RAMBUS INC Q4 FY2024 earnings call

• 2024 was a strong year with the company gaining market share in core business, introducing a record number of new chip products, and finishing Q4 with revenue beating high end of guidance.
• Completed strategic extension of patent licensing agreement with Micron through 2029, achieved new annual high for cash from operations at $231 million in 2024.
• Addressed market trends like AI and data center evolution by introducing new products such as DDR5 server PMIC, Client Clock driver chip, and industry-first GDDR7 and HBM4 memory controllers.

Memory Interface Chips: In Q4, memory interface chips delivered record revenue of $73 million, up 11% quarter-over-quarter and 37% year-over-year. This contributed to a record annual product revenue of $247 million. Silicon IP: AI drove strong results in Q4, with strong demand for solutions like HBM4 and GDDR7 memory controllers, as well as security IP, which are vital for AI accelerators, graphics, and HPC applications.

• Expect Q1 2025 revenue to be between $156 million and $162 million.
• Royalty revenue expected between $56 million and $62 million, licensing billings between $59 million and $65 million.
• Q1 non-GAAP total operating costs (including COGS) expected between $87 million and $91 million.
• Anticipate Q1 non-GAAP earnings per share range between $0.51 and $0.59.

• Market trends and technology challenges may cause actual results to differ materially from forward-looking statements.
• Differences between licensing billings and royalty revenue due to timing issues with some legacy contracts.
• Potential issues with power management chips in the market, though minimal impact on Rambus's expectations.

Q: Could you characterize demand from end markets, particularly for server DRAM, DIMM solutions, and inventory levels for DDR5 solutions?

A: Luc Seraphin noted market recovering in 2024's second half, server demand continuing to grow mid to upper single-digit in 2025, with DDR5 demand strong and inventories for DDR5 down for seventh consecutive quarter.

Q: How should we think about revenue contribution from increased R&D?

A: Luc Seraphin said R&D uptick is to accelerate roadmap, with Desmond Lynch noting R&D expected to be 23%-25% of revenue similar to past three years.

Q: Can you talk about the breadth of customers licensing HBM and HBM4?

A: Luc Seraphin stated they typically don't disclose customer numbers, but HBM4 and GDDR7 IP are licensed to leading-edge customers, with deeper engagements than earlier generations.

Q: How do you balance ramp of Grace and subsequent Grace-based architectures from NVIDIA versus DIMM module count in AI systems?

A: Luc Seraphin said Grace and related architectures are a small market niche, and Rambus doesn't see immediate impact on standard module demand as AI systems have separate layers.