Rambus Investor Presentation Q2 2020
Safe Harbor for Forward-Looking Statements; Other Disclosures This presentation contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 including Rambus’ financial guidance for future periods, product and investment strategies, timing of expected product launches, demand for existing and newly- acquired technologies, the growth opportunities of the various markets we serve, the expected benefits of our merger, acquisition and divestiture activity, including the success of our integration efforts, and the effects of ASC 606 on reported revenue, amongst other things. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by Rambus’ management. Actual results may differ materially. Our business is subject to a number of risks which are described more fully in our periodic reports filed with the Securities and Exchange Commission, as well risks and the potential adverse impacts related to, or arising from, the Novel Coronavirus (COVID -19). Rambus undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof. Effective January 1, 2018, the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers in ASC 606. The adoption of ASC 606 materially impacted the timing of revenue recognition for the Company's fixed-fee intellectual property licensing arrangements. The adoption of ASC 606 did not have a material impact on the Company's other revenue streams, net cash provided by operating activities, or its underlying financial position. This presentation contains non-GAAP financial measures, including operating costs and expenses, interest and other income (expense), net and diluted net income (loss) per share. In computing these non-GAAP financial measures, stock-based compensation expenses, acquisition-related transaction costs and retention bonus expense, amortization expenses, non-cash interest expense and certain other one-time adjustments were considered. The non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes the non-GAAP financial measures are appropriate for both its own assessment of, and to show investors, how the Company’s performance compares to other periods. Reconciliation from GAAP to non-GAAP results are made available and more fully described on our website as well as the back of this deck and in the earnings release. CONFIDENTIAL CO 2
Rambus at a Glance Who We Are Rambus Offerings Financial Performance Q120 2019 Premier si silicon on IP IP a and c chip • Architecture High-speed IO & DPA Licensing Billings $67.1M $267.2M provider, making da data faster Countermeasures Licenses an and safer Contract & Other $13.6M $60.3M Revenue Developed fo foundational • High-speed Interface te technology for all modern Product Revenue $30.7M $73.0M Silicon IP and Security IP computing systems Cash from Operations $37.3M $128.5M Improving pe performanc nce, • ca capacity and security for Memory Interface Chips leading SoCs and systems Chips HQ: 2900 + California Ca 30 Years 30 Y 2900 ~ 700 700 NASDAQ: RMBS RM Employees Tech leadership Patents and WW Offices in Worldwide & innovation Applications India, EU, Asia 3
Targeting Growth Markets Ar Artificial Intelligence Da Data Center Accurate training requires enormous amounts Explosion of data pushing demands on of data - memory bandwidth is key. Securing training interconnects to move data faster. Value of data and inference models and data now vital demands securing the communication links Au Autonomous/AD ADAS AS Au Automotive Ed Edge Compute (5G) Real-time decisions from multiple inputs Near edge (base stations) drive increase demand on processing and trust performance and far edge (gateways and in the data routers) demand power efficiency and trust In Inter ernet of of T Things Defense Billions of connected endpoints make device-level Trusted device authentication is critical security critical to enabling trust across the ecosystem to global supply chain 4
Semiconductor Industry Ecosystem Built on Leading-Edge IP Markets AI/ML AI Data Dat a Center Au Automotive Communications Co Io IoT Go Government Cloud Providers System OEMs Memory SoC Chip Makers Foundry Technology Suppliers Ecosystem Example 5
Semiconductor Solutions Built on Leading-Edge IP Architecture Silicon IP Chips License Security IP: Interface IP: Memory 2400+ issued & Foundational Secure Cores, Protocols Memory and SerDes Interface pending patents IP and Provisioning PHYs and Controllers Chips 6
Strong, Growing and Relevant Patent Portfolio Rambus Patent Portfolio 80 DRAM Market Increased 84% DRAM Market Size 60 2900+ 40 20 $40B $45B $73B 0 2010 2015 2020 • Growing patent portfolio in key areas: • Memory architectures • High-speed serial links • Embedded security Relevant portfolio regularly cited by major • industry players Industry Citations of Rambus Patents 7 Source: IHS Markit and Innography, respectively
Products Driving Growth Record Q1’20 revenue for Silicon IP and Chips Product Revenue ($M) 50 50 Contract & Other (~Silicon IP) 45 45 40 40 Q120 Up 84% over Q119 35 35 to $13.6M 30 30 25 25 20 20 Product (~Chips) 15 15 Q120 > 3X revenue of Q119 10 10 at $30.7M 5 0 Q Q2 18 Q3 18 Q Q4 18 Q Q1 19 Q Q2 19 Q Q3 19 Q Q4 19 Q Q1 Q1 20 Product (~Chips) Contract & Other (~Silicon IP) Other (~RLD, Payments & Ticketing) 8
Continued Strong Cash Generation AS ASC 606 AS ASC 606 AS ASC 606 AS ASC 606 AS ASC 606 Q1 Q1 2019 Q2 Q2 2019 Q3 Q3 2019 Q4 2019 Q4 Q1 2020 Q1 In Millions Year over year growth from chip and Silicon Revenue $48.4 $58.3 $57.4 $59.9 $64.0 IP revenue. Impacted by structure and timing of key licensing arrangements. Managed expenses through refocus on core Total Operating Expenses 1 $67.3 $64.1 $67.1 $62.3 $63.5 growth initiatives. Operating results under ASC 606 do not Operating Income (Loss) 1 ($18.9) ($5.8) ($9.7) ($2.3) $0.5 reflect significant cash flow from fixed-fee licensing arrangements Outstanding cash generation Cash from Operations $28.8 $38.7 $25.6 $35.4 $37.3 ¹Please refer to reconciliations of non-GAAP financial measures included in this presentation and in our earnings release 9
Solid Balance Sheet Supports Strategic Initiatives In Millions Q1 Q1 2019 2019 Q2 Q2 2020 2020 Q3 Q3 2020 2020 Q4 Q4 2019 2019 Q1 Q1 2020 2020 Total Cash & Marketable $305.9 $337.7 $338.0 $407.7 $435.4 Driven by strong cash from operations. Securities $1,321.4 $1,312.2 $1,299.8 $1,339.0 $1,319.5 Total Assets Strong balance sheet with limited debt $487M and $528M contract assets in Q1 2020 and Q4 2019 respectively, related to ASC 606 adoption $999.9 $973.2 $961.3 $970.9 $965.7 Stockholders’ Equity Cash from Operations $28.8 $38.7 $25.6 $35.4 $37.3 Outstanding cash generation 10
Strong Cash From Operations Low Capital Expenditure, Consistent Return to Shareholders 1.01 Execution of strategy and 0.98 • 1.00 140 operational discipline yields excellent cash flow 120 129 0.77 0.80 117 0.69 114 100 108 Strong cash position • 0.61 0.59 100 ($M) ($M 96 ($) ($) 0.60 enables flexibility for 80 87 87 M&A 77 76 76 0.39 71 69 60 0.40 Returned $200M of cash • 51 50 50 40 44 to shareholders from 0.20 20 2015 through 2018 - - - through Accelerated - 0.00 2013 2014 2015 2016 2017 2018 2019 Share Repurchase programs Cash Flow from Operations Free Cash Flow Return of Capital (Share Buyback) Free Cash Flow/share 11
Rambus Investment Summary Focusing on core strengths in semiconductor with unique expertise Growing patent portfolio of interface and security IP has continued relevance Strong balance sheet and cash generation to re-invest in R&D and M&A in areas of focus Delivering to performance-intensive, high-growth market segments including data center, edge, AI and automotive 12
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