDRX the a second quarter Sidney, did customers is that at which inventory come

to are digestion the decline the sort is the our discussions reordering a complete on And the customers all now the saw which situation in place really a DDRX expect we're fluid quarter and just customers, timing QX we inventory QX customers really encouraged see be quarter. and year-end. with from by versus pattern, to September across expect with It from to take we year. an substantially inventory really do of the June of We working there. next that

tail is But we our regards long now, continue but there. a have demand from with DDRX to do just will that this expect of limited visibility to

of sort timing DDRX, next and of I regards product DDRX of the think the year. question for part of sort to with growth revenue second your

for a XXXX really at and relatively execution company, at next given is us to pleased really prudent, the year. of assuming As which product million, $XXX our us we revenue guide the XXXX foundation just especially for our been X midpoint only We've uncertainty now. macro guidance quarter provides sort which grow with time, a a of flat very QX, in our

put important in to is we year. it And declined And grow share performance versus this in digits the double market context to because this XXXX the market has competitors. do expect

it And the DDRX As out line growth greater the anticipate research see be about We we're offerings DDRX. will that's industry recovery expect next just do second companion growth, do excited XXXX, all continuation is to with our there product anticipate which relates we in the now. competitive in mentioned, to the the platforms. as growth of of in Luc of year. contribution from the And chips we half

So market. overall, share in well in faster our expect very year next to see products are to positioned market the than XXXX. grow We gains do and continued

very of Okay. that different That's positioned the in kind sounds product remarks, ramp a helpful. Then ways is that can you benefit touched help this both memory business from my prepared but you are is summarize follow-up you from Can licensing fixed. guys AI. to it us you question like the guys upon understand standpoint? licensing from the benefit I well and

sure to just make want I the opportunity. to understand So

business of of Yes, is so if you AI. X not pillars by at course, look business affected the our and licensing patent our

a some On buffer do memory purpose AI typically with the boxes. side, purpose servers those AI the general high DDRX. servers servers and let's And the product chips. actually content typically, start in general have

I of the QX between and explains think, of bit was QX in the this the the accelerate depressed profile year. of year, DDRX partially AI, of although total, DDRX impact So QX, to seeing market impact a And been AI this, has this mix demand our the for DDRX positive modules. especially

with With that see our of AI respect nodes, specialized compute What to the business. we emergence architectures. see disaggregated we is

of to these between all chips So have themselves. communicate

architectures. as So CXL course, HBM, for data in stay curve or with into rest HBM at as to respect there. chips that's all data at go next-generation ahead high build data we heterogeneous the specialized these why our and of new to GDDR on PCIe center, we very remarks, actually IP that our in vulnerability important customers become and the now silicon mentioned these announced of very very, the they And very, of the prepared finally, with the attacks want We chips speed.

more between to security is our motion relevant becoming portfolio is becoming therefore, in ships And market. important. the more IP

to all business for semiconductor as brought our by we companies in sold that see continue our we because the do high we that would opportunity actually market. we invest So to IP the with said portfolio build Cadence, chips

next from question Our with SIG. is Mehdi Rossini

Yes.

to a want quick earnings it I be prior comes revenue say your statement. just conference clarification. up go your So fair is that Look, by every number call. And necessarily back this just a with mostly of to is Would and the to that of temp words, product DDRX. not of driven, units other In HBIM of statement? bits driven number bits. the business your not DDRX be fair Would

for number density capacity [indiscernible]. shape are There the correct. wish. several the is being of rightfully of really you the But of That's buffer memory factors going say, if into our the equation One itself. the use commerce, you as

the And come why of that through end go transition, their inflection could is DIMs this available configure what on little of customers a demand. a then down really configuration number will system come with set customer is this to CPUs channels for that end a be each fair? -- up number in for and it the bit of meet are and we going point coming of context, DIM with different the number new the out there per channel. to a going per as going And CPU number time based And to CPU, of of a to of service severe is Yes. CPU to how take when

volume But the those deployments of the trend number depend the is teams teams. The of really on channels depends buffer correct. said, the That's being on of per and this of capacity expansion. Therefore, channel, of number the and number sheet it on for depends end all customers.

per can in memory the and populate they market they the bandwidth things many trying we feel there's are put because as can capacity channel people So supporting as between as power servers trend this the have still that that. from and many and memory channels compute the gap to to as that

The per being volume. the way it's So depends the teams of on number customers. how in the of towards definitely when being and are populated many used terms higher channel trend is channels deployed specific

concludes would the over now There question-and-answer to That to conference further are no turn like session. questions. the I company. the

Thank you. you your your talk to you I interest, Bye-bye. and would like we'll later. to and time for all thank

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

may You your disconnect now lines.