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Rambus Reports Second Quarter 2017 Financial Results

SUNNYVALE, Calif.--(BUSINESS WIRE)--Rambus Inc. (NASDAQ:RMBS) today reported financial results for the second quarter ended June 30, 2017. Total revenue for the quarter was $94.7 million, 24% higher than a year ago, with GAAP diluted net income per share of $0.02 and non-GAAP diluted net income per share of $0.14. Total revenue for the six months ended June 30, 2017 was $192.1 million, 29% higher than a year ago.

“We continue to build upon our positive start to the year with strength in our patent and technology licensing programs, as well as ongoing validation from our partners and customers that our technologies are solving the critical problems facing the data center and mobile edge markets,” said Dr. Ron Black, chief executive officer of Rambus. “We are excited by the momentum in our Security Division, signing agreements with Cybertrust and Synopsys on our CryptoManager Infrastructure and introducing our in-field CryptoManager IoT Device Management service for easy and broad adoption of our provisioning solutions.”

Business Review

In our Memory and Interfaces Division, we expanded our Server DIMM chipset family with the introduction of the industry’s first production, JEDEC-standard DDR4 Non-volatile Register Clock Driver (NVRCD) for NVDIMM applications in high-performance data centers. The NVRCD chip builds upon our existing high-speed chip and signaling expertise to enable non-volatile server memory modules to combine the performance of DRAM with the persistence of storage-class memory, delivering high performance and reliability of data for next-generation enterprise and data center systems. In addition, we signed key renewals and new agreements for patent and technology licensing, closing our largest ever high-speed interface technology agreement with a large semiconductor company.

Our Security Division, which consists of our cryptography, mobile payments and smart ticketing businesses, had an exciting quarter with the launch of our in-field CryptoManager IoT Device Management service for turnkey secure device connectivity, monitoring and provisioning. The service is designed to work with leading cloud platforms and provides out-of-the-box connectivity to IoT service providers and device manufacturers. As part of the launch at IoT World in Santa Clara, we featured live demonstrations with both Qualcomm and STMicroelectronics processor chips showcasing mutual authentication and communication. In addition, we expanded our ecosystem of CryptoManager Infrastructure customers and partners with the addition of Cybertrust, a subsidiary of SoftBank Technology Corp, and Synopsys. Both accelerate adoption of our security solutions and leverage our CryptoManager Infrastructure for secure key provisioning to enable secure, remote lifecycle management and updates of connected devices.

Financial Review GAAP Non-GAAP(1)
(In millions, except for percentages and per share amounts) Three Months Ended June 30, Three Months Ended June 30,
2017 2016 2017 2016
Revenue $ 94.7 $ 76.5 $ 94.7 $ 76.5
Total operating costs and expenses $ 86.5 $ 64.5 $ 69.3 $ 50.5
Operating income $ 8.2 $ 12.0 $ 25.4 $ 26.0
Operating margin 9 % 16 % 27 % 34 %
Net income $ 2.6 $ 3.9 $ 15.6 $ 16.7
Diluted net income per share $ 0.02 $ 0.03 $ 0.14 $ 0.15
Total cash and marketable securities $ 168.0 $ 259.3 $ 168.0 $ 259.3
Total assets $ 806.0 $ 765.8 $ 806.0 $ 765.8
Total stockholders’ equity $ 570.2 $ 542.4 $ 570.2 $ 542.4
Financial Review GAAP Non-GAAP(1)
(In millions, except for percentages and per share amounts) Six Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Revenue $ 192.1 $ 149.2 $ 192.1 $ 149.2
Total operating costs and expenses $ 170.4 $ 127.9 $ 136.1 $ 99.5
Operating income $ 21.7 $ 21.3 $ 56.0 $ 49.7
Operating margin 11 % 14 % 29 % 33 %
Net income $ 5.6 $ 5.8 $ 34.7 $ 31.3
Diluted net income per share $ 0.05 $ 0.05 $ 0.30 $ 0.28

Revenue for the quarter was $94.7 million as execution in our Security Division and Lighting Division offset the anticipated seasonality of our business. As a result of our execution on acquisitions, revenue for our Memory and Interface Division was up 24% year over year and revenue for the Security Division was up 42% year over year. GAAP total operating costs and expenses were at the low end of our expectations, yielding $0.02 of GAAP net income per share and in line with our expectations. We had non-GAAP net income per share of $0.14, towards the high end of our expectations.

Cash, cash equivalents, and marketable securities as of June 30, 2017 were $168.0 million, a decrease of $19.7 million from March 31, 2017, mainly due to the use of $50 million related to the accelerated share repurchase program announced on May 1st, offset by cash generated from operating activities of approximately $25 million. Adjusted EBITDA for the quarter was $28.7 million.

2017 Third Quarter Outlook

For the third quarter of 2017, the Company expects revenue to be between $96 million and $102 million. Revenue is not without risk and achieving revenue in this range will require that the Company sign customer agreements for patent licensing, various product sales, mobile payments software and solutions licensing among other matters. The Company also expects operating costs and expenses to be between $85 million and $89 million, and diluted net income per share to be between $0.02 and $0.08. The Company also expects non-GAAP operating costs and expenses to be between $67 million and $71 million, and non-GAAP diluted net income per share to be between $0.14 and $0.20. These non-GAAP expectations assume non-GAAP interest and other income and expense of $1 million, tax rate of 35% (refer to non-GAAP financial information below - income tax adjustments) and diluted share count of 113 million, and exclude stock-based compensation expense ($8 million), amortization expense ($11 million), and non-cash interest expense on convertible notes ($2 million).

Conference Call:

Rambus management will discuss the results of the quarter during a conference call scheduled for 2:00pm PT today. The call, audio and slides will be available online at investor.rambus.com and a replay will be available for the next week at the following numbers: (855) 859-2056 (domestic) or (404) 537-3406 (international) with ID#36458130.

About Rambus Inc.

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