RAMBUS INC
For the period ended Sep 30, 2024. Filed Oct 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 30, 2024
RMBS$74.53+7.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0000917273-24-000100
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0000917273-24-000107
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 115 previous paragraphs and 117 current paragraphs.
64 unchanged; 41 reworded; 12 added; 10 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
•Revenue of $145.5 million;
Current report
•Operating expenses of $62.7 million; and
Current report
•Net cash provided by operating activities of $62.1 million.
Current report
Total sales, general and administrative expenses for the three months ended September 30, 2024 increased approximately $0.6 million as compared to the same period in 2023, primarily due to increases in consulting expenses of $0.7 million, stock-based compensation expenses of $0.7 million and headcount-related expenses of $0.5 million, offset by decreases in rent and facility expenses of $0.8 million and sales and marketing activities of $0.8 million. Total sales, general and administrative expenses for the nine months ended September 30, 2024 decreased approximately $6.4 million as compared to the same period in 2023, primarily due to decreases in rent and facility expenses of $3.3 million, stock-based compensation expenses of $1.9 million, sales and marketing activities of $0.7 million and headcount-related costs of $0.5 million, offset by increases in consulting expenses of $1.0 million and acquisition-related costs of $0.8 million.
Current report
Total research and development expenses for the three months ended September 30, 2024 increased approximately $3.9 million as compared to the same period in 2023, primarily due to increases in prototyping costs of $2.0 million, stock-based compensation expenses of $1.3 million, headcount-related expenses of $0.8 million and facility expenses of $0.6 million, offset by a decrease in software EDA tool subscriptions of $1.1 million.
Current report
Total sales, general and administrative expenses for the three months ended September 30, 2024 increased approximately $0.6 million as compared to the same period in 2023, primarily due to increases in consulting expenses of $0.7 million, stock-based compensation expenses of $0.7 million and headcount-related expenses of $0.5 million, offset by decreases in rent and facility expenses of $0.8 million and sales and marketing activities of $0.8 million.
Current report
Total sales, general and administrative expenses for the nine months ended September 30, 2024 decreased approximately $6.4 million as compared to the same period in 2023, primarily due to decreases in rent and facility expenses of $3.3 million, stock-based compensation expenses of $1.9 million, sales and marketing activities of $0.7 million and headcount-related costs of $0.5 million, offset by increases in consulting expenses of $1.0 million and acquisition-related costs of $0.8 million.
Current report
Restructuring and Other Charges (Recoveries)
Current report
Gain on Divestiture
Current report
In July 2023, we entered into an asset purchase agreement (the “Purchase Agreement”) with Cadence Design Systems, Inc. (the “Purchaser”), pursuant to which we agreed to sell certain assets and the Purchaser agreed to assume certain liabilities from us, in each case with respect to our PHY IP group. The decision to sell this portion of our business reflected the ongoing review of our core semiconductor business to focus on our development of digital IP and chips, including novel memory solutions for high-performance computing, to support the continued evolution of the data center and AI.
Current report
Consequently, we recognized a gain of approximately $90.8 million during the three and nine months ended September 30, 2023. Refer to Note 17, “Divestiture,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for additional information.
Current report
Concurrent with the sale of our PHY IP group to Cadence in the third quarter of 2023, we recorded a charge of approximately $10.0 million in our Unaudited Condensed Consolidated Statement of Operations during the three and nine months ended September 30, 2023. The charge was primarily related to the accelerated amortization of software licenses that were not part of the PHY IP disposal group, but where acceleration was warranted due to the lower headcount and corresponding excess capacity for such licenses. Refer to Note 17, “Divestiture,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for additional information.
Removed paragraphs (10)
Previous report
•Revenue of $132.1 million;
Previous report
•Operating expenses of $65.0 million; and
Previous report
•Net cash provided by operating activities of $70.4 million.
Previous report
During the second quarter of 2024, the Company continued its product portfolio expansion with DDR5 server PMICs and PCIe 7 IP solutions.
Previous report
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 report
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 report
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.
Previous report
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 report
Restructuring and Other Charges
Previous report
NM* — percentage is not meaningful
Reworded paragraphs (41)
Previous 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.
Current wording
We delivered strong results during the third quarter of 2024, driven by continued demand for our memory interface chips and stability from our royalty revenue. As part of the ongoing execution of our industry-leading product roadmap, we added the DDR5 Client Clock Driver to our product portfolio.
Previous wording
Key second quarter 2024 financial results included:
Current wording
Key third quarter 2024 financial results included:
Previous wording
The Company’s consolidated revenue is comprised of product revenue, royalties and contract and other revenue.
Current wording
Our consolidated revenue is comprised of product revenue, royalties and contract and other revenue.
Previous 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.
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 46% and 44% of our consolidated revenue for the three and nine months ended September 30, 2024, as compared to 50% for both the three and nine months ended September 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 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.
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 44% and 42% of our consolidated revenue for the three and nine months ended September 30, 2024, as compared to 27% and 29% for the three and nine months ended September 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 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.
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 10% and 14% of our consolidated revenue for the three and nine months ended September 30, 2024, as compared to 23% and 21% of our consolidated revenue for the three and nine months ended September 30, 2023. The decreases for both the three and nine months ended September 30, 2024 as compared to the same periods in 2023 were primarily attributed to the sale of our PHY IP group in the third quarter of 2023.
Previous wording
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.
Current wording
Cost of product revenue increased approximately $5.2 million for the three months ended September 30, 2024 as compared to the same period in 2023. Cost of product revenue increased approximately $2.8 million for the nine months ended September 30, 2024 as compared to the same period in 2023. The increases in both periods were primarily due to higher sales volumes of our memory interface chips.
Previous 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.
Current wording
Cost of contract and other revenue decreased approximately $0.5 million for the three months ended September 30, 2024 as compared to the same period in 2023. Cost of contract and other revenue decreased approximately $2.0 million for the nine months ended September 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 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. 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.
Current wording
Total research and development expenses for the three months ended September 30, 2024 increased approximately $3.9 million as compared to the same period in 2023, primarily due to increases in prototyping costs of $2.0 million, stock-based compensation expenses of $1.3 million, headcount-related expenses of $0.8 million and facility expenses of $0.6 million, offset by a decrease in software EDA tool subscriptions of $1.1 million. Total research and development expenses for the nine months ended September 30, 2024 decreased approximately $1.6 million as compared to the same period in 2023, primarily due to decreases in software EDA tool subscriptions of $4.7 million, consulting expenses of $1.6 million, headcount-related expenses of $1.4 million, depreciation expense of $0.7 million and retention bonus expense related to acquisitions of $0.6 million, offset by increases in prototyping costs of $3.4 million, lower engineering costs allocated to cost of revenue of $2.0 million, facility costs of $1.9 million and stock-based compensation expenses of $0.7 million. The fluctuations in both periods are primarily driven by growth in our research and development initiatives, offset by decreases attributable to the sale of our PHY IP group in the third quarter of 2023.
Previous 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.
Current wording
As of September 30, 2024, our semiconductor, security and other technologies are covered by 2,241 U.S. and foreign patents. Additionally, we have 522 patent applications pending in various countries. 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% 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.
Current wording
We have a high degree of revenue concentration. Our top five customers represented approximately 69% and 64% of our consolidated revenue for the three and nine months ended September 30, 2024, as compared to 63% and 59% for the three and nine months ended September 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 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.
Current wording
Our revenue from companies headquartered outside of the United States accounted for approximately 68% and 61% of our consolidated revenue for the three and nine months ended September 30, 2024, as compared to 69% and 61% for the three and nine months ended September 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 six months ended June 30, 2024, including Kioxia, Marvell 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 nine months ended September 30, 2024, including Kioxia, Marvell and Nanya.
Previous 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.
Current wording
Product revenue increased approximately $14.2 million for the three months ended September 30, 2024 as compared to the same period in 2023. Product revenue increased approximately $2.5 million for the nine months ended September 30, 2024 as compared to the same period in 2023. The increases in both periods were primarily due to higher sales of our memory interface chips.
Previous 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.
Current wording
Royalty revenue, which includes patent and technology license royalties, increased approximately $35.2 million for the three months ended September 30, 2024 as compared to the same period in 2023. Our royalty revenue increased approximately $70.3 million for the nine months ended September 30, 2024 as compared to the same period in 2023. The increases in both periods were primarily due to the timing and structure of license agreements and renewals.
Previous 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.
Current wording
Contract and other revenue consist of revenue from technology development projects. Contract and other revenue decreased approximately $9.2 million for the three months ended September 30, 2024 as compared to the same period in 2023. Contract and other revenue decreased approximately $16.2 million for the nine months ended September 30, 2024 as compared to the same period in 2023. The decreases for both the three and nine months ended September 30, 2024 as compared to the same periods in 2023 were 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 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.
Current wording
Cost of product revenue includes costs attributable to the sale of memory and security products. Cost of product revenue increased approximately $5.2 million for the three months ended September 30, 2024 as compared to the same period in 2023. Cost of product revenue increased approximately $2.8 million for the nine months ended September 30, 2024 as compared to the same period in 2023. The increases in both periods were primarily due to higher sales volumes of our memory interface chips.
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 $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.
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 $0.5 million for the three months ended September 30, 2024 as compared to the same period in 2023. Cost of contract and other revenue decreased approximately $2.0 million for the nine months ended September 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 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.
Current wording
Total research and development expenses for the nine months ended September 30, 2024 decreased approximately $1.6 million as compared to the same period in 2023, primarily due to decreases in software EDA tool subscriptions of $4.7 million, consulting expenses of $1.6 million, headcount-related expenses of $1.4 million, depreciation expense of $0.7 million and retention bonus expense related to acquisitions of $0.6 million, offset by increases in prototyping costs of $3.4 million, lower engineering costs allocated to cost of revenue of $2.0 million, facility costs of $1.9 million and stock-based compensation expenses of $0.7 million. The fluctuations in both periods are primarily driven by growth in our research and development initiatives, offset by decreases attributable to the sale of our PHY IP group in the third quarter of 2023.
Previous 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.
Current wording
Amortization of acquired intangible assets recognized in cost of revenue and operating expenses for the three and nine months ended September 30, 2024 decreased by approximately $0.7 million and $2.1 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, as well as a reduction of our amortization expense as intangibles become fully amortized.
Previous wording
In June 2023, we initiated a restructuring program to reduce overall expenses to improve future profitability by reducing our overall spending (the “2023 Restructuring Plan”). In connection with this restructuring program, we initiated a plan resulting in a reduction of 42 employees. During the six months ended June 30, 2023, we recorded charges of approximately $9.5 million related to the reduction in workforce, as well as write-downs of obligations related to certain IP development costs and software licenses for engineering development tools. The 2023 Restructuring Plan was substantially completed in the fourth quarter of 2023. Refer to Note 16, “Restructuring and Other Charges,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for additional information.
Current wording
In June 2023, we initiated a restructuring program to reduce overall expenses to improve future profitability by reducing our overall spending (the “2023 Restructuring Plan”). In connection with this restructuring program, we initiated a plan resulting in a reduction of 42 employees. During the nine months ended September 30, 2023, we recorded charges of approximately $9.4 million, which included an immaterial recovery of costs during the three months ended September 30, 2023, related to the reduction in workforce, as well as write-downs of obligations related to certain IP development costs and software licenses for engineering development tools. The 2023 Restructuring Plan was substantially completed in the fourth quarter of 2023. Refer to Note 16, “Restructuring and Other Charges” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for additional information.
Previous wording
During the six months ended June 30, 2024, we did not initiate any restructuring programs.
Current wording
During the nine months ended September 30, 2024, we did not initiate any restructuring programs.
Previous wording
During the three and six months ended June 30, 2024, we recorded a charge of approximately $1.1 million in our Unaudited Condensed Consolidated Statement of Operations of this Form 10-Q, related to the write-off of certain fixed assets no longer in use and for which we determined they had no alternate economic use.
Current wording
During the nine months ended September 30, 2024, we recorded a charge of approximately $1.1 million in our Unaudited Condensed Consolidated Statement of Operations of this Form 10-Q, related to the write-off of certain fixed assets no longer in use and for which we determined they had no alternate economic use.
Previous wording
The changes in the fair value of the earn-out liability related to the 2021 acquisition of the PLDA Group (“PLDA”), which is subject to certain revenue targets of the acquired business for a period of three years from the date of acquisition, and which is settled annually in shares of our common stock based on the fair value of that common stock fixed at the time we acquired PLDA. The fair value of the earn-out liability is remeasured each quarter, depending on the acquired business’s revenue performance relative to target over the applicable period, and adjusted to reflect changes in the per share value of our common stock.
Current wording
The changes in the fair value of the earn-out liability related to the 2021 acquisition of the PLDA Group (“PLDA”), which was subject to certain revenue targets of the acquired business for a period of three years from the date of acquisition, and settled annually in shares of our common stock based on the fair value of that common stock fixed at the time we acquired PLDA. The fair value of the earn-out liability was remeasured each quarter, depending on the acquired business’s revenue performance relative to target over the applicable period, and adjusted to reflect changes in the per share value of our common stock.
Previous 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.
Current wording
During the three and nine months ended September 30, 2024, we remeasured the fair value of the earn-out liability, which resulted in reductions of $4.5 million and $5.0 million, respectively, in our Unaudited Condensed Consolidated Statements of Operations of this Form 10-Q. During the three and nine months ended September 30, 2023, we remeasured the fair value of the earn-out liability, which resulted in a reduction of $5.7 million and additional expenses of $8.1 million, respectively, in our Unaudited Condensed Consolidated Statements of Operations of this Form 10-Q. The final earn-out was achieved as of September 30, 2024 and is expected to be fully paid during the fourth quarter of 2024.
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 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.
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 September 30, 2024 and 2023, interest income and other income (expense), net, consisted primarily of interest income of $4.8 million and $2.5 million, respectively, generated from our investment portfolio. For the nine months ended September 30, 2024 and 2023, interest income and other income (expense), net, consisted primarily of interest income of $13.6 million and $6.4 million, respectively, generated from our investment portfolio. The increases in interest income and other income (expense), net, for the three and nine months ended September 30, 2024 as compared to the same periods in 2023 were 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 and six months ended June 30, 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 nine months ended September 30, 2024 and 2023.
Previous 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.
Current wording
Our provision for income taxes for the three and nine months ended September 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 nine months ended September 30, 2024 reflected an effective tax rate of 17.6% and 14.6%, respectively. The provision for income taxes for the three months ended September 30, 2023 was primarily driven by foreign withholding taxes and adjustments to the valuation allowance release on our U.S. deferred tax assets due to a change in forecasted taxable income and expense, offset by tax benefits from excess stock-based compensation deductions. The benefit from income taxes for the nine months ended September 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, offset by foreign withholding taxes. Our income tax provision (benefit) for the three and nine months ended September 30, 2023 reflected an effective tax rate of 3.8% and (121.6)%, respectively. Our effective tax rate for the three and nine months ended September 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 nine months ended September 30, 2023, differed from the U.S. statutory rate primarily due to the valuation allowance release on our U.S. deferred tax assets.
Previous 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.
Current wording
During the three months ended September 30, 2024 and 2023, we paid foreign withholding taxes of $5.1 million and $5.4 million, respectively. During the nine months ended September 30, 2024 and 2023, we paid foreign withholding taxes of $15.5 million and $15.8 million, respectively.
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 six months ended June 30, 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 nine months ended September 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 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.
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 nine months ended September 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 $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.
Current wording
Cash provided by operating activities of $171.6 million for the nine months ended September 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 nine months ended September 30, 2024 primarily included decreases in unbilled receivables and prepaids and other current assets and an increase in income taxes payable, offset by increases in income taxes receivable, inventories and accounts receivable, and a decrease in accrued salaries and benefits.
Previous 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.
Current wording
Cash provided by operating activities of $140.9 million for the nine months ended September 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 nine months ended September 30, 2023 primarily included a decrease in unbilled receivablesand an increase in income taxes payable, offset by increases in income taxes receivable, inventories and accounts receivable, as well as decreases in accounts payable, accrued salaries and benefits and deferred revenue.
Previous 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.
Current wording
Cash provided by investing activities of $13.0 million for the nine months ended September 30, 2024, consisted of proceeds from the maturities and sales of available-for-sale marketable securities of $206.9 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 $278.2 million, and $24.2 million paid to acquire property, plant and equipment.
Previous 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.
Current wording
Cash provided by investing activities of $30.9 million for the nine months ended September 30, 2023, consisted of proceeds from the maturities and sales of available-for-sale marketable securities of $127.5 million and $117.8 million, respectively, and net proceeds from the sale of our PHY IP group of $106.3 million, offset by purchases of available-for-sale marketable securities of $298.3 million and $22.5 million paid to acquire property, plant and equipment.
Previous 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.
Current wording
Cash used in financing activities of $165.3 million for the nine months ended September 30, 2024, was primarily due to an aggregate payment of $113.3 million as part of our 2024 ASR program and the Buying Plan (includes $0.2 million in fees related to the ASR program), $40.3 million in payments of taxes on restricted stock units, and $12.7 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 $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.
Current wording
Cash used in financing activities of $165.4 million for the nine months ended September 30, 2023, was primarily due to an aggregate payment of $100.3 million as part of our 2023 ASR program (includes $0.3 million in fees related to the ASR program), $36.7 million in payments of taxes on restricted stock units, $11.3 million paid under installment payment arrangements to acquire fixed assets, $10.7 million paid for the retirement of the remaining outstanding warrants, and $10.4 million in aggregate principal amount paid upon maturity of the remaining outstanding 2023 Notes, offset by $6.5 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 $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.
Current wording
(1) The above table does not reflect possible payments in connection with unrecognized tax benefits of approximately $126.9 million, including $25.6 million recorded as a reduction of long-term deferred tax assets and $101.3 million in long-term income taxes payable as of September 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 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.
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 nine months ended September 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 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.
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 first quarter of 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 third quarter of 2024, the Buying Plan was further amended to allow RBCCM to purchase an aggregate amount of $100.0 million of our common stock, not to exceed $50.0 million in a quarter. The execution of share repurchases is dependent on our stock price reaching certain levels. During the nine months ended September 30, 2024, we repurchased approximately 1.4 million shares for approximately $63.1 million as part of the Buying Plan, which were retired and recorded as a reduction to stockholders’ equity.
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