Rambus NASDAQ: RMBS outlined its second-quarter outlook and provided updates on product transitions, supply chain conditions, and longer-term platform-driven opportunities during its latest earnings call.
Guidance calls for sequential revenue growth in Q2
Management guided to second-quarter revenue of $192 million to $198 million. Within that range, the company expects:
- Product revenue of $95 million to $101 million, which would represent an 11% sequential increase at the midpoint.
- Royalty revenue of $72 million to $78 million.
- Licensing billings (an operational metric) of $76 million to $82 million.
The company also provided a non-GAAP profitability framework for the quarter. It expects non-GAAP total operating costs (including cost of sales) of $110 million to $114 million and non-GAAP operating profit of $78 million to $88 million. Rambus projected $7 million of non-GAAP interest income, non-GAAP tax expense of $13.6 million to $15.2 million, and a diluted share count of 110 million, resulting in expected non-GAAP EPS of $0.65 to $0.73.
Additional call disclosures included first-quarter depreciation expense of $8.5 million, first-quarter free cash flow of $66.3 million, and planned second-quarter capital expenditures of approximately $14 million.
Company highlights diversified model and AI-driven demand signals
In prepared remarks, management said it “delivered solid results in line with our objectives, driving ongoing profitability and cash generation,” adding that a diversified portfolio remains “a core strength, with each of the businesses contributing meaningfully to our performance.”
Rambus said its patent licensing business continues to provide “consistent, predictable performance,” supported by long-term agreements. The company also cited its Silicon IP business as “well-positioned,” pointing to “critical interconnect and security technologies” that are addressing demand tied to AI solutions.
On the product side, management said the product business grew 15% year-over-year and is positioned for sequential growth in the second quarter. The company also reiterated a longer-term objective of delivering year-over-year revenue growth in 2026.
Product revenue: OSAT issue resolved, Gen 2-to-Gen 3 transition cited as catalyst
In the Q&A, Jefferies analyst Kevin Garrigan asked about the pace of product revenue recovery following a previously discussed “one-time OSAT issue.” Management responded that the issue is “behind us,” adding that the company is now focused on re-stabilizing and normalizing the supply chain. Management pointed to the company’s Q2 product revenue guide—an 11% sequential increase at the midpoint—as “the right trajectory,” and said it expects sequential growth beyond Q2.
Management also discussed the industry transition in DDR5, saying the market is moving from “Gen 2 to Gen 3,” which it characterized as a positive catalyst. The company said it does not see demand issues and does not see further quality issues related to what occurred in Q1.
Supply chain: tight back-end persists; platform timing remains key dependency
Baird analyst Tristan Gerra asked about component shortages and how they could impact revenue. Management said it is seeing demand grow for standard servers, citing agentic AI as a driver, and said it expects the server market to grow faster this year than last year, modeling “low double digit growth.”
However, on supply, management said the back-end situation “has not improved” since last quarter, citing long lead times and ongoing “tension on the back end.” Management said it accounts for these constraints in its forecasts and emphasized that platform launch timing is another key variable because new product launches are tied to the rollout of new industry platforms.
When asked later about the cause of back-end tightness, management cited two primary drivers: increased demand, “especially in the data center,” and the fact that many semiconductor suppliers have moved back-end supply chains away from China to other countries in Asia, straining total capacity. Management added it has “not seen an effect yet” from war-related disruptions, though it noted discussions about potential impacts to some basic inputs such as gas.
MRDIMM and next-generation DDR: ramps tied to Intel and AMD platforms
Management said it continues to make progress on MRDIMM product launches and customer engagement, highlighting the value proposition of “larger capacity” and “larger bandwidth” with easier adoption due to staying within an established ecosystem. It reiterated that the ramp is driven primarily by the timing of next-generation platform launches from Intel and AMD and said it continues to expect the ramp to begin “in 2027 in earnest.”
On the market opportunity, management reiterated its current view of a $600 million serviceable addressable market (SAM) for MRDIMM, while cautioning that the SAM could be refined once products are in-market and feedback is available. In a separate exchange, management said it is modeling a “conservative percentage” attach rate for MRDIMMs given the number of variables, including platform timing, DRAM pricing, module pricing, and customer configuration decisions during a memory cycle.
On DDR5 generations, management said Gen 4 will begin ramping this year but described it as more of a niche generation, with the market “waiting for Gen 5.” It said Rambus expects to start shipping Gen 5-related products toward the end of the year, but, similar to MRDIMM, the bulk of Gen 5 volume is expected to start in 2027, dependent on Intel and AMD platform ramps.
Management also discussed customer preference for bundled solutions as performance requirements rise. In response to a question from William Blair’s Sébastien Naji about companion chips, John (a company executive participating in Q&A) said newer products contributed a “low double-digit” percentage of total product revenue in the first quarter and are expected to remain roughly the same in the second quarter. Management added it expects continued growth in the contribution from new chips and said it may exit the year at a “mid-double-digit” percentage of product revenue from new chips, citing the increasing importance of interoperability at higher speeds as a reason customers want a full chipset from one supplier.
Separately, management said it continues to gain share, stating it exited 2025 at “mid-40%” share and sees no indication of erosion heading into 2026, particularly given its footprint in Gen 3 and the addition of content through additional components.
About Rambus NASDAQ: RMBS
Rambus Inc is a technology licensing company specializing in semiconductor and system-level interface solutions. Founded in 1990 by Stanford University researchers Mike Farmwald and Mark Horowitz, Rambus established its headquarters in Sunnyvale, California. The company initially gained prominence by developing high-speed DRAM interface technology and securing a broad patent portfolio covering memory architecture, data signaling and power management innovations.
Today, Rambus licenses its proprietary intellectual property (IP) to semiconductor companies, original equipment manufacturers (OEMs) and system integrators worldwide.
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