• Revenue: $166.7 million, above expectations.
• Product Revenue: $76.3 million, up 4% sequentially and 52% year-over-year.
• Royalty Revenue: $74 million.
• Licensing Billings: $73.3 million.
• Contract and Other Revenue: $16.4 million.
• Operating Costs: $90.4 million.
• Operating Expenses: $59.4 million.
• Net Income: $64.6 million (GAAP).
• Cash, Cash Equivalents, and Marketable Securities: $514.4 million.
• Cash from Operations: $77.4 million.
• Capital Expenditures: $11.7 million.
• Depreciation Expense: $7.1 million.
• Free Cash Flow: $65.7 million.
• Q2 Revenue Guidance: $167 million to $173 million.
• Q2 Non-GAAP Earnings Per Share Guidance: $0.57 to $0.64.

• Warning! GuruFocus has detected 2 Warning Sign with RMBS.

Release Date: April 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Rambus Inc (NASDAQ:RMBS) achieved record product revenue in Q1 2025, driven by strong leadership in DDR5 chips.
• The company reported outstanding cash from operations of $77 million, indicating strong financial health.
• Rambus Inc (NASDAQ:RMBS) continues to expand its product portfolio, including new server power management solutions and a complete chipset for DDR5 server memory modules.
• The company maintains a resilient business model with diversified revenue streams from chips, IP, and patents, providing financial stability.
• Rambus Inc (NASDAQ:RMBS) exceeded its revenue and earnings expectations for Q1 2025, showcasing effective strategic execution.

Negative Points

• The geopolitical and macroeconomic environment remains uncertain, potentially impacting future operations.
• There is limited visibility on the potential indirect impacts of tariffs on the company's operations.
• Silicon IP revenue may vary due to customer program timing, indicating potential revenue fluctuations.
• The company experienced a slight decline in gross margins due to price negotiations with customers.
• Rambus Inc (NASDAQ:RMBS) faces challenges in predicting the impact of new product rollouts on future revenue growth.

Q & A Highlights

Q: What are the trends driving memory density in servers beyond general market growth? A: Desmond Lynch, CFO, explained that factors such as the number of sockets, channels per processor, and the mix between AI and standard servers influence the market. Overall, Rambus expects mid to high single-digit growth for their products this year, considering these factors.

Q: Why is there a difference between ASC 606 GAAP revenue and adjusted revenue? A: Desmond Lynch noted that a small patent agreement renewal resulted in upfront revenue recognition, causing a temporary divergence. However, most major patent licenses are now under long-term agreements, aligning GAAP and non-GAAP results more closely.

Q: How are tariffs impacting Rambus' business and customer behavior? A: Desmond Lynch stated that their business model is resilient to tariffs, with no direct impact on patent licensing or product operations. They are monitoring potential indirect impacts on supply chains and customer inventory levels but have not observed any significant changes yet.

Q: What is the expected timeline for MRDIMM adoption and its impact on Rambus' product line? A: Luc Seraphin, CEO, mentioned that MRDIMM is expected to ramp with the next generation of computing platforms, with revenue contributions starting in the second half of 2026. It will initially serve high-end systems requiring more capacity and bandwidth.

Q: How does Rambus view the shift between x86 and ARM CPU servers in terms of market share and product impact? A: Desmond Lynch explained that Rambus is agnostic to the type of processor core used, as the interface to the memory module remains the same. Therefore, shifts in processor market share do not affect their product lines or revenue.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.