Rambus (RMBS) 29 Apr 242024 Q1 Earnings call transcript

Welcome to the Rambus First Quarter Fiscal Year 2024 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 proceed.

Thank you, operator, and welcome to the Rambus First Quarter 2024 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) SEC today for XXX-XXXX. be be the the X-K. press filed at has Form results on will been week release will that

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

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

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

to as investors to metrics such give insight our we provide into will licensing continue In performance. operational our addition, better operational billings

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

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

Thank everyone. you, afternoon, Des, and good

QX we traditional QX, the continued new and as performed our products our market quarter, we needs ongoing stockholder focused introduction businesses. execution completed share AI of remain In demonstrating repurchase and With to our disciplined the across stockholders results strategically of the over X all $XX with commitment brings and to return leadership years expanded In servers. opportunity of to on addressing solid million $XXX return, a well we of our our delivered we which we the past total the that, million. cash accelerated

$XX and execution, investments With strong of million quarter our drive growth. also future in revenue new continued products we product to delivered first

As the production accelerated of pace platform of sampling RCVs to progressing the through stages latest and rollouts multiple continues, have DDRX of and generation different new customers. compute we generations qualification

XX% the to approximately We expect are, product for product cycle and second the therefore, this DDRX revenue drive growth quarter. in positioned well

Additionally, confident the in softness outlook the the we traditional in beyond for current market. are longer-term the data server center

other the address increasing the we consumptions is advanced architectures see by requirements. performance While constant workloads. and generative from in industry performance the customer advancement NAI inventory, is servers earnest DDRX rapid and to amplified traditional products for of and requires to DDRX demand continue of of growing AI The evolution new to the modest memory transition moving

long-term product a leadership our such, portfolio of these strategy. element As growth expanding our meet requirements is key to

high-capacity center. the line the of servers DDRX leading-edge the new announced interface family DDRX companion product our for the expansion enable with availability offering new DDRX current our our line modules This In that just with chipset RDIMMs. server includes will memory PMICs, completing data in of first that of extreme server industry's for chip strategy, PMIC we high-bandwidth,

in positive are feedback. receiving are We and currently memory vendors major qualification with

the achieve today's the solutions the server and industry moving power order individual critical latest in increased bandwidth by DDRX, lower chips made resulting architecture a PMICs a of are environment. tolerances of motherboard the The change and to component challenging a major management subsystems. capacity to the of from memory Management and Power to memory DDRX voltages the PMIC operating modules. DRAM deliver to tighter very while power reliable the server are challenging at the required In

We under have solutions a power of track subsystem demanding our space built robust memory noise, efficiency proven family upon expertise thermal module-based to delivery delivering PMIC deliver record optimized and and to conditions.

management with to performance, and team memory invest, advance bandwidth a world-class higher to mission the and to are road strategic PMIC the and our map the product management We a market power heritage the family power build decision opportunity future our amplifies technology server critical as to need. lays we address products our foundation memory Given for identified of capacity. leadership market intercepting now unlocking chips. This made new and

solutions will expands performance and to As factors. tailored and form use AI emerging for from beyond need drive the increasing training extend PMIC client demands systems insurance, for new to cases and servers

Continued are business, in advances also IP and led HBM, PCIe momentum strong wins in CXL, Silicon center our security data AI driving by Express IP. the design and with

With IP most growth portfolio and our making the progress for industry's on are advanced we targets. are great annual for interface AI, track security and

next first by controller, performance Edge for of the GDDRX of part our leadership, needed chips introduced As which continued memory we wave inference industry's AI. the delivers

and chip value up. does going pushing so and The and bandwidth And with At interface data higher. breach. impact is memory time, the is of requirements higher also the risk data same that, ever-increasing a of the of itself volume the speeds

Silicon them data the enabling differentiated and more for adjacent offer and against solutions Our SoCs secure and markets. chip making to center designers, performance top-of-the-line faster IP advanced protection essential attacks,

generative data-intensive the demands security the computing and performance forward, other further As on accelerate workloads and across AI we will look landscape.

systems clients. of computing from in serial multi-rank continue that focus center We architectures and to to the and solutions form such as data be bandwidth memory the critical memory to and factors [ through and scaling ongoing on ] memory efficiency attached would capacity improving novel performance

will In be addition, safe hardware and ongoing including to valuable protecting quantum data. advancements essential in solutions security,

Recent system IP, through our this As new unlocking in offerings, road on market we demonstrated chips opportunity. for continue newly levels execute introduced to and quarter, expanding performance and both our of product map double our the featuring leaders announcements importance of serve system memory improvement latest for systems the than performance as more industry of memory AI the proof bandwidth in the by with capacity. points and

those As and we will our only look well are and grow, map forward, the requirements aligned market address road to strategy needs.

disciplined solid for execution a the on company our the market. was QX quarter closing, continued in a and innovation strategy. across that of We achieved our clear was In through commitments delivered the board

drive of the company us profitable data our value growth for Our us the long-term our products strong focus AI, high-performance on to consistent the positions sheet deliver stockholders. and enables center of balance to return and well to

our and employees customers, ongoing thank As always, I'd for like support. partners their to

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

the to of Slide results our Luc. quarter for begin first you, with like I'd X. financial a summary Thank on

solid initiatives. as execution We in disciplined our a and company's on quarter delivered results the strategic the focus result of ongoing

to expanded are which the products, new pleased have market product investments management new launched power to our We demonstrate opportunity. of translation

return. Through cash to record $XX have our total to million which program in strong $XXX retired we stockholders cash driven shows returned by XXX,XXX repurchase sheet, a of generation, years, Continuing shares. robust accelerated executed we commitment million back returning QX, of in cash a that balance share capital consistent our our last over a to our approximately X strong track stockholders the

royalty as licensing me while income expectations. Slide to our first billings was Revenue the million, was on between revenue customers. revenue $XX.X was which our was X. you our bill we through million. relates always in Let the $XXX.X quarter difference walk timing non-GAAP as recognize don't mainly revenue Royalty for $XX.X The same and we statement billings million, quarter licensing above

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

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

goods our be expense Operating XXX. were $XX.X operating continue our with disciplined quarter million, And expenses the as line a $XX.X we to count sold were Total the of cost quarter management. head ended of including in expectations with total of for we million in costs,

$XXX,XXX $X.X rate includes XX% interest income, first assumed tax of non-GAAP GAAP $XX.X was an for XXX flat interest income. net million. which quarter pretax Using non-GAAP the and was other for income ASC of quarter income million, the for

the the to quarter. million. turn and $XX marketable completed QX, due me Slide Cash from was X. accelerated that repurchase the million for the quarter quarter million. the sheet program mainly let details down ended in We share to cash cash, balance $XXX.X This is Now $XX.X we operations from on securities equivalents with totaling

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

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

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

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

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

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

and quarter ASC between Under $XXX in to the expect be $XXX second revenue million we XXX, million.

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

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

million. to We be expect CapEx $XX QX approximately

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

For non-GAAP we and interest of $X interest million other income. expense, and expect income

pro with QX. to be in to $XX an the expect be expected taxes of forma rate tax non-GAAP $XX We expense XX%, and million million approximately between

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

continued pleased finish Let conditions term. navigate in I X. summary a we execution on the the me as short with Slide team's market dynamic am with

see and IP. We in all by across products are both leading-edge our fueled chips to continued our pleased businesses, of momentum silicon

growth strong Our continues model to cash and disciplined innovation, generation. diversified drive profitable and portfolio

to expansion sheet AI, in value solid market opportunities while balance and Our investments data consistently delivering into stockholders. the enables our center

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

Wells question [Operator Mobley Gary Fargo. Instructions] And line the from first the of with is

And increase clock those maybe expected between the can your with distinction Is the an sequentially. sales? revenue then some of more ramp to latest you for about and turning parse the specific positive market then can register driver you DDRX of on companion X% With timing DDRX view out maybe the to product chip that related sales to share companionships? indication us and

for your question. Gary, Thanks,

slight We results growth said, decline you of the in into the So yes, a fourth year. a we for good execution in had are which half We expect, inventories, pleased QX. QX, first for see sign. as is DDRX of we the a with solid this quarter and row, still

predominant we year first into a into the inventory continue of second to DDRX see is going digestion. the in DDRX we expect sales modest that following recovery Our be the half. But the what half

expect see our newly more server to standard coming in also introduced PMIC. demand already And quarters, we recovery we contribution companionships from sampled The on refresh prior board. We but two start to also that in cycle a companionships. had with customers with will a a our now

see we in growth these factors. based do the on second X half So main

a business. Had IP follow-up about Okay. silicon your

Is in that be to controller business? a in it year security high-speed sort 'XX seems business better Refresh is by performing business? mentioned the And memory. that expectations? it for you're driven fiscal you more that on that your by You maybe Is driven Or annual how and SerDes side the the in than sales of of of my if your IP? memory prepared sense give track remarks million can us $XXX targets.

here. We're silicon Des very IP. our in it's Gary, performance with pleased

And the to This XX% plus our business our and If midpoint what we've half revenue, adjusted across actuals XX%, really line seeing IP strong is across our guidance also the which CXL portfolio. and nice led growth the you talked which $XXX QX of excludes double We're last interface take Root security will in side, is seen take on the PCIe. performance we're PHY million. and with Trust all in up be year, really solutions. our in components if of was about by you long-term our number our really digits targeted HBM, silicon by growing year, of for And that first the divestiture. revenue we've rate. What of at really MACsec the we seeing growth also driven the

Des, Yes. I is What this, our to offering focus. would silicon we've worked really add IP on

of type our really to So HBMXe, in of of HBM announced last applications. AI several HBMXe, provide, if IP HBMX, which year. you the QX targeted We look had in type we at generations of they HBMX, the we are well market,

have X.X. We mentioned, last more the And data into more importance quarter moving these security of from important. security as announced all fragmented We X.X. around PCIe X.X CXL the to architectures, of becomes PCIe Des on with PCIe IP, these and

on AI last growth focused So we doubling in We're particular. portfolio. and with to that that we're that year, starting the refocused portfolio, portfolio for down that our very explains see IP

The SIG. of Hosseini next Mehdi with question is from line the

from end. follow-ups my Two

a Just double have silicon follow kind of we QX. incremental clicking half? that the so into have a you been on second I Q-over-Q It's expect the flattish growth IP. additional up. would on into Should And revenues a

a good That's Des. its question. Mehdi,

We're of half saw XXXX. and Gary, sort to ago, very of just a if XX% that mentioned, I As compare minute take -- performing against performing are first we growth you well. a XXXX the we

nice gave we half controller that, of do we're really think to that some as really side on the expanded the the continue we're the our nice side. the growth. I that security And given expect year grow on drivers back as talked seeing sort well about, of some on the color offering traction Luc Luc of into will seeing

see So the growth our we expect sequential on as throughout move business IP silicon to do we year.

Okay.

the it was revenue, overall it wasn't comment to of second revenue, ] more there product right? an So [ a first just half -- half

near, The revenue, Mehdi relating comment to XX% IP was growth. silicon from the

double-digit also growth QX on remarks product are prepared think revenue we Luc almost well. product you take mentioned the midpoint seeing I side, as his on that the if guidance side the in

performing we're QX very So there. well from in

the for year? product with the of the margins in mix gross Sure. should also expect Gross And revenues. higher to meaningful show half DDRX I improvement finally of margin second

That's by margins think anticipated QX, gross were In was the Yes. approximately I way of XX%. would That our it, us. Mehdi.

continue mix higher to some products. As healthy in coming And we concentration margins a And a out. year, will will new our margin ASP our in our reductions throughout to we I long-term DDRX of what overall, we expect the gross continue would disciplined the always, to move XX% we'll see are management. on of as be to is target maintain gross that to drive margins. But be product line of gross the XX% the year, cost with product for products on

Rosenblatt. the of from Kevin The next question Cassidy line is with

solid the on Congratulations results.

there's X, year, refresh the expecting give -- of product you the Just an and coming -- second you're as of and of we're on RCDs into idea us are can half the as mentioned, that X? Gen DDRX you've X a mix to ship that

a Thanks, Kevin. That's question. difficult

generations We and of are up. with have production There actually customers. different qualification three stages of DDRX different layering

of of is shipping So a Gen do is more earnest. the we can of for inventory. But say preparation qualification first see it backlog And small the as different Gen managing stages the depending small production. we challenging we DDRX first life said remains in customers, in X X. for the the depending -- growing Gen the for terms production. What quarter. makes little well in and we're and is, the have are and we DDRX DDRX and modules earlier, -- ramping, X parts quarter on remains on we

generations We of expect this be DDRX in DDRX DDRX. business The to our a be in second will we across some recovery the half. of slight long majority starting those having continue expect tail. But to

Okay. Great.

market of across Kevin what add we our DDRX. generations, a on for pleased we're said, qualification -- generation on maybe and DDRX, really strong to have Luc position just to all on regardless shifts with footprint

lead the my there's Yes. is what next landscape any I competitive was issues. time to if That question. goes right wondering

the lead time lead no So are there issues, time on issues.

shape. generation in mentioned, as are move Des of good terms qualification, we our footprint And as standpoint, generation, supply a from in to to from think we I continues improve.

mix So of is, with X generations the confident the that that feel these depending this ramp DDRX for mix on in we year, whatever market.

DDRX. across had footprint Our in of we than what DDRX is the generations larger

for us. positive market transition that So is

of The next Nam question Research. the with is from line Kim Arete

question and and [ in -- why companies us one PMIC may on growth [indiscernible]. on -- your you the [indiscernible] what's some PMIC one question for market Can RDIMM? share and you common other reasons ] be My provide is

PMIC question to share. If why and your you, expect we're I we Thank incumbents well, grow introducing Nam. understood against was question how the your

what that PMIC competitiveness on -- incumbent The than your better Yes. [indiscernible]? is your does -- PMIC, PMIC

Thank you, Nam.

So yes, bit let announcement a me little give regarding you we on of just the made color PMIC.

As the a how to that deliver. most very and component It's DIMMs of power management the believe And deliver become R servers the that must ramp has you management DIMMs. manner down workloads traditional use to is AI chip electronic up critical of reliable one know, these power. much a continue stability power tolerances we and in domains But the to and you have the R increase, you for dense. service that -- you you Accuracy devices different for DIMMs, these sits management on behavior DIMM. performance system power. also ramp dense because that of distributes you can on power chip the find and The as of the power the power power systems or the good on efficiency, a demonstrate power very, when

become we competency this it's Rambus, is to in thought that a complex very going a long So at chip. And core run. the

for management of a now. and power the investments still We're area. that in team growing invested have We couple years in the

level, talked capitalizing the products saw And our think is by JEDEC. competitors important. were which into where announcement, PMIC, DIMM is better we do. But specified And extreme most understanding and really, you are is the targeted as we could about I that goes density. that we the deep extreme the could than our by really most show challenging terms on the targeting to which we speed of that the this name that the actually ones difficult system have We DIMMs PMIC at of a is the because PMIC in in

We have now. sampled customers in quantities some large

our qualification down that low long that We make high that is And or used difficult the but process. And for current to other this customers PMIC, on the to current positive. for us PMIC also other going in make be will down applications very, the extreme feedback performance in is are run, ability trickle we the most PMIC to and road. PMIC in these PMIC tells is from have them very systems the what

if extreme That's And very to a is confidence about look one always first It's bandwidth at and end about the with So is is the about saying, PMIC. we in this and at DIMMs. this. I density, high PMIC good got and it's power difficult integrity signal say the results integrity It's gives make. you signal and about customers, us power is what would high integrity by Rambus, targeting the really DIMMs integrity that. PMIC. we've RCD

So one couple trickle this subsystems. applications over we're family. to product worked And But at product time, it's memory a of time, going different very we're the in for excited. on point one this We've in down years. introducing

sounds high what's [indiscernible] AI your the term? high And in in share market like and It the acquired longer that server, bandwidth right? which PMIC you is capacity, target very

typically the and if number an a that to of true you the maximize is they density. it CPU try channel. also So But maximize server, DIMMs per AI take they

good extreme a AI or servers a the PMIC. good the the PMIC for are -- definitely, extreme target So is

that. with you're absolutely So right

the always when huge going production, family. PMIC market XX% share, get to qualified XX% in that half eventually in to we're of share [ to target production our on that. But ] our of our long run to the to And ramp second to get volume through fully going are year. said way year. going in next see we've target we initial terms share. we is some this In volumes We're We're to ship

since raise will One queue. Okay. quite have just quite usually I chip RCD some significantly? quarter I'm pricing is just price? relative last more be when then year. price you curious there forward, been DRAM stable RDIMM room do RDIMM question, in December did price dramatically if the going I can, to on RCD prices up think price increasing are back Or to the

the R prices and prices RCD correlated. are Now R DIMM The typically, defined demand prices with supply. the the supply grow not DIMM by typically situation. the competitive environment RCD and The DRAM on RCD prices

pricing prices X from there's add, is the would production, generation. with price and So thing new from the the we an technologies into DDRX Gen one generation Gen Gen I we there's see X, erosion these as of to RCD only no between But standard The uptick move on prices. has that ramp correlation technology. to the RCD, the X do those R to when though, DDRX to DIMM introduction generation that on DDRX each of in

the is of question [Operator Mehdi And Instructions] SIG. from Hosseini our next line with

just couple the actually This PMIC in would And of do when revenue expect the DIMM, -- Yes, line? top incremental impacting you a the revenue? to be for follow-ups. product start also PMIC

Des. it's Mehdi,

we're the to into our a Luc as year, will into mentioned, in grow continue XXXX, then. to and to announce very pleased do Luc expect contribution that of the volumes mentioned PMIC today. half the As revenue solutions second production have We

revenue, correct, You product this revenue. under PMIC show are for the right categorization that's the will up

gross clarification XX% in QX. the And a on Okay. then product margin, just

DDRX. has were that cost product a the you DDRX. your assumption margin? that a associated saying partners? heard I gross there that what is Or think higher most it DDRX QX for your adversely I'm of impacting than startup with foundry products under the gross is Is margin I like And

Mehdi, it's a good question.

profile. gross we the these relates manage margin to have gross healthy our it we a long margins, do As And term. for product to continue

that driven also low anticipated in were in margin by QX. digits. was gross on product in our XX% incurred approximately ASP gross which was from in the decline If you the margin which -- side. In XX%, year, margins we the the And last was were down XX% QX, erosion, maybe. on The was take manufacturing have side XXXX, year for full gross it onetime costs XX% single did QX, sequential some

to product margins. will we our continue product that with disciplined in margins overall, we target XX% But a be will expect to year, healthy reductions in to product been XX%. our continue of be long-term line and ASP management, cost will and have our gross the would to As I gross maintain our drive company, for

maybe And if is What the And some to the if I for any just there and actually a in application even for inferencing. on DDRX? Sure. low just also will squeeze this Or DIMM. for Are be -- anticipating happens DDRX be follow-up. ] there may, it? actually demand you where for in-server kind be scenario would more a demand -- to focusing [ steady there is life of especially one for of DDRX or no were there, there's

for to expect some long-term launched. in Gen production X Gen We X demand has We have today. DDRX. see been

industry X, in Gen X December the for continue well. the is to were year. develop X we the Gen customer was orders first X solutions data customer have and orders And DDRX anticipating in introduced last to have We to center. on we of introduce Gen as based one Gen

we that demand as necessarily be DDRX, The center of to expect see data is sales long for earlier, respect going we DDRX of DDRX. to be forward -- not going high. going So to tail the we a is said vast to majority continue. With

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

with a again you. continued your who Thank Have we and and everyone, to you interest joined you, great day. speaking forward soon. Thank look with Thank us time, have you call for the today.

Thank you. today's This concludes now conference.