Rambus, Inc.

Welcome and thank you for standing by. Today's conference is scheduled to begin momentarily. Until that time, your lines will again be placed and hold. Thank you for your patience. Once again, today's conference is scheduled to begin momentarily. Until that time, your lines will again be placed and hold. Thank you and please continue to stand by. Oh, my God. THE END Welcome to the third quarter in fiscal year 2020 earnings conference call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question and answer session. If you would like to ask a question, you may press on your touchstone pad at any time. If anyone should require assistance during the conference, please press on your touchstone pad at any time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Rahul Mathur, Chief Financial Officer. You may begin your conference.

Thank you, Operator, and welcome to the RAMBUS Third Quarter 2020 Results Conference Call. I'm Rahul Mathur, CFO, and on the call with me today is Luke Serafin, our CEO. The press release for the results that we will be discussing today have been furnished to the SEC on Form 8-K. A replay of this call will be available for the next week at 855-859-2056. You can hear the replay by dialing the toll-free number and then entering ID number 228-1104 when you hear the prompt. In addition, we are simultaneously webcasting this call, and along with the audio, we're webcasting slides that we will reference during portions of today's call. So even if you're joining us via conference call, you may want to access the webcast with the slide presentation. A replay of this call can be accessed on our website beginning today at 5 p.m. Pacific time. Our discussion today will contain forward-looking statements, including our 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, risks and the potential adverse impacts related to or arising from coronavirus or COVID-19, and the effects of AC606 on reported revenue, amongst other things. These statements are subject to risks and uncertainties that are discussed during this call. and may be more fully described in the documents we file with the SEC, including our 8Ks, 10Qs, and 10Ks. These forward-looking statements may differ materially from our actual results, and we're under no obligation to update these statements. In an effort to provide greater clarity in our financials, we're using both GAAP and non-GAAP financial presentations in both our press release and also on this call. A reconciliation of these non-GAAP financials to the most directly comparable GAAP measures has been included in our press release, in our slide presentation, and on our website at rambus.com on the investor relations page under financial releases. The order of our call today will be as follows. Luke will start with an overview of the business. I will discuss our financial results, including our guidance for future periods, and then we will end with Q&A. I'll now turn the call over to Luke to provide an overview of the quarter.

Luke? Thanks Rahul and good afternoon everyone. The company had another very solid performance this quarter as our excellent product growth continues. We delivered on revenue of $56.9 million and exceeded expectations for profitability with continued great discipline on the bottom line. It was another very strong quarter of cash generation with $44.1 million in cash flow operations. This brings the total for the year to over $143 million, which already significantly exceeds our total for the entirety of last year. As our proven track record of cash generation and progress on strategic product initiatives continue, we are poised for healthy top-line growth in 2021. Data Center remains the key growth market across all of our businesses. Cloud demand skyrocketed in the first half, driven by the significant increase in online activity from corporations and consumers, and has returned to more normal growth rates in the third quarter. We continue to see sustained investment from our customers in products and solutions that will help improve the performance and security of the global data infrastructure. Memory and interface chips delivered a solid quarter, with quarterly revenue up 39% year over year. We are on track to have another record year with over 50% growth in our product business versus 2019. While we continue to gain DDR4 market share, the third quarter saw the beginning of the short-term data center inventory digestion we cautioned about in previous calls. We expect the bulk of these adjustments to occur in the fourth quarter and a return to normal consumption levels early next year. We still anticipate to end 2020 significantly above the full year guidance we provided in 2019. Looking forward to 2021, we have a larger qualification footprint in the upcoming DDR4 server platform transition, which should drive further market share gains. For DDR5, we are in a leading position for qualification with our memory customers and CPU partners. DRAM suppliers are now sampling DDR5 modules with our chips to system companies. Looking forward, we are investing in the development of additional chips for DDR5 platforms, as well as new architectures and IP for novel memory subsystems. This will further strengthen our memory leadership position in the years to come. Turning to silicon IP, we have strong quarter with increasing design with momentum across data center 5G and edge. This was supported by excellent execution from last year's acquisitions with a form of very metrics and Northwest logic teams, both hitting their targeted run rates for revenue. I'm delighted with this performance as the successful integration of these teams gives us confidence in our ability to create greater value from future acquisitions. Our solutions continue to lead the industry, with the latest example being our silicon demonstration of the world's fastest HBM2e memory interface running at up to 4 gigabit per second. At this speed, our comprehensive solution delivers the highest bandwidth for the most demanding data center applications, including AI machine learning training and high-end graphics. Lastly, We are very pleased Micron extended their license agreement for an additional four years under the existing financial terms. This extends their license agreement beyond the next renewal dates for Samsung and SK Hynix and is a great testament to the ongoing strength and relevance of our patent portfolio, as well as our growing partnership with Micron. With this extension, we have solidified a sustained foundation of cash generation from our licensing program, that allows us to return value to our stockholders and build our growing product businesses. With that, this afternoon we announced a new stock repurchase program, which Rahul will discuss in more detail later on in the call. The program demonstrates the Board's confidence in our strategic direction and underscores our ongoing commitment to investors. Strong cash generation, also gives us the flexibility to invest and expand our technology roadmap to address more data-centric applications. Through our ongoing focus on execution, we have multiple revenue streams across the company, and with our structural step-downs behind us after Q4, we will be well positioned for significant absolute growth in 2021. With that, I turn the call to Rahul to discuss the quarterly financial results. Rahul?