RAMBUS INC

Previous wording

As an industry pioneer with over 30 years of advanced semiconductor design experience, we are ideally positioned to address the challenges of moving and protecting data. We are a leader in high-performance memory subsystems, providing chips, silicon intellectual property (“IP”) and innovations that maximize the performance and security in computationally intensive systems. Whether in the cloud, at the edge or in your hand, real-time and immersive applications depend on data throughput and integrity. Our products and innovations deliver the increased bandwidth, capacity and security required to meet the world’s data needs and drive ever-greater end-user experiences.

Current wording

As an industry pioneer with over 30 years of advanced semiconductor design experience, we are ideally positioned to address the challenges of moving and protecting data. We are a leader in high-performance memory subsystems, providing chips, silicon IP and innovations that maximize the performance and security in computationally intensive systems. Whether in the cloud, at the edge or in your hand, real-time and immersive applications depend on data throughput and integrity. Our products and innovations deliver the increased bandwidth, capacity and security required to meet the world’s data needs and drive ever-greater end-user experiences.

Previous wording

The Company’s continued execution delivered solid results during the first quarter of 2024, driven by the demand for our memory interface chips and our Silicon IP solutions, and continued stability from our royalties revenue.

Current wording

The Company’s continued execution delivered solid results during the second quarter of 2024, driven by the demand for our memory interface chips and our Silicon IP solutions, and continued stability from our royalties revenue.

Previous wording

Key first quarter 2024 financial results included:

Current wording

Key second quarter 2024 financial results included:

Previous wording

Product revenue consists primarily of memory interface chips. Our memory interface chips are sold to major DRAM manufacturers, Micron, Samsung and SK hynix, as well as directly to system manufacturers and cloud providers, for integration into server memory modules. Product revenue accounted for 43% of our consolidated revenue for the three months ended March 31, 2024, as compared to 56% for the three months ended March 31, 2023.

Current wording

Product revenue consists primarily of memory interface chips. Our memory interface chips are sold directly and through distributors to major DRAM manufacturers, Micron, Samsung and SK hynix, as well as to system manufacturers and cloud providers, for integration into server memory modules. Product revenue accounted for 43% of our consolidated revenue for both the three and six months ended June 30, 2024, as compared to 46% and 51% for the three and six months ended June 30, 2023.

Previous wording

Royalty revenue is derived from our patent licenses, through which we provide our customers certain rights to our broad worldwide portfolio of patented inventions. Our patent licenses enable our customers to use a portion of our patent portfolio in their own digital electronics products. The licenses typically range in term up to ten years and may define the specific field of use where our customers may utilize our inventions in their products. Royalties may be structured as fixed, variable or a hybrid of fixed and variable royalty payments. Leading semiconductor and electronic system companies such as AMD, Broadcom, CXMT, IBM, Infineon, Kioxia, Marvell, MediaTek, Micron, Nanya, Nuvoton, NVIDIA, Phison, Qualcomm, Samsung, SK hynix, Socionext, STMicroelectronics, Toshiba, Western Digital, and Winbond have licensed our patents. The vast majority of our patents originate from our internal research and development efforts. Additionally, from time to time, we enter into agreements to sell certain patent assets under agreements which may also include subsequent profit-sharing. The sale of these patents, as well as the subsequent profit-sharing, are included as part of our royalty revenue. Revenue from royalties accounted for 40% of our consolidated revenue for the three months ended March 31, 2024, as compared to 25% for the three months ended March 31, 2023.

Current wording

Royalty revenue is derived from our patent licenses, through which we provide our customers certain rights to our broad worldwide portfolio of patented inventions. Our patent licenses enable our customers to use a portion of our patent portfolio in their own digital electronics products. The licenses typically range in term up to ten years and may define the specific field of use where our customers may utilize our inventions in their products. Royalties may be structured as fixed, variable or a hybrid of fixed and variable royalty payments. Leading semiconductor and electronic system companies, such as AMD, Broadcom, CXMT, IBM, Infineon, Kioxia, Marvell, MediaTek, Micron, Nanya, Nuvoton, NVIDIA, Phison, Qualcomm, Samsung, SK hynix, Socionext, STMicroelectronics, Toshiba, Western Digital and Winbond, have licensed our patents. The vast majority of our patents originate from our internal research and development efforts. Additionally, from time to time, we enter into agreements to sell certain patent assets under agreements which may also include subsequent profit-sharing. The sale of these patents, as well as the subsequent profit-sharing, are included as part of our royalty revenue. Revenue from royalties accounted for 43% and 41% of our consolidated revenue for the three and six months ended June 30, 2024, as compared to 34% and 29% for the three and six months ended June 30, 2023.

Previous wording

Contract and other revenue consists primarily of Silicon IP, which is comprised of our high-speed interface and security IP. Revenue sources under contract and other revenue include our IP core licenses, software licenses and related implementation, support and maintenance fees and engineering services fees. The timing and amounts invoiced to customers can vary significantly depending on specific contract terms and can therefore have a significant impact on deferred revenue or accounts receivable in any given period. Contract and other revenue accounted for 17% of our consolidated revenue for the three months ended March 31, 2024, as compared to 19% for the three months ended March 31, 2023.

Current wording

Contract and other revenue consists primarily of Silicon IP, which is comprised of our high-speed interface and security IP. Revenue sources under contract and other revenue include our IP core licenses, software licenses and related implementation, support and maintenance fees and engineering services fees. The timing and amounts invoiced to customers can vary significantly depending on specific contract terms and can therefore have a significant impact on deferred revenue or accounts receivable in any given period. Contract and other revenue accounted for 14% and 16% of our consolidated revenue for the three and six months ended June 30, 2024, as compared to 20% of our consolidated revenue for both the three and six months ended June 30, 2023.

Previous wording

Cost of contract and other revenue decreased approximately $1.1 million for the three months ended March 31, 2024 as compared to the same period in 2023, primarily due to lower engineering services associated with the contracts.

Current wording

Cost of contract and other revenue decreased approximately $0.3 million for the three months ended June 30, 2024 as compared to the same period in 2023. Cost of contract and other revenue decreased approximately $1.4 million for the six months ended June 30, 2024 as compared to the same period in 2023. The decreases in both periods were primarily due to lower engineering services associated with the contracts.

Previous wording

Total sales, general and administrative expenses for the three months ended March 31, 2024 decreased approximately $5.2 million as compared to the same period in 2023, primarily due to decreases in stock-based compensation expenses of $2.8 million due to the timing of the annual equity award grants to employees, rent and facility expenses of $1.5 million and bonus expenses of $0.9 million.

Current wording

Total sales, general and administrative expenses for the three months ended June 30, 2024 decreased approximately $1.8 million as compared to the same period in 2023, primarily due to decreases in rent and facility expenses of $1.0 million and headcount-related expenses of $0.6 million. Total sales, general and administrative expenses for the six months ended June 30, 2024 decreased approximately $7.0 million as compared to the same period in 2023, primarily due to decreases in stock-based compensation expense of $2.6 million, rent and facility expenses of $2.5 million, headcount-related expenses of $1.0 million and bonus expenses of $0.6 million.

Previous wording

As of March 31, 2024, our semiconductor, security and other technologies are covered by 2,219 U.S. and foreign patents. Additionally, we have 536 patent applications pending. Some of the patents and pending patent applications are derived from a common parent patent application or are foreign counterpart patent applications. We file applications for and obtain patents in the United States and in selected foreign countries where we believe filing for such protection is appropriate and would further our overall business strategy and objectives. In some instances, obtaining appropriate levels of protection may involve prosecuting continuation and counterpart patent applications based on a common parent application. We believe our patented innovations provide our customers with the ability to achieve improved performance, lower risk, greater cost-effectiveness, and other benefits in their products and services.

Current wording

As of June 30, 2024, our semiconductor, security and other technologies are covered by 2,240 U.S. and foreign patents. Additionally, we have 523 patent applications pending. Some of the patents and pending patent applications are derived from a common parent patent application or are foreign counterpart patent applications. We file applications for and obtain patents in the United States and in selected foreign countries where we believe filing for such protection is appropriate and would further our overall business strategy and objectives. In some instances, obtaining appropriate levels of protection may involve prosecuting continuation and counterpart patent applications based on a common parent application. We believe our patented innovations provide our customers with the ability to achieve improved performance, lower risk, greater cost-effectiveness, and other benefits in their products and services.

Previous wording

We have a high degree of revenue concentration. Our top five customers represented approximately 64% of our revenue for the three months ended March 31, 2024, as compared to 61% for the three months ended March 31, 2023, respectively. The particular customers which account for revenue concentration have varied from period-to-period as a result of the addition of new contracts, expiration of existing contracts, renewals of existing contracts, industry consolidation and the volumes and prices at which the customers have recently sold to their customers. These variations are expected to continue in the foreseeable future.

Current wording

We have a high degree of revenue concentration. Our top five customers represented approximately 64% and 63% of our consolidated revenue for the three and six months ended June 30, 2024, as compared to 66% and 59% for the three and six months ended June 30, 2023, respectively. The particular customers which account for revenue concentration have varied from period-to-period as a result of the addition of new contracts, expiration of existing contracts, renewals of existing contracts, industry consolidation and the volumes and prices at which the customers have recently sold to their customers. These variations are expected to continue in the foreseeable future.

Previous wording

Our revenue from companies headquartered outside of the United States accounted for approximately 56% of our total revenue for the three months ended March 31, 2024, as compared to 44% for the three months ended March 31, 2023. We expect that revenue derived from international customers will continue to represent a significant portion of our total revenue in the future. Currently, our revenue from international customers is predominantly denominated in U.S. dollars. For additional information concerning international revenue, refer to Note 6, “Segments and Major Customers,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q.

Current wording

Our revenue from companies headquartered outside of the United States accounted for approximately 58% and 57% of our consolidated revenue for the three and six months ended June 30, 2024, as compared to 70% and 58% for the three and six months ended June 30, 2023. We expect that revenue derived from international customers will continue to represent a significant portion of our total revenue in the future. Currently, our revenue from international customers is predominantly denominated in U.S. dollars. For additional information concerning international revenue, refer to Note 6, “Segments and Major Customers,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q.

Previous wording

The royalties we receive from our semiconductor customers are partly a function of the adoption of our technologies by system companies. Many system companies purchase semiconductors containing our technologies from our customers and do not have a direct contractual relationship with us. Our customers generally do not provide us with details as to the identity or volume of licensed semiconductors purchased by particular system companies. As a result, we face difficulty in analyzing the extent to which our future revenue will be dependent upon particular system companies. Several of our licensees have renewed or extended their license agreements with us during the three months ended March 31, 2024, including Kioxia and Nanya.

Current wording

The royalties we receive from our semiconductor customers are partly a function of the adoption of our technologies by system companies. Many system companies purchase semiconductors containing our technologies from our customers and do not have a direct contractual relationship with us. Our customers generally do not provide us with details as to the identity or volume of licensed semiconductors purchased by particular system companies. As a result, we face difficulty in analyzing the extent to which our future revenue will be dependent upon particular system companies. Several of our licensees have renewed or extended their license agreements with us during the six months ended June 30, 2024, including Kioxia, Marvell and Nanya.

Previous wording

Product revenue decreased approximately $13.4 million for the three months ended March 31, 2024 as compared to the same period in 2023. The decrease was due to lower sales of our memory interface chips.

Current wording

Product revenue increased approximately $1.7 million for the three months ended June 30, 2024 as compared to the same period in 2023 due to higher sales of our memory interface chips. Product revenue decreased approximately $11.7 million for the six months ended June 30, 2024 as compared to the same period in 2023 due to lower sales of our memory interface chips.

Previous wording

Royalty revenue, which includes patent and technology license royalties, increased approximately $19.3 million for the three months ended March 31, 2024 as compared to the same period in 2023. The increase was primarily due to the timing and structure of license renewals.

Current wording

Royalty revenue, which includes patent and technology license royalties, increased approximately $15.7 million for the three months ended June 30, 2024 as compared to the same period in 2023. Our royalty revenue increased approximately $35.1 million for the six months ended June 30, 2024 as compared to the same period in 2023. The increase in both periods was primarily due to the timing and structure of license renewals.

Previous wording

Contract and other revenue consists of revenue from technology development projects. Contract and other revenue decreased approximately $1.8 million for the three months ended March 31, 2024 as compared to the same period in 2023. The decrease was due to lower revenue associated with our Silicon IP offerings, which is primarily attributed to the sale of our PHY IP group in the third quarter of 2023.

Current wording

Contract and other revenue consist of revenue from technology development projects. Contract and other revenue decreased approximately $5.1 million for the three months ended June 30, 2024 as compared to the same period in 2023. Contract and other revenue decreased approximately $7.0 million for the six months ended June 30, 2024 as compared to the same period in 2023. The decrease in both periods was due to lower revenue associated with our Silicon IP offerings, which is primarily attributed to the sale of our PHY IP group in the third quarter of 2023.

Previous wording

Cost of product revenue are costs attributable to the sale of memory and security products. Cost of product revenue decreased approximately $6.4 million for the three months ended March 31, 2024 as compared to the same period in 2023, primarily due to lower shipments of memory products and a change in product mix.

Current wording

Cost of product revenue are costs attributable to the sale of memory and security products. Cost of product revenue increased approximately $4.1 million for the three months ended June 30, 2024 as compared to the same period in 2023, primarily due to higher shipments of memory products and a change in product mix. Cost of product revenue decreased approximately $2.4 million for the six months ended June 30, 2024 as compared to the same period in 2023, primarily due to a decrease in sales volumes of our memory interface chips, partially offset by a change in product mix during the period.

Previous wording

Cost of contract and other revenue reflects the portion of the total engineering costs which are specifically devoted to individual customer development and support services. Cost of contract and other revenue decreased approximately $1.1 million for the three months ended March 31, 2024 as compared to the same period in 2023, primarily due to lower engineering services associated with the contracts.

Current wording

Cost of contract and other revenue reflects the portion of the total engineering costs which are specifically devoted to individual customer development and support services. Cost of contract and other revenue decreased approximately $0.3 million for the three months ended June 30, 2024 as compared to the same period in 2023. Cost of contract and other revenue decreased approximately $1.4 million for the six months ended June 30, 2024 as compared to the same period in 2023. The decreases in both periods was primarily due to lower engineering services associated with the contracts.

Previous wording

Total research and development expenses for the three months ended March 31, 2024 decreased approximately $4.5 million as compared to the same period in 2023, primarily due to decreases in headcount-related expenses of $1.6 million, software EDA tool subscriptions of $1.5 million, consulting expenses of $1.3 million, bonus expenses of $0.9 million and stock-based compensation expenses of $0.8 million, offset by decreases in engineering costs allocated to cost of revenue of $1.1 million and increases in facility expenses of $0.6 million. These expense reductions are primarily attributable to the sale of our PHY IP group in the third quarter of 2023 and the timing of the annual equity award grants to employees.

Current wording

Total research and development expenses for the three months ended June 30, 2024 decreased approximately $1.1 million as compared to the same period in 2023, primarily due to decreases in software EDA tool subscriptions of $2.1 million and headcount-related expenses of $0.6 million, offset by increases in prototyping costs of $1.0 million and facility expenses of $0.7 million. These expense reductions are primarily attributable to the sale of our PHY IP group in the third quarter of 2023.

Previous wording

Total research and development expenses for the three months ended March 31, 2024 decreased approximately $4.5 million as compared to the same period in 2023, primarily due to decreases in headcount-related expenses of $1.6 million, software EDA tool subscriptions of $1.5 million, consulting expenses of $1.3 million, bonus expenses of $0.9 million and stock-based compensation expenses of $0.8 million, offset by decreases in engineering costs allocated to cost of revenue of $1.1 million and increases in facility expenses of $0.6 million. These expense reductions are primarily attributable to the sale of our PHY IP group in the third quarter of 2023 and the timing of the annual equity award grants to employees.

Current wording

Total research and development expenses for the six months ended June 30, 2024 decreased approximately $5.6 million as compared to the same period in 2023, primarily due to decreases in software EDA tool subscriptions of $3.6 million, headcount-related expenses of $2.2 million, consulting expenses of $1.3 million, bonus expenses of $0.9 million, retention bonus expense related to acquisitions of $0.7 million, stock-based compensation of $0.7 million, depreciation expense of $0.6 million and an increase in engineering costs allocated to cost of revenue of $1.4 million, offset by increases in prototyping costs of $1.4 million and facility costs of $1.3 million. These expense reductions were primarily attributable to the sale of our PHY IP group in the third quarter of 2023 and the timing of the annual equity award grants to employees.

Previous wording

Total sales, general and administrative expenses for the three months ended March 31, 2024 decreased approximately $5.2 million as compared to the same period in 2023, primarily due to decreases in stock-based compensation expenses of $2.8 million due to the timing of the annual equity award grants to employees, rent and facility expenses of $1.5 million and bonus expenses of $0.9 million.

Current wording

Total sales, general and administrative expenses for the six months ended June 30, 2024 decreased approximately $7.0 million as compared to the same period in 2023, primarily due to decreases in stock-based compensation expense of $2.6 million, rent and facility expenses of $2.5 million, headcount-related expenses of $1.0 million and bonus expenses of $0.6 million.

Previous wording

Amortization of acquired intangible assets recognized in cost of revenue and operating expenses for the three months ended March 31, 2024 remained relatively flat as compared to the same period in 2023. In the third quarter of 2023, we divested our PHY IP group and as a result, we disposed of approximately $7.4 million of net intangible assets, which reduced our amortization expense in future periods.

Current wording

Amortization of acquired intangible assets recognized in cost of revenue and operating expenses for the three and six months ended June 30, 2024 decreased by approximately $0.7 million and $1.4 million, respectively, as compared to the same periods in 2023. The decreases in both periods were primarily due to the divestiture of our PHY IP group in the third quarter of 2023, which resulted in the disposal of approximately $7.4 million of net intangible assets, and reduction of our amortization expense as intangibles become fully amortized.

Previous wording

During the three months ended March 31, 2024 and 2023, we remeasured the fair value of the earn-out liability, which resulted in additional expenses of $0.7 million and $6.9 million, respectively, in our Unaudited Condensed Consolidated Statements of Operations.

Current wording

During the three and six months ended June 30, 2024, we remeasured the fair value of the earn-out liability, which resulted in reductions of $1.2 million and $0.5 million, respectively, in our Unaudited Condensed Consolidated Statements of Operations of this Form 10-Q. During the three and six months ended June 30, 2023, we remeasured the fair value of the earn-out liability, which resulted in additional expenses of $6.9 million and $13.8 million, respectively, in our Unaudited Condensed Consolidated Statements of Operations of this Form 10-Q.

Previous wording

Interest income and other income (expense), net, includes interest income from our investment portfolio and from the significant financing component of licensing agreements, as well as any gains or losses from the re-measurement of our monetary assets or liabilities denominated in foreign currencies. For the three months ended March 31, 2024, interest income and other income (expense), net, consisted primarily of interest income from our investment portfolio of $4.4 million. For the three months ended March 31, 2023, interest income and other income (expense), net, consisted primarily of interest income from our investment portfolio of $1.7 million and interest income due to the significant financing component of licensing agreements of $0.9 million. Interest income and other income (expense), net increased in the three months ended March 31, 2024 as compared to the same period in 2023, primarily due to higher interest rates within our investment portfolio, which generated a higher interest income.

Current wording

Interest income and other income (expense), net, includes interest income from our investment portfolio and from the significant financing component of licensing agreements, as well as any gains or losses from the re-measurement of our monetary assets or liabilities denominated in foreign currencies. For the three months ended June 30, 2024, interest income and other income (expense), net, consisted primarily of interest income from our investment portfolio of $4.4 million. For the six months ended June 30, 2024, interest income and other income (expense), net, consisted primarily of interest income of $8.8 million, generated from our investment portfolio. Interest income and other income (expense), net increased in the three and six months ended June 30, 2024 as compared to the same periods in 2023, primarily due to higher interest rates within our investment portfolio, which generated a higher interest income.

Previous wording

Interest expense consists primarily of interest expense associated with long term software licenses. Interest expense remained flat for the three months ended March 31, 2024 and 2023.

Current wording

Interest expense consists primarily of interest expense associated with long-term software licenses. Interest expense remained flat for the three and six months ended June 30, 2024 and 2023.

Previous wording

Our income tax provision for the three months ended March 31, 2024 was primarily driven by the statutory tax expense for domestic and foreign jurisdictions for 2024, offset by tax benefits from excess stock-based compensation deductions. Our income tax provision for the three months ended March 31, 2024 and 2023 reflected an effective tax rate of 4.2% and 5.8%, respectively. Our effective tax rate for the three months ended March 31, 2024 differed from the U.S. statutory rate primarily due to tax benefits from excess stock-based compensation deductions. Our effective tax rate for the three months ended March 31, 2023, differed from the statutory rate primarily due to foreign tax credits and the full valuation allowance against our U.S. deferred tax assets.

Current wording

Our provision for income taxes for the three and six months ended June 30, 2024 was primarily driven by the statutory tax expense for domestic and foreign jurisdictions for 2024, offset by tax benefits from excess stock-based compensation deductions. Our provision for income taxes for the three and six months ended June 30, 2024 reflected an effective tax rate of 18.7% and 12.4%, respectively. The benefit from income taxes for the three and six months ended June 30, 2023 was primarily driven by the valuation allowance release on our U.S. deferred tax assets, as well as tax benefits from excess stock-based compensation deductions. Our income tax benefit for the three and six months ended June 30, 2023 reflected an effective tax rate of (1,145.9)% and (910.5)%, respectively. Our effective tax rate for the three and six months ended June 30, 2024, differed from the U.S. statutory rate primarily due to tax benefits from excess stock-based compensation deductions. Our effective tax rate for the three and six months ended June 30, 2023, differed from the U.S. statutory rate primarily due to the valuation allowance release on U.S. deferred tax assets.

Previous wording

During the three months ended March 31, 2024 and 2023, we paid withholding taxes of $5.1 million and $5.4 million, respectively.

Current wording

During the three months ended June 30, 2024 and 2023, we paid withholding taxes of $5.3 million and $5.0 million, respectively. During the six months ended June 30, 2024 and 2023, we paid withholding taxes of $10.3 million and $10.4 million, respectively.

Previous wording

During the second quarter of 2023, based on all available positive and negative evidence, we determined that it was appropriate to release the valuation allowance on the majority of our U.S. federal and state deferred tax assets. During the third quarter of 2023, we further adjusted our valuation allowance release as a result of a change in forecasted income and tax expense, primarily due to the sale of intangible assets as part of our PHY IP group divestiture. During the second quarter of 2023, we reached a cumulative income position over the previous three years. The cumulative three-year income is considered positive evidence, which is considered objective and verifiable, and thus received significant weighting. Additional positive evidence considered by us in our assessment included recent utilization of tax attribute carryforwards and future forecasts of continued profitability in the United States. Upon considering the relative impact of all evidence during the second quarter of 2023, both negative and positive, and the weight accorded to each, we concluded that it was more likely than not that the majority of our deferred tax assets would be realizable, with the exception of primarily our California research and development credits that have not met the “more likely than not” realization threshold criteria. As a result, we released the related valuation allowance against the majority of our federal and state deferred tax assets.

Current wording

During the second quarter of 2023, based on all available positive and negative evidence, we determined that it was appropriate to release the valuation allowance on the majority of our U.S. federal and state deferred tax assets. During the third quarter of 2023, we further adjusted our valuation allowance release as a result of a change in forecasted income and tax expense, primarily due to the sale of intangible assets as part of our PHY IP group divestiture. During the second quarter of 2023, we reached a cumulative income position over the previous three years. The cumulative three-year income is considered positive evidence, which is considered objective and verifiable, and thus received significant weighting. Additional positive evidence considered by us in our assessment included recent utilization of tax attribute carryforwards and future forecasts of continued profitability in the United States. Upon considering the relative impact of all evidence during the second quarter of 2023, both negative and positive, and the weight accorded to each, we concluded that it was more likely than not that the majority of our deferred tax assets would be realizable, with the exception of our California research and development credits that have not met the “more likely than not” realization threshold criteria. As a result, we released the related valuation allowance against the majority of our federal and state deferred tax assets.

Previous wording

We currently anticipate that existing cash, cash equivalents and marketable securities balances and cash flows from operations will be adequate to meet our cash needs for at least the next 12 months. Additionally, the majorityof our cash and cash equivalents is in the United States. Our cash needs for the three months ended March 31, 2024, were funded primarily from cash collected from our customers.

Current wording

We currently anticipate that existing cash, cash equivalents and marketable securities balances and cash flows from operations will be adequate to meet our cash needs for at least the next 12 months. Additionally, the majorityof our cash and cash equivalents is in the United States. Our cash needs for the six months ended June 30, 2024, were funded primarily from cash collected from our customers.

Previous wording

To provide us with more flexibility in returning capital to our stockholders, on October 29, 2020, our Board approved a share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million shares (the “2020 Repurchase Program”). Share repurchases under the 2020 Repurchase Program may be made through the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules, and regulations. There is no expiration date applicable to the 2020 Repurchase Program. The 2020 Repurchase Program replaced the previous program approved by our Board in January 2015 and canceled the remaining shares outstanding as part of the previous authorization. During the three months ended March 31, 2024, we repurchased shares of our common stock under the 2020 Repurchase Program as discussed in the “Share Repurchase Program” section below.

Current wording

To provide us with more flexibility in returning capital to our stockholders, on October 29, 2020, our Board approved a share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million shares (the “2020 Repurchase Program”). Share repurchases under the 2020 Repurchase Program may be made through the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules, and regulations. There is no expiration date applicable to the 2020 Repurchase Program. The 2020 Repurchase Program replaced the previous program approved by our Board in January 2015 and canceled the previous outstanding authorization. During the six months ended June 30, 2024, we repurchased shares of our common stock under the 2020 Repurchase Program as discussed in the “Share Repurchase Program” section below.

Previous wording

Cash provided by operating activities of $39.1 million for the three months ended March 31, 2024, was primarily attributable to the cash generated from customer licensing, product sales and engineering services fees. Changes in operating assets and liabilities for the three months ended March 31, 2024 primarily included decreases in unbilled receivables and prepaids and other current assets, as well as increases in income taxes payable and accounts payable, offset by increases in inventories, accounts receivable, and decreases in accrued salaries and benefits and other liabilities.

Current wording

Cash provided by operating activities of $109.5 million for the six months ended June 30, 2024, was primarily attributable to the cash generated from customer licensing, product sales and engineering services fees. Changes in operating assets and liabilities for the six months ended June 30, 2024 primarily included decreases in unbilled receivables, prepaids and other current assets and increases in accounts payable and income taxes payable, offset by increases in inventories and income taxes receivable, as well as decreases in other current and long-term liabilities and accrued salaries and benefits.

Previous wording

Cash provided by operating activities of $38.9 million for the three months ended March 31, 2023, was primarily attributable to the cash generated from customer licensing, product sales and engineering services fees. Changes in operating assets and liabilities for the three months ended March 31, 2023 primarily included decreases in unbilled receivables, offset by decreases in accounts payable, accrued salaries and benefits, deferred revenue and other liabilities, and increases in inventories, accounts receivable, and prepaids and other current assets.

Current wording

Cash provided by operating activities of $89.3 million for the six months ended June 30, 2023, was primarily attributable to the cash generated from customer licensing, product sales and engineering services fees. Changes in operating assets and liabilities for the six months ended June 30, 2023 primarily included a decrease in unbilled receivables and an increase in other current liabilities, offset by increases in inventories and accounts receivable, as well as decreases in accounts payable, deferred revenue and income taxes payable.

Previous wording

Cash provided by investing activities of $71.4 million for the three months ended March 31, 2024, consisted of proceeds from the maturities and sales of available-for-sale marketable securities of $100.7 million and $63.4 million, respectively, and net proceeds from the sale of a non-marketable equity security of $22.8 million, offset by purchases of available-for-sale marketable securities of $112.5 million and $3.0 million paid to acquire property, plant and equipment.

Current wording

Cash provided by investing activities of $30.8 million for the six months ended June 30, 2024, consisted of proceeds from the maturities and sales of available-for-sale marketable securities of $160.8 million and $85.7 million, respectively, and net proceeds from the sale of a non-marketable equity security of $22.8 million, offset by purchases of available-for-sale marketable securities of $224.2 million, and $14.3 million paid to acquire property, plant and equipment.

Previous wording

Cash used in investing activities of $10.7 million for the three months ended March 31, 2023, consisted of purchases of available-for-sale marketable securities of $45.6 million and $7.7 million paid to acquire property, plant and equipment, offset by proceeds from the sale and maturities of available-for-sale marketable securities of $24.5 million and $18.1 million, respectively.

Current wording

Cash used in investing activities of $35.0 million for the six months ended June 30, 2023, consisted of purchases of available-for-sale marketable securities of $137.2 million and $14.5 million paid to acquire property, plant and equipment, offset by proceeds from the maturities and sales of available-for-sale marketable securities of $87.6 million and $29.2 million, respectively.

Previous wording

Cash used in financing activities of $92.3 million for the three months ended March 31, 2024, was primarily due to an aggregate payment of $50.8 million as part of our 2024 ASR program and the Buying Plan (includes $0.2 million in fees related to the ASR program), $37.7 million in payments of taxes on restricted stock units, $4.0 million paid under installment payment arrangements to acquire fixed assets, offset by $0.2 million in proceeds from the issuance of common stock under equity incentive plans.

Current wording

Cash used in financing activities of $110.1 million for the six months ended June 30, 2024, was primarily due to an aggregate payment of $63.3 million as part of our 2024 ASR program and the Buying Plan (includes $0.2 million in fees related to the ASR program), $38.6 million in payments of taxes on restricted stock units, $9.0 million paid under installment payment arrangements to acquire fixed assets, offset by $3.4 million in proceeds from the issuance of common stock under equity incentive plans.

Previous wording

Cash used in financing activities of $54.2 million for the three months ended March 31, 2023, was primarily due to$30.7 million in payments of taxes on restricted stock units,$10.7 million paid for the retirement of the remaining outstanding warrants, $10.4 million in aggregate principal amount paid upon maturity of the remaining outstanding 2023 Notes, and $3.2 million paid under installment payment arrangements to acquire fixed assets, offset by $0.8 million in proceeds from the issuance of common stock under equity incentive plans.

Current wording

Cash used in financing activities of $58.3 million for the six months ended June 30, 2023, was primarily due to $31.9 million in payments of taxes on restricted stock units, $10.7 million paid for the retirement of the remaining outstanding warrants, $10.4 million in aggregate principal amount paid upon maturity of the remaining outstanding 2023 Notes, $7.9 million paid under installment payment arrangements to acquire fixed assets, offset by $5.1 million in proceeds from the issuance of common stock under equity incentive plans.

Previous wording

(1) The above table does not reflect possible payments in connection with unrecognized tax benefits of approximately $116.0 million, including $30.4 million recorded as a reduction of long-term deferred tax assets and $85.6 million in long-term income taxes payable as of March 31, 2024. As noted in Note 14, “Income Taxes,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q, although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, we cannot reasonably estimate the timing of the outcome at this time.

Current wording

(1) The above table does not reflect possible payments in connection with unrecognized tax benefits of approximately $121.3 million, including $28.6 million recorded as a reduction of long-term deferred tax assets and $92.7 million in long-term income taxes payable as of June 30, 2024. As noted in Note 14, “Income Taxes,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q, although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, we cannot reasonably estimate the timing of the outcome at this time.

Previous wording

On October 29, 2020, our Board approved the 2020 Repurchase Program authorizing the repurchase of up to an aggregate of 20.0 million shares. Share repurchases under the 2020 Repurchase Program may be made through the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules, and regulations. There is no expiration date applicable to the 2020 Repurchase Program. The 2020 Repurchase Program replaced the previous program approved by the Board in January 2015 and canceled the remaining shares outstanding as part of the previous authorization. During the three months ended March 31, 2024, we repurchased shares of our common stock under the 2020 Repurchase Program as discussed below.

Current wording

On October 29, 2020, our Board approved the 2020 Repurchase Program authorizing the repurchase of up to an aggregate of 20.0 million shares. Share repurchases under the 2020 Repurchase Program may be made through the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules, and regulations. There is no expiration date applicable to the 2020 Repurchase Program. The 2020 Repurchase Program replaced the previous program approved by the Board in January 2015 and canceled the previous outstanding authorization. During the six months ended June 30, 2024, we repurchased shares of our common stock under the 2020 Repurchase Program as discussed below.

Previous wording

On November 2, 2023, we entered into a share repurchase plan (the “Buying Plan”) with RBC Capital Markets, LLC (“RBCCM”). The Buying Plan was part of the 2020 Repurchase Program. Under the Buying Plan, RBCCM shall commence purchases for a 12-month period starting on November 2, 2023 and ending on November 1, 2024, unless terminated sooner pursuant to the Buying Plan (the “Repurchase Period”). During the Repurchase Period, RBCCM may purchase an aggregate amount of $50.0 million of our common stock, and its execution is dependent on our stock price reaching certain levels. Share repurchases shall not exceed $25.0 million in a quarter. On February 29, 2024, the Buying Plan was amended and as a result, no purchases were made from the Buying Plan during the period from March 1, 2024 to March 28, 2024, while the 2024 ASR Program was in effect. During the first quarter of 2024, an immaterial amount of shares was repurchased, retired and recorded as a reduction to stockholders’ equity, from the Buying Plan.

Current wording

On November 2, 2023, we entered into a share repurchase plan (the “Buying Plan”) with RBC Capital Markets, LLC (“RBCCM”). The Buying Plan was part of the 2020 Repurchase Program. Under the Buying Plan, RBCCM commenced purchases for a 12-month period starting on November 2, 2023 and ending on November 1, 2024, with a provision to terminate sooner pursuant to the Buying Plan (the “Repurchase Period”). During the Repurchase Period, RBCCM may purchase an aggregate amount of $50.0 million of our common stock, and its execution is dependent on our stock price reaching certain levels. Share repurchases shall not exceed $25.0 million in a quarter. On February 29, 2024, the Buying Plan was amended and as a result, no purchases were made from the Buying Plan during the period from March 1, 2024 to March 28, 2024, while the 2024 ASR Program was in effect. During the six months ended June 30, 2024, we repurchased approximately 0.2 million shares for approximately $13.1 million as part of the Buying Plan, which were retired and recorded as a reduction to stockholders’ equity.

Previous wording

Effective January 1, 2023, our share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. As of March 31, 2024, there was no exercise tax liability as the fair market value of our common stock issued exceeded the fair market value of the total repurchases.

Current wording

Effective January 1, 2023, our share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. As of June 30, 2024, we recorded an immaterial excise tax liability on our accompanying Unaudited Condensed Consolidated Balance Sheet of this Form 10-Q.

Previous wording

As of March 31, 2024, there remained an outstanding authorization to repurchase approximately 7.1 million shares of our outstanding common stock under the 2020 Repurchase Program.

Current wording

As of June 30, 2024, there remained an outstanding authorization to repurchase approximately 6.8 million shares of our outstanding common stock under the 2020 Repurchase Program.