Rambus, Inc.

Welcome to the Rambis Second Quarter and FY23 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 star 1 on your touch-tone keypad at any time. If anyone should require assistance during the conference, please press the star 0 on your touch-tone keypad at any time. As a reminder, this conference call is being recorded. I will now like to turn the conference over to your host, Desmond Lynch, Chief Financial Officer. You may begin with your conference.

Thank you, Operator, and welcome to the RAMBIS second quarter 2023 results conference call. I am Desmond Lynch, Chief Financial Officer at RAMBIS, and on the call with me today is Luke Serafin, our CEO. The press release for the results that we will be discussing today has been filed with the SEC on Form 8K. A replay of this call will be available for the next week at 866-813-9403. In addition, we are simultaneously webcasting this call, and along with the audio, we are webcasting slides that we will reference during portions of today's call. A replay of this call can be accessed on our website beginning today at 5pm Pacific time. Our discussions today will contain forward-looking statements, including our expectations regarding projected financial results, financial prospects, market growth, demand for our solutions, the company's ability to effectively manage supply chain and other market challenges, and the effects of ASC 606 on reported revenue, amongst other items. These statements are subject to risks and uncertainties that may be discussed during this call and are 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 are under no obligation to update these statements. In an effort to provide greater clarity in the financials, we are using both GAAP and non-GAAP financial presentations in both our press release and 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. We adopted ASC 606 in 2018 using the modified retrospective method, which did not restate prior periods, but rather ran the cumulative effect of the adoption through retained earnings as a beginning balance sheet adjustment. Any comparison between our results under ASC 606 and prior results under ASC 605 is not an accurate way to track the company's progress. We will continue to provide operational metrics such as licensing billings to give our investors better insight into our operational performance. 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, 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? Thank you, Dave, and good afternoon, everyone. We delivered another strong quarter with revenue in line and earnings at a high end of guidance. We also generated $50 million in cash from operations as we continue to successfully navigate through challenging microeconomic conditions. As generative AI and other advanced workloads accelerate demand for performance in the data center, requirements for greater memory bandwidth and capacity are growing at a rapid pace. Generative AI is expected to simultaneously boost demand for general-purpose servers that utilize DDR DIMMs for data preprocessing, as well as specialized accelerators with dedicated memory, such as HBM. The systems that run these advanced workloads will typically be high-end servers populated with substantially more memory than traditional servers. This is a strong catalyst for demand for multiple types of memory and a very positive long-term growth driver for the company. Rambus continues to lead in our areas of focus, providing chips and IP that deliver the performance, reliability, and security to feed the AI data pipeline. We just took an important step in the strategic evolution of the company to continue to intercept the long-term needs of the market. we signed a definitive agreement to sell our PHY IP business to Cadence while retaining our digital IP business, including industry-leading control solutions for HBM, CXL, and PCIe, as well as state-of-the-art security IP critical to data center and AI. With that, we have maintained the scale and diversity of the business while strengthening our focus on the development of differentiated chips and digital IP that expand our opportunities in the data center market. In concert with the increased focus on our competitive digital IP offerings, we are investing in initiatives to expand our product portfolio for the data center, as well as the emerging client space. Data center memory subsystems will require higher bandwidth memory modules and more complex companionships. And the client space with its increasing performance requirements, will gradually adopt technologies and solutions only used in data center service thus far. These new investments will expand our product offering to support the continued evolution of high-performance computing systems for years to come. Turning now to our quarterly results, all of our businesses continue to execute well. For memory interface chips, we delivered strong results at the high end of expectations, with product revenue of $55 million. As we have highlighted in past quarters, the transition to DDR5 continues to be dynamic. In Q2, we were very pleased to see DDR5 volume production run faster than projected, but this was offset by a deeper than anticipated DDR4 inventory correction. In line with the broader ecosystem, we expect DDR4 headwinds to continue through the remainder of the year but remain very positive on the long-term outlook for DDR5, which represented our predominant unit shipments this quarter and tripled in volume over Q1. Going forward, we expect continued lumpiness in our product business in the short run while the DDR5 run continues, as the industry works through the challenges of platform migration and continues to face DDR4 inventory headwinds. With this, we remain focused on execution and are actively working with customers and partners. As the first generation of DDR5 ramps, we continue our leadership position in follow-on generations of DDR5 with our Gen2 RCD in-qualification across the ecosystem and our Gen3 RCD sampling to all of our customers and partners. In addition to DDR5, Close collaboration and development with the ecosystem continues on novel memory solutions to support the roadmap of future server generations. In closing, this was a strong quarter for the company with solid results and continued execution from the team. We continue to see excellent long-term growth opportunities driven by increasing demand in the data center fueled by AI. While we navigate dynamic market conditions in the near term, our focused investments position as well to expand our leadership and deliver the critical solutions for high-performance computing systems. As always, I'd like to thank our customers, partners, and employees for their ongoing support. And with that, I turn the call over to Dev to discuss the quarterly financial results. Dev? Thank you, Luke.