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Rambus (RMBS) Q1 Earnings and Revenues Surpass Estimates
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Rambus Inc. (RMBS - Free Report) reported first-quarter 2017 adjusted earnings per share (including stock-based compensation but excluding all one-time items) of 12 cents, which came ahead of the Zacks Consensus Estimate by a penny. However, reported earnings compared unfavourably with the year-ago quarter figure of 11 cents. The year-over-year decrease was mainly due to higher share count and higher tax.
Quarter Details
Total revenue for the quarter increased 33.9% year over year to $97.4 million. The increase was mainly due to strength in licensing program, synergies from newly acquired businesses, higher product revenue and higher royalty revenue. Reported revenues also surpassed the Zacks Consensus Estimate of $96 million.
Royalty revenues for the quarter increased 9.7% year over year, whereas revenues from Contract and other were up 189.6% on a year-over-year basis.
Total operating costs and expenses of $83.9 million were 32.3% higher than the year-ago quarter, primarily due to higher consulting costs, higher headcount related costs and higher cost of sales.
Excluding one-time items but including stock-based compensation expenses, total operating costs and expenses increased nearly 36.2% year over year to $73.3 million. As a percentage of revenues, it increased from 74.1% to 75.3%.
Adjusted operating income (including stock-based compensation but excluding all one-time items) came in at $24 million compared with $18.8 million in the year-ago quarter, increasing 27.5% year over year. However, adjusted operating margin was 24.7% compared with 25.9% a year ago (primarily due to higher operating expense as a percentage of revenues).
On a GAAP basis, net income was approximately $3 million compared witrh $1.9 million reported last year. Also, net income on an adjusted basis (including stock-based compensation but excluding all one-time items) was approximately $16 million compared with $12.1 million reported in the year-ago quarter.
Rambus exited the quarter with cash, cash equivalents and marketable securities of roughly $187.6 million, up from $172.2 million in the previous quarter. The company does not carry any long-term debt.
Guidance
For the second quarter of 2017, the company expects revenues between $90 million and $96 million. The Zacks Consensus Estimate is pegged at $93 million. Total non-GAAP operating costs and expenses are expected to be in the range of $67–$71 million. Non-GAAP operating income for the second quarter is expected to be between $19 million and $29 million. Non-GAAP earnings per share are expected to be in the range of 10–15 cents. The Zacks Consensus Estimates is pegged at 12 cents.
Share Price
Rambus’ stock price in the last one year increased only 1.6%, underperforming the Zacks Categorized Electronics-Semiconductors industry's gain of 67.9%.
Our Take
Rambus reported encouraging first-quarter results, wherein both the bottom and top line surpassed the Zacks Consensus Estimate. Quarterly revenues also increased from the year-ago period. The company also provided modest second-quarter guidance.
Rambus is poised well to capitalize on the rising popularity of energy-efficient lighting, and LED products in the latest architectural, retail, commercial and residential lighting fixtures.
Recently, Rambus signed a patent licensing agreement with hard disk drive (HDD) manufacturer Western Digital Corp. (WDC - Free Report) for an undisclosed sum. Per the terms of the agreement, Western Digital can use Rambus’ patented technology for its memory products for five years.
Rambus is going through a restructuring phase and we expect it to yield favourable results. Additionally, licensing agreements — the result of successful monetization of Rambus’ patents — remains a recurring source of revenue.
Moreover, the acquisition of certain serial link assets of Semtech Corporation’s Snowbush IP and Smart Card Software will enhance its product offerings, thereby boosting its top and bottom line performance.
However, competition from Semiconductor Manufacturing International Corp. (SMI - Free Report) and Advanced Micro Devices (AMD - Free Report) and customer concentration remain headwinds for the company.
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Rambus (RMBS) Q1 Earnings and Revenues Surpass Estimates
Rambus Inc. (RMBS - Free Report) reported first-quarter 2017 adjusted earnings per share (including stock-based compensation but excluding all one-time items) of 12 cents, which came ahead of the Zacks Consensus Estimate by a penny. However, reported earnings compared unfavourably with the year-ago quarter figure of 11 cents. The year-over-year decrease was mainly due to higher share count and higher tax.
Quarter Details
Total revenue for the quarter increased 33.9% year over year to $97.4 million. The increase was mainly due to strength in licensing program, synergies from newly acquired businesses, higher product revenue and higher royalty revenue. Reported revenues also surpassed the Zacks Consensus Estimate of $96 million.
Royalty revenues for the quarter increased 9.7% year over year, whereas revenues from Contract and other were up 189.6% on a year-over-year basis.
Total operating costs and expenses of $83.9 million were 32.3% higher than the year-ago quarter, primarily due to higher consulting costs, higher headcount related costs and higher cost of sales.
Excluding one-time items but including stock-based compensation expenses, total operating costs and expenses increased nearly 36.2% year over year to $73.3 million. As a percentage of revenues, it increased from 74.1% to 75.3%.
Adjusted operating income (including stock-based compensation but excluding all one-time items) came in at $24 million compared with $18.8 million in the year-ago quarter, increasing 27.5% year over year. However, adjusted operating margin was 24.7% compared with 25.9% a year ago (primarily due to higher operating expense as a percentage of revenues).
On a GAAP basis, net income was approximately $3 million compared witrh $1.9 million reported last year. Also, net income on an adjusted basis (including stock-based compensation but excluding all one-time items) was approximately $16 million compared with $12.1 million reported in the year-ago quarter.
Rambus exited the quarter with cash, cash equivalents and marketable securities of roughly $187.6 million, up from $172.2 million in the previous quarter. The company does not carry any long-term debt.
Guidance
For the second quarter of 2017, the company expects revenues between $90 million and $96 million. The Zacks Consensus Estimate is pegged at $93 million. Total non-GAAP operating costs and expenses are expected to be in the range of $67–$71 million. Non-GAAP operating income for the second quarter is expected to be between $19 million and $29 million. Non-GAAP earnings per share are expected to be in the range of 10–15 cents. The Zacks Consensus Estimates is pegged at 12 cents.
Share Price
Rambus’ stock price in the last one year increased only 1.6%, underperforming the Zacks Categorized Electronics-Semiconductors industry's gain of 67.9%.
Our Take
Rambus reported encouraging first-quarter results, wherein both the bottom and top line surpassed the Zacks Consensus Estimate. Quarterly revenues also increased from the year-ago period. The company also provided modest second-quarter guidance.
Rambus is poised well to capitalize on the rising popularity of energy-efficient lighting, and LED products in the latest architectural, retail, commercial and residential lighting fixtures.
Recently, Rambus signed a patent licensing agreement with hard disk drive (HDD) manufacturer Western Digital Corp. (WDC - Free Report) for an undisclosed sum. Per the terms of the agreement, Western Digital can use Rambus’ patented technology for its memory products for five years.
Rambus is going through a restructuring phase and we expect it to yield favourable results. Additionally, licensing agreements — the result of successful monetization of Rambus’ patents — remains a recurring source of revenue.
Moreover, the acquisition of certain serial link assets of Semtech Corporation’s Snowbush IP and Smart Card Software will enhance its product offerings, thereby boosting its top and bottom line performance.
However, competition from Semiconductor Manufacturing International Corp. (SMI - Free Report) and Advanced Micro Devices (AMD - Free Report) and customer concentration remain headwinds for the company.
Currently, Rambus carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>