Market Overview

Rambus Reports Second Quarter 2018 Financial Results

Share:
  • Second quarter GAAP revenue of $56.5 million; revenue under ASC 605
    would have been $98.8 million, in line with expectations
  • Second quarter GAAP royalty revenue of $30.1 million, royalty revenue
    under ASC 605 would have been $73.6 million and licensing billings of
    $73.2 million
  • Record number of licensing deals closed in Q2, including IBM and
    Socionext

Rambus Inc. (NASDAQ:RMBS) today reported financial results for the
second quarter ended June 30, 2018 under GAAP Accounting Standards
Codification Topic 606 ("ASC 606"), which superseded the revenue
recognition requirements in ASC Topic 605, Revenue Recognition ("ASC
605") that was previously applicable. Total revenue for the quarter
under ASC 606 was $56.5 million, with GAAP diluted net loss per share of
$0.14 and non-GAAP diluted net loss per share of $0.03.

Rambus also reported financial results as they would have been presented
under ASC 605. This ASC 605 presentation is required under the modified
retrospective transition method that Rambus has chosen to adopt under
ASC 606. Rambus notes that this presentation allows a more relevant
comparability with prior results, which were all reported under ASC 605.
Total revenue for the quarter ended June 30, 2018 under ASC 605 would
have been $98.8 million, 9% higher than a year ago excluding the impact
of the Lighting Division which was wound down in the first quarter, with
GAAP diluted net income per share of $0.13 and non-GAAP diluted net
income per share of $0.21.

"With a record number of licensing deals this quarter and record revenue
in the first half of the year for our Memory and Interface IP Cores, we
continue to execute on key strategic programs for the data center and
mobile edge," said Luc Seraphin, interim chief executive officer of
Rambus. "We are also seeing growing traction for our Security products
with recent customer announcements for our Unified Payment Platform and
HCE Ticketing."

Business Review

For the Memory and Interface division, Q2 was a positive quarter with
broad OEM and cloud customer qualifications in chips and record first
half revenue for IP cores. For server DIMM chipsets, our DDR4 memory
buffer chip business continues to grow with steady gains in market share
and revenue growth remains on track to meet our targets for 2018. For
the next-generation DDR5 memory buffer chips, we maintain our leadership
position as the first and only supplier with working silicon that
supports the top-end speeds for both the Register Clock Driver (RCD) and
Data Buffer (DB) chips, and we continue to engage with our customers and
the ecosystem. We also continue our leadership in high-speed IP Cores,
with multiple new customer wins for GDDR6 and HBM2 on advanced process
nodes. As the first IP supplier to offer a broadly-available GDDR6 PHY,
we continue to see traction from customers across multiple
high-performance applications including AI, automotive and networking.

Our Security Division, which consists of our Cryptography, Ticketing and
Payments groups, had a solid quarter with new customer announcements and
the launch of the CryptoManager Root of Trust core. The CryptoManager
Root of Trust builds upon our first-generation CryptoManager Security
Engine by adding flexible and secure processing capabilities within the
trust boundary of the core. Featuring a secure RISC-V CPU custom
designed by our security experts, the core helps to address
wide-reaching CPU vulnerabilities, like Meltdown and Spectre, in a broad
range of applications including IoT, networking and automotive. As a
market leader in smart ticketing solutions, we announced the
implementation of our smart ticketing software with West Midlands, and
have been selected to roll out our Host Card Emulation, or HCE, Ticket
Wallet Service for mobile ticketing to passengers on Scotland's national
rail network. Finally, our Payment Product Group announced last week
that the Unified Payment Platform has been selected by Coles, one of
Australia's largest retail groups, to secure its Digital Payments
Solutions to enhance the customer buying journey and provide a
hassle-free, omni-channel payment service.

Lastly, our Emerging Solutions Division which focuses on advanced
research, innovation and IP development continues its partnerships with
industry leaders like Microsoft and IBM to build our portfolio of
advanced memory IP and develop technologies that help move the industry
forward. Both our cold memory and hybrid memory programs continue to
progress with each in varying stages of prototype development. By
collaborating on research and development for the future memory
architectures, which includes a growing list of ecosystem partners, we
are also able to leverage our learnings to drive licensing and product
engagements with our memory and security customers.

       

Financial Review - GAAP

Three Months Ended June 30,

(In millions, except for percentages and per share amounts)

2018

2017

As Reported
ASC 606

Adjustments
(1)

ASC 605 (1)

As Reported
ASC 605

Revenue
Royalties $ 30.1 $ 43.5 $ 73.6 $ 70.0
Product revenue 8.1 0.1 8.2 8.4
Contract and other revenue 18.3   (1.3 ) 17.0   16.3  
Total revenue $ 56.5 $ 42.3 $ 98.8 $ 94.7
Total operating costs and expenses $ 76.4 $ $ 76.4 $ 86.5
Operating income (loss) $ (19.9 ) $ 42.3 $ 22.4 $ 8.2
Operating margin (35

)%

58 % 23 % 9 %
Net income (loss) $ (15.4 ) $ 29.6 $ 14.2 $ 2.6
Diluted net income (loss) per share $ (0.14 ) $ 0.27 $ 0.13 $ 0.02
 
Licensing billings (2) $ 73.2 $ $ 73.2 $ 72.9
 
Net cash provided by operating activities $ 3.6 $ $ 3.6 $ 25.0
 
           
(1) As noted above, Rambus is presenting the ASC 606 results together
with the adjustments made to reconcile the ASC 606 presentation to
the results that would have been applicable under ASC 605. The ASC
605 information should be considered in addition to, not as a
substitute for, nor superior to or in isolation from, the financial
information prepared in accordance with ASC 606.
 
(2) Licensing billings is an operational metric that reflects amounts
invoiced to our licensing customers during the period, as adjusted
for certain differences.
 
 
Financial Review - Non-GAAP (1) Three Months Ended June 30,
(In millions, except for percentages and per share amounts) 2018   2017

As Reported
ASC 606

 

Adjustments
(2)

  ASC 605 (2)

As Reported
ASC 605

Revenue
Royalties $ 30.1 $ 43.5 $ 73.6 $ 70.0
Product revenue 8.1 0.1 8.2 8.4
Contract and other revenue 18.3   (1.3 ) 17.0   16.3  
Total revenue $ 56.5 $ 42.3 $ 98.8 $ 94.7
Total operating costs and expenses $ 66.8 $ $ 66.8 $ 69.3
Operating income (loss) $ (10.3 ) $ 42.3 $ 32.0 $ 25.4
Operating margin (18 )% 50 % 32 % 27 %
Net income (loss) $ (3.1 ) $ 26.9 $ 23.8 $ 15.6
Diluted net income (loss) per share $ (0.03 ) $ 0.24 $ 0.21 $ 0.14
 
           
(1) See "Reconciliation of GAAP Forward Looking Estimates to Non-GAAP
Forward Looking Estimates" tables included below. Note that the
applicable non-GAAP measures are presented and that revenue is
solely presented on a GAAP basis.
 
(2) See note (1) under "Financial Review-GAAP" above for a description
of the Adjustments and ASC 605 presentations.
 

Revenue for the quarter was $56.5 million, above the high end of our
expectations, due to the structure of our licensing agreements signed
within the quarter. Revenue under ASC 605 would have been $98.8 million,
in line with our expectations. We had GAAP total operating costs and
expenses of $76.4 million and non-GAAP total operating costs and
expenses of $66.8 million. We also had $0.14 of GAAP diluted net loss
per share and $0.03 of non-GAAP diluted net loss per share. Total GAAP
and non-GAAP diluted net income per share under ASC 605 would have been
$0.13 and $0.21, respectively, and were in line with our expectations.

Cash, cash equivalents, and marketable securities as of June 30, 2018
were $298.3 million. Adjusted EBITDA under ASC 605 for the quarter would
have been $34.6 million.

2018 Third Quarter Outlook

Effective January 1, 2018, the Company adopted ASC 606 which materially
impacted the timing of revenue recognition for the Company's fixed-fee
intellectual property licensing arrangements. The adoption of ASC 606
did not have a material impact on the Company's other revenue streams,
net cash provided by operating activities or its underlying financial
position.

The Company has provided its third quarter outlook under ASC 606 and ASC
605 in order to provide additional transparency. The Company believes
that providing this additional disclosure in the short term will help
its investors and analysts understand the impact of the change in
revenue recognition standards, especially given the material difference
in the timing of revenue recognition for its fixed-fee licensing
arrangements as mentioned above. Note that the presentation under ASC
605 is not a substitute for the new ASC 606 revenue recognition rules
under current GAAP.

   
2018 Third Quarter Outlook (ASC 606)
(In millions, except per share amounts) GAAP Non-GAAP (1)
Revenue $45 - $51 $45 - $51
Total operating costs and expenses $81 - $77 $69 - $65
Operating loss $36 - $26 $24 - $14
Diluted net loss per share $0.24 - $0.17 $0.13 - $0.06
 
             
(1) See "Reconciliation of GAAP Forward Looking Estimates to Non-GAAP
Forward Looking Estimates" tables included below. Note that the
applicable non-GAAP measures are presented and that revenue is
solely presented on a GAAP basis.
 

For the third quarter of 2018, the Company expects revenue under ASC 606
to be between $45 million and $51 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 $81
million and $77 million, and diluted net loss per share to be between
$0.24 and $0.17. Additionally, the Company expects non-GAAP operating
costs and expenses to be between $69 million and $65 million, and
non-GAAP diluted net loss per share to be between $0.13 and $0.06. These
expectations also assume non-GAAP interest and other income and expense
of ($6 million), tax rate of 24% (refer to non-GAAP financial
information below - income tax adjustments) and diluted share count of
108 million, and exclude stock-based compensation expense ($8 million),
amortization expense ($5 million) and non-cash interest expense on
convertible notes ($3 million).

   
2018 Third Quarter Outlook (ASC 605)
(In millions, except per share amounts) GAAP Non-GAAP (1)
Revenue $97 - $103 $97 - $103
Total operating costs and expenses $81 - $77 $69 - $65
Operating income $16 - $26 $29 - $39
Diluted net income per share $0.08 - $0.15 $0.19 - $0.25
 
           
(1) See "Reconciliation of GAAP Forward Looking Estimates to Non-GAAP
Forward Looking Estimates" tables included below. Note that the
applicable non-GAAP measures are presented and that revenue is
solely presented on a GAAP basis.
 

For the third quarter of 2018, the Company expects that revenue under
ASC 605 would be between $97 million and $103 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 that operating costs and expenses would be
between $81 million and $77 million, and diluted net income per share
would be between $0.08 and $0.15. Additionally, the Company expects that
non-GAAP operating costs and expenses would be between $69 million and
$65 million, and non-GAAP diluted net income per share would be between
$0.19 and $0.25. These expectations also assume non-GAAP interest and
other income and expense of $1 million, tax rate of 24% (refer to
non-GAAP financial information below - income tax adjustments) and
diluted share count of 111 million, and exclude stock-based compensation
expense ($8 million), amortization expense ($5 million) and non-cash
interest expense on convertible notes ($3 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# 3034809.

Non-GAAP Financial Information:

In the commentary set forth above and in the financial statements
included in this earnings release, the Company presents the following
non-GAAP financial measures: operating costs and expenses, operating
margin, operating income (loss), net income (loss) and, diluted net
income (loss) per share, presented both under ASC 606 and as they would
have been presented under ASC 605. In computing each of these non-GAAP
financial measures, the following items were considered as discussed
below: stock-based compensation expenses, acquisition-related
transaction costs and retention bonus expense, amortization expenses,
non-cash interest expense and certain other one-time adjustments. The
non-GAAP financial measures disclosed by the Company should not be
considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results calculated
in accordance with GAAP and reconciliations from these results should be
carefully evaluated. Management believes the non-GAAP financial measures
are appropriate for both its own assessment of, and to show investors,
how the Company's performance compares to other periods. The non-GAAP
financial measures used by the Company may be calculated differently
from, and therefore may not be comparable to, similarly titled measures
used by other companies. Reconciliation from GAAP to non-GAAP results is
included in the financial statements contained in this release.

The Company's non-GAAP financial measures reflect adjustments based on
the following items:

Stock-based compensation expense. These expenses primarily relate
to employee stock options, employee stock purchase plans, and employee
non-vested equity stock and non-vested stock units. The Company excludes
stock-based compensation expense from its non-GAAP measures primarily
because such expenses are non-cash expenses that the Company does not
believe are reflective of ongoing operating results. Additionally, given
the fact that other companies may grant different amounts and types of
equity awards and may use different option valuation assumptions,
excluding stock-based compensation expense permits more accurate
comparisons of the Company's results with peer companies.

Acquisition-related transaction costs and retention bonus expense.
These expenses include all direct costs of certain acquisitions and the
current periods' portion of any retention bonus expense associated with
the acquisitions. The Company excludes these expenses in order to
provide better comparability between periods.

Restructuring charges (recoveries). These charges (recoveries)
may consist of severance, contractual retention payments, exit costs and
other charges (recoveries) and are excluded because such charges
(recoveries) are not directly related to ongoing business results and do
not reflect expected future operating expenses.

Amortization expense. The Company incurs expenses for the
amortization of intangible assets acquired in acquisitions. The Company
excludes these items because these expenses are not reflective of
ongoing operating results in the period incurred. These amounts arise
from the Company's prior acquisitions and have no direct correlation to
the operation of the Company's core business.

Non-cash interest expense on convertible notes. The Company
incurs non-cash interest expense related to its convertible notes. The
Company excludes non-cash interest expense related to its convertible
notes to provide more accurate comparisons of the Company's results with
other peer companies and to more accurately reflect the Company's
ongoing operations.

Income tax adjustments. For purposes of internal forecasting,
planning and analyzing future periods that assume net income from
operations, the Company estimates a fixed, long-term projected tax rate
of approximately 24 percent for 2018 and 35 percent for 2017, which
consists of estimated U.S. federal and state tax rates, and excludes tax
rates associated with certain items such as withholding tax, tax
credits, deferred tax asset valuation allowance and the release of any
deferred tax asset valuation allowance. Accordingly, the Company has
applied these tax rates to its non-GAAP financial results for all
periods in the relevant years to assist the Company's planning. The
Company has provided below a reconciliation of its GAAP provision for
income taxes and GAAP effective tax rate to the assumed non-GAAP
provision for income taxes and non-GAAP effective tax rate.

On occasion in the future, there may be other items, such as significant
gains or losses from contingencies that the Company may exclude in
deriving its non-GAAP financial measures if it believes that doing so is
consistent with the goal of providing useful information to investors
and management.

About Rambus Inc.

Dedicated to making data faster and safer, Rambus creates innovative
hardware, software and services that drive technology advancements from
the data center to the mobile edge. Our architecture licenses, IP cores,
chips, software and services span memory and interfaces, security and
emerging technologies to positively impact the modern world. We
collaborate with the industry, partnering with leading chip and system
designers, foundries and service providers. Integrated into tens of
billions of devices and systems, our products power and secure diverse
applications, including Big Data, Internet of Things (IoT) security,
mobile payments and smart ticketing. For more information, visit rambus.com.

Forward-Looking Statements

This release contains forward-looking statements under the Private
Securities Litigation Reform Act of 1995 including those relating to
Rambus' expectations regarding our new product and service offerings,
growth for 2018 and financial guidance for the third quarter of 2018,
including revenue, operating costs and expenses, earnings per share and
estimated, fixed, long-term projected tax rates, both on a GAAP and
non-GAAP basis as appropriate. Such forward-looking statements are based
on current expectations, estimates and projections, management's beliefs
and certain assumptions made by Rambus' management. Actual results may
differ materially. Rambus' business generally is subject to a number of
risks which are described more fully in Rambus' periodic reports filed
with the Securities and Exchange Commission. Rambus undertakes no
obligation to update forward-looking statements to reflect events or
circumstances after the date hereof.

   

Rambus Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

June 30,
2018
December 31,
2017
ASSETS
 
Current assets:
Cash and cash equivalents $ 248,284 $ 225,844
Marketable securities 50,056 103,532
Accounts receivable 39,263 25,326
Unbilled receivables 179,606 566
Inventories 6,041 5,159
Prepaids and other current assets 14,456   11,317
Total current assets 537,706 371,744
Intangible assets, net 70,940 91,722
Goodwill 208,680 209,661
Property, plant and equipment, net 50,235 54,303
Deferred tax assets 82,111 159,099
Unbilled receivables, long-term 571,269
Other assets 4,832   4,543
Total assets $ 1,525,773   $ 891,072
 
LIABILITIES & STOCKHOLDERS' EQUITY
 
Current liabilities:
Accounts payable $ 8,386 $ 9,614
Accrued salaries and benefits 17,385 17,091
Deferred revenue 13,583 18,272
Income taxes payable, short-term 18,794 258
Convertible notes, short-term 80,648 78,451
Other current liabilities 13,402   9,156
Total current liabilities 152,198 132,842
Long-term liabilities:
Convertible notes, long-term 138,647 135,447
Long-term imputed financing obligation 36,816 37,262
Long-term income taxes payable 84,804 3,344
Other long-term liabilities 7,823   10,593
Total long-term liabilities 268,090   186,646
Total stockholders' equity 1,105,485   571,584
Total liabilities and stockholders' equity $ 1,525,773   $ 891,072
 
   

Rambus Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

June 30,

Six Months Ended

June 30,

2018   2017 2018   2017
 
Revenue:
Royalties $ 30,049 $ 69,990 $ 51,423 $ 138,946
Product revenue 8,087 8,401 15,400 19,305
Contract and other revenue 18,322   16,329   36,061   33,820  
Total revenue 56,458   94,720   102,884   192,071  
Operating costs and expenses:
Cost of product revenue (1) $ 4,199 $ 7,480 $ 8,556 $ 12,730
Cost of contract and other revenue 11,089 14,337 23,211 28,818
Research and development (1) 37,696 37,522 77,813 73,522
Sales, general and administrative (1) 24,483 27,137 54,681 55,323
Restructuring charges (recoveries) (1,022 )   2,223    
Total operating costs and expenses 76,445   86,476   166,484   170,393  
Operating income (loss) (19,987 ) 8,244 (63,600 ) 21,678
Interest income and other income (expense), net 8,249 129 17,365 283
Interest expense (4,634 ) (3,261 ) (9,055 ) (6,467 )
Interest and other income (expense), net 3,615   (3,132 ) 8,310   (6,184 )
Income (loss) before income taxes (16,372 ) 5,112 (55,290 ) 15,494
Provision for (benefit from) income taxes (1,015 ) 2,507   (4,244 ) 9,883  
Net income (loss) $ (15,357 ) $ 2,605   $ (51,046 ) $ 5,611  
Net income (loss) per share:
Basic $ (0.14 ) $ 0.02   $ (0.47 ) $ 0.05  
Diluted $ (0.14 ) $ 0.02   $ (0.47 ) $ 0.05  
Weighted average shares used in per share calculation
Basic 107,737   110,060   108,542   110,758  
Diluted 107,737   112,565   108,542   114,091  
 

_________

(1) Total stock-based compensation expense for the three and six
months ended June 30, 2018 and 2017 is presented as follows:

 
Three Months Ended

June 30,

Six Months Ended

June 30,

2018 2017 2018 2017
Cost of product revenue $ 2 $ 19 $ 5 $ 33
Research and development $ 3,286 $ 3,067 $ 6,478 $ 6,079
Sales, general and administrative $ (1,400 ) $ 3,523 $ 2,919 $ 7,093
 
 

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(In thousands)

(Unaudited)

 
Three Months Ended June 30,
ASC 606   ASC 605
2018 2018   2017
 
Operating costs and expenses $ 76,445 $ 76,445 $ 86,476
Adjustments:
Stock-based compensation expense (1,888 ) (1,888 ) (6,609 )
Acquisition-related transaction costs and retention bonus expense (30 ) (30 ) (90 )
Amortization expense (8,738 ) (8,738 ) (10,450 )
Restructuring charges (recoveries) 1,022   1,022    
Non-GAAP operating costs and expenses $ 66,811   $ 66,811   $ 69,327  
 
Operating income (loss) $ (19,987 ) $ 22,375 $ 8,244
Adjustments:
Stock-based compensation expense 1,888 1,888 6,609
Acquisition-related transaction costs and retention bonus expense 30 30 90
Amortization expense 8,738 8,738 10,450
Restructuring charges (recoveries) (1,022 ) (1,022 )  
Non-GAAP operating income (loss) $ (10,353 ) $ 32,009   $ 25,393  
 
Income (loss) before income taxes $ (16,372 ) $ 18,949 $ 5,112
Adjustments:
Stock-based compensation expense 1,888 1,888 6,609
Acquisition-related transaction costs and retention bonus expense 30 30 90
Amortization expense 8,738 8,738 10,450
Restructuring charges (recoveries) (1,022 ) (1,022 )
Non-cash interest expense on convertible notes 2,717   2,717   1,774  
Non-GAAP income (loss) before income taxes $ (4,021 ) $ 31,300 $ 24,035
GAAP provision for (benefit from) income taxes (1,015 ) 4,791 2,507
Adjustment to GAAP provision for (benefit from) income taxes 50   2,721   5,905  
Non-GAAP provision for (benefit from) income taxes (965 ) 7,512   8,412  
Non-GAAP net income (loss) $ (3,056 ) $ 23,788   $ 15,623  
 
Non-GAAP basic net income (loss) per share $ (0.03 ) $ 0.22 $ 0.14
Non-GAAP diluted net income (loss) per share $ (0.03 ) $ 0.21 $ 0.14
Weighted average shares used in non-GAAP per share calculation:
Basic 107,737 107,737 110,060
Diluted 107,737 111,157 112,565
 
 

Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax
Rate (1)

 
Three Months Ended June 30,
ASC 606   ASC 605
2018 2018   2017
GAAP effective tax rate 6 % 25

 %

49

 %

Adjustment to GAAP effective tax rate 18 % (1 )% (14 )%
Non-GAAP effective tax rate 24

%

24

 %

35

 %

 
           
(1) For purposes of internal forecasting, planning and analyzing future
periods that assume net income from operations, the Company
estimates a fixed, long-term projected tax rate of approximately 24
percent for 2018 and 35 percent for 2017, which consists of
estimated U.S. federal and state tax rates, and excludes tax rates
associated with certain items such as withholding tax, tax credits,
deferred tax asset valuation allowance and the release of any
deferred tax asset valuation allowance. Accordingly, the Company has
applied these tax rates to its non-GAAP financial results for all
periods in the relevant year to assist the Company's planning for
future periods.
 
   

Rambus Inc.

Reconciliation of Other GAAP to Non-GAAP Items

(In thousands, except percentages)

(Unaudited)

 
GAAP Non-GAAP
Three Months Ended June 30, Three Months Ended June 30,
ASC 606   ASC 605 ASC 606   ASC 605
2018 2018   2017 2018 2018   2017
 
Revenue (i) $   56,458 $ 98,820 $ 94,720 $ 56,458 $ 98,820 $ 94,720
Operating income (loss) (ii) (19,987 ) 22,375 8,244 (10,353 ) 32,009 25,393
Operating margin (ii/i) (35 )% 23

%

9 % (18 )% 32 % 27 %
 
 
Three Months Ended June 30,
ASC 605
2018   2017
 
Net income $ 14,158 $ 2,605
Add back:
Interest and other income (expense), net 3,426 3,132
Provision for income taxes 4,791 2,507
Depreciation expense 2,587 3,330
Amortization expense 8,738   10,450
EBITDA (1) $ 33,700 $ 22,024
Adjustments:
Stock-based compensation expense 1,888 6,609
Acquisition-related transaction costs and retention bonus expense 30 90
Restructuring recoveries (1,022 )
Adjusted EBITDA (2) $ 34,596   $ 28,723
 
           
(1) EBITDA is a non-GAAP measure that management uses to evaluate the
cash generating capacity of the company. The most directly
comparable GAAP measure is net income. EBITDA is net income adjusted
for net interest expense, income taxes, and depreciation and
amortization. It should not be considered as an alternative to net
income computed under GAAP.
 
(2) Adjusted EBITDA excludes the impact of other non-GAAP adjustments
indicated in the above tables.
 
   

Rambus Inc.

Reconciliation of GAAP Forward Looking Estimates to Non-GAAP
Forward Looking Estimates

(In millions, except per share amounts)

(Unaudited)

 
ASC 606 ASC 605

Three Months Ended
September 30, 2018

Three Months Ended
September 30, 2018

Low   High Low   High
 
Forward-looking operating costs and expenses $ 81.4 $ 77.4 $ 81.4 $ 77.4
Adjustments:
Stock-based compensation expense (7.5 ) (7.5 ) (7.5 ) (7.5 )
Amortization expense (5.4 ) (5.4 ) (5.4 ) (5.4 )
Forward-looking Non-GAAP operating costs and expenses $ 68.5   $ 64.5   $ 68.5   $ 64.5  
 
Forward-looking operating income (loss) $ (36.4 ) $ (26.4 ) $ 15.6 $ 25.6
Adjustments:
Stock-based compensation expense 7.5 7.5 7.5 7.5
Amortization expense 5.4   5.4   5.4   5.4  
Forward-looking Non-GAAP operating income (loss) $ (23.5 ) $ (13.5 ) $ 28.5   $ 38.5  
 
Forward-looking income (loss) before income taxes $ (33.5 ) $ (23.5 ) $ 11.5 $ 21.5
Adjustments:
Stock-based compensation expense 7.5 7.5 7.5 7.5
Amortization expense 5.4 5.4 5.4 5.4
Non-cash interest expense on convertible notes 2.7   2.7   2.7   2.7  
Forward-looking Non-GAAP income (loss) before income taxes $ (17.9 ) $ (7.9 ) $ 27.1 $ 37.1
Forward-looking GAAP provision for (benefit from) income taxes (8.0 ) (5.6 ) 2.8 5.2
Adjustment to Forward-looking GAAP provision for (benefit from)
income taxes
3.7   3.7   3.7   3.7  
Forward-looking Non-GAAP provision for (benefit from) income taxes (4.3 ) (1.9 ) 6.5   8.9  
Forward-looking Non-GAAP net income (loss) $ (13.6 ) $ (6.0 ) $ 20.6   $ 28.2  
 
Forward-looking Non-GAAP basic net income (loss) per share $ (0.13 ) $ (0.06 ) $ 0.19 $ 0.26
Forward-looking Non-GAAP diluted net income (loss) per share $ (0.13 ) $ (0.06 ) $ 0.19 $ 0.25
Weighted average shares used in forward-looking Non-GAAP per share
calculation:
Basic 108.0 108.0 108.0 108.0
Diluted 108.0 108.0 111.0 111.0
 

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