Rambus Inc. (RMBS) Earnings

Management highlights

### Executive Summary & Business Overview - Rambus delivered an all-time record quarter, exceeding $200 million in total revenue for the first time ever, beating the high end of prior guidance ranges - New CFO Sumeet Gagneja joins the leadership team, bringing over 20 years of semiconductor and data center industry experience; the company will now report solely on an ASC 606 revenue basis, as the gap between GAAP royalty revenue and licensing billings is now minimal and expected to remain so - Growing demand for memory capacity, bandwidth, and power efficiency driven by scaling AI and agentic workloads aligns directly with Rambus' core strengths, creating opportunities for higher chip content and broader IP adoption ### Chip Product Segment Highlights - Achieved record chip product revenue, with double-digit year-over-year growth expected to continue in Q3 2026, driven by DDR5 leadership and growing traction for new products - Expanded the DDR5 roadmap to include complete chipsets for DDR5 9600 client and server memory modules, extending leadership in high-speed memory interface solutions; the new client chipset enables top-tier performance for emerging AI PCs, while the server RDM chipset supports next-generation CPU-based platform performance requirements - Maintains on-track development for differentiated memory subsystem solutions, including chipsets for MR-DIMM and LPDDR5 SOCAM2, to address demand for novel memory architectures from AI workloads, with material revenue contribution expected in 2027 ### Silicon IP Segment Highlights - Delivered a strong quarter with growing customer traction and key design wins across hyperscalers, custom silicon firms, and AI semiconductor developers - Secured a strategic HBM IP design win with a Tier 1 U.S. hyperscaler for next-generation AI chips, secured ahead of final industry standards to help the customer reach first-to-market performance - Launched new PCIe 7 switch IP supporting 128 GT/s, designed to meet high bandwidth, low latency connectivity requirements for next-generation AI scale-up and scale-out architectures - Growing demand for custom AI silicon optimized for specific workloads drives increasing demand for Rambus' differentiated memory, connectivity, and security IP ### Balance Sheet & Operational Cash Flow - Ended the quarter with $825 million in cash, cash equivalents, and marketable securities, with $61 million in operating cash flow for the quarter and $12 million in capital expenditures - Increased inventory by $16 million during the quarter to support future product ramps and deliver supply assurance to customers amid extended supply chain lead times

Guidance

• For Q3 fiscal 2026, Rambus guides total revenue between $210 million and $216 million, representing approximately 20% year-over-year growth • Product revenue is guided between $110 million and $116 million, with a 14% sequential increase at the guidance midpoint • Royalty revenue is guided between $69 million and $75 million; contract and other revenue is guided between $25 million and $31 million • Non-GAAP EPS is guided between 75 cents and 82 cents, with non-GAAP operating income expected between $91 million and $101 million, and capital expenditures expected to be approximately $13 million • Management confirms the long-term expectation for the silicon IP business to grow 10% to 15% annually, with growing confidence in this growth projection amid increasing AI-driven demand • Management reaffirms the long-term product gross margin target range of 60% to 65%, which remains intact despite normal quarterly fluctuations • Management expects H2 2026 to be stronger than H1 2026, consistent with historical seasonal trends, and continues to practice quarter-by-quarter guidance due to platform ramp timing and supply chain uncertainty • Demand drivers for 2027 growth are strong, including widespread DDR5 adoption, increasing memory channel counts per CPU, MR-DIMM ramp, and growing new product contribution, but the company does not provide full-year 2027 guidance at this time

Segment performance

Rambus recorded total Q2 2026 revenue of $207.4 million, up 20% year-over-year and 15% sequentially. Product segment revenue (memory interface chips) was $99.2 million, up 22% year-over-year and 13% sequentially, representing 47.8% of total revenue. Royalty revenue was $84.2 million, representing 40.6% of total revenue. Contract and other revenue (which includes a portion of the company's silicon IP revenue, with the remainder reported in royalty revenue) was $24 million, representing 11.6% of total revenue.

Risks & headwinds

• Ongoing tightness in the global supply chain has extended lead times, and supply constraints are expected to persist through 2027, which may limit the company's ability to meet demand • Platform ramp timelines for new memory architectures (including MR-DIMM) often take longer than initially anticipated, creating uncertainty around near-term revenue contribution • Adoption of new memory architectures depends on customer and ecosystem uptake, and faster-than-expected adoption of alternative architectures could impact demand for the company's current core products • The fragmented nature of emerging CXL-based product markets makes large-scale standard product investment unattractive at this stage, creating opportunity cost for product development

Analyst Q&A

• Q: Did Rambus face any capacity issues or unfulfilled orders in Q2, and does the company have any existing business with Chinese memory maker CXMT?

  A: Rambus did not experience any capacity constraints or unmet demand in Q2. While overall supply chain tightness and longer lead times persist, the company's strong supplier relationships allow it to meet current market demand. All memory manufacturers are required to hold Rambus intellectual property licenses, and CXMT is a current licensee; management views CXMT's market growth as a positive long-term opportunity for Rambus.

• Q: What is the visibility for MR-DIMM adoption, are customers building excess inventory, and when will MR-DIMM contribute materially to revenue?

  A: Management views MR-DIMM as a material long-term opportunity, but adoption timing depends on full platform ramp, so the company will not overstate adoption before market feedback is confirmed. Q4 2026 MR-DIMM contribution will be minimal, with material contribution not expected until 2027 when CPU platforms ramp in earnest. Rambus has not seen any customer inventory buildup, but is building strategic inventory of critical products itself to offset extended lead times for upcoming ramps.

• Q: What is Rambus' position on CXL technology, and how is growing hyperscaler direct involvement changing the Rambus IP business opportunity?

  A: Rambus supports CXL as a relevant interconnect protocol for AI memory tiering, and it remains an important opportunity for the company's silicon IP business. For the chip product segment, CXL-based products are currently fragmented custom ASIC designs, so Rambus will focus product investment on higher-volume standard memory products for now. Hyperscalers increasingly define their own silicon architectures early, working with Rambus before standards are finalized, and these designs then proliferate across the ecosystem, driving growing long-term visibility for IP growth.

• Q: How does the 20% year-over-year product growth guidance for Q3 align with CPU server demand, and could growth accelerate in 2027?

  A: 20% year-over-year product growth reflects stronger demand than prior expectations, with Rambus growing faster than overall server CPU market growth. The growth comes from a combination of increasing memory channel counts per CPU and early contribution from new products, with a strong secular trend but no step-function jump in growth. While 2027 demand fundamentals are very positive, with DDR5 generation ramp, MR-DIMM adoption, and new product contribution, supply constraints are expected to persist, so the company continues to guide only one quarter in advance and will not provide full-year 2027 guidance currently.