0001193125-26-186931
SEC filingQ1 2026 revenue grew 8.1% YoY to $180.2M, driven by product revenue growth, while operating margin contracted.
For the three months ended March 31, 2026, Rambus reported total revenue of $180.2 million, an increase of 8.1% compared to $166.7 million in the same period of 2025. The growth was driven by a 15.3% increase in product revenue to $88.0 million, reflecting strong execution in the memory interface chip portfolio, and a 37.6% increase in contract and other revenue to $22.6 million, due to higher Silicon IP revenue. This was partially offset by a 5.9% decline in royalties revenue to $69.6 million, attributed to the timing and structure of license agreements and renewals.
Gross profit increased 7.4% to $143.8 million, but gross margin contracted slightly to 79.8% from 80.3% in the prior year, primarily due to a shift in revenue mix toward lower-margin product revenue. Operating expenses grew 16.0% to $81.9 million, outpacing revenue growth. Research and development expenses increased 17.9% to $50.2 million, driven by higher headcount-related costs, stock-based compensation, prototyping, and depreciation. Sales, general and administrative expenses rose 12.9% to $31.7 million, mainly due to increases in payroll-related and legal expenses. As a result, operating income decreased 2.1% to $61.9 million, and operating margin fell to 34.3% from 37.9%.
Net income was $59.8 million, or $0.55 per diluted share, compared to $60.3 million, or $0.60 per diluted share, in the prior year. The decline was driven by lower operating income and a higher effective tax rate (12.8% vs. 10.8%), partially offset by higher interest and other income.
Product revenue, now 49% of total revenue (up from 46%), is the primary growth engine, driven by demand for memory interface chips sold to major DRAM manufacturers and system customers. Royalties revenue, at 39% of total revenue (down from 44%), remains a significant but variable contributor, subject to the timing of license renewals and customer shipment volumes. Contract and other revenue, at 12% of total revenue (up from 10%), is growing from Silicon IP offerings but is expected to fluctuate based on project milestones and new contracts.
Management expects product revenue growth to continue, dependent on customer orders, new product development, and supply chain stability. Royalties revenue is expected to vary period-to-period based on licensing success and customer activity. Contract and other revenue will fluctuate with technology development contracts. Operating expenses will continue to reflect investments in R&D and sales infrastructure. The company maintains a strong liquidity position with $786.1 million in cash, cash equivalents, and marketable securities, and expects existing resources to meet cash needs for at least the next 12 months. No specific quantitative guidance was provided.
As of March 31, 2026, Rambus held $134.3M in cash and equivalents plus $651.8M in marketable securities, totaling $786.1M in liquidity. This represents a $24.3M increase from $761.8M at year-end 2025. The investment portfolio consists primarily of U.S. government bonds and corporate bonds with maturities within three years. Unrealized losses were $1.0M, deemed temporary. Total assets were $1.53B, with stockholders' equity of $1.39B. The company has no outstanding debt, maintaining a clean balance sheet.
Total contractual obligations as of March 31, 2026 were $35.1M, predominantly software license commitments ($35.0M). Payment schedule: $11.8M in remainder of 2026, $16.4M in 2027, and $6.9M in 2028. Additionally, operating lease commitments total $26.2M undiscounted, with $5.6M due in the remaining nine months of 2026. The remaining performance obligations (RPO) were $30.9M, expected to be recognized over the next two years.
During Q1 2026, Rambus repurchased an immaterial 30,000 shares for $2.6M under its 2020 Repurchase Program, leaving 5.5 million shares authorized for future repurchases. No dividends were paid. Capital expenditures totaled $11.6M (6.5% of revenue), mainly for property and equipment. The company also invested $255.8M in marketable securities, net of maturities.
The company operates as a single segment in the semiconductor space. Net income was $59.9M on revenue of $180.2M. Adjusted cost of revenue was $34.7M, adjusted R&D $45.0M, and adjusted SG&A $24.9M. Geographically, South Korea contributed $86.5M (48% of revenue), Singapore $28.3M (16%), United States $22.1M (12%), and other regions $43.2M (24%). Two customers accounted for 49% and 24% of accounts receivable; three customers contributed 29%, 15%, and 10% of revenue in Q1 2026.
Operating cash flow (OCF) of $83.2M exceeded net income of $59.9M, yielding a cash flow margin of 139%. This strong conversion reflects non-cash charges (stock-based compensation $11.5M, depreciation $9.6M, amortization $1.7M, deferred taxes $3.9M) totaling $26.7M. Working capital was a net use of cash, primarily due to inventory buildup (-$14.3M) and a decrease in deferred revenue (-$6.0M), partly offset by a large reduction in accounts receivable ($28.1M). Capex intensity (capex/OCF) was 14%, moderate for a semiconductor IP company. Free cash flow approximated $71.6M (OCF minus capex), covering share repurchases ($2.6M) nearly 28 times. Investing activities were dominated by net marketable securities purchases ($73.7M), while financing activities included $38.4M in tax payments on equity awards. Overall, cash generation remains robust with ample liquidity.