Rambus (RMBS) 29 Jul 242024 Q2 Earnings call transcript

Welcome to the Rambus Second 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 begin your conference.

Thank you, operator, and welcome to the Rambus Second Quarter 2024 Results Conference Call. I am Desmond Lynch, Chief Financial Officer at Rambus. with with for is will the today been call CEO. The Seraphin, be the Form has release on press results filed on me Luc today our discussing X-K. And SEC the that we A the week replay at for next of will available call this be XXX-XXX-XXXX.

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

clarity and our Investor Releases. presentation comparable has the been measures under slide Financial GAAP including Our prospects, that discussions statements our our today amongst results risks using our the we press are XX-Ks. our and included the rambus.com factors, obligation XX-Qs greater in no will update non-GAAP financials, expectations statements. In directly may press discussed to demand fully are reconciliation most ASC on including this growth, in and actual during effects projected documents contain release an non-GAAP solutions provide These and financial our statements these our to we revenue subject under forward-looking differ XXX and release, results, SEC, these this the items. the page, of X-Ks, in more other the reported are be financial materially call market are and from to both may described statements, and other forward-looking financials effort website financial our GAAP These to presentations and for and regarding market file we with Relations in both of in on on uncertainties at A on call.

start Q&A. I'll follows; then our continue today investors The the Luc I give provide with the as an our operational our will to In business. order of discuss call with billings of turn insight of will will addition, results, better call such now provide financial over performance. an end as our overview licensing be to we metrics Luc? quarter. and will into will the overview to we to operational Luc

to everyone. that benefiting well Thank from are market data driven and and introductions faster we fueled in state-of-the-art develop remain strength AI. the the and industry-leading year-over-year opportunity our suite drove overall uplift strategic data afternoon, solutions. Client the revenue further for from at and the as RCD to sequential well of continued execute drive data DDRX in revenue balance products servers as both server confident expanding double-digit Memory by growth new million AI. DDRX And product growth early from million, traditional outstanding continued of address the Driver Clock IP grew anticipate core delivered in investments XX% you, with we high our new of At RCDs, an driven by $XX of Through in and contributions our our QX, interface we of long-term needs and expectations, ongoing designing center, our safer, our chips ongoing end in strengthened product products. $XX to expectations growth expertise by product good technology sequentially leadership Rambus, generation results qualification growth, cash DDRX. line with in quarterly sheet. We operations Strong long-term for and QX, outlook Des, move in X PMICs, revenue in the in profitable extensive center products products, memory our growth. In and advancing and we in of high-end and subsystems in ongoing the PCIe chip progress product

shipments modest and performance DDRX, see the demands advanced of other transitioned of AI predominant the workloads. While supporting industry we memory DDRX has the memory to as solution, to continue

for We life the product are well ongoing cycle. DDRX positioned

We the accelerated have of of multiple different rollouts. pace server new stages and platform support generations to DDRX through of production qualification RCDs progressing

has position Our the our and great value chipset. product DDRX lays in delivered leading DDRX to customers RCDs complete for our DIMM foundation

products critical with Power Management deliver we mentioned PMICs, of Last tighter leverage I to the long-term of our are my current extreme lower modules our continue device family we first investments power ranges. As in including our a voltages tolerance balance in growth. DDRX support earlier strategic sheet part quarter, memory DDRX IC industry's remarks, PMIC. required reliable strong to server introduced is to and drive at new server to

We the PMICs customer at with the the reception performance are Rambus the vendors. DRAM positive of demonstrated major pleased and

seeing in module with strong making multiple production this across customers' throughout types we high-performance, qualifications year our applications. are progress We high-capacity qualification later with XXXX. traction for are shipments And ramping

point jumping-off for servers solutions map Our factors. growing to will systems and chips. as product and for road new and expands client opportunity performance amplifies management market use the to power future increasing for server emerging AI from tailored PMIC training drive family beyond of extend inference, establishes Also, on a PMIC a demands form our cases need

the required for the to high-performance integrity signal will memory to modules used in new our for performance. speed. as levels PC running be targeted dedicated higher into center chip notebook data space CKD clients X,XXX waterfall the rise, clock Clock desktop server PMICs, product speeds CKDs and Leveraging speeds or and and today, our next-generation is memory This at the achieve modules additional the in DDRX in market, DDRX continue Driver the the at Beyond memory high many the of per of experience to maintain client first we introduced to chips memory technology, will X,XXX CKD. supports chip RCD, to PCs. broad Client of products technologies DDRX mega-transfers second. Similar

and road company the into for to client we the milestone our While will portion is initially branch of products continue small out the CKD as space. address expand it an new of a market, exciting the map

other security that demands while IP, Silicon advanced require to customer IP across continued center, results and our in short-term accelerated of to quarter-on-quarter suppliers to fueled Turning high-speed program purpose-built business. In QX, continues impacts, from revenue or of at PCIe by the interface increased momentum cores continue timing due strength and data AI, vary long-term led our our wins our may solutions. the drive And HBM IP AI AI by chips trajectory, complex growth propel and were the Tier-X hyperscalers. to development of chip design in suite interconnect

securing the more places we these heterogeneous trend proliferate, architectures value computing continuing toward As purpose-built see moving chips and on data.

solutions, to processing chip IP and offering are our industry's our and of processors, safe including the portfolio, between expanded of solutions, including of are blocks coupled security data units. When needs leaders in our the AI AI parallel high-performance investments advanced systems, ongoing computing of working PCIe and providing and next next-generation transfers in secure X vital market the building we system designs. IP quantum accelerators we and introduction for their HPC every further X PCIe AI nearly family with workloads most advanced massive IP designed handle chip wave on the is data designs. for With with enable

interconnect, memory power, accelerate, novel and critical solutions. and Generative on strategically the computing in data demands and and driven performance on memory, clients. workloads. We power remain be AI These data-intensive continue of bandwidth systems other and by forward, capacity performance for to ongoing focused will look we improving to through security management system As will to scaling the efficiency center

solid system growth new to double-digit product of on to delivering performance innovative momentum leadership and strong that DDRX With growing consistently from continuing investments QX. products, with while expand further of in the us our of are along positioned unlock for higher strong in in quarter product to driven our RCDs, pursue to trends. And leadership generation performance levels ongoing market PMICs, and was opportunity. In to long-term forward company, value current and company, business, new of in and our strategic the look CKD investing our to are a We the by introductions as our our in chip growth products part our stockholders. the we emerging drive enables market capitalize and core well we continue cash QX introduction initiatives products, security in to the closing, continued

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

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

growth solid are driven pleased in the by sequential We financial revenue product quarter. our with strong QX results,

outstanding our to commitment Our returns. to stock, cash in generation demonstrating repurchase us enabled and profitable quarter the stockholder results

value continue to addition, us ability to cash generate strong In to consistently initiatives invest allows and flows stockholders. our deliver to in our strategic our

with and Slide licensing were $XX.X chips. was $XX of primarily and on in $XXX.X you royalty was X. do million, which mainly predominantly quarter memory consisting for provide relates IP. as customers. Product silicon revenue our recognize revenue same million, summary a in timing $XX.X Contract now revenue licensing was billings was million. revenue revenue non-GAAP me we our between the expectations. not always bill as the we to million, while our of of million, interface quarter statement income line billings difference other Royalty consisting The second was Revenue $XX.X Let

quarter Using as includes portion costs, disciplined only second flat silicon for income $X for the well our reflected the and be pretax for and million, $XX.X line royalty income. non-GAAP in income, including in continue cost was headcount were of of rate of sold non-GAAP of million an XXX income with ASC we in net with $XXX,XXX for of quarter, to other is million. billings. Total the reminder, was expense revenue total operating $XX.X management. is our a interest in contract the remaining which As we assumed quarter And interest quarter expenses IP tax a revenue a Operating ended revenue $XX our licensing as and expectations XXX. GAAP as portion million. XX% the reported of other in were goods

X. $XXX.X cash with In the QX, cash, mainly retired stock, from details and Now let the from turn quarter, million. XXX,XXX We operations, $XX.X quarter which was million. is totaling This shares. me million marketable which Slide to cash equivalents balance up repurchased of the ended approximately sheet $XX.X strong due to on we securities

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

now outlook Slide review on third me our for X. the quarter Let

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

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

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

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

expect be million between we revenue We $XX from recognize and $XX to the royalty million ASC under between will and $XX QX, hynix million $XX licensing begin year. and extension patent SK XXX royalty revenue billings to last that licensing signed we million. In

and to revenue on As QX go-forward see a difference licensing result, minimal royalty billings for between we expect basis. and a

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

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

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

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

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

with a our closing, In X. I with pleased results. finish Slide me summary QX financial on Let am

product strong growth delivered with double-digit the revenue quarter. cash generation team Our in

product continued growth long-term are we and QX, revenue the ahead about optimistic are the opportunity excited in us. about We of

delivering strong robust AI, cash our our opportunities balance and stockholders. in to expansion us sheet invest consistently enables data to value Our with market center in generation while

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

the with Our first Instructions] Securities. from question Cassidy comes Rosenblatt company Kevin [Operator

the results. good Yes, congratulations on

generations are RCDs shipping DDRX ship to Just revenue, in when or now your you expect how at of many next look the product quarter? do you you

Gen production, today. Hey, is in into ramping Gen production thank you, shipping X Kevin. We're currently X.

will And in So to qualification we of we the X X Gen generations; have half in X that have production, X the Gen for production. these ramping contribute second volumes also Gen year.

could maybe you too. And maybe, color if Okay. more a little give

As how pressure selling full Gen in the average you are X I any guess, market? production, is Is or prices? that in price what's are happening -- there

pricing overall That's expectations pricing is cycles. line environment good here. say with would in Des I sort Hi, it's Kevin, question. a playing the normal out our of in

this would which Gen there. of single-digit in as low with is line terms sort X, really price of from our I expectations erosion, categorize In

pricing I So, call the on out from there. wouldn't anything environment special

get I'll great. Okay, queue. back in the

question comes Curtis Jefferies. company with next Our the Blayne from

I to go question. just want it's share growth, the great. Double-digit to DDRX

double I different has think growing of your pin down. that. thing and to volumes competitor And hard I maybe different was modules kind know

share revisit So, I'm just if curious you position. kind your could of just

Well, higher was QX. the XX% side. we're product QX pleased with our on growth than

be We expect XX% QX to than higher QX.

So product growth the continued inventories see DDRX. remains us. from small is, do we of see demand DDRX coming interesting for What's mostly but for on depletion DDRX, we

we is with today, main slightly to on XX% our So, the we're year, growing continue XX% things. a because the higher of DDRX Last we share was move. we side share. share product yearly as DDRX sell than basis increase on And

ask buyback. want on just to the I

$XX I did the You in think, million, quarter.

what that's think said. you I

curious, sort decent year? amount the are cash. throwing of the kind up What's plan Just you of for of

shareholders Hi, here. from In buyback Blayne, was million to was these structured quarter over I terms years, return, and above returning free continue about QX, the say really is the What that you say in it forward. I back to would there. cash allocation shareholders. our consistent returns a that it's last look a would is, we I targeted Des in we'll we and flow What to $XX.X certainly making XX% which approach XX% repurchase, million going $XX capital which targets of ASR. do of to of we've sort the think And shareholder have been XXbX-X if in did level X QX,

Our Mehdi next with question Hosseini comes company from the SIG.

me. And revenue understand to words, the companionship companionship I'm just should of you're clarify, that what the your follow-ups expecting A To and into how by Yeah, that impacted growth in sequential extent trying the by second year? double-digit target Luc, the is In product about we're year-end? couple So be next I from for what talking that of to material other to is going mix? was half. increase mix mix growth

QX higher Mehdi. That's way, Thank of And by growth mentioned we the over is double-digit mentioned. XX% what more QX you, QX last QX. than also We year. than

today go last seen we've were one to with the that first good and high-end are reception in in customers. to the contribution but going with on this point It's that market. as can So, being the growing we're systems. to one are the phases We see well of PMIC and a had with new the extreme single-digit products on customers mix. number the core introduce from the PMIC, X call I It's we low we products indicated the to of business seeing small time. customers. I the in probably RCD we're we the QX, of each mentioned at traction ramping say to the that particular. starting call qualification in all in our is this into We the our qualified

pleased new introducing probably in the products phases. that we're the to to -- our with our part of represent revenue. this And going all qualification They're single-digit market. through we low are going the revenue of terms that of So, product QX,

Is Okay. RCD that first just remained margin half? improvement what or second around And of product margin the combination shipping the driving a then, half, is has ramping X? in or more your the given XX% product how the mix DDRX gross of a gross in new

it's Hi Des. Mehdi,

of But the in expectations the costs Our have In gross QX term, were XX%, the flat new associated half see the really the for of by from of of driven line there. And year, with margins do impacted margins to gross ahead as well gross products. do to improvement an a our and cost approach QX drive And model company, will to we savings. looking management with cost some margins a track half, margin. in gross our year, really margins a our price we XX% for by mix our short I to XX% was have well line a full product on to our manufacturing as be which with our higher in think the first expect gross as favorable been disciplined strong savings as of as to the to through around second really ability we margins combination expect to certainly, gross record be delivering ramp continued long-term which quarter. compared

queue. Great. the I'll get in back

with the from question Tristan Gerra Baird. comes company Next

is this Tyler for Hi, on Tristan.

You touched opportunity market? driving should deeper Driver this in little client expect emerging contribution? when see What you a for Can the we on high-performance Client new and the PCs. into dig the you DDRX is Clock

that's question. today pleased performance a to for to that We're time. the the is about Yes, in the data very CKD. the systems see The the requirements with high-end in going a of center. some talked client This similar great we ones we've announcement trend are be

So, solutions remarks, going you the to at transfer to need high-end speeds, the And do of clean with today we're desktop clock target second. to X,XXX. Mega and notebook said to center. speed the do the the prepared as data we DRAMs, as we in X,XXX those in is

center are strategic that. When trying ramping, technology we that will a you at of products, As way the a is the new XXXX. technologies an into leapfrog client, we're soon make what in making we're types from do the we we're Rapids their new current say idea we're and to standpoint. preparing That the platforms investments for are gives trying Emerald to develop reference, that for that data

the we modules. dense it's And going this you into For goes not the to we the the address we space. which XXXX that client PMIC. PC waterfall introduce know PC extreme one same a solutions. The first to we to how when in PMIC, environment. are if standard to market. other that those first very-high do for We're most are example, XXXX and in extreme PMIC challenging the move drive speeds technology requirements, at We're the going to going is, applies Extreme

that market. for developed CKD that we've So

go from the qualification few So, it's we'll share through go process about the in and through we This a going to market to $XXX is to into grow that expect to time our years take that a we million grow well. market as qualifications. now, as

Our next with company comes from the question Kevin Securities. Cassidy Rosenblatt

market, PC and expand aligned are to also processors I on expect various CPUs be from you to and do any this AMD be xXX in or these mean, Intel going included to the Just PCs ARM with interface?

that's Yes, intercept solution as Intel going the same. typically, interface we a to the or ARM platform, as an to it's and equivalent a xXX the the question. first good agnostic from It's platforms, of the the Arrow the follow-on And Lake are of AMD. ARM equivalent because whether question, remains for platform memory

in So, the for creates as ARM today, of people that xXX We're center, agnostic it's whether we data solutions kind ARM-based processor. see an demand ramping an us. or

question next company Hosseini SIG. comes Our the from with Mehdi

at But a that to hear assumption products with It's just want term the have increase. Gen that the RCD, an get -- look I longer the the want is prior an strategy. every ASP. to generation ASP on I get will I'm declining update going of and Look, the and you generation X under qualification

you RCD. that in So dynamic have the

You're client. ramping companionship and have now also you the

DDRX I'm sure top the understand RCD higher manifest And pointing again, into a been a I the come past the CXL trajectory have of be should for would X would assume we not XXXX adoption. quarters, figure say materialize. you just rate? And that going client generation now that of is towards we and out growth over waiting not I'm the they that X the vectors not look you that at to CXL at how may growth. trying factor, As assuming and the because in help all those to time, if the to same and happening, And companionship third the we line is with

of in different of Yes. generations we terms RCD. Yes, continue introduce to RCD, our

Gen X, we but my AI client see As terms performance. all ] moving AI, of to as is servers. AI that space way is in to X; at of this itself, are power gain in going said introduced as not Gen starts And continue exciting opportunity production. X in earlier, an The in it's [ X become pulling Gen we December X is or said X AI performance in share also as in relevant we and DDRX. We the to Gen with of we to well. center, technologies the look it's believe qualification. standard Gen AI, market on last in is relevant we become Gen I production, is in year. data and remarks, security going these up whether the

for AI from move inference, to we AI example. As training to for

into are blocks what company, know manage to doing the as integrity power are year those systems. we're and when to we're well the space. a manage data how And which when signal client based is what in need successful and every So, how we the planes is, increase that to different complex we in building deliver on building speeds blocks you center power necessary the very be to integrity

companionship So, expansion standard we to in SAM these the in the growth. There as contribute going RCD into space. data is all enter of move client The a to technologies waterfall and those from as generation center growth we to expansion SAM as generation. the are we

the those first. to those of all less then that's why So, are anticipate trajectory. we going high-end meet applications. demanding once going this we to needs introduce to growth what able try needs. be. We we our It's will always being is needs, to long define then waterfall meet because in run recognized products are the And this into as the And

the trajectory. see we So that's how

trajectory that's very of going what the be with in space growth the produce. our what speed is in for known by to Now center, customers, is qualifications we've defined which client we the this always similar data

it. Got

follow-up. quick a Just

Because to and is Silicon was Other, the be line see last As year-over-year down flat-to-down scales, year basis. kind we AI year, of story this should item Contract on trending should IP finally the a growth? that revenue a that and assume

growth the going that assume we should is to resume into 'XX? So,

Hi Mehdi, it's Des.

on there. would revenue, X XX% we've to Silicon revenue remember, year as What to relates to forward well. and of this as that had QX, Silicon comparison, revenue do shows Other that grow a our what portion going numbers revenue it will up expect also IP. show if last that performance, And we about of portion it relates IP is this As the to year-over-year, the were to is the we an down on meet Silicon under of rate said we trajectory we're that take IP And fact $XXX divestiture Contract certainly up were But a Silicon revenue, any at you adjusted IP our business basis of royalty and say from growth sort I year, in out would I XX%. which our last draw sort year-to-date for here. business to bring the million can of on

me. reminding for Thanks

Luc will queue. this like are the At the question-and-answer the Thank no back This you. there time, registered to questions turn over now other conclude to conference Seraphin. I'd in session.

may You proceed.

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

call. your today's rest participation you the Thank and That day. will conclude conference of your enjoy for