Silicon IP and chip provider Rambus (NASDAQ:RMBS) has reported robust financial results for the third quarter of fiscal year 2023, exceeding revenue and earnings expectations. The company generated $52 million in cash from operations and completed a $100 million share repurchase program. Rambus also finalized the sale of its IP business to concentrate on developing distinguished chips and digital IP for the data center market.
Key takeaways from the earnings call:
- Rambus reported Q3 revenue of $105.3 million, with royalty revenue at $28.9 million and licensing billings at $57.9 million. Product revenue, primarily from memory interface chips, was $52.2 million.
- The company completed a $100 million share repurchase program and the sale of its IP business to focus on the data center market.
- Rambus announced support for 9.6 giga transfers per second in their HBM3 memory controller IP as part of efforts to broaden their portfolio.
- The company expects DDR4 headwinds to continue through the remainder of the year, with inventories normalizing in early 2024.
- For Q4, Rambus forecasts revenue between $117 million and $123 million, with royalty revenue between $42 million and $48 million, and licensing billings between $56 million and $62 million. Non-GAAP earnings per share are expected to range between $0.32 and $0.39.
The company sees a promising long-term trend in the demand for memory performance and capacity, driven by generative AI and other data-intensive workloads. They are investing in initiatives to expand their portfolio of offerings, including support for 9.6 giga transfers per second in their HBM3 memory controller IP.
Despite ongoing DDR4 headwinds, Rambus remains positive about the outlook for DDR5 and believes they are well-positioned for long-term profitable growth. The market shift to DDR5 is happening faster than expected, with the crossover anticipated to occur in the first half of 2024. DDR5 Gen 2 is also gaining momentum, and the company has received positive feedback on its PMIC solution.
In terms of financials, Rambus reported Q4 non-GAAP total operating costs are expected to be between $73 million and $69 million, with CapEx at approximately $8 million. Non-GAAP operating results are expected to be between a profit of $44 million and $54 million. Non-GAAP taxes are expected to be between an expense of $11 million and $13 million.
During the earnings call, the company also discussed the importance of communication between chips in the context of compute nodes and disaggregated architectures. They highlighted the significance of CXL and PCIe IP for silicon customers building heterogeneous chips. The company also mentioned the relevance of GDDR and HBM in staying ahead of the curve, as well as the increasing importance of their security IP portfolio. The company's product revenue is primarily driven by the number of DIMMs rather than the number of DDR5 bits, with system configurations dependent on CPU availability and customer demand.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.