RAMBUS INC Q4 FY2025 earnings call

• 2025 was an excellent year for Rambus with strong Q4 performance, record revenue and earnings. - Achievements included leadership in DDR5 with increased market share in RCDs, progress in power management chips, introduction of complete client chipset, and design wins for HBM4, GDDR7, PCIe7 digital IP and security IP. - Chip product revenue for Q4 was $97 million, annual product revenue reached $348 million, up 41% YOY. - Silicon IP is focused on empowering next wave of AI hardware with design wins for high-speed memory interconnect and security IP.

Chip segment had a strong Q4 2025 with product revenue of $97 million, bringing annual product revenue to a new record of $348 million, up 41% year over year. Silicon IP is strategically focused, with increasing design wins and customer engagement led by latest generation digital IP and security IP. Contract and other revenue, consisting predominantly of silicon IP, was $21.8 million for the full year.

• Expect revenue in Q1 2026 to be between $172 million and $108 million. - Q1 product revenue impacted by supply chain issue but expected to resume growth from Q2. - Expect Q1 non-GAAP total operating costs between $104 million and $100 million. - Anticipate Q1 non-GAAP earnings per share range between $0.56 and $0.64. - Expect product revenue for 2026 to grow faster than the market.

• Supply chain issue in Q1 2026 affecting product revenue, though root cause identified and corrective actions in place. - Market supply constraints, including potential memory shortages, which could impact growth expectations.

Q: Congratulations on the great results. But, of course, the questions will be around the supply chain issue. I understand you resolved the issue. Will there be catch-up on meaning, can in the second quarter, can you make up for that revenue loss in the first quarter? Or is that just loss to market share that on competitor picking up the business?

A: Thank you, Kevin. Let me maybe take a few minutes to explain what the supply issue is. That we understand the dynamics in the market. So in Q4, we, as we said, we identified the back-end manufacturing issue with one of our OSATs. We have identified the root cause of that issue. We have implemented all the corrective actions in collaboration with our supply chain partners. And before I go into the detail, note that the issue was affecting an extremely low number of parts, which made the identification of the root cause a bit difficult because it was hard to reproduce. But we have identified the root cause. We've put the measures in place. And in reality, what we've done is we've done two things. The first thing we've done is once the root cause was identified and the corrective actions were in place, we did actually pull forward fresh material from inventory that was originally staged for Q1 to meet our Q4 customer demand. So that's the first thing we did. We accelerated fresh material once these measures were in place because our customer demand remained very strong in Q4. The second thing we did is despite the very, very low PPMs that we observed, and because quality is paramount, out of an abundance of precaution, we actually quarantined all potential impact production material. And now we are retesting these materials with enhanced screens in place. So these measures have put additional strain on capacity, a tighter supply environment, and that impacts Q1, as we said. But the issue was identified in Q4. We accelerated material through after we put the measures in place. We are screening parts that were potentially tainted, and that's what's creating that issue in Q1. So that issue is behind us. And the lower Q1 product revenue does not change the trajectory of the business. We expect the business to return to strong growth in Q2, and the product revenue for 2026 remains on track to grow faster than the market. And that's how I would qualify the issue, Dave. I don't know whether you want to add anything to this.

Q: Hey, guys. Thanks for taking my question. Hey, can you just talk about how your RCD market share finished for 2025?

A: Yes. Thanks, Kevin. So, you know, we believe that we ended up the year in the mid-40% share for DDR5. We put the market between 24-25, grew mid-single digit. But the portion of DDR5 became more important. DDR4 continues to decrease in terms of share. So, in 2024, we were in the early forties for DDR5. In 2025, we believe we are in the mid-forties on DDR5. We're in a market where DDR5 dominates even more. And I think as we said in the prepared remarks, we expect to continue to grow faster than the market in 2026 despite the glitch we had in Q1.

Q: Yeah. Thanks for taking my question. I guess one question that I have is revisiting the average of the DIMMs per CPU expected in 2027, and you mentioned it previously, given the cost of memory and the shortage, has this changed your expectations of having channels being populated with DIMMs per CPU?

A: Thanks, Bastian, for your question. The DIMM's CPU dynamic is a complex one. Typically, what happens is people who want very high bandwidth, like in AI-type of applications, tend to use fewer DIMMs per channel so that they can make the best use of this bandwidth. People who are in need of more capacity tend to populate more DIMMs on their channels. And then you combine this with the respective growth of standard applications with AI applications. So we continue to see, on average, the number of DIMMs per channel growing, but it's a bit difficult to really put a number on it. I think the memory situation is a broader situation than the number of DIMMs per channel. Thank God memory is booming these days. There's a dynamic between HBM and standard DDR, for example, and with the standard DDRs, there's a dynamic between the different speeds of these DDRs. So I think, overall, we believe that the market is going to be constrained. But, again, trying to put a number on how the supply constraints on the memory side are going to impact the number of DIMMs per channel is something that is quite difficult to figure out.