000091727312/312024Q3falsexbrli:sharesiso4217:USDiso4217:USDxbrli:sharesxbrli:pure00009172732024-01-012024-09-3000009172732024-09-3000009172732023-12-310000917273rmbs:ProductRevenueMember2024-07-012024-09-300000917273rmbs:ProductRevenueMember2023-07-012023-09-300000917273rmbs:ProductRevenueMember2024-01-012024-09-300000917273rmbs:ProductRevenueMember2023-01-012023-09-300000917273us-gaap:RoyaltyMember2024-07-012024-09-300000917273us-gaap:RoyaltyMember2023-07-012023-09-300000917273us-gaap:RoyaltyMember2024-01-012024-09-300000917273us-gaap:RoyaltyMember2023-01-012023-09-300000917273rmbs:ContractandotherRevenueMember2024-07-012024-09-300000917273rmbs:ContractandotherRevenueMember2023-07-012023-09-300000917273rmbs:ContractandotherRevenueMember2024-01-012024-09-300000917273rmbs:ContractandotherRevenueMember2023-01-012023-09-3000009172732024-07-012024-09-3000009172732023-07-012023-09-3000009172732023-01-012023-09-300000917273us-gaap:CommonStockMember2024-06-300000917273us-gaap:AdditionalPaidInCapitalMember2024-06-300000917273us-gaap:RetainedEarningsMember2024-06-300000917273us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-3000009172732024-06-300000917273us-gaap:RetainedEarningsMember2024-07-012024-09-300000917273us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-07-012024-09-300000917273us-gaap:CommonStockMember2024-07-012024-09-300000917273us-gaap:AdditionalPaidInCapitalMember2024-07-012024-09-300000917273us-gaap:CommonStockMember2024-09-300000917273us-gaap:AdditionalPaidInCapitalMember2024-09-300000917273us-gaap:RetainedEarningsMember2024-09-300000917273us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-09-300000917273us-gaap:CommonStockMember2023-06-300000917273us-gaap:AdditionalPaidInCapitalMember2023-06-300000917273us-gaap:RetainedEarningsMember2023-06-300000917273us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-3000009172732023-06-300000917273us-gaap:RetainedEarningsMember2023-07-012023-09-300000917273us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300000917273us-gaap:CommonStockMember2023-07-012023-09-300000917273us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300000917273us-gaap:CommonStockMember2023-09-300000917273us-gaap:AdditionalPaidInCapitalMember2023-09-300000917273us-gaap:RetainedEarningsMember2023-09-300000917273us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-3000009172732023-09-300000917273us-gaap:CommonStockMember2023-12-310000917273us-gaap:AdditionalPaidInCapitalMember2023-12-310000917273us-gaap:RetainedEarningsMember2023-12-310000917273us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310000917273us-gaap:RetainedEarningsMember2024-01-012024-09-300000917273us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-09-300000917273us-gaap:CommonStockMember2024-01-012024-09-300000917273us-gaap:AdditionalPaidInCapitalMember2024-01-012024-09-300000917273us-gaap:CommonStockMember2022-12-310000917273us-gaap:AdditionalPaidInCapitalMember2022-12-310000917273us-gaap:RetainedEarningsMember2022-12-310000917273us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-3100009172732022-12-310000917273us-gaap:RetainedEarningsMember2023-01-012023-09-300000917273us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300000917273us-gaap:CommonStockMember2023-01-012023-09-300000917273us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-3000009172732024-10-012024-09-300000917273us-gaap:DevelopedTechnologyRightsMembersrt:MinimumMember2024-09-300000917273us-gaap:DevelopedTechnologyRightsMembersrt:MaximumMember2024-09-300000917273us-gaap:DevelopedTechnologyRightsMember2024-09-300000917273us-gaap:CustomerContractsMembersrt:MinimumMember2024-09-300000917273us-gaap:CustomerContractsMembersrt:MaximumMember2024-09-300000917273us-gaap:CustomerContractsMember2024-09-300000917273us-gaap:NoncompeteAgreementsMember2024-09-300000917273us-gaap:InProcessResearchAndDevelopmentMember2024-09-300000917273us-gaap:DevelopedTechnologyRightsMembersrt:MinimumMember2023-12-310000917273us-gaap:DevelopedTechnologyRightsMembersrt:MaximumMember2023-12-310000917273us-gaap:DevelopedTechnologyRightsMember2023-12-310000917273us-gaap:CustomerContractsMembersrt:MinimumMember2023-12-310000917273us-gaap:CustomerContractsMembersrt:MaximumMember2023-12-310000917273us-gaap:CustomerContractsMember2023-12-310000917273us-gaap:NoncompeteAgreementsMember2023-12-310000917273us-gaap:InProcessResearchAndDevelopmentMember2023-12-310000917273us-gaap:AccountsReceivableMember2024-01-012024-09-300000917273rmbs:Customer1Memberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2024-09-300000917273rmbs:Customer1Memberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2023-12-310000917273rmbs:Customer2Memberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2024-09-300000917273rmbs:Customer2Memberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2023-12-310000917273rmbs:Customer3Memberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2023-12-310000917273rmbs:SalesNetMember2024-01-012024-09-300000917273rmbs:CustomerAMemberus-gaap:CustomerConcentrationRiskMemberrmbs:SalesNetMember2024-07-012024-09-300000917273rmbs:CustomerAMemberus-gaap:CustomerConcentrationRiskMemberrmbs:SalesNetMember2023-07-012023-09-300000917273rmbs:CustomerAMemberus-gaap:CustomerConcentrationRiskMemberrmbs:SalesNetMember2024-01-012024-09-300000917273rmbs:CustomerAMemberus-gaap:CustomerConcentrationRiskMemberrmbs:SalesNetMember2023-01-012023-09-300000917273rmbs:CustomerBMemberus-gaap:CustomerConcentrationRiskMemberrmbs:SalesNetMember2024-07-012024-09-300000917273rmbs:CustomerBMemberus-gaap:CustomerConcentrationRiskMemberrmbs:SalesNetMember2023-07-012023-09-300000917273rmbs:CustomerBMemberus-gaap:CustomerConcentrationRiskMemberrmbs:SalesNetMember2024-01-012024-09-300000917273rmbs:CustomerBMemberus-gaap:CustomerConcentrationRiskMemberrmbs:SalesNetMember2023-01-012023-09-300000917273rmbs:CustomerCMemberus-gaap:CustomerConcentrationRiskMemberrmbs:SalesNetMember2024-07-012024-09-300000917273rmbs:CustomerCMemberus-gaap:CustomerConcentrationRiskMemberrmbs:SalesNetMember2024-01-012024-09-300000917273rmbs:CustomerDMemberus-gaap:CustomerConcentrationRiskMemberrmbs:SalesNetMember2024-07-012024-09-300000917273country:US2024-07-012024-09-300000917273country:US2023-07-012023-09-300000917273country:US2024-01-012024-09-300000917273country:US2023-01-012023-09-300000917273country:KR2024-07-012024-09-300000917273country:KR2023-07-012023-09-300000917273country:KR2024-01-012024-09-300000917273country:KR2023-01-012023-09-300000917273country:SG2024-07-012024-09-300000917273country:SG2023-07-012023-09-300000917273country:SG2024-01-012024-09-300000917273country:SG2023-01-012023-09-300000917273rmbs:OtherCountriesMember2024-07-012024-09-300000917273rmbs:OtherCountriesMember2023-07-012023-09-300000917273rmbs:OtherCountriesMember2024-01-012024-09-300000917273rmbs:OtherCountriesMember2023-01-012023-09-300000917273us-gaap:CashMember2024-09-300000917273us-gaap:MoneyMarketFundsMember2024-09-300000917273us-gaap:CorporateDebtSecuritiesMember2024-09-300000917273us-gaap:CashEquivalentsMember2024-09-300000917273us-gaap:BankTimeDepositsMember2024-09-300000917273us-gaap:USTreasuryAndGovernmentShorttermDebtSecuritiesMember2024-09-300000917273us-gaap:CorporateDebtSecuritiesMember2024-09-300000917273us-gaap:CashMember2023-12-310000917273us-gaap:MoneyMarketFundsMember2023-12-310000917273us-gaap:CorporateDebtSecuritiesMember2023-12-310000917273us-gaap:CashEquivalentsMember2023-12-310000917273us-gaap:USTreasuryAndGovernmentShorttermDebtSecuritiesMember2023-12-310000917273us-gaap:CorporateDebtSecuritiesMember2023-12-310000917273us-gaap:ShortTermInvestmentsMember2024-09-300000917273us-gaap:ShortTermInvestmentsMember2023-12-310000917273us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2024-09-300000917273us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2024-09-300000917273us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2024-09-300000917273us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2024-09-300000917273us-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2024-09-300000917273us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2024-09-300000917273us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2024-09-300000917273us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2024-09-300000917273us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentShorttermDebtSecuritiesMember2024-09-300000917273us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentShorttermDebtSecuritiesMember2024-09-300000917273us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentShorttermDebtSecuritiesMember2024-09-300000917273us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentShorttermDebtSecuritiesMember2024-09-300000917273us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2024-09-300000917273us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2024-09-300000917273us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2024-09-300000917273us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2024-09-300000917273us-gaap:FairValueMeasurementsRecurringMember2024-09-300000917273us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-09-300000917273us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-09-300000917273us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-09-300000917273us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-310000917273us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-310000917273us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-310000917273us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-310000917273us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentShorttermDebtSecuritiesMember2023-12-310000917273us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentShorttermDebtSecuritiesMember2023-12-310000917273us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentShorttermDebtSecuritiesMember2023-12-310000917273us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentShorttermDebtSecuritiesMember2023-12-310000917273us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310000917273us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310000917273us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310000917273us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310000917273us-gaap:FairValueMeasurementsRecurringMember2023-12-310000917273us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000917273us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000917273us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000917273us-gaap:FairValueInputsLevel3Memberrmbs:ContingentConsiderationEarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2024-06-300000917273us-gaap:FairValueInputsLevel3Memberrmbs:ContingentConsiderationEarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000917273us-gaap:FairValueInputsLevel3Memberrmbs:ContingentConsiderationEarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000917273us-gaap:FairValueInputsLevel3Memberrmbs:ContingentConsiderationEarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000917273us-gaap:FairValueInputsLevel3Memberrmbs:ContingentConsiderationEarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2024-07-012024-09-300000917273us-gaap:FairValueInputsLevel3Memberrmbs:ContingentConsiderationEarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2023-07-012023-09-300000917273us-gaap:FairValueInputsLevel3Memberrmbs:ContingentConsiderationEarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2024-01-012024-09-300000917273us-gaap:FairValueInputsLevel3Memberrmbs:ContingentConsiderationEarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2023-01-012023-09-300000917273us-gaap:FairValueInputsLevel3Memberrmbs:ContingentConsiderationEarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2024-09-300000917273us-gaap:FairValueInputsLevel3Memberrmbs:ContingentConsiderationEarnOutLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000917273rmbs:PrivateCompanyMember2023-12-310000917273rmbs:PrivateCompanyMember2023-10-012023-12-310000917273rmbs:PrivateCompanyMember2024-01-012024-03-310000917273srt:MinimumMember2024-09-300000917273srt:MaximumMember2024-09-300000917273rmbs:SeniorOnePointThreeSevenFivePercentConvertibleNotesDueTwoThousandTwentyThreeMemberus-gaap:ConvertibleNotesPayableMember2022-12-310000917273rmbs:SeniorOnePointThreeSevenFivePercentConvertibleNotesDueTwoThousandTwentyThreeMemberus-gaap:ConvertibleNotesPayableMember2023-01-012023-03-310000917273us-gaap:CommonStockMember2023-01-012023-03-3100009172732023-01-012023-03-310000917273us-gaap:SoftwareLicenseArrangementMember2024-09-300000917273us-gaap:OtherCommitmentsDomain2024-09-300000917273rmbs:BusinessAcquisitionRetentionBonusPayableMember2024-09-300000917273rmbs:LongTermDeferredTaxAssetsMember2024-09-300000917273rmbs:LongTermIncomeTaxesPayableMember2024-09-300000917273us-gaap:SoftwareLicenseArrangementMember2024-01-012024-09-300000917273us-gaap:StockCompensationPlanMember2023-12-310000917273us-gaap:StockCompensationPlanMember2024-01-012024-09-300000917273us-gaap:StockCompensationPlanMember2024-09-300000917273us-gaap:StockCompensationPlanMemberrmbs:AwardDatePeriod1Member2024-09-300000917273us-gaap:StockCompensationPlanMemberrmbs:AwardDatePeriod2Member2024-09-300000917273rmbs:PotentialAdditionalPerformanceStockUnitsDomain2024-01-012024-09-300000917273rmbs:PotentialAdditionalPerformanceStockUnitsDomain2024-07-012024-09-300000917273us-gaap:EmployeeStockOptionMember2023-12-310000917273us-gaap:EmployeeStockOptionMember2024-01-012024-09-300000917273us-gaap:EmployeeStockOptionMember2024-09-300000917273us-gaap:EmployeeStockMember2024-01-012024-09-300000917273us-gaap:EmployeeStockMember2024-09-300000917273us-gaap:EmployeeStockMember2023-01-012023-09-300000917273us-gaap:EmployeeStockMember2023-09-300000917273us-gaap:EmployeeStockMember2024-07-012024-09-300000917273us-gaap:EmployeeStockMember2023-07-012023-09-300000917273rmbs:RestrictedStockAndStockUnitsMember2024-07-012024-09-300000917273rmbs:RestrictedStockAndStockUnitsMember2024-01-012024-09-300000917273rmbs:RestrictedStockAndStockUnitsMember2023-01-012023-09-300000917273rmbs:RestrictedStockAndStockUnitsMember2023-07-012023-09-300000917273rmbs:RestrictedStockAndStockUnitsMembersrt:DirectorMember2024-01-012024-09-300000917273rmbs:RestrictedStockAndStockUnitsMembersrt:DirectorMember2023-01-012023-09-300000917273rmbs:RestrictedStockAndStockUnitsMembersrt:DirectorMember2023-07-012023-09-300000917273rmbs:RestrictedStockAndStockUnitsMembersrt:DirectorMember2024-07-012024-09-300000917273rmbs:RestrictedStockAndStockUnitsMembersrt:MinimumMember2024-01-012024-09-300000917273rmbs:RestrictedStockAndStockUnitsMembersrt:MinimumMember2023-01-012023-09-300000917273rmbs:RestrictedStockAndStockUnitsMembersrt:MaximumMember2023-01-012023-09-300000917273rmbs:RestrictedStockAndStockUnitsMembersrt:MaximumMember2024-01-012024-09-300000917273rmbs:RestrictedStockAndStockUnitsMember2024-09-300000917273rmbs:RestrictedStockAndStockUnitsMember2023-12-310000917273rmbs:A2020ShareRepurchaseProgramMember2020-10-290000917273rmbs:A2024AcceleratedShareRepurchaseProgramMember2024-01-012024-03-310000917273rmbs:A2024AcceleratedShareRepurchaseProgramMember2024-03-012024-03-010000917273rmbs:A2024AcceleratedShareRepurchaseProgramMember2024-03-182024-03-180000917273rmbs:A2020ShareRepurchaseProgramMember2023-11-020000917273rmbs:A2020ShareRepurchaseProgramMember2024-01-012024-09-300000917273rmbs:A2023AcceleratedShareRepurchaseProgramMember2023-07-012023-09-300000917273rmbs:A2023AcceleratedShareRepurchaseProgramMember2023-08-112023-08-110000917273rmbs:A2023AcceleratedShareRepurchaseProgramMember2023-09-222023-09-220000917273rmbs:A2020ShareRepurchaseProgramMember2024-09-300000917273rmbs:LongTermDeferredTaxAssetsMember2023-12-310000917273us-gaap:ForeignCountryMemberrmbs:NationalTaxServicesMemberus-gaap:OtherAssetsMember2023-12-310000917273rmbs:LongTermIncomeTaxesPayableMember2023-12-310000917273us-gaap:ForeignCountryMemberrmbs:NationalTaxServicesMemberus-gaap:OtherAssetsMember2024-09-300000917273us-gaap:ForeignCountryMemberrmbs:NationalTaxServicesMember2024-09-300000917273us-gaap:ForeignCountryMemberrmbs:NationalTaxServicesMember2023-10-310000917273us-gaap:ForeignCountryMemberrmbs:NationalTaxServicesMember2023-10-012023-10-310000917273rmbs:A2023PlanDomain2023-06-012023-06-300000917273rmbs:A2023PlanMember2024-01-012024-09-300000917273us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberrmbs:SerDesAndMemoryInterfacePHYIPMember2023-09-300000917273us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberrmbs:SerDesAndMemoryInterfacePHYIPMember2023-07-012023-09-300000917273us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberrmbs:SerDesAndMemoryInterfacePHYIPMember2023-01-012023-09-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 10-Q
_______________________________
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 000-22339
_______________________________
RAMBUS INC.
(Exact name of registrant as specified in its charter)
_______________________________
| | | | | | | | |
| Delaware | | 94-3112828 |
| (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | | | | | | | | | | | | | |
| 4453 North First Street | | |
| Suite 100 | | |
San Jose, California | | 95134 |
| | | | |
| (Address of principal executive offices) | | (ZIP Code) |
Registrant’s telephone number, including area code:
(408) 462-8000
________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
| Common Stock, $0.001 Par Value | RMBS | The Nasdaq Stock Market LLC |
| | (The Nasdaq Global Select Market) |
Securities registered pursuant to Section 12(g) of the Act:
None
________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | |
| Large accelerated filer | ☒ | | Accelerated filer | ☐ |
| | | | |
| Non-accelerated filer | ☐ | | Smaller reporting company | ☐ |
| | | | |
| Emerging growth company | ☐ | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☒
The number of shares outstanding of the registrant’s Common Stock, par value $0.001 per share, was 106,575,437 as of September 30, 2024.
RAMBUS INC.
TABLE OF CONTENTS
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include, without limitation, predictions regarding the following aspects of our future:
•Success in the markets of our products and services or our customers’ products;
•Sources of competition;
•Research and development costs and improvements in technology;
•Sources, amounts and concentration of revenue, including royalties;
•Success in signing and renewing customer agreements, including license agreements;
•The timing of completing engineering deliverables and the changes to work required;
•Success in obtaining new technology development contracts booked in the future;
•Success in adding and maintaining new customers;
•Success in obtaining orders from our customers, and our ability to accurately anticipate and meet our customers’ demands;
•Success in entering and growth in new markets;
•Levels of variation in our customers’ shipment volumes, sales prices and product mix;
•Variation in contract and other revenue, based on varying revenue recognized from contract and other revenue;
•Implications of short-term or long-term increases in our research and development expenses;
•Short-term increases in cost of product revenue;
•Variation in our sales, general and administrative expenses;
•Terms of our licenses and amounts owed under license agreements;
•Technology product development;
•Perceived or actual changes in the quality of our products;
•Dispositions, acquisitions, mergers or strategic transactions and our related integration efforts;
•Impairment of goodwill and long-lived assets;
•Pricing policies of our customers;
•Changes in our strategy and business model, including the expansion of our portfolio of inventions, products, software, services and solutions to address additional markets in memory, chip and security;
•Deterioration of financial health of commercial counterparties and their ability to meet their obligations to us;
•Effects of security breaches or failures in our or our customers’ products and services on our business;
•Engineering, sales, legal, advertising, marketing, general and administration, and other expenses;
•Contract revenue;
•Operating results;
•Continued product revenue growth, specifically in connection with the growth in sales of our memory interface chips;
•International licenses, operations and expansion;
•Effects of changes in the economy and credit market on our industry and business;
•Effects of natural disasters, climate change and extreme weather events on our supply chain;
•Ability to identify, attract, motivate and retain qualified personnel;
•Effects of government regulations on our industry and business;
•Manufacturing, shipping and supply partners, supply chain availability and/or sale and distribution channels;
•Growth in our business;
•Methods, estimates and judgments in accounting policies;
•Adoption of new accounting pronouncements;
•Effective tax rates, including as a result of recent U.S. tax legislation;
•Restructurings and plans of termination;
•Realization of deferred tax assets/release of deferred tax valuation allowance;
•Trading price of our common stock;
•Internal control environment;
•Protection of intellectual property (“IP”);
•Any changes in laws, agency actions and judicial rulings that may impact the ability to enforce our IP rights;
•Indemnification and technical support obligations;
•Equity repurchase programs;
•Issuances of debt or equity securities, which could involve restrictive covenants or be dilutive to our existing stockholders;
•Effects of fluctuations in interest rates and currency exchange rates;
•Effects of a varying rate of inflation;
•Effects of U.S. government restrictions on exports, including with China;
•Effects of current and future uncertainty in the worldwide economy, including major central bank policies and worldwide changes in credit markets;
•Effects of changes in macroeconomic conditions, increased risk of recession and geopolitical issues;
•Management of supply chain risks; and
•Outcome and effect of potential future IP litigation and other significant litigation.
You can identify these and other forward-looking statements by the use of words such as “may,” “future,” “shall,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continue,” “projecting” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements.
Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part II, Item 1A, “Risk Factors.” All forward-looking statements included in this document are based on our assessment of information available to us at this time. We assume no obligation to update any forward-looking statements.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
RAMBUS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | | | | | | | | | | | | |
| (In thousands, except shares and par value) | | September 30,
2024 | | December 31,
2023 |
| ASSETS | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 113,980 | | | $ | 94,767 | |
| Marketable securities | | 318,717 | | | 331,077 | |
| Accounts receivable | | 87,198 | | | 82,925 | |
| Unbilled receivables | | 30,778 | | | 50,872 | |
| Inventories | | 48,905 | | | 36,154 | |
| | | | |
| Prepaids and other current assets | | 12,435 | | | 34,850 | |
| | | | |
| Total current assets | | 612,013 | | | 630,645 | |
| Intangible assets, net | | 19,389 | | | 28,769 | |
| Goodwill | | 286,812 | | | 286,812 | |
| Property, plant and equipment, net | | 73,374 | | | 67,808 | |
| Operating lease right-of-use assets | | 21,039 | | | 21,497 | |
| | | | |
| Deferred tax assets | | 129,348 | | | 127,892 | |
| Income taxes receivable | | 104,270 | | | 88,768 | |
| Other assets | | 5,325 | | | 6,036 | |
| Total assets | | $ | 1,251,570 | | | $ | 1,258,227 | |
LIABILITIES & STOCKHOLDERS’ EQUITY | | | | |
| Current liabilities: | | | | |
| Accounts payable | | $ | 20,365 | | | $ | 18,074 | |
| Accrued salaries and benefits | | 13,966 | | | 17,504 | |
| | | | |
| | | | |
| Deferred revenue | | 18,404 | | | 17,393 | |
| | | | |
| Income taxes payable | | 1,114 | | | 5,099 | |
| Operating lease liabilities | | 5,397 | | | 4,453 | |
| | | | |
| Other current liabilities | | 14,881 | | | 26,598 | |
| Total current liabilities | | 74,127 | | | 89,121 | |
| | | | |
| | | | |
| Long-term operating lease liabilities | | 24,794 | | | 26,255 | |
| Long-term income taxes payable | | 101,350 | | | 78,947 | |
| | | | |
| Other long-term liabilities | | 12,314 | | | 25,803 | |
| Total liabilities | | 212,585 | | | 220,126 | |
Commitments and contingencies (Notes 9, 11 and 15) | | | | |
| Stockholders’ equity: | | | | |
Convertible preferred stock, $0.001 par value: | | | | |
Authorized: 5,000,000 shares; issued and outstanding: no shares at September 30, 2024 and December 31, 2023 | | — | | | — | |
Common stock, $0.001 par value: | | | | |
Authorized: 500,000,000 shares; issued and outstanding: 106,575,437 shares at September 30, 2024 and 107,853,778 shares at December 31, 2023 | | 107 | | | 108 | |
| Additional paid-in capital | | 1,255,183 | | | 1,324,796 | |
| Accumulated deficit | | (215,862) | | | (285,534) | |
| Accumulated other comprehensive loss | | (443) | | | (1,269) | |
| Total stockholders’ equity | | 1,038,985 | | | 1,038,101 | |
| Total liabilities and stockholders’ equity | | $ | 1,251,570 | | | $ | 1,258,227 | |
Refer to Notes to Unaudited Condensed Consolidated Financial Statements
RAMBUS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | | September 30, | | September 30, |
| (In thousands, except per share amounts) | | 2024 | | 2023 | | 2024 | | 2023 |
| Revenue: | | | | | | | | |
| Product revenue | | $ | 66,394 | | | $ | 52,181 | | | $ | 173,446 | | | $ | 170,934 | |
| Royalties | | 64,105 | | | 28,857 | | | 167,961 | | | 97,698 | |
| Contract and other revenue | | 15,014 | | | 24,260 | | | 54,115 | | | 70,260 | |
| Total revenue | | 145,513 | | | 105,298 | | | 395,522 | | | 338,892 | |
| Cost of revenue: | | | | | | | | |
| Cost of product revenue | | 24,554 | | | 19,388 | | | 67,381 | | | 64,554 | |
| Cost of contract and other revenue | | 752 | | | 1,295 | | | 2,307 | | | 4,280 | |
| Amortization of acquired intangible assets | | 2,796 | | | 3,349 | | | 8,904 | | | 10,472 | |
| Total cost of revenue | | 28,102 | | | 24,032 | | | 78,592 | | | 79,306 | |
| Gross profit | | 117,411 | | | 81,266 | | | 316,930 | | | 259,586 | |
| Operating expenses (benefits): | | | | | | | | |
| Research and development | | 41,299 | | | 37,368 | | | 119,183 | | | 120,842 | |
| Sales, general and administrative | | 25,867 | | | 25,333 | | | 76,096 | | | 82,484 | |
| | | | | | | | |
| Amortization of acquired intangible assets | | 94 | | | 258 | | | 476 | | | 1,022 | |
| Restructuring and other charges (recoveries) | | — | | | (100) | | | — | | | 9,394 | |
| Gain on divestiture | | — | | | (90,843) | | | — | | | (90,843) | |
| Impairment of assets | | — | | | 10,045 | | | 1,071 | | | 10,045 | |
| Change in fair value of earn-out liability | | (4,544) | | | (5,666) | | | (5,044) | | | 8,134 | |
| | | | | | | | |
| | | | | | | | |
| Total operating expenses (benefits) | | 62,716 | | | (23,605) | | | 191,782 | | | 141,078 | |
| Operating income | | 54,695 | | | 104,871 | | | 125,148 | | | 118,508 | |
| Interest income and other income (expense), net | | 4,667 | | | 2,715 | | | 13,654 | | | 7,112 | |
| | | | | | | | |
| | | | | | | | |
| Loss on fair value adjustment of derivatives, net | | — | | | — | | | — | | | (240) | |
| | | | | | | | |
| Interest expense | | (327) | | | (356) | | | (1,064) | | | (1,113) | |
| Interest and other income (expense), net | | 4,340 | | | 2,359 | | | 12,590 | | | 5,759 | |
| Income before income taxes | | 59,035 | | | 107,230 | | | 137,738 | | | 124,267 | |
| Provision for (benefit from) income taxes | | 10,370 | | | 4,032 | | | 20,119 | | | (151,092) | |
| Net income | | $ | 48,665 | | | $ | 103,198 | | | $ | 117,619 | | | $ | 275,359 | |
| Net income per share: | | | | | | | | |
| Basic | | $ | 0.45 | | | $ | 0.95 | | | $ | 1.09 | | | $ | 2.54 | |
| Diluted | | $ | 0.45 | | | $ | 0.93 | | | $ | 1.08 | | | $ | 2.48 | |
| Weighted-average shares used in per share calculation: | | | | | | | | |
| Basic | | 107,235 | | | 108,317 | | | 107,681 | | | 108,412 | |
| Diluted | | 108,474 | | | 110,775 | | | 109,318 | | | 111,179 | |
Refer to Notes to Unaudited Condensed Consolidated Financial Statements
RAMBUS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | | September 30, | | September 30, |
| (In thousands) | | 2024 | | 2023 | | 2024 | | 2023 |
| Net income | | $ | 48,665 | | | $ | 103,198 | | | $ | 117,619 | | | $ | 275,359 | |
| Other comprehensive income (loss): | | | | | | | | |
| Foreign currency translation adjustment | | 97 | | | (166) | | | (51) | | | 164 | |
| Unrealized gain on marketable securities, net of tax | | 1,426 | | | 827 | | | 877 | | | 2,431 | |
| Total comprehensive income | | $ | 50,188 | | | $ | 103,859 | | | $ | 118,445 | | | $ | 277,954 | |
Refer to Notes to Unaudited Condensed Consolidated Financial Statements
RAMBUS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, 2024 |
| | Common Stock | | Additional Paid-in Capital | | Accumulated Deficit | | Accumulated Other
Comprehensive Loss | | |
| (In thousands) | | Shares | | Amount | | | | | Total |
| Balances at June 30, 2024 | | 107,680 | | | $ | 108 | | | $ | 1,295,277 | | | $ | (264,527) | | | $ | (1,966) | | | $ | 1,028,892 | |
| Net income | | — | | | — | | | — | | | 48,665 | | | — | | | 48,665 | |
| Foreign currency translation adjustment | | — | | | — | | | — | | | — | | | 97 | | | 97 | |
| Unrealized gain on marketable securities, net of tax | | — | | | — | | | — | | | — | | | 1,426 | | | 1,426 | |
| Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan, net of withholding taxes | | 68 | | | — | | | (1,623) | | | — | | | — | | | (1,623) | |
| | | | | | | | | | | | |
| Repurchase and retirement of common stock under repurchase program (includes excise tax) | | (1,173) | | | (1) | | | (50,469) | | | — | | | — | | | (50,470) | |
| Stock-based compensation | | — | | | — | | | 11,998 | | | — | | | — | | | 11,998 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Balances at September 30, 2024 | | 106,575 | | | $ | 107 | | | $ | 1,255,183 | | | $ | (215,862) | | | $ | (443) | | | $ | 1,038,985 | |
| | | | | | | | | | | | |
| | For the Three Months Ended September 30, 2023 |
| | Common Stock | | Additional Paid-in Capital | | Accumulated Deficit | | Accumulated Other
Comprehensive Loss | | |
| (In thousands) | | Shares | | Amount | | | | | Total |
| Balances at June 30, 2023 | | 109,131 | | | $ | 109 | | | $ | 1,301,013 | | | $ | (352,535) | | | $ | (3,029) | | | $ | 945,558 | |
| Net income | | — | | | — | | | — | | | 103,198 | | | — | | | 103,198 | |
| Foreign currency translation adjustment | | — | | | — | | | — | | | — | | | (166) | | | (166) | |
| Unrealized gain on marketable securities, net of tax | | — | | | — | | | — | | | — | | | 827 | | | 827 | |
| Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan, net of withholding taxes | | 233 | | | — | | | (3,366) | | | — | | | — | | | (3,366) | |
| Repurchase and retirement of common stock under repurchase program | | (1,855) | | | (1) | | | (5,781) | | | (94,742) | | | | | (100,524) | |
| Stock-based compensation | | — | | | — | | | 10,039 | | | — | | | — | | | 10,039 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Balances at September 30, 2023 | | 107,509 | | | $ | 108 | | | $ | 1,301,905 | | | $ | (344,079) | | | $ | (2,368) | | | $ | 955,566 | |
| | | | | | | | | | | | |
| | For the Nine Months Ended September 30, 2024 |
| | Common Stock | | Additional Paid-in Capital | | Accumulated Deficit | | Accumulated Other
Comprehensive Loss | | |
| (In thousands) | | Shares | | Amount | | | | | Total |
Balances at December 31, 2023 | | 107,854 | | | $ | 108 | | | $ | 1,324,796 | | | $ | (285,534) | | | $ | (1,269) | | | $ | 1,038,101 | |
| Net income | | — | | | — | | | — | | | 117,619 | | | — | | | 117,619 | |
| Foreign currency translation adjustment | | — | | | — | | | — | | | — | | | (51) | | | (51) | |
| Unrealized gain on marketable securities, net of tax | | — | | | — | | | — | | | — | | | 877 | | | 877 | |
| Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan, net of withholding taxes | | 932 | | | 1 | | | (36,866) | | | — | | | — | | | (36,865) | |
| Repurchase and retirement of common stock under repurchase program (includes excise tax) | | (2,211) | | | (2) | | | (65,892) | | | (47,947) | | | — | | | (113,841) | |
| Stock-based compensation | | — | | | — | | | 33,145 | | | — | | | — | | | 33,145 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Balances at September 30, 2024 | | 106,575 | | | $ | 107 | | | $ | 1,255,183 | | | $ | (215,862) | | | $ | (443) | | | $ | 1,038,985 | |
| | | | | | | | | | | | |
| | For the Nine Months Ended September 30, 2023 |
| | Common Stock | | Additional Paid-in Capital | | Accumulated Deficit | | Accumulated Other
Comprehensive Loss | | |
| (In thousands) | | Shares | | Amount | | | | | Total |
Balances at December 31, 2022 | | 107,610 | | | $ | 108 | | | $ | 1,297,408 | | | $ | (513,256) | | | $ | (4,963) | | | $ | 779,297 | |
| Net income | | — | | | — | | | — | | | 275,359 | | | — | | | 275,359 | |
| Foreign currency translation adjustment | | — | | | — | | | — | | | — | | | 164 | | | 164 | |
| Unrealized gain on marketable securities, net of tax | | — | | | — | | | — | | | — | | | 2,431 | | | 2,431 | |
| Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan, net of withholding taxes | | 1,556 | | | 1 | | | (30,204) | | | — | | | — | | | (30,203) | |
| Repurchase and retirement of common stock under repurchase program | | (1,855) | | | (1) | | | (5,781) | | | (94,742) | | | — | | | (100,524) | |
| Stock-based compensation | | — | | | — | | | 34,477 | | | — | | | — | | | 34,477 | |
| Issuance of common stock in connection with the payment of year 1 earn-out related to the PLDA Group (“PLDA”) acquisition | | 198 | | | — | | | 5,022 | | | — | | | — | | | 5,022 | |
| Issuance of common stock in connection with the maturity of the convertible senior notes related to the settlement of the in-the-money conversion feature of the convertible senior notes | | 284 | | | — | | | — | | | — | | | — | | | — | |
| Exercise of the convertible senior note hedges in connection with the conversion of convertible senior notes and retirement of the corresponding shares | | (284) | | | — | | | 11,440 | | | (11,440) | | | — | | | — | |
| Retirement of warrants | | — | | | — | | | (10,457) | | | — | | | — | | | (10,457) | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Balances at September 30, 2023 | | 107,509 | | | $ | 108 | | | $ | 1,301,905 | | | $ | (344,079) | | | $ | (2,368) | | | $ | 955,566 | |
Refer to Notes to Unaudited Condensed Consolidated Financial Statements
RAMBUS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | | | | | | | | |
| | Nine Months Ended |
| | | September 30, |
| (In thousands) | | 2024 | | 2023 |
| Cash flows from operating activities: | | | | |
| Net income | | $ | 117,619 | | | $ | 275,359 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
| Stock-based compensation | | 33,145 | | | 34,477 | |
| Depreciation | | 23,000 | | | 26,608 | |
| Amortization of intangible assets | | 9,380 | | | 11,494 | |
| | | | |
| | | | |
| Loss on fair value adjustment of derivatives, net | | — | | | 240 | |
| Impairment of assets | | 1,071 | | | 10,045 | |
| Gain on divestiture | | — | | | (90,843) | |
| Deferred income taxes | | (2,217) | | | (147,144) | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Change in fair value of earn-out liability | | (5,044) | | | 8,134 | |
| Other | | 19 | | | 649 | |
| | | | |
| | | | |
| Change in operating assets and liabilities, net of effects of disposition: | | | | |
| Accounts receivable | | (4,279) | | | (10,984) | |
| Unbilled receivables | | 20,938 | | | 81,418 | |
| Prepaids and other current assets | | (1,694) | | | 785 | |
| Inventories | | (12,751) | | | (13,715) | |
| Income taxes receivable | | (15,502) | | | (83,423) | |
| Accounts payable | | 2,295 | | | (7,436) | |
| Accrued salaries and benefits and other liabilities | | (9,666) | | | (7,596) | |
| Income taxes payable | | 17,890 | | | 61,736 | |
| Deferred revenue | | 1,259 | | | (4,783) | |
| Operating lease liabilities | | (3,848) | | | (4,085) | |
| Net cash provided by operating activities | | 171,615 | | | 140,936 | |
| Cash flows from investing activities: | | | | |
| Purchases of property, plant, and equipment | | (24,208) | | | (22,454) | |
| | | | |
| | | | |
| Purchases of marketable securities | | (278,158) | | | (298,289) | |
| Maturities of marketable securities | | 206,861 | | | 127,467 | |
| | | | |
| Proceeds from sales of marketable securities | | 85,722 | | | 117,798 | |
| Proceeds from divestiture | | — | | | 106,347 | |
| | | | |
| Proceeds from sale of non-marketable equity security | | 22,796 | | | — | |
| | | | |
| | | | |
| Net cash provided by investing activities | | 13,013 | | | 30,869 | |
| Cash flows from financing activities: | | | | |
| Proceeds from issuance of common stock under employee stock plans | | 3,447 | | | 6,453 | |
| Payments of taxes on restricted stock units | | (40,312) | | | (36,656) | |
| Payments under installment payment arrangements | | (12,699) | | | (11,323) | |
| Payments for settlement and repurchase of convertible senior notes | | — | | | (10,381) | |
| | | | |
| | | | |
| Payments for settlement of warrants | | — | | | (10,697) | |
| Payment of deferred purchase consideration from acquisition | | (2,450) | | | (2,450) | |
| | | | |
| Repurchase and retirement of common stock | | (113,312) | | | (100,325) | |
| Net cash used in financing activities | | (165,326) | | | (165,379) | |
| Effect of exchange rate changes on cash and cash equivalents | | (89) | | | (163) | |
| Net increase in cash and cash equivalents | | 19,213 | | | 6,263 | |
| Cash and cash equivalents at beginning of period | | 94,767 | | | 125,694 | |
| Cash and cash equivalents at end of period | | $ | 113,980 | | | $ | 131,957 | |
| | | | |
| Non-cash operating, investing and financing activities: | | | | |
| Property, plant and equipment received and accrued in accounts payable and other liabilities | | $ | 1,510 | | | $ | 375 | |
| Operating lease right-of-use assets obtained in exchange for operating lease obligations | | $ | 3,331 | | | $ | 273 | |
| Issuance of common stock in connection with the payment of year 1 earn-out related to the PLDA acquisition | | $ | — | | | $ | 5,022 | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Refer to Notes to Unaudited Condensed Consolidated Financial Statements
RAMBUS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of Rambus Inc. (“Rambus” or the “Company”) and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the accompanying Unaudited Condensed Consolidated Financial Statements.
In the opinion of management, the Unaudited Condensed Consolidated Financial Statements include all adjustments (consisting only of normal recurring items) necessary to state fairly the financial position and results of operations for each interim period presented. Interim results are not necessarily indicative of results for a full year.
Financial Statement Preparation
The Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) applicable to interim financial information. Certain information and note disclosures included in the financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been omitted in these interim statements pursuant to such SEC rules and regulations. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto in Form 10-K for the year ended December 31, 2023.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications
Certain prior-year balances were reclassified to conform to the current year’s presentation. None of these reclassifications had an impact on reported net income or cash flows for any of the periods presented.
Significant Accounting Policies
There were no material changes to Rambus’s significant accounting policies disclosed in Note 2, “Summary of Significant Accounting Policies,” of Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
2. Recent Accounting Pronouncements
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This guidance requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker. In addition, this ASU requires that all existing annual disclosures about segment profit or loss must be provided on an interim basis and clarifies that single reportable segment entities are subject to the disclosure requirement under Topic 280 in its entirety. This ASU is effective for annual reporting periods beginning after December 15, 2023, and interim reporting periods within annual reporting periods beginning after December 15, 2024. Early adoption is permitted. The amendments in this ASU should be applied on a retrospective basis. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance requires additional disclosures related to rate reconciliation, income taxes paid and other disclosures. For each annual period presented, public business entities are required to 1) disclose specific categories in the rate reconciliation and 2) provide additional information for reconciling items that meet a quantitative threshold. In addition, this ASU requires all reporting entities to disclose on an annual basis the amount of income taxes paid disaggregated by federal, state and foreign taxes, as well as the amount of income taxes paid disaggregated by individual jurisdictions which meet a quantitative threshold. This ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. The
amendments in this ASU should be applied on a prospective basis, with retrospective application permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.
3. Revenue Recognition
Contract Balances
The contract assets are primarily related to the Company’s fixed fee intellectual property (“IP”) licensing arrangements and rights to consideration for performance obligations delivered but not billed as of September 30, 2024.
The Company’s contract balances were as follows:
| | | | | | | | | | | | | | |
| | As of |
| (In thousands) | | September 30, 2024 | | December 31, 2023 |
| Unbilled receivables | | $ | 34,357 | | | $ | 55,295 | |
| Deferred revenue | | $ | 19,346 | | | $ | 18,085 | |
During the nine months ended September 30, 2024, the Company recognized $16.4 million of revenue that was included in deferred revenue as of December 31, 2023. During the nine months ended September 30, 2023, the Company recognized $19.3 million of revenue that was included in deferred revenue as of December 31, 2022.
Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. Contracted but unsatisfied performance obligations were approximately $28.2 million as of September 30, 2024, which the Company primarily expects to recognize over the next 2 years.
4. Earnings Per Share
Basic earnings per share is calculated by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the earnings by the weighted-average number of common shares and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of incremental common shares issuable upon exercise of stock options, employee stock purchases, and restricted stock and restricted stock units and shares issuable upon the conversion of convertible notes. The dilutive effect of outstanding shares is reflected in diluted earnings per share by application of the treasury stock method, or the if-converted method for the in-the-money conversion feature of the Company’s 2023 Notes (“the 2023 Notes”). This method includes consideration of the amounts to be paid by the employees, the amount of excess tax benefits that would be recognized in equity if the instrument was exercised and the amount of unrecognized stock-based compensation related to future services. No potential dilutive common shares are included in the computation of any diluted per share amount when a net loss is reported.
The following table sets forth the computation of basic and diluted net income per share:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | | September 30, | | September 30, |
| (In thousands, except per share amounts) | | 2024 | | 2023 | | 2024 | | 2023 |
| Net income per share: | | | | | | | | |
| Numerator: | | | | | | | | |
| Net income | | $ | 48,665 | | | $ | 103,198 | | | $ | 117,619 | | | $ | 275,359 | |
| Denominator: | | | | | | | | |
| Weighted-average shares outstanding - basic | | 107,235 | | 108,317 | | 107,681 | | 108,412 |
| Effect of potentially dilutive common shares | | 1,239 | | | 2,458 | | | 1,637 | | | 2,767 | |
| Weighted-average shares outstanding - diluted | | 108,474 | | 110,775 | | 109,318 | | 111,179 |
| Basic net income per share | | $ | 0.45 | | | $ | 0.95 | | | $ | 1.09 | | | $ | 2.54 | |
| Diluted net income per share | | $ | 0.45 | | | $ | 0.93 | | | $ | 1.08 | | | $ | 2.48 | |
5. Intangible Assets and Goodwill
Goodwill
The following tables present goodwill information for the nine months ended September 30, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | As of December 31, 2023 | | | | | | | | Adjustments to
Goodwill | | | | As of September 30, 2024 |
| Total goodwill | | $ | 286,812 | | | | | | | | | $ | — | | | | | $ | 286,812 | |
Intangible Assets, Net
The components of the Company’s intangible assets as of September 30, 2024 and December 31, 2023 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | As of September 30, 2024 |
| (In thousands, except useful life) | | Useful Life | | Gross Carrying
Amount | | Accumulated Amortization | | | | Net Carrying Amount |
| Existing technology | | 3 to 10 years | | $ | 286,712 | | | $ | (274,765) | | | | | $ | 11,947 | |
| Customer contracts and contractual relationships | | 0.5 to 10 years | | 37,496 | | | (37,454) | | | | | 42 | |
| Trademarks | | 3 years | | 300 | | | (300) | | | | | — | |
| In-process research and development (“IPR&D”) | | Not applicable | | 7,400 | | | — | | | | | 7,400 | |
| Total intangible assets | | | | $ | 331,908 | | | $ | (312,519) | | | | | $ | 19,389 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | As of December 31, 2023 |
| (In thousands, except useful life) | | Useful Life | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount |
| Existing technology | | 3 to 10 years | | $ | 286,712 | | | $ | (265,756) | | | $ | 20,956 | |
| Customer contracts and contractual relationships | | 0.5 to 10 years | | 37,496 | | | (37,083) | | | 413 | |
| Trademarks | | 3 years | | 300 | | | (300) | | | — | |
| IPR&D | | Not applicable | | 7,400 | | | — | | | 7,400 | |
| Total intangible assets | | | | $ | 331,908 | | | $ | (303,139) | | | $ | 28,769 | |
Amortization expense for intangible assets for the three and nine months ended September 30, 2024 was $2.9 million and $9.4 million, respectively. Amortization expense for intangible assets for the three and nine months ended September 30, 2023 was $3.6 million and $11.5 million, respectively.
The estimated future amortization of intangible assets as of September 30, 2024 was as follows (in thousands):
| | | | | | | | |
| Years Ending December 31: | | Amount |
| 2024 (remaining three months) | | $ | 2,349 | |
| 2025 | | 5,433 | |
| 2026 | | 3,744 | |
| 2027 | | 463 | |
| | |
| | |
| Total amortizable purchased intangible assets | | 11,989 | |
| IPR&D | | 7,400 | |
| Total intangible assets | | $ | 19,389 | |
6. Segments and Major Customers
Operating segments are based upon the Company’s internal organization structure, the manner in which its operations are managed, the criteria used by its Chief Operating Decision Maker (“CODM”) to evaluate segment performance and availability of separate financial information regularly reviewed for resource allocation and performance assessment.
The Company has determined its CODM to be the Chief Executive Officer (“CEO”). The CEO reviews financial information presented on a consolidated basis for purposes of managing the business, allocating resources, making operating decisions and assessing financial performance. On this basis, the Company is organized and operates as a single segment within the semiconductor space. As of September 30, 2024, the Company has a single operating and reportable segment.
Accounts receivable from the Company’s major customers representing 10% or more of total accounts receivable at September 30, 2024 and December 31, 2023, respectively, was as follows:
| | | | | | | | | | | | | | |
| | As of |
| Customer | | September 30, 2024 | | December 31, 2023 |
| Customer 1 | | 38 | % | | 49 | % |
| Customer 2 | | 24 | % | | 13 | % |
| Customer 3 | | * | | 12 | % |
| | | | |
| | | | |
| | | | |
| | | | |
_________________________________________
* Customer accounted for less than 10% of total accounts receivable in the period.
Revenue from the Company’s major customers representing 10% or more of total revenue for the three and nine months ended September 30, 2024 and 2023, respectively, was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | | September 30, | | September 30, |
| Customer | | 2024 | | 2023 | | 2024 | | 2023 |
| Customer A | | 21 | % | | 29 | % | | 23 | % | | 26 | % |
| Customer B | | 21 | % | | 25 | % | | 19 | % | | 18 | % |
| Customer C | | 10 | % | | * | | 11 | % | | * |
| Customer D | | 14 | % | | * | | * | | * |
| | | | | | | | |
__________________________________________
* Customer accounted for less than 10% of total revenue in the period.
Revenue from customers in the geographic regions based on the location of contracting parties was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | | September 30, | | September 30, |
| (In thousands) | | 2024 | | 2023 | | 2024 | | 2023 |
| USA | | $ | 46,315 | | | $ | 32,347 | | | $ | 153,915 | | | $ | 131,415 | |
| South Korea | | 56,129 | | | 38,228 | | | 134,931 | | | 100,985 | |
| Singapore | | 21,082 | | | 16,325 | | | 45,406 | | | 42,371 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Other | | 21,987 | | | 18,398 | | | 61,270 | | | 64,121 | |
| Total | | $ | 145,513 | | | $ | 105,298 | | | $ | 395,522 | | | $ | 338,892 | |
7. Marketable Securities
Rambus invests its excess cash and cash equivalents primarily in U.S. government-sponsored obligations, corporate bonds, commercial paper and notes, time deposits and money market funds that mature within three years.
All cash equivalents and marketable securities are classified as available-for-sale. Total cash, cash equivalents and marketable securities are summarized as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of September 30, 2024 | | |
| (In thousands) | | Fair Value | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | |
| Cash | | $ | 101,110 | | | $ | 101,110 | | | $ | — | | | $ | — | | | |
| Cash equivalents: | | | | | | | | | | |
| Money market funds | | 6,089 | | | 6,089 | | | — | | | — | | | |
| | | | | | | | | | |
| Corporate bonds, commercial paper and notes | | 6,781 | | | 6,781 | | | 1 | | | (1) | | | |
| Total cash equivalents | | 12,870 | | | 12,870 | | | 1 | | | (1) | | | |
| Total cash and cash equivalents | | 113,980 | | | 113,980 | | | 1 | | | (1) | | | |
| Marketable securities: | | | | | | | | | | |
| Time deposits | | 13,090 | | | 13,090 | | | — | | | — | | | |
| U.S. Government bonds and notes | | 180,035 | | | 179,639 | | | 428 | | | (32) | | | |
| Corporate bonds, commercial paper and notes | | 125,592 | | | 125,315 | | | 287 | | | (10) | | | |
| Total marketable securities | | 318,717 | | | 318,044 | | | 715 | | | (42) | | | |
| Total cash, cash equivalents and marketable securities | | $ | 432,697 | | | $ | 432,024 | | | $ | 716 | | | $ | (43) | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of December 31, 2023 | | |
| (In thousands) | | Fair Value | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | |
| Cash | | $ | 88,486 | | | $ | 88,486 | | | $ | — | | | $ | — | | | |
| Cash equivalents: | | | | | | | | | | |
| Money market funds | | 3,790 | | | 3,790 | | | — | | | — | | | |
| U.S. Government bonds and notes | | 2,491 | | | 2,491 | | | — | | | — | | | |
| Total cash equivalents | | 6,281 | | | 6,281 | | | — | | | — | | | |
| Total cash and cash equivalents | | 94,767 | | | 94,767 | | | — | | | — | | | |
| Marketable securities: | | | | | | | | | | |
| U.S. Government bonds and notes | | 194,428 | | | 194,389 | | | 251 | | | (212) | | | |
| Corporate bonds, commercial paper and notes | | 136,649 | | | 136,892 | | | 162 | | | (405) | | | |
| Total marketable securities | | 331,077 | | | 331,281 | | | 413 | | | (617) | | | |
| Total cash, cash equivalents and marketable securities | | $ | 425,844 | | | $ | 426,048 | | | $ | 413 | | | $ | (617) | | | |
Available-for-sale securities are reported at fair value on the balance sheets and classified along with cash as follows: | | | | | | | | | | | | | | |
| | As of |
| (In thousands) | | September 30, 2024 | | December 31, 2023 |
| Cash | | $ | 101,110 | | | $ | 88,486 | |
| Cash equivalents | | 12,870 | | | 6,281 | |
| Total cash and cash equivalents | | 113,980 | | | 94,767 | |
| Marketable securities | | 318,717 | | | 331,077 | |
| Total cash, cash equivalents and marketable securities | | $ | 432,697 | | | $ | 425,844 | |
The Company continues to invest in highly rated and highly liquid debt securities. The Company holds all of its marketable securities as available-for-sale, marks them to market, and regularly reviews its portfolio to ensure adherence to its investment policy and to monitor individual investments for risk analysis, proper valuation, and impairment.
The estimated fair value and gross unrealized losses of cash equivalents and marketable securities classified by the length of time that the securities have been in a continuous unrealized loss position at September 30, 2024 and December 31, 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Fair Value | | Gross Unrealized Losses |
| (In thousands) | | September 30, 2024 | | December 31, 2023 | | September 30, 2024 | | December 31, 2023 |
| Less than 12 months | | | | | | | | |
| U.S. Government bonds and notes | | $ | 46,746 | | | $ | 32,454 | | | $ | (32) | | | $ | (53) | |
| Corporate bonds, commercial paper and notes | | 21,009 | | | 46,407 | | | (11) | | | (40) | |
| Total cash equivalents and marketable securities in a continuous unrealized loss position for less than 12 months | | 67,755 | | | 78,861 | | | (43) | | | (93) | |
| 12 months or greater | | | | | | | | |
| U.S. Government bonds and notes | | — | | | 6,841 | | | — | | | (159) | |
| Corporate bonds, commercial paper and notes | | — | | | 16,619 | | | — | | | (365) | |
| Total marketable securities in a continuous unrealized loss position for 12 months or greater | | — | | | 23,460 | | | — | | | (524) | |
| Total cash equivalents and marketable securities in a continuous unrealized loss position | | $ | 67,755 | | | $ | 102,321 | | | $ | (43) | | | $ | (617) | |
The gross unrealized losses at September 30, 2024 and December 31, 2023 were not material in relation to the Company’s total available-for-sale portfolio. The gross unrealized losses can be primarily attributed to a combination of market conditions as well as the demand for and duration of the U.S. government-sponsored obligations and corporate bonds, commercial paper and notes. The Company reasonably believes that there is no need to sell these investments and that it can recover the amortized cost of these investments. The Company has found no evidence of impairment due to credit losses in its portfolio. Therefore, these unrealized losses were recorded in other comprehensive income (loss). The Company cannot provide any assurance that its portfolio of cash, cash equivalents and marketable securities will not be impacted by adverse conditions in the financial markets, which may require the Company in the future to record an impairment charge for credit losses which could adversely impact its financial results.
The contractual maturities of cash equivalents (excluding money market funds which have no maturity) and marketable securities are summarized as follows:
| | | | | | | | |
| | |
| (In thousands) | | September 30, 2024 |
| Due in less than one year | | $ | 282,683 | |
| Due from one year through three years | | 42,815 | |
| Total | | $ | 325,498 | |
Refer to Note 8, “Fair Value of Financial Instruments,” for a discussion regarding the fair value of the Company’s cash equivalents and marketable securities.
8. Fair Value of Financial Instruments
The following table presents the financial instruments and liabilities that are carried at fair value and summarizes their valuation by the respective pricing levels as of September 30, 2024 and December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | As of September 30, 2024 |
| (In thousands) | | Total | | Quoted Market Prices in Active Markets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) |
| Assets carried at fair value | | | | | | | | |
| Money market funds | | $ | 6,089 | | | $ | 6,089 | | | $ | — | | | $ | — | |
| Time deposits | | 13,090 | | | — | | | 13,090 | | | — | |
| U.S. Government bonds and notes | | 180,035 | | | — | | | 180,035 | | | — | |
| Corporate bonds, commercial paper and notes | | 132,373 | | | — | | | 132,373 | | | — | |
| Total assets carried at fair value | | $ | 331,587 | | | $ | 6,089 | | | $ | 325,498 | | | $ | — | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | As of December 31, 2023 |
| (In thousands) | | Total | | Quoted Market Prices in Active Markets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) |
| Assets carried at fair value | | | | | | | | |
| Money market funds | | $ | 3,790 | | | $ | 3,790 | | | $ | — | | | $ | — | |
| U.S. Government bonds and notes | | 196,919 | | | — | | | 196,919 | | | — | |
| Corporate bonds, commercial paper and notes | | 136,649 | | | — | | | 136,649 | | | — | |
| Total available-for-sale securities | | $ | 337,358 | | | $ | 3,790 | | | $ | 333,568 | | | $ | — | |
| Liabilities carried at fair value | | | | | | | | |
| Earn-out liability related to the PLDA acquisition | | $ | 12,500 | | | $ | — | | | $ | — | | | $ | 12,500 | |
| Total liabilities carried at fair value | | $ | 12,500 | | | $ | — | | | $ | — | | | $ | 12,500 | |
The Company’s liabilities related to earn-out liability were classified within Level 3 of the fair value hierarchy because the fair value was determined using significant unobservable inputs. The following table presents additional information about liabilities measured at fair value for which the Company utilizes Level 3 inputs to determine fair value, as of September 30, 2024 and 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30, | | September 30, |
| (In thousands) | | 2024 | | 2023 | | 2024 | | 2023 |
| Balance as of beginning of period | | $ | 12,000 | | | $ | 28,600 | | | $ | 12,500 | | | $ | 14,800 | |
| | | | | | | | |
| Change in fair value of earn-out liability due to remeasurement | | (4,544) | | | (5,666) | | | (5,044) | | | 8,134 | |
| Change in fair value of earn-out liability due to achievement of revenue target | | (7,456) | | | (11,534) | | | (7,456) | | | (11,534) | |
| | | | | | | | |
| Balance as of end of period | | $ | — | | | $ | 11,400 | | | $ | — | | | $ | 11,400 | |
For the three and nine months ended September 30, 2024 and 2023, the changes in the fair value of the earn-out liability related to the 2021 acquisition of PLDA, which was subject to certain revenue targets of the acquired business for a period of three years from the date of acquisition, and which is settled annually in shares of the Company’s common stock based on the fair value of that common stock fixed at the time the Company acquired PLDA. The fair value of the earn-out liability was remeasured each quarter, depending on the acquired business’s revenue performance relative to target over the applicable period, and adjusted to reflect changes in the per share value of the Company’s common stock. The Company classified its liability for the contingent earn-out liability related to the PLDA acquisition within Level 3 of the fair value hierarchy because the fair value calculation included significant unobservable inputs, such as revenue forecast, revenue volatility, equity volatility and weighted-average cost of capital. During the three and nine months ended September 30, 2024, the Company remeasured the fair value of the earn-out liability, which resulted in reductions of $4.5 million and $5.0 million, respectively, in the Company’s Unaudited Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2023, the Company remeasured the fair value of the earn-out liability, which resulted in a reduction of $5.7 million and additional expenses of $8.1 million, respectively, in the Company’s Unaudited Condensed Consolidated Statements of Operations. The final earn-out was achieved as of September 30, 2024 and is expected to be fully paid during the fourth quarter of 2024.
The Company monitors its investments for impairment and records appropriate reductions in carrying value when necessary. The Company monitors its investments for impairment by considering current factors, including the economic environment, market conditions, operational performance and other specific factors relating to the business underlying the investment, reductions in carrying values when necessary and the Company’s ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery in the market. Any impairment is reported under “Interest and other income (expense), net” in the Unaudited Condensed Consolidated Statements of Operations.
In 2018, the Company made an investment in a non-marketable equity security of a private company. This equity investment was accounted for under the equity method of accounting, and the Company accounted for its equity method share of the income (loss) on a quarterly basis. During the fourth quarter of 2023, the Company sold its 25.0% ownership share in the equity investment for approximately $25.0 million, which represented a gross gain on this transaction for the same amount. The gross gain was offset by transaction costs of approximately $1.1 million, resulting in a net gain of approximately $23.9 million, which was included in the Company’s Consolidated Statement of Operations for the year ended December 31, 2023. Subsequently, the Company received proceeds, net of tax, of approximately $22.8 million from this transaction during the first quarter of 2024.
During the three and nine months ended September 30, 2024 and 2023, there were no transfers of financial instruments between different categories of fair value.
9. Leases
The Company leases office space, domestically and internationally, under operating leases. The Company’s leases have remaining lease terms generally between one year and six years. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities and long-term operating lease liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheets. The Company does not have any finance leases.
The table below reconciles the undiscounted cash flows for the first five years and total of the remaining years to the operating lease liabilities recorded on the Unaudited Condensed Consolidated Balance Sheet as of September 30, 2024 (in thousands):
| | | | | | | | |
| Years ending December 31, | | Amount |
| 2024 (remaining three months) | | $ | 1,723 | |
| 2025 | | 6,939 | |
| 2026 | | 7,209 | |
| 2027 | | 5,661 | |
| 2028 | | 4,549 | |
| Thereafter | | 8,453 | |
| Total minimum lease payments | | 34,534 | |
| Less: amount of lease payments representing interest | | (4,343) | |
| Present value of future minimum lease payments | | 30,191 | |
| Less: current obligations under leases | | (5,397) | |
| Long-term lease obligations | | $ | 24,794 | |
| | |
As of September 30, 2024, the weighted-average remaining lease term for the Company’s operating leases was 5.4 years and the weighted-average discount rate used to determine the present value of the Company’s operating leases was 7.3%.
Operating lease costs included in research and development and selling, general and administrative costs on the Unaudited Condensed Consolidated Statements of Operations were $1.4 million and $1.3 million for the three months ended September 30, 2024 and 2023, respectively. Operating lease costs included in research and development and selling, general and administrative costs on the Unaudited Condensed Consolidated Statements of Operations were $4.0 million and $4.7 million for the nine months ended September 30, 2024 and 2023, respectively.
Cash paid for amounts included in the measurement of operating lease liabilities were $4.5 million and $5.2 million for the nine months ended September 30, 2024 and 2023, respectively.
10. Convertible Notes
The Company did not have any convertible notes outstanding as of September 30, 2024 and December 31, 2023.
During the first quarter of 2023, the holders of the remaining $10.4 million aggregate principal amount of the 2023 Notes elected to convert the notes pursuant to the original terms of the conversion feature. Accordingly, upon maturity, the Company paid $10.4 million in cash to settle the aggregate principal amount of the 2023 Notes and delivered approximately 0.3 million shares of the Company's common stock to settle the conversion spread.
In connection with the settlement of the conversion of the remaining 2023 Notes, the Company received 0.3 million shares of the Company’s common stock for the retirement of the remaining convertible senior note hedges and paid $10.7 million in cash for the retirement of the remaining warrants during the first quarter of 2023. Additionally, the retirement of the remaining warrants was subject to derivative accounting, resulting in a loss on fair value adjustment of derivatives of $0.2 million for the nine months ended September 30, 2023.
Interest expense related to the convertible notes for the nine months ended September 30, 2023 was immaterial.
11. Commitments and Contingencies
As of September 30, 2024, the Company’s material contractual obligations were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | Total | | Remainder of 2024 | | 2025 | | 2026 | | | | | | |
Contractual obligations (1) (2) | | | | | | | | | | | | | | |
Software licenses (3) | | $ | 13,001 | | | $ | 4,044 | | | $ | 8,520 | | | $ | 437 | | | | | | | |
| Other contractual obligations | | 300 | | | 31 | | | 131 | | | 138 | | | | | | | |
Acquisition retention bonuses (4) | | 275 | | | — | | | 275 | | | — | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Total | | $ | 13,576 | | | $ | 4,075 | | | $ | 8,926 | | | $ | 575 | | | | | | | |
_________________________________________
(1) The above table does not reflect possible payments in connection with unrecognized tax benefits of approximately $126.9 million, including $25.6 million recorded as a reduction of long-term deferred tax assets and $101.3 million in long-term income taxes payable as of September 30, 2024. As noted below in Note 14, “Income Taxes,” although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, the Company cannot reasonably estimate the timing of the outcome at this time.
(2) For the Company’s lease commitments as of September 30, 2024, refer to Note 9, “Leases.”
(3) The Company has commitments with various software vendors for agreements generally having terms longer than one year.
(4) In connection with the acquisitions of Hardent in the second quarter of 2022 and PLDA in the third quarter of 2021, the Company is obligated to pay retention bonuses to certain employees subject to certain eligibility and acceleration provisions, including the condition of employment.
From time to time, the Company indemnifies certain customers as a necessary means of doing business. Indemnification covers customers for losses suffered or incurred by them as a result of any patent, copyright, or other IP infringement or any other claim by any third party arising as a result of the applicable agreement with the Company. The Company generally attempts to limit the maximum amount of indemnification that the Company could be required to make under these agreements to the amount of fees received by the Company, however, this may not always be possible. The fair value of the liability as of September 30, 2024 and December 31, 2023, respectively, was not material.
12. Equity Incentive Plans and Stock-Based Compensation
A summary of shares available for grant under the Company’s plans is as follows:
| | | | | | | | |
| | | Shares Available for Grant |
| Total shares available for grant as of December 31, 2023 | | 11,954,150 |
| | |
| | |
| | |
| Stock options expired | | 1,125 |
Nonvested equity stock and stock units granted (1) (2) | | (1,145,510) |
Nonvested equity stock and stock units forfeited (1) | | 290,495 |
| Total shares available for grant as of September 30, 2024 | | 11,100,260 |
_________________________________________
(1) For purposes of determining the number of shares available for grant under the 2015 Plan against the maximum number of shares authorized, each restricted stock unit granted prior to April 27, 2023 reduces the number of shares available for grant by 1.5 shares and each restricted stock unit forfeited increases shares available for grant by 1.5 shares. Each restricted stock unit granted on or after April 27, 2023 reduces the number of shares available for grant by 1.0 share and each restricted stock unit forfeited increases shares available for grant by 1.0 share.
(2) Amount includes approximately 0.1 million shares that have been reserved for potential future issuance related to certain performance unit awards granted in the second quarter of 2024 and discussed under the section titled “Nonvested Equity Stock and Stock Units” below.
General Stock Option Information
The following table summarizes stock option activity under the Company’s equity incentive plans for the nine months ended September 30, 2024 and information regarding stock options outstanding, exercisable, and vested and expected to vest as of September 30, 2024.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Options Outstanding | | | | |
| (In thousands, except shares, per share amounts and years) | | Number of Shares | | Weighted- Average Exercise Price Per Share | | Weighted- Average Remaining Contractual Term (years) | | Aggregate Intrinsic Value |
| Outstanding as of December 31, 2023 | | 124,732 | | $ | 11.60 | | | | | |
| | | | | | | | |
| Options exercised | | (33,607) | | $ | 9.42 | | | | | $ | 1,102 | |
| Options expired | | (1,125) | | $ | 8.76 | | | | | |
| Outstanding and vested as of September 30, 2024 | | 90,000 | | $ | 12.45 | | | 3.79 | | $ | 2,679 | |
| | | | | | | | |
| | | | | | | | |
Employee Stock Purchase Plan
Under the 2015 Employee Stock Purchase Plan (“2015 ESPP”) the Company issued 69,828 shares at a price of $44.84 and 120,569 shares at a price of $27.91 per share during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, approximately 2.3 million shares under the 2015 ESPP remained available for issuance.
Stock-Based Compensation
For the nine months ended September 30, 2024 and 2023, the Company maintained stock plans covering a broad range of potential equity grants, including stock options, nonvested equity stock and equity stock units and performance-based instruments. In addition, the Company sponsors the 2015 ESPP, whereby eligible employees are entitled to purchase common stock semi-annually, by means of limited payroll deductions, at a 15% discount from the fair market value of the common stock as of specific dates.
Stock Options
There were no stock options granted during the nine months ended September 30, 2024 and 2023, respectively. All compensation cost net of expected forfeitures, related to unvested stock-based compensation arrangements granted under the stock option plans had been fully recognized as of December 31, 2023. There was no stock-based compensation expense related to stock options for the nine months ended September 30, 2024. Stock-based compensation expense related to stock options was immaterial for the nine months ended September 30, 2023.
Employee Stock Purchase Plan
For the three and nine months ended September 30, 2024 the Company recorded stock-based compensation expense related to the 2015 ESPP of $0.4 million and $1.4 million, respectively. For the three and nine months ended September 30, 2023, the Company recorded stock-based compensation expense related to the 2015 ESPP of $0.5 million and $1.5 million, respectively. As of September 30, 2024, there was $0.1 million of total unrecognized compensation cost related to stock-based compensation arrangements granted under the 2015 ESPP. That cost is expected to be recognized over one month.
Nonvested Equity Stock and Stock Units
The Company grants nonvested equity stock units to officers, employees and directors. During the three and nine months ended September 30, 2024, the Company granted nonvested equity stock units totaling approximately 0.1 million and 1.0 million shares, respectively. During the three months ended September 30, 2023, the Company granted an immaterial amount of nonvested equity stock units. During the nine months ended September 30, 2023, the Company granted nonvested equity stock units totaling approximately 1.2 million shares. These awards have a service condition, generally a service period of four years, except in the case of grants to directors, for which the service period is one year. For the three and nine months ended September 30, 2024, the nonvested equity stock units granted were valued at the date of grant giving them a fair value of approximately $4.1 million and $59.8 million, respectively. For the three and nine months ended September 30, 2023, the nonvested equity stock units granted were valued at the date of grant giving them a fair value of approximately $2.1 million and $57.3 million, respectively. During the second quarter of 2024, as part of its updated annual grant process, the Company granted performance unit awards to certain company executive officers with vesting subject to the achievement of certain performance and/or market conditions. During the first quarter of 2023, as part of its previous annual grant process, the Company granted performance unit awards to certain company executive officers with vesting subject to the achievement of certain performance and/or market conditions. The ultimate number of performance units that can be earned can range from 0% to 200% of target depending on performance relative to target over the applicable period. The shares earned will vest on the third or fourth anniversary of the date of grant. The Company’s shares available for grant have been reduced to reflect the shares that could be earned at the maximum t