Rambus expects double-digit Q3 product revenue growth as DDR5 leadership continues
Jul. 28, 2025 9:06 PM ET
AI-Generated Earnings Calls Insights
Earnings Call Insights: Rambus Inc. (RMBS) Q2 2025
Management View- CEO Luc Seraphin stated that Rambus "delivered a very strong second quarter, exceeding expectations for both revenue and earnings, while continuing momentum in our growth initiatives." Seraphin highlighted that the memory interface chip business "outpaced the market with 43% year-over-year growth, another quarter of record product revenue." He attributed this to sustained leadership in DDR5 products and ongoing execution on the strategic roadmap for signal and power integrity solutions, noting, "We also generated record cash from operations of $94 million, showcasing the efficiency of our execution and the robustness of our business model."
- Seraphin emphasized the company's balanced portfolio, saying, "Our balanced portfolio and diverse revenue streams across chips, silicon IP and patent licensing position us exceptionally well in the market."
- Looking forward, Seraphin projected, "Looking forward to Q3, we expect our ongoing LCD market share leadership, combined with early contributions from new products to drive double-digit sequential product revenue growth."
- CFO Desmond Lynch stated, "We delivered a strong quarter, exceeding our expectations for both revenue and earnings. Our chip business continued to drive our growth as we delivered record results marking our fifth consecutive quarter of product revenue growth. In addition, our diversified portfolio generated record quarterly cash from operations of $94 million."
Outlook- Lynch provided guidance for Q3: "We expect revenue in the third quarter to be between $172 million and $178 million. We expect royalty revenue to be between $57 million and $63 million. And licensing billings between $58 million and $64 million."
- Lynch also projected Q3 non-GAAP total operating costs to be between $98 million and $94 million, capital expenditures of approximately $12 million, and non-GAAP operating results expected to be between a profit of $74 million and $84 million. "Overall, we anticipate the Q3 non-GAAP earnings per share range between $0.58 and $0.66."
- Management language shifted to highlight the expectation of "another quarter of record product revenue with double-digit growth in Q3."
Financial Results- Lynch reported, "Revenue for the second quarter was $172.2 million, which was above our expectations. Royalty revenue was $68.6 million, while licensing billings were $66.4 million. Product revenue was $81.3 million as we delivered another quarter of record product revenue. This represents a 7% sequential increase and a 43% year-over-year growth, driven by continued strength in DDR5 products."
- Contract and other revenue was $22.3 million, predominantly from silicon IP.
- Total operating costs, including cost of goods sold, were $93.2 million. Operating expenses were $60.4 million. Interest and other income for Q2 was $4.8 million. Non-GAAP net income for the quarter was $67.1 million.
- Cash, cash equivalents and marketable securities totaled $594.8 million at quarter end, up from Q1, with capital expenditures at $10.4 million and depreciation expense at $7.4 million. Free cash flow delivered was $84 million.
Q&A- Aaron Christopher Rakers, Wells Fargo: Asked about RCDs, market share targets in DDR5, and PMIC ramp. Seraphin responded, "RCD remains very strong for us. And our belief is that we continue to gain share with the expansion of DDR5 in the market. We were slightly above 40% share at the end of 2024, and we expect to continue to gain share this year."
- Gary Wade Mobley, Loop Capital: Questioned PMIC product traction in PCs and client clock driver revenue. Seraphin replied, "We introduced the clock driver last year, and we are starting to see modest traction...We do expect the contributions from this client market to start to be visible in 2026."
- Mobley also asked about inventory. Lynch answered, "Our inventory levels in Q2 came down to about 120 days...we will have sufficient inventory to support our customers' demand through at the end of the year."
- Kevin Edward Cassidy, Rosenblatt Securities: Inquired about AI ASIC market and silicon IP demand. Seraphin explained, "the need for very high-speed connectivity and the need for very high-speed memory interfaces increases and accelerates. And that translates for us into an acceleration of our development for solutions such as HBM4, HBM4E as well as PCIe 7.0."
- Mehdi Hosseini, SIG: Asked about product revenue mix and companion chip contributions. Seraphin clarified, "in Q2, these new products represented low single-digit contribution...in Q3, that contribution in terms of percentage is probably going to be mid- to upper single-digit percentage of our product revenue."
- Natalia Sukhotina Winkler, Evercore: Sought update on MRDIMM opportunity. Seraphin said, "MRDIMM is staged to enter the market towards the end of 2026...we expect in full swing, it could represent about $600 million market for MRDIMM."
Sentiment Analysis- Analyst tone focused on growth sustainability, new product ramp timelines, and inventory management, with a neutral to slightly positive sentiment as most questions sought specifics on execution and market dynamics.
- Management maintained a confident and constructive tone, emphasizing record performance, market share gains, and growth initiatives. Seraphin frequently referenced strong momentum and leadership, and Lynch described results as "exceeding our expectations for both revenue and earnings."
- Compared to the previous quarter, management's tone remains optimistic but demonstrates increased confidence in product and market share momentum, while analysts continue to probe for clarity on new product impact and market dynamics.
Quarter-over-Quarter Comparison- Guidance for Q3 revenue was lifted to $172 million–$178 million, up from Q2 guidance of $167 million–$173 million, and Q3 EPS guidance is $0.58–$0.66 versus $0.57–$0.64 for Q2.
- Management continued to highlight DDR5 product leadership and record product revenue, but now projects double-digit sequential product revenue growth for Q3, a shift from prior quarter's outlook of ongoing but less defined growth.
- Analysts focused on the same themes—DDR5 share, PMIC and companion chip ramp, and silicon IP demand—but questions increasingly targeted the timeline for client and AI-related product contributions.
- The tone of both management and analysts reflects steady confidence, with management offering stronger forward-looking statements on product revenue trajectory and market expansion.
Risks and Concerns- Management acknowledged the dynamic economic environment, with Lynch stating, "The economic environment remains a dynamic environment, and we continue to actively monitor the situation."
- Potential risks include the timing of new product adoption, lumpiness in silicon IP revenue, and the extended ramp timeline for client and MRDIMM products, as discussed in response to analyst questions.
- The company is monitoring inventory levels and supply chain partnerships to ensure sufficient stock for customer demand.
Final Takeaway
Rambus delivered a record-setting second quarter driven by robust DDR5 product demand, strengthened its leadership in high-performance memory and silicon IP, and is positioned for double-digit sequential product revenue growth in Q3. Management projects continued momentum from new product introductions, expanding opportunities in data center, AI, and client markets, and maintains that its diversified portfolio and strong cash generation will support long-term, profitable growth.
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