Rambus (NASDAQ: RMBS) outlines AI-driven memory and IP roadmap
Rhea-AI Filing Summary
Rambus Inc. files its annual report describing a semiconductor and silicon IP business centered on high‑performance memory and security for data center and AI infrastructure.
The company reports strong execution in 2025 across DDR5 and LPDDR5 memory interface chips, expansion into high‑performance and AI PCs, and growing demand for HBM4, GDDR7, PCIe 7.0 and security IP. It highlights a fabless manufacturing model and long-term patent licensing agreements as key cash generators and sources of shareholder returns.
Rambus spent $187.7 million on research and development in 2025, up from $162.9 million in 2024 and $156.8 million in 2023. As of December 31, 2025 it had 791 employees, about 71% in engineering, and held 2,049 patents with 486 applications pending. Revenue is concentrated, with the top five customers providing 66% of 2025 revenue and international customers 82%. The report outlines extensive risk factors including industry cyclicality, AI demand uncertainty, supply chain and cybersecurity exposure, high customer concentration, and complex global regulatory and tax environments.
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Insights
Rambus leans into AI memory and IP while flagging concentration and macro risk.
Rambus positions itself as a specialist in high-performance memory interface chips and silicon IP for AI and data‑center workloads. The report emphasizes leadership in DDR5, LPDDR5 and security IP, plus momentum in HBM4, GDDR7 and PCIe 7.0, supported by a fabless model and long-term patent licenses.
In 2025, research and development rose to
The risk section is extensive. Key issues include reliance on a small customer set—top five contributed 66% of 2025 revenue—and heavy exposure to international markets, which drove 82% of revenue. The company also calls out AI demand uncertainty, potential semiconductor supply‑chain disruptions, cybersecurity threats and evolving export controls, particularly involving China. Future filings for periods after
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Securities registered pursuant to Section 12(g) of the Act:
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
The aggregate market value of the Registrant’s Common Stock held by non-affiliates of the Registrant as of June 30, 2025 was approximately $
The number of outstanding shares of the Registrant’s Common Stock, $0.001 par value, was
DOCUMENTS INCORPORATED BY REFERENCE
Certain information is incorporated into Part III of this report by reference to the Proxy Statement for the Registrant’s annual meeting of stockholders to be held on or about April 23, 2026 to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Form 10-K.
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TABLE OF CONTENTS
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Note Regarding Forward-Looking Statements |
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PART I |
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Item 1. |
Business |
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Item 1A. |
Risk Factors |
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Item 1B. |
Unresolved Staff Comments |
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Item 1C. |
Cybersecurity |
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Item 2. |
Properties |
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Item 3. |
Legal Proceedings |
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Item 4. |
Mine Safety Disclosures |
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PART II |
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Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
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Reserved |
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Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk |
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Item 8. |
Financial Statements and Supplementary Data |
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Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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Item 9A. |
Controls and Procedures |
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Other Information |
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Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
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PART III |
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Directors, Executive Officers and Corporate Governance |
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Executive Compensation |
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Certain Relationships and Related Transactions, and Director Independence |
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Principal Accountant Fees and Services |
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PART IV |
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Exhibits and Financial Statement Schedules |
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INDEX TO EXHIBITS |
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SIGNATURES |
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NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (“Annual Report on Form 10-K”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include, without limitation, predictions regarding the following aspects of our future:
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You can identify these and other forward-looking statements by the use of words such as “may,” “future,” “shall,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continue,” “projecting” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements.
Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Item 1A, “Risk Factors.” All forward-looking statements included in this document are based on our assessment of information available to us at this time. We assume no obligation to update any forward-looking statements.
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PART I
Rambus is a trademark of Rambus Inc. Other trademarks or copyrights that may be mentioned in this Annual Report on Form 10-K are the property of their respective owners.
Item 1. Business
Overview
Rambus is a global semiconductor company providing industry-leading chips and silicon IP for data-intensive computing systems, focusing on data center and artificial intelligence (“AI”) infrastructure.
As a pioneer with over three decades of advanced semiconductor design experience, Rambus is at the forefront of enabling the next era of AI-driven computing, addressing the critical challenges of signal and power integrity at increasingly extreme data rates in the data center, edge and client markets. We are a leader in high-performance memory subsystems, offering a balanced and diverse portfolio of products, IP and patents that maximize performance and security in computationally intensive systems.
The ongoing proliferation of AI is placing unprecedented demands on computing infrastructure, requiring massive amounts of processor performance and extremely high memory bandwidth. As workloads grow in size and diversity, system performance becomes memory bound, making the memory interface technology a critical determinant of overall throughput. This persistent gap between processor performance and memory subsystem capabilities remains one of the largest bottlenecks in high performance compute systems. In addition, power management is increasingly important to optimize system efficiency and thermal performance as the power-performance demands continue to rise.
Rambus is well positioned to address these challenges. Leveraging our deep expertise in memory technology and innovative architectures, we provide industry-leading memory interface chips that enable the highest bandwidth, capacity and power efficient server memory modules, maximizing memory performance and reliability for the most demanding data-intensive workloads. Beyond the data center, server-class technologies are migrating into client devices to bring these same benefits to end-user systems, such as AI personal computers (“PCs”).
Furthermore, the growing adoption of AI and heterogenous computing across diverse applications is creating significant opportunities for our silicon IP portfolio. Our high-performance digital controller cores are increasingly vital components in accelerated computing chips, including custom silicon, which are the workhorses of AI processing. The expanding attack surface in today’s accelerated computing environments also necessitates robust security solutions. Our industry-leading security IP plays a crucial role in safeguarding both data at rest and data in motion, protecting against evolving cyber threats.
Rambus is committed to the sustained investment in our technology development and product roadmap to stay at the forefront of the innovation cycle and advance our product leadership. In 2025, Rambus delivered strong execution across our memory and interface portfolio. We strengthened our leadership in DDR5 Registering Clock Drivers (“RCD”) and expanded the adoption of our new products, contributing to revenue growth. We expanded into high-performance and AI PCs with the launch of our complete client chipset, giving Rambus a comprehensive portfolio that supports all JEDEC-standard DDR5 and LPDDR5 modules across server and client systems. We also achieved strong customer momentum across our HBM4, GDDR7 and PCIe 7.0 digital IP families, along with our security IP, reinforcing our position as a key enabler of next-generation data center and AI architectures. Finally, further fueling our continuous technology investment, we successfully secured and extended key patent licensing agreements, providing a strong foundation for sustained cash generation and consistent return of value to our stockholders.
Memory Interface Chips
Rambus provides complete chipset solutions for industry-standard DDR5 and LPDDR5 memory modules for server and client systems, including Registered Dual Inline Memory Modules (“RDIMM”) and next-generation Multiplexed Rank Dual Inline Memory Modules (“MRDIMM”), enabling high memory subsystem performance, capacity, reliability and power efficiency.
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The Company’s leading-edge chipset offerings include:
We sell memory interface chips directly and indirectly to memory module manufacturers, OEMs and hyperscalers worldwide through multiple channels, including our direct sales force and distributors, and we employ global sales personnel to support such operations.
We operate a fabless business model and use third-party foundries and manufacturing contractors to fabricate, assemble and test our memory interface chips. We also inspect and test parts in our U.S.-based facilities. This outsourced manufacturing approach allows us to focus our investment and resources on the research, development, design, sale and marketing of our products. Outsourcing also allows us the flexibility needed to respond to new market opportunities, simplifies our operations and significantly reduces our capital requirements.
Silicon IP
Rambus Silicon IP includes high-performance interface and security IP solutions that move and protect data in advanced AI, data center, government and automotive applications.
Our interface IP solutions feature both high-speed memory and chip-to-chip digital controller IP, including:
Our security IP offerings comprise one of the industry’s most comprehensive portfolio of solutions, including:
We sell Silicon IP solutions to leading chip makers worldwide for integration into their custom silicon, Application Specific Standard Products (“ASSP”) and Field Programmable Gate Array (“FPGA”) designs. Rambus Silicon IP is sold primarily through our direct global sales force.
Patent Licenses
Our patented inventions are foundational to the semiconductor industry and are licensed to leading semiconductor and system companies around the world. Rambus continues to innovate and invent, thereby advancing semiconductor technology. With a broad worldwide portfolio of patents covering memory architecture, high-speed serial links and security, we enhance our value and relevance in our target markets and create a platform for investment in product development.
Our patent licenses enable our customers to use specified portions of our portfolio of patented inventions in the customer’s own digital electronics products, systems or services. These licenses may also define the specific field of use where our
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customers may use or employ our inventions in their products. License agreements are structured with fixed or variable, or a hybrid of fixed and variable royalty payments over certain periods typically ranging up to ten years. Leading semiconductor and electronic system companies, such as AMD, Amlogic, Broadcom, CXMT, IBM, Infineon, Kioxia, Marvell, MediaTek, Micron, Nanya, Nuvoton, NVIDIA, Phison, Qualcomm, Samsung, Silicon Motion, SK hynix, Socionext, STMicroelectronics, Toshiba, Western Digital and Winbond have licensed our patents. Additionally, from time to time, we enter into agreements to sell certain patent assets under agreements which may also include subsequent profit-sharing. The sale of these patents, as well as the subsequent profit-sharing, are included as part of our royalties revenue.
Competition
The semiconductor industry is intensely competitive and is characterized by rapid technological change, short product life cycles, cyclical market patterns, price erosion, increasing foreign and domestic competition, market consolidation and geopolitical developments that increasingly impact business. Rambus competes with product offerings from various companies depending upon the particular Rambus product line. In the memory interface chip market, we compete with international semiconductor companies, including but not limited to Monolithic Power Systems, Montage Technology, Renesas and Texas Instruments. In the Silicon IP market, Rambus competes with the in-house design teams at our potential customers, as well as with third-party IP suppliers, such as Cadence and Synopsys. Many of our competitors are larger and may have better access to financial, technical, sales and marketing resources than we possess.
To the extent that alternative technologies, which might provide comparable system performance at lower or similar cost to our patented technologies, are perceived to require the payment of no or lower fees or royalties, or to the extent other factors influence the industry, our customers and prospective customers may adopt and promote such alternative technologies. Even to the extent we determine that such alternative technologies infringe our patents, there can be no assurance that we would be able to negotiate agreements that would result in royalties being paid to us without litigation, which could be costly and the results of which would be uncertain. As in the past, litigation may be required to enforce and protect our IP rights, on top of the substantial investments undertaken to research and develop our innovations and technologies.
Research and Development
Building upon our foundation of core semiconductor technologies, our research priorities focus on innovation and patent development that differentiate our product offerings in the market and enhance the value of our patent portfolio. Key to our efforts is continuing to hire and retain world-class inventors, scientists and engineers to lead the development and deployment of inventions and technology solutions for our intended markets.
To foster our research and development efforts, we have assembled a team of highly skilled inventors, engineers and scientists whose activities are focused on continually developing new innovations within our chosen technology fields, and have thereby secured the IP rights and legal protections for these ground-breaking inventions. Using this foundation of innovation, our technical teams develop new semiconductor solutions that enable increased performance, greater power efficiency and increased levels of security, as well as other improvements and benefits. Our solution design and development process is a multi-disciplinary effort requiring expertise in multiple fields across all of our operational units.
A significant number of our scientists and engineers spend all or a portion of their time on research and development. For the years ended December 31, 2025, 2024 and 2023, research and development expenses were $187.7 million, $162.9 million and $156.8 million, respectively. We expect to continue to invest substantial funds in research and development activities. In addition, because our customer agreements often call for us to provide engineering support, a portion of our total engineering costs are allocated to the cost of contract and other revenue.
Human Capital Resources
As of December 31, 2025, we had 791 employees, of which approximately 47% were in the United States and 53% in other global regions, including but not limited to Bulgaria, Canada, China, Finland, France, India, the Netherlands, South Korea and Taiwan. Additionally, approximately 71% of our employees were engineers with the remaining employees in sales, general and administrative positions. None of our employees are covered by collective bargaining agreements.
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We believe that our future success largely depends upon our continued ability to identify, attract, motivate and retain qualified personnel. We provide our employees with competitive compensation, as well as opportunities for equity ownership and developmental programs that enable continued learning and growth. We also offer employees benefits such as life and health insurance, paid time off, paid parental leave and retirement savings plans. We utilize successful recruiting practices that yield qualified and dedicated employees who are driven to achieve our vision.
The employment market in the United States can be competitive, especially for technology companies in the San Francisco Bay Area and elsewhere. Our human capital resources objectives, as described above, help us retain and motivate our existing employees, advisors and consultants, which is a key component of increasing stockholder value and the success of Rambus.
We are an equal opportunity employer and are committed to maintaining an inclusive work environment. Our commitment to inclusion helps us attract and retain the best talent, enables employees to realize their full potential and drives high performance through innovation and collaboration. We strive to maintain a best-in-class work environment that fosters respect for all individuals, their ideas and contributions.
Intellectual Property
We maintain and support an active program to protect our IP, primarily through the filing of patent applications and the defense of issued patents against potential infringement. As of December 31, 2025, our semiconductor, security and other technologies are covered by 2,049 U.S. and foreign patents, with expiration dates ranging from 2026 to 2044. Additionally, we have 486 patent applications pending in various countries. Some of the patents and pending patent applications are derived from a common parent patent application or are foreign counterpart patent applications. We believe our patented innovations provide our customers with the ability to achieve improved performance, lower risk, greater cost-effectiveness and other benefits in their products and services. We intend to continue our innovation efforts and allocate significant investment in our IP development programs.
We file applications for and obtain patents in the United States and in selected foreign countries where we believe filing for such protection is appropriate and would further our overall business strategy and objectives. In some instances, obtaining appropriate levels of protection may involve prosecuting continuation and counterpart patent applications based on a common parent application. In addition, we attempt to protect our trade secrets and other proprietary information through agreements with current and prospective customers, and confidentiality agreements with employees and consultants and other security measures. We also rely on copyright, trademarks and trade secret laws to protect our IP and other proprietary assets.
Backlog
Our sales of memory interface chips are generally made pursuant to short-term purchase orders. These purchase orders are made without deposits and may be, and often are, rescheduled, canceled or modified on relatively short notice, without substantial penalty. Therefore, we believe that purchase orders or backlog are not necessarily a reliable indicator of our future product sales.
Corporate and Available Information
Rambus Inc. was founded in 1990 and reincorporated in Delaware in March 1997. Our principal executive offices are located at 4453 North First Street, Suite 100, San Jose, California, 95134. Our website is www.rambus.com. We have used, and intend to continue to use, our investor relations website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. The inclusion of our website address in this report does not include or incorporate by reference into this report any information on our website. You can obtain copies of our Forms 10-K, 10-Q, 8-K and other filings with the SEC, and all amendments to these filings, free of charge, from our website as soon as reasonably practicable following our filing of any of these reports with the SEC. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC at www.sec.gov. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only.
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Information concerning our revenue, results of operations and revenue by geographic area is set forth in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in Note 7, “Segments and Major Customers,” of Notes to Consolidated Financial Statements of this Form 10-K, all of which are incorporated herein by reference. Information concerning identifiable assets and segment reporting is also set forth in Note 7, “Segments and Major Customers,” of Notes to Consolidated Financial Statements of this Form 10-K. Information on customers that comprise 10% or more of our consolidated revenue and risks attendant to our foreign operations is set forth below in Item 1A, “Risk Factors.”
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Our Executive Officers
Information regarding our current executive officers and their ages and positions is contained in the table below. Our executive officers are appointed by, and serve at the discretion of, our Board of Directors. There is no family relationship between any of our executive officers.
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Luc Seraphin |
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President & Chief Executive Officer. Mr. Seraphin has served as President & Chief Executive Officer since October 2018 and was interim Chief Executive Officer from June 2018 to October 2018. With over 30 years of experience managing global businesses, Mr. Seraphin brings the overall vision and leadership necessary to drive future growth for the company. Prior to this role, Mr. Seraphin was the Senior Vice President and General Manager of the Memory and Interface Division, leading the development of the company’s innovative memory architectures and high-speed serial link solutions. Mr. Seraphin also served as the Senior Vice President of Worldwide Sales and Operations where he oversaw sales, business development, customer support and operations across the various business units within Rambus. Mr. Seraphin started his career as a field application engineer at NEC and later joined AT&T Bell Labs, which became Lucent Technologies and Agere Systems (now Broadcom Inc.). During his 18 years at Agere, Mr. Seraphin held several senior positions in sales, marketing and general management, culminating in his last position as Executive Vice President and General Manager of the Wireless Business Unit. Following this, Mr. Seraphin held the position of General Manager of a GPS startup company in Switzerland and was Vice President of Worldwide Sales and Support at Sequans Communications. During his career, Mr. Seraphin has advised and supported companies in both the product and IP markets. Mr. Seraphin holds a bachelor’s degree in Mathematics and Physics and a master’s degree in Electrical Engineering from Ecole Superieure de Chimie, Physique, Electronique, based in Lyon, France where he majored in Computer Architecture. Mr. Seraphin also holds an MBA from the University of Hartford and has completed the senior executive program of Columbia University and the Stanford Directors’ Consortium. |
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Desmond Lynch |
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Chief Financial Officer. Mr. Lynch has served as Chief Financial Officer since August 2022, where he is responsible for the global finance organization, with responsibility for financial management, planning, tax, treasury, controls and reporting. Previously, he served as the Vice President of Finance for Rambus. On February 4, 2026, Mr. Lynch notified the Company that he is resigning, effective February 27, 2026. Prior to joining Rambus, Mr. Lynch served as Vice President of Finance at Renesas Electronics, a leading global semiconductor company, where he was the head of U.S. finance. Mr. Lynch has extensive semiconductor experience, including financial leadership roles at Integrated Device Technology, Atmel, Knowles Corporation and National Semiconductor. Mr. Lynch is a Chartered Accountant with the Institute of Chartered Accountants of Scotland and holds a bachelor’s degree in Accountancy and Finance from the University of Glasgow in Scotland. |
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Sean Fan |
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Executive Vice President, Chief Operating Officer. Mr. Fan has served as the Executive Vice President, Chief Operating Officer since November 2024 and as the Senior Vice President, Chief Operating Officer since August 2019. Prior to Rambus, from March 2019 to June 2019, he served as Corporate Vice President and General Manager at Renesas Electronics Corporation, a premier supplier of advanced semiconductor solutions, responsible for the data center business unit with full profit and loss responsibilities. Prior to his role at Renesas, Mr. Fan was Senior Vice President and Corporate General Manager of the Computing and Communications Group at Integrated Device Technology, Inc. (“IDT”), a leading supplier of analog mixed-signal products including sensors, connectivity and wireless power, from May 2017 until March 2019 when IDT was acquired by Renesas Electronics Corporation. Mr. Fan joined IDT in 1999 and held various management roles at IDT, including Vice President and General Manager of the Computing and Communications Division, Vice President and General Manager of the Interface Connectivity Division, Vice President of China Operations, Vice President and General Manager of the Memory Interface Division, General Manager of Standard Product Operations and Senior Director of Silicon Timing Solutions. Prior to joining IDT, Mr. Fan served in various engineering and management roles with Lucent Microelectronics, Mitel Semiconductor and the National Lab of Telecom Research in China. Mr. Fan holds a master’s degree in Computer Engineering from the University of Cincinnati where he also conducted a PhD program study in Computer and Electrical Engineering. He also holds a bachelor's degree in Computer Engineering and Telecommunications from the Beijing University of Posts & Telecom. He continued his executive management education at Stanford University and the Wharton School of Business. |
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John Shinn |
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Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer. Mr. Shinn has served as the Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer since February 2021 and as our Vice President, Deputy General Counsel since October 2016. Prior to Rambus, Mr. Shinn was Vice President and General Counsel at Toptal, LLC, a global remote company that provides a freelancing platform, connecting businesses with software engineers, designers, finance experts, product managers and project managers, from February 2016 until October 2016, where he was responsible for all aspects of the corporate legal function, including corporate governance, regulatory compliance, commercial transactions, intellectual property matters and employment law. From February 2015 to January 2016, Mr. Shinn served as the Vice President of Legal at Tanium, Inc., an enterprise software company at the forefront of security and systems management, where he was responsible for all aspects of the company legal function, including commercial licensing, partnership and vendor contracts, new hire and employment matters, sales compensation plan design and corporate legal matters. Prior to February 2015, Mr. Shinn held the position of Sr. Director of Legal, Commercial Transactions at Brocade Communication Systems, Inc. Mr. Shinn has also worked in private practice with the law firm of Wilson Sonsini Goodrich & Rosati, advising high tech and emerging growth companies on technology transactions and mergers and acquisitions. Mr. Shinn began his legal career as a litigation attorney with a boutique intellectual property and securities litigation law firm in San Jose. Mr. Shinn is a member of the State Bar of California and received his J.D. from Santa Clara University and his bachelor’s degree in American and European History from Stanford University. |
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Item 1A. Risk Factors
Because of the following factors, as well as other variables affecting our operating results, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. See also “Note Regarding Forward-Looking Statements” at the beginning of this report.
Summary Risk Factors
Our business is subject to numerous risks and uncertainties that you should consider before investing in our company, as fully described below. The principal factors and uncertainties that make investing in our company risky include, among others:
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Risks Associated with Our Business, Industry and Market Conditions
We have traditionally operated in, and may enter other, industries that are highly cyclical and competitive.
Our target customers are companies that develop and market high volume business and consumer products in semiconductors, computing, data centers, networks, artificial intelligence (“AI”), tablets, handheld devices, mobile applications, gaming and graphics, high-definition televisions, cryptography and data security. The electronics industry is intensely competitive and has been impacted by rapid technological change, short product life cycles, cyclical market patterns, price erosion and increasing foreign and domestic competition. We are subject to many risks beyond our control that influence whether or not we are successful in winning target customers or retaining existing customers, including, primarily, competition in a particular industry, market acceptance of such customers’ products and the financial resources of such customers. In particular, DRAM manufacturers, which make up a significant part of our revenue, are prone to significant business cycles and have suffered material losses and other adverse effects to their businesses, leading to industry consolidation from time-to-time that may result in loss of revenue under our existing license agreements or loss of target customers. Additionally, AI has been developing at a rapid pace and continues to evolve and change, especially with robust growth for AI infrastructure. We cannot predict whether the demand for AI solutions and therefore the demand for our products that support the AI ecosystem and infrastructure will continue and at what pace. The adoption of AI solutions by our customers and/or their end users may not develop in the manner or in the time periods we anticipate and, as the markets for AI solutions are still developing, demand for our products that support AI may be unpredictable and vary significantly from one period to another. If we are unable to predict the demand for AI or if we overestimate the demand for our products as a result of AI, our business may be adversely impacted. Furthermore, as a result of ongoing competition in the industries in which we operate and volatility in various economies around the world, we may achieve reduced market share, a reduced number of licenses or may experience tightening of customers’ operating budgets, difficulty or inability of our customers to pay our licensing fees, reduction in downstream demand, lengthening of the approval process for new products and licenses and consolidation among our customers. All of these factors may adversely affect the demand for our products and technologies and may cause us to experience substantial fluctuations in our operating results and financial condition.
We face competition from semiconductor and digital electronics products and systems companies, and other semiconductor IP companies that provide security and interface IP that are available to the market. We believe some of the competition for our technologies may come from our prospective customers, some of which are internally evaluating and developing products
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based on technologies that they contend or may contend will not require a license from us. Many of these companies are larger and may have better access to financial, technical and other resources than we possess and may be able to develop and advance competitive products more effectively, including through the use of AI.
To the extent that alternative technologies might provide comparable system performance at lower or similar cost to our technologies, or are perceived to require the payment of no or lower fees and/or royalties, or to the extent other factors influence the industry, our customers and prospective customers may adopt and promote such alternative technologies. Even to the extent we determine that such alternative technologies infringe our patents, there can be no assurance that we would be able to negotiate agreements that would result in royalties being paid to us without litigation, which could be costly and the results of which would be uncertain.
In addition, our efforts to introduce new products and/or expand into new markets subject us to additional risks. We may have limited or no experience in new products and markets, and our customers may not adopt our new offerings and/or new customers may not adopt our offerings. These and other new offerings may present new and difficult challenges, which could negatively affect our operating results.
Much of our revenue is concentrated in a few customers, and if we lose any of these customers through contract terminations, acquisitions or other means, our revenue may decrease substantially.
We have a high degree of revenue concentration. Our top five customers for each reporting period represented approximately 66% of our consolidated revenue for the year ended December 31, 2025 and 62% of our consolidated revenue for both the years ended December 31, 2024 and 2023. We expect to continue to experience significant revenue concentration for the foreseeable future. Our customers’ demand for our products may fluctuate due to factors beyond our control. We could experience fluctuations in our customer base or the mix of revenue by customer as markets and strategies evolve. A disruption in our relationship with any of our customers could adversely affect our business. In addition, any consolidation of our customers could reduce the number of customers to whom our products may be sold or the demand for our products. Our inability to meet our customers’ requirements or to qualify our products with them could adversely impact our revenue. The loss of, or restrictions on our ability to sell to, one or more of our major customers or any significant reduction in orders from, or a shift in product mix by customers, could have a material adverse effect on our operating results and financial condition.
In addition, our license agreements are complex and some contain terms that require us to provide certain customers with the lowest royalty rate that we provide to other customers for similar technologies, volumes and schedules. These clauses may limit our ability to effectively price differently among our customers, to respond quickly to market forces or otherwise to compete on the basis of price. These clauses may also require us to reduce royalties payable by existing customers when we enter into or amend agreements with other customers. Any adjustment that reduces royalties from current customers or licensees may have a material adverse effect on our operating results and financial condition.
We continue to negotiate with customers and prospective customers to enter into license agreements. Any future agreement may trigger our obligation to offer comparable terms or modifications to agreements with our existing customers, which may be less favorable to us than the existing license terms. We expect licensing fees will continue to vary based on our success in renewing existing license agreements and adding new customers, as well as the level of variation in our customers’ reported shipment volumes, sales price and mix, offset in part by the proportion of customer payments that are fixed. In addition, our license agreements may contain rights by the customer to terminate for convenience, or upon certain other events, such as change of control, material breach, insolvency or bankruptcy proceedings. If we are unsuccessful in entering into license agreements with new customers or renewing license agreements with existing customers, on favorable terms or at all, or if these agreements are terminated, our results of operations may decline significantly.
Some of our revenue is subject to the pricing policies of our customers over which we have no control.
We have no control over our customers’ pricing of their products and there can be no assurance that licensed products will be competitively priced or will sell in significant volumes. Any premium charged by our customers in the price of memory and controller chips or other products over alternatives must be reasonable. If the benefits of our technology do not match the price
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premium charged by our customers, the resulting decline in sales of products incorporating our technology could harm our operating results.
Our customers often require our products to undergo a lengthy and expensive qualification process which does not assure product sales. If we are unsuccessful or delayed in qualifying any of our products with a customer, our business and operating results would suffer.
Prior to purchasing our products, our customers often require that our products undergo extensive qualification processes, which involve testing of our products in the customers’ systems, as well as testing for reliability. This qualification process may continue for several months. However, qualification of a product by a customer does not assure any sales of the product to that customer. Even after successful qualification and sales of a product to a customer, a subsequent revision in third-party manufacturing processes or in customer requirements may require a new qualification process with our customers or changes to our yield or margin profiles, which may result in delays, our holding of excess or obsolete inventory, or other business challenges. After our products are qualified, it can take several months or more before the customer commences volume production of components or systems that incorporate our products. Despite these uncertainties, we devote substantial resources, including design, engineering, sales, marketing and management efforts, to qualify our products with customers in anticipation of sales. If we are unsuccessful or delayed in qualifying any of our products with a customer, sales of those products to the customer may be precluded or delayed, which may impede our growth and cause our business to suffer.
Products that fail to meet their specifications or are defective could impose significant costs on us or result in loss of business.
Products that do not meet their specifications or that contain, or are perceived by our customers to contain, defects could impose significant costs on us or otherwise materially adversely affect our operating results and financial condition. From time to time, we experience problems with nonconforming, defective or incompatible products after we have shipped such products. In recent periods, we have further expanded our product offerings, which could potentially increase the chance that one or more of our products could fail to meet specifications in a particular application. Our products and technologies may be deemed fully or partially responsible for functionality in our customers’ products and may result in sharing or shifting of product or financial liability from our customers to us for costs incurred by the end user as a result of our customers’ products failing to perform as specified. In addition, if our products and technologies perform critical functions in our customers’ products or are used in high-risk consumer end products, such as automotive products, our potential liability may increase. We could be adversely affected in several ways, including the following:
Any of the foregoing items could have a material adverse effect on our operating results and financial condition.
We may not be successful with new product introduction and/or expanding into new markets.
Various target markets for our products, such as AI, may develop slower than anticipated or could utilize competing technologies. The markets for some of these products depend in part upon the continued development and deployment of various other technologies, which may or may not address the needs of the users of these products. We cannot predict the size or growth rate of these markets or the market share we will achieve or maintain in these markets in the future.
Our ability to generate significant revenue from new markets will depend on various factors, including the development and growth of these markets; the ability of our technologies and products to address the needs of these markets; the price and
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performance requirements of our customers and the preferences of end users; and our ability to provide our customers with products that provide advantages compared with alternative products.
Our ongoing success in these markets will require us to offer better performance alternatives to other products at competitive costs. The failure of any of these target markets to develop as we expect, or our failure to serve these markets to a significant extent, will impede the sales growth of products incorporating our technology, which could harm our operating results.
If we do not keep pace with technological innovations or customers’ increasing technological requirements, we may not be able to enhance our existing products, our products may not be competitive and our revenue and operating results may suffer.
We operate in rapidly changing, highly competitive markets. Technological advances, the introduction of new products and services, including AI, and new design techniques could adversely affect our business unless we are able to adapt to changing conditions. Technological advances could render our products and technologies less competitive or obsolete, and we may not be able to respond effectively to the technological requirements of evolving markets. We may therefore be required to commit significant resources to enhancing and developing new technology, which may include purchasing or licensing advanced design tools and test equipment, hiring additional highly qualified engineering and other technical personnel, and continuing and expanding research and development activities on existing and potential technologies.
Our existing product offerings may present new and difficult challenges, and we may be subject to claims if customers of our offerings experience delays, failures, non-performance or other quality issues. In particular, we may experience difficulties with product design, qualification, manufacturing, including supply chain disruptions or shortages that might lead to an inability to meet customer demand, marketing or certification that could delay or prevent our development, introduction or marketing and sales of products. Although we intend to design our products to be fully compliant with applicable industry standards, proprietary enhancements may not in the future result in full conformance with existing industry standards under all circumstances. Further, our products must be enhanced periodically to keep up with evolving system requirements. Our introduction of new products could reduce the demand and revenue of our older products or affect their pricing.
Our research and development efforts with respect to new technologies may not result in customer or market acceptance. Some or all of those technologies may not successfully make the transition from the research and development stage to cost-effective production as a result of technology problems, competitive cost issues, yield problems and other factors. Even if we successfully complete a research and development effort with respect to a particular technology, our customers may decide not to introduce or may terminate products utilizing the technology for a variety of reasons, including difficulties with other suppliers of components for the products, superior technologies developed by our competitors and unfavorable comparisons of our products with these technologies, price considerations and lack of anticipated or actual market demand for the products.
Our business model continues to transform towards greater reliance on product revenue. We could experience a slowdown in our customers’ demand for our products in the near term, including if we or our customers overestimate the demand for AI-based solutions in the future; however, we anticipate our memory interface chips will contribute to continued long-term growth. If sales of our memory interface chips do not grow as anticipated, then our business could suffer as a result. Our business could be harmed if we are unable to develop and utilize new technologies that address the needs of our customers, or our competitors or customers develop and utilize new technologies, including AI, more effectively or more quickly than we can. A transition by our customers to different business models could also result in reduced revenue. We cannot guarantee that we will be successful in keeping pace with all, or any, of the customer trends. Any investments made to enhance or develop new technologies that are not successful could have an adverse effect on our operating results and financial condition.
If our customers do not incorporate our technologies into their products, or if our customers’ products are not commercially successful, our business would suffer.
We sell our memory interface chips directly and indirectly to memory module manufacturers and OEMs worldwide for integration into server memory modules. We cannot be assured that our customers’ products will be commercially successful
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over time or at all as a result of factors beyond our control. If products incorporating our technologies are not commercially successful or experience rapid decline, our revenue and business will suffer. Further, we are continuing to expand into new segments and if our memory interface chips fail to achieve acceptance by customers in such segments, then our business could suffer as a result. Changes in our customers’ order patterns could result in us holding excess quantities of inventory which could result in us recording reserves for excess and obsolete inventory. Any such reserves would have an adverse effect on our operating results and financial condition.
We purchase inventory in advance based on expected demand for our products, and if demand is not as expected, we may have insufficient or excess inventory, which could adversely impact our financial condition.
As a fabless semiconductor company, we purchase our inventory from third-party manufacturers in advance of selling our products. We place orders with our manufacturers based on existing and expected orders from our customers and distributors for particular products. We are also subject to increased inventory risks and costs because we build our products based on forecasts provided by our customers and distributors before receiving purchase orders for the product. While most of our contracts with our customers and distributors include lead time requirements and cancellation penalties that are designed to protect us from misalignment between orders and inventory levels, we must nonetheless make some predictions when we place orders with our manufacturers and we are not always able to make adjustments to align with our inventory needs. Our customers and distributors may also fail to place orders or cancel orders for many reasons, including but not limited to trends in the global economy, including as a result of tariffs or trade restrictions or relationships, business challenges, supply chain constraints, longer than expected inventory digestion or other changes in their business requirements. In the event that our predictions are inaccurate due to unexpected increases in orders or our manufacturers are unable to provide the inventory that we require, we may have insufficient inventory to meet our customers’ and distributors’ demands. In addition, a perceived negative trend in market conditions could lead us to decrease the manufacturing volume of our products to avoid excess inventory. If we inaccurately assess market conditions for our products, we could have insufficient inventory to meet the demands of our customers and distributors, resulting in loss of revenue. In the event that we order products that we are unable to sell due to a decrease in orders, unexpected order cancellations, import/export restrictions or product returns, we may have excess inventory which, if not sold, may need to be written down or would result in a decrease in our revenue in future periods. If any of these situations were to arise, it could have a material impact on our business, financial condition and results of operations.
The markets for semiconductor products are cyclical, and increased levels of inventory may lead to overcapacity and lower prices, and conversely, if we do not hold sufficient inventory, we may not be able to satisfy unexpected demand for our products.
The cyclical nature of the semiconductor industry has resulted in periods when demand for our products has increased or decreased rapidly. For example, we are currently experiencing increased demand for our products that is attributed to increased demand for AI-based solutions. If we overbuild inventory in a period of decreased demand, or if we expand our operations too rapidly or procure excessive resources in anticipation of increased demand for our products, including in relation to AI, and that demand does not materialize at the pace at which we expect, or declines, our operating results may be adversely affected as a result of charges related to obsolete inventory, inventory write-downs, increased operating expenses or reduced margins.
We may in the future experience periods of inventory adjustments by our customers and distributors that may adversely affect our operating results. In addition, we may not be able to expand our operations in a sufficiently timely manner, procure adequate resources and raw materials, locate suitable third-party suppliers or respond effectively to changes in demand for our existing products or to demand for new products requested by our customers and/or distributors, and our current or future business could be materially and adversely affected.
We periodically transition to newer generations of our semiconductor products as the market shifts to demand for such products. While we have managed prior product transitions and have previously sold multiple generations of products at the
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same time, these transitions are difficult to forecast and may result in under-supply or over-supply of inventory by product generation, which may negatively impact revenue and inventory reserves.
Our business is dependent on distributors to service our end customers.
We utilize distributors to sell our memory interface chips to certain customers. We do not have long-term purchase commitments from our distributors. If a key distributor were to experience financial difficulties, including bankruptcy, this could materially impact our financial results due to potential losses from uncollectible receivables. Additionally, any oversupply of inventory at our distributors, whether due to an industry or economic downturn or other causes, could result in reduced sales in a given period, increased order push-outs, increased inventory returns and cause us to carry higher levels of inventory. This could result in us incurring charges for obsolete or excess inventory, or we may not fully recover our costs, which would reduce our gross margin. Violations of the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), export controls and sanction laws, or similar laws, by our distributors could also have a material adverse impact on our business.
A meaningful portion of our future revenue depends on sustaining or growing our licensing revenue and the failure to achieve such revenue would lead to a material decline in our results of operations.
While our business model continues to transform towards greater reliance on product revenue, a large portion of our revenue still consists of fees paid for access to our patented technologies, existing technology and other development and support services we provide to our customers. Our ability to secure and renew the licenses from which that revenue is derived depends on our customers adopting our technology and using it in the products they sell. If customers do not upgrade or enhance their product offerings to include such technologies, our revenue and operating results may be adversely affected. Once secured, license revenue may be negatively affected by factors within and outside our control, including reductions in our customers’ sales prices, sales volumes, our failure to timely complete any engineering deliverables and the actual terms of such licenses themselves. In addition, our licensing cycle for new licensees, as well as for renewals for existing licensees is lengthy, costly and unpredictable. We cannot provide any assurance that we will be successful in signing new license agreements or renewing existing license agreements on equal or favorable terms or at all. If we do not achieve our revenue goals, our results of operations could decline.
Our licensing cycle is lengthy and costly, and our marketing and licensing efforts may be unsuccessful.
The process of persuading customers to adopt and license our chip interface, data security IP and other technologies can be lengthy. Even if successful, there can be no assurance that our technologies will be used in a product that is ultimately brought to market, achieves commercial acceptance or results in significant royalties to us. We generally incur significant marketing and sales expenses prior to entering into our license agreements, generating a license fee and establishing a royalty stream from each customer. The length of time it takes to establish a new licensing relationship can take many months or even years. We may incur costs in any particular period before any associated revenue stream begins, if at all. If our marketing and sales efforts are very lengthy or unsuccessful, then we may face a material adverse effect on our business and results of operations as a result of failure to obtain, or an undue delay in obtaining, royalties.
Some of our license agreements may convert from royalty generating to fully paid-up licenses at the expiration of their terms or upon certain milestones, and we may not receive royalties after that time.
From time to time, we enter into license agreements that automatically convert from royalty generating arrangements to fully paid-up licenses under which the customer is no longer required to make payments for all or certain components of the licensed technology or IP upon expiration or upon reaching certain milestones. We may not receive further royalties from customers for any licensed technology under those agreements if they convert to fully paid-up licenses because such customers will be entitled to continue using some, if not all, of the relevant IP or technology under the terms of the license agreements without further payment, even if relevant patents or technologies are still in effect. If we cannot find another source of royalties to replace the royalties from those license agreements that convert to fully paid-up licenses, our results of operations following such conversion could be adversely affected.
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Future revenue is difficult to predict for several reasons, and our failure to predict revenue or revenue trends accurately may result in our stock price declining.
As we commercially launch each of our products, the sales volume of and resulting revenue from such products in any given period will be difficult to predict. Our lengthy license negotiation cycles could make a considerable portion of our future revenue difficult to predict because we may not be successful in entering into or renewing licenses with our customers on our anticipated timelines.
In addition, while some of our license agreements provide for fixed royalty payments, many of our license agreements provide for volume-based royalties and may also be subject to caps on royalties or other adjustments in a given period. The sales volume and prices of our customers’ products in any given period can be difficult to predict.
Because we provide memory interface chips, among others, that are used in end products and systems, demand for our products is influenced by the demand for end products sold by our customers or via distributors. For example, we are currently experiencing increased demand for our products that is attributed to an increased demand for AI-based solutions, but we cannot predict future trends in such demand. As a result, we may have difficulty in accurately forecasting our product revenue. Our product revenue depends on the timing, scale and speed of introductions of new end products and systems, as well as the ongoing demand for existing end products and systems, that incorporate our products, all of which are intrinsically difficult to forecast. In addition, demand for our products is influenced by the ability of our customers and distributors to manage their inventory. If our customers and distributors do not manage their inventory correctly or misjudge their customers’ demand, our shipments to and orders from our customers and distributors may vary significantly, and we may have difficulty forecasting our inventory levels, which could reduce our product revenue, result in inventory write offs and adversely affect our financial condition and results of operations. For these reasons, our actual results may differ substantially from analyst estimates or our forecasts in any given quarter.
We may fail to meet our publicly announced guidance or other expectations about our business, which would likely cause our stock price to decline.
We provide guidance regarding our expected financial and business performance, including our anticipated future revenue, operating expenses and other financial and operation metrics. Correctly identifying the key factors affecting business conditions and predicting future events is an inherently uncertain process. Any guidance that we provide may not always be accurate, or may vary from actual results, due to our inability to correctly identify and quantify risks and uncertainties to our business and to quantify their impact on our financial performance. We offer no assurance that such guidance will ultimately be accurate, and investors should treat any such guidance with appropriate caution. If we fail to meet our guidance or if we find it necessary to revise such guidance, even if such failure or revision is seemingly insignificant, investors and analysts may lose confidence in us and the market value of our common stock could be materially adversely affected.
A substantial portion of our revenue is derived from sources outside of the United States and this revenue and our business generally are subject to risks related to international operations that are often beyond our control.
For the years ended December 31, 2025, 2024 and 2023, revenue from our international customers constituted approximately 82%, 64% and 62%, respectively, of our total consolidated revenue. We expect that future revenue derived from international sources will continue to represent a significant portion of our total revenue.
To the extent that customer sales are not denominated in U.S. dollars, any royalties that are based on a percentage of the customers’ sales and which we receive as a result of such sales could be subject to fluctuations in currency exchange rates. In addition, if the effective price of licensed products sold by our foreign customers were to increase as a result of fluctuations in the exchange rate of the relevant currencies, demand for licensed products could fall, which in turn would reduce our royalties.
Trade-related government actions, including changes in trade restrictions or relationships, tariffs and exchange controls, and potential retaliatory tariffs or actions by other countries, whether implemented by the United States, China, the European Union or other countries, that impose barriers or restrictions impacting our ability to sell or ship products to certain customers may have a negative impact on our financial condition and results of operations. We cannot predict the actions government entities
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may take in this context and may be unable to quickly offset or effectively react to government actions that restrict our ability to sell to certain customers or in certain jurisdictions. Government actions that affect our customers’ ability to sell products or access critical elements of their supply chains may result in a decreased demand for their products, which may consequently reduce their demand for our products.
In addition, the U.S. government has implemented controls affecting the ability to send certain products and technology related to semiconductors, semiconductor manufacturing and supercomputing to China without an export license and added additional entities to restricted party lists in addition to other import/export and national security laws and regulations. We may be impacted by any of these current or new restrictions in the future if such controls are expanded to cover our key products/markets.
We currently have international business, business development and design operations in Bulgaria, Canada, China, Finland, France, India, the Netherlands, South Korea and Taiwan. Our international operations and revenue are subject to a variety of risks that are beyond our control, including:
We and our customers are subject to many of the risks described above with respect to companies which are located in different countries. There can be no assurance that one or more of the risks associated with our international operations will not result in a material adverse effect on our business, financial condition or results of operations.
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Weak global economic conditions may adversely affect demand for the products and services of our customers and could otherwise harm our business.
Our operations and performance depend significantly on worldwide economic conditions. Current and future uncertainty in the worldwide economy due to inflation, geopolitics, major central bank policies, including interest rate changes, public health crises or other global factors, could adversely affect our business. Additionally, there is ongoing uncertainty regarding the current U.S. presidential administration’s economic and other policies, priorities and actions, such as potential changes in trade restrictions or relationships, tariffs and exchange controls, and potential retaliatory tariffs or actions by other countries, which could impact our business and the cost and/or sale of our products in any countries that are impacted. Adverse economic conditions could also affect demand for our products and our customers’ products. If our customers experience reduced demand or excess inventory as a result of global or regional economic conditions or otherwise, including as a result of changes in tariffs or trade restrictions and relationships, this could result in reduced royalties revenue and/or product sales and our business and results of operations could be harmed. Inflationary pressures and shortages have in the past increased, and may increase in the future, costs for materials, supplies and labor, which could cause our expenses to increase at a rate faster than our product pricing to recover such increases, which may further result in a material adverse effect on our business, financial condition or results of operations.
Additionally, deterioration of conditions in worldwide credit markets could limit our ability to obtain external financing, if needed, to fund our operations and capital expenditures. In addition, we may experience losses on our holdings of cash and investments due to failures of financial institutions and other parties. Difficult economic conditions may also result in a higher rate of losses on our accounts receivable due to credit defaults. As a result, downturns in, or other events or uncertainty that impact, the worldwide economy could have a material adverse effect on our business, results of operations and financial condition.
Any failure in our delivery of high-quality technical support services may adversely affect our relationships with our customers and our financial results.
Our customers depend on our support organization to resolve technical issues and provide ongoing maintenance relating to our products and services. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services. Increased customer demand for these services, without corresponding revenue, could increase costs and adversely affect our operating results. In addition, our sales process is highly dependent on our offerings and business reputation and on positive recommendations from our existing customers. Any failure to maintain high-quality technical support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation, our ability to sell our solutions to existing and prospective customers and our business, operating results and financial position.
Our operations are subject to the effects of inflation.
The United States has previously experienced historically high levels of inflation. If the inflation rate increases again as a result of increases in the costs of labor and supplies, it will affect our expenses, such as employee compensation and research and development charges. Research and development expenses account for a significant portion of our operating expenses. Additionally, the United States has experienced and continues to experience an acute workforce shortage of qualified applicable talent, which in turn creates a competitive wage environment that may increase our operating costs. To the extent inflation results in rising interest rates or has other adverse effects on the market, it may adversely affect our consolidated financial condition and results of operations.
Risks Associated with Our Supply and Third Party Manufacturing
We rely on third parties for a variety of services, including manufacturing, and these third parties’ failure to perform these services adequately or change our allocation of their services/capacity due to industry or other pressures could materially and adversely affect our business.
We rely on third parties for a variety of services, including our manufacturing supply chain partners and third parties within our sales and distribution channels. Some of these third parties are, and may be, our sole manufacturer or sole source of certain
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production materials and may be located in regions subject to geopolitical uncertainty (e.g., tensions between China and Taiwan and evolving export/import and national security restrictions). If we fail to manage our relationships with these manufacturers and suppliers effectively, or if they experience delays, disruptions, geopolitical changes, capacity constraints/allocation pressures or quality control problems in their operations, our ability to ship products to our customers could be impaired and our competitive position and reputation could be harmed. In addition, any adverse change in any of our manufacturers and suppliers’ financial or business condition could disrupt our ability to supply quality products to our customers. If we are required to change our manufacturers, we may lose revenue, incur increased costs and damage our end-customer relationships. In addition, porting to and qualifying a new manufacturer and commencing production can be an expensive and lengthy process. If our third-party manufacturers or suppliers are unable to provide us with adequate supplies of high-quality products for any other reason, we could experience a delay in our order fulfillment, and our business, operating results and financial condition would be adversely affected. In the event these and other third parties we rely on fail to provide their services adequately, including as a result of errors in their systems, industry pressures or events beyond their control, or refuse to provide these services on terms acceptable to us, and we are not able to find suitable alternatives, our business may be materially and adversely affected. In addition, our orders may represent a relatively small percentage of the overall orders received by our manufacturers from their customers. As a result, fulfilling our orders may not be considered a priority in the event our manufacturers are constrained in their ability to fulfill all of their customer obligations in a timely manner. If our manufacturers are unable to provide us with adequate supplies of high-quality products, or if we or our manufacturers are unable to obtain adequate quantities of components, it could cause a delay in our order fulfillment, in which case our business, operating results and financial condition could be adversely affected.
Semiconductor supply chain disruptions have been well publicized in the recent past. We believe that we could experience various supply constraints related to our memory interface chip business in the future. For example, to the extent we do not have sufficient wafer and packaging substrate firm commitments from our third-party suppliers or they are otherwise unable to provide such services and materials, we may not obtain the materials needed on our desired timelines or at reasonable prices. Large swings in demand could exceed our contracted supply and/or our suppliers’ capacity to meet those demand changes resulting in a shortage of parts, materials or capacity needed to manufacture our products. While we continually work with our suppliers to mitigate the impact of the supply constraints to our customer deliveries, in the event of a shortage or supply interruption from suppliers of our components, we may not be able to develop alternate sources quickly, cost-effectively or at all. An extended period of global supply chain and economic disruption, including as a result of tariffs or trade restrictions, could have a material negative impact on our business, results of operations, access to sources of liquidity and financial condition, though the full extent and duration is uncertain.
Additionally, various sources of supply-chain risk, including strikes or shutdowns at delivery ports or loss of or damage to our products while they are in transit or storage, IP theft, losses due to tampering, third-party vendor issues with quality or sourcing control, failure by our suppliers to comply with applicable laws and regulations, potential tariffs or other trade restrictions, geopolitical uncertainty and related military actions or other similar problems could limit or delay the supply of our products. Any interruption or delay in manufacturing or component supply, any increases in manufacturing or component costs, or the inability to obtain these services or components from alternate sources at acceptable prices and within a reasonable amount of time would harm our ability to provide our products to customers on a timely basis. This could harm our relationships with our customers, prevent us from acquiring new customers and materially and adversely affect our business.
If the manufacturing and/or packaging process for our products is disrupted by operational issues, natural disasters or other events, our business, results of operations or financial condition could be materially adversely affected.
We rely on subcontractors to manufacture and package our products using highly complex processes that require technologically advanced equipment and continuous modification. Our subcontractors maintain operations and continuously implement new product and process technology at facilities which are dispersed in multiple locations in Asia. As a result of the necessary interdependence within our network of manufacturing and packaging facilities, an operational disruption at one of our or a subcontractor’s facilities may have a disproportionate impact on our ability to produce many of our products.
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From time to time, there have been disruptions in our subcontractors’ operations as a result of power outages, improperly functioning equipment, disruptions in supply of raw materials or components or equipment failures. Our subcontractors have manufacturing and other operations in locations subject to natural disasters and possible climate changes, such as severe and variable weather and geological events resulting in increased costs, or disruptions to our manufacturing operations or those of our suppliers or customers. In addition, climate change may pose physical risks to our manufacturing facilities or our suppliers’ facilities, including increased extreme weather events that could result in supply delays or disruptions. Other events, including political or public health crises, such as an outbreak of contagious diseases, may also affect our subcontractors’ production capabilities.
If production is disrupted for any reason, manufacturing yields may be adversely affected, or we may be unable to meet our customers’ requirements and they may purchase products from other suppliers. This could result in a significant increase in manufacturing costs, loss of revenue or damage to customer relationships, any of which could have a material adverse effect on our business.
We rely on a number of third-party providers for data center hosting facilities, equipment, maintenance and other services, and the loss of, or problems with, one or more of these providers may impede our growth or cause us to lose customers.
We rely on third-party providers to supply data center hosting facilities, equipment, maintenance and other services in order to enable us to provide some of our services and have entered into various agreements for such services. The continuous availability of our services depends on the operations of those facilities, on a variety of network service providers and on third-party vendors. In addition, we depend on our third-party facility providers’ ability to protect these facilities against damage or interruption from natural disasters, power or telecommunications failures, criminal acts, cyber-attacks and similar events. If there are any lapses of service or damage to a facility, we could experience lengthy interruptions in our service, as well as delays and additional expenses in arranging new facilities and services. Even with current and planned disaster recovery arrangements, our business could be harmed. Any interruptions or delays in our service, whether as a result of third-party error, our own error, natural disasters, criminal acts, security breaches or other causes, whether accidental or willful, could harm our relationships with customers, harm our reputation and cause our revenue to decrease and/or our expenses to increase. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. These factors in turn could further reduce our revenue, subject us to liability and cause us to issue credits or cause us to lose customers, any of which could materially adversely affect our business.
Certain software and/or IP blocks that we use in or with some of our products are licensed from third parties and, for that reason, may not be available to us in the future. This has the potential to delay product development and production or cause us to incur additional expense, which could materially adversely affect our business, financial condition, operating results and cash flow.
Some of our products and services contain or function with software and/or IP blocks licensed from third parties. Some of these licenses may not be available to us in the future on terms that are acceptable to us or allow our products to remain competitive. The loss of these licenses or the inability to maintain any of them on commercially acceptable terms could delay development of future offerings or the enhancement of existing products and services. We may also choose to pay a premium price for such a license in certain circumstances where continuity of the licensed product would outweigh the premium cost of the license. The unavailability of these licenses or the necessity of agreeing to commercially unreasonable terms for such licenses could materially adversely affect our business, financial condition, operating results and cash flow.
Risks Associated with Our Business Operations
Our business and operations could suffer in the event of physical and cybersecurity breaches and incidents.
Attempts by others to gain unauthorized access to and disrupt our information technology systems and IP assets are becoming more sophisticated. These attempts, which might be related to industrial or other espionage, may include (to Rambus, our customers and/or our third-party service providers), covertly introducing malware to our computers and networks and impersonating authorized users, phishing attempts and other forms of social engineering, employee or contractor malfeasance,
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denial of service attacks and ransomware attacks, among others. We seek to detect and investigate all security incidents impacting our systems and to prevent their recurrence, but in some cases, we might be unaware of an incident or its magnitude and effects. We also utilize third-party service providers to host, transmit or otherwise process electronic data in connection with our business activities, including our supply chain processes, operations and communications. Our customers also often have access to and host our confidential IP and business information on their own internal and directed third-party systems. Our data, corporate systems, third-party systems and security measures and those of our customers or the third parties that support us or our services may be subject to breaches or intrusions due to the actions of outside parties, employee error, malfeasance, a combination of these or otherwise, including social engineering and employee and contractor error or malfeasance, especially as certain of our employees engage in work from home arrangements. As a result, an unauthorized party may obtain access to our systems, networks or data, including IP and confidential business information of ourselves, our customers and/or the third parties that support us. There have been and may continue to be significant supply chain attacks, and we cannot guarantee that our or our third-party service providers’ systems and networks have not been breached or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our systems and networks or the systems and networks of our customers or of third parties that support us and our services. Geopolitical tensions, instability and conflicts may increase the cybersecurity risks that we, our customers and the third parties that support us face. We and our service providers may face difficulties or delays in identifying or responding to any actual or perceived security breach or incident. The theft or other unauthorized acquisition of, unauthorized use, publication or other processing of or access to our IP and/or confidential business information could harm our competitive position and reputation, reduce the value of our investment in research and development and other strategic initiatives or otherwise adversely affect our business. In the event of any security breach or incident, including any breach or incident that results in inappropriate access to, or loss, corruption, unavailability or unauthorized acquisition, disclosure or other processing of our or our customers’ confidential information or any personal information we or our third-party service providers maintain, including that of our employees, we could suffer a loss of IP or loss of data, may be subject to claims, liability and proceedings and may incur liability and otherwise suffer financial harm.
Any actual, alleged or perceived breach of security in our systems or networks, or any other actual, alleged or perceived data security incident we or our third-party service providers or customers suffer, could result in damage to our reputation, negative publicity, loss of customers and sales, harm to our market position, increased costs to remedy any problems and otherwise respond to any incident, regulatory investigations and enforcement actions, claims, litigation, proceedings and other liability. In addition, we may incur significant costs and operational consequences of investigating, remediating, eliminating and putting in place additional tools and devices designed to prevent actual or perceived security breaches and other security incidents, as well as the costs to comply with any notification or other legal obligations resulting from any security incidents. Any of these negative outcomes could result in substantial costs and diversion of resources, distract management and technical personnel, adversely impact our sales and reputation and seriously harm our business or operating results.
Although we maintain insurance coverage that may cover certain liabilities in connection with some security breaches and other security incidents, we cannot be certain our insurance coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable terms (if at all) or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, or denials of coverage, could have a material adverse effect on our business, including our financial condition, results of operations and reputation.
Failures in our products and services or in the products of our customers, including those resulting from security vulnerabilities, defects, bugs or errors, could harm our business.
Our products and services are highly technical and complex, and among our various businesses our products and services are crucial to providing security and other critical functions for our customers’ operations. Our products and services have from time to time contained and may in the future contain undetected errors, bugs, defects or other security vulnerabilities. Some errors in our products and services may only be discovered after a product or service has been deployed and used by customers and may in some cases only be detected under certain circumstances or after extended use. In addition, because the techniques used by hackers to access or sabotage our products and services and other technologies change and evolve frequently and
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generally are not recognized until launched against a target, we may be unable to anticipate, detect or prevent these techniques and may not address them in our data security technologies. Any errors, bugs, defects or security vulnerabilities discovered in our solutions after commercial release could adversely affect our revenue, our customer relationships and the market’s perception of our products and services. These risks may be increased through the use of AI by third-party threats or if we or our partners use AI that has errors, bugs, defects, security vulnerabilities or creates privacy concerns. We may not be able to correct any errors, bugs, defects, security flaws or vulnerabilities promptly or at all. Any breaches, defects, errors or vulnerabilities in our products and services could result in:
Changes in accounting principles and guidance could result in unfavorable accounting charges or effects.
We prepare our financial statements in accordance with accounting principles generally accepted in the United States and these principles are subject to interpretation by the SEC, the Financial Accounting Standards Board (“FASB”) and various bodies formed to interpret and create appropriate accounting principles and guidance. A change in these principles or application guidance, or in their interpretations, may have a material effect on our reported results, as well as our processes and related controls, and may retroactively affect previously reported results.
We have in the past made and may in the future make acquisitions or enter into mergers, strategic investments, sales of assets, divestitures or other arrangements that may not produce expected operational benefits or operating and financial results.
From time to time, we engage in acquisitions, strategic transactions, strategic investments, divestitures and potential discussions with respect thereto. For example, we divested our PHY IP group in September 2023. Many of our acquisitions or strategic investments entail a high degree of risk, including those involving new areas of technology and such investments may not become accretive for several years after the date of the investment, if at all. Our acquisitions or strategic investments may not provide the advantages that we anticipated or generate the financial returns we expect, including if we are unable to close any pending acquisitions. For example, for any pending or completed acquisitions, we may discover unidentified issues not discovered in due diligence, and we may be subject to regulatory approvals or liabilities that are not covered by indemnification protection or become subject to litigation.
Achieving the anticipated benefits of business acquisitions depends in part upon our ability to integrate the acquired businesses in an efficient and effective manner and achieve anticipated synergies, and we may not be successful in these efforts. The integration of companies that have previously operated independently is complex and time consuming and may result in significant challenges, including, among others: retaining key employees; successfully integrating new employees, facilities, products, processes, operations, business models and systems, technology and sales and distribution channels; retaining customers and suppliers of the acquired business; minimizing the diversion of management’s and other employees’ attention from ongoing business matters; coordinating geographically separate organizations; consolidating research and development operations; consolidating corporate and administrative infrastructures; implementing controls, processes and policies appropriate for a public company at acquired companies that may have previously lacked such controls, processes and policies; and managing the increased scale, complexity and globalization of our business, operations and employee base.
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Additional risks related to our acquisitions or strategic investments include, but are not limited to:
Our strategic investments in new areas of technology may involve significant risks and uncertainties, including distraction of management from current operations, greater than expected liabilities and expenses, inadequate return of capital and unidentified issues not discovered in due diligence. These investments are inherently risky and may not be successful.
In addition, we may record impairment charges related to our acquisitions or strategic investments. Any losses or impairment charges that we incur related to acquisitions, strategic investments or sales of assets will have a negative impact on our financial results and the market value of our common stock, and we may continue to incur new or additional losses related to acquisitions or strategic investments.
We may have to incur debt or issue equity securities to pay for any future acquisitions, which debt could involve restrictive covenants or which equity security issuance could be dilutive to our existing stockholders. We may also use cash to pay for any future acquisitions which will reduce our cash balance.
From time to time, we may also divest certain assets. These divestitures or proposed divestitures may involve the loss of revenue and/or potential customers, and the market for the associated assets may dictate that we sell such assets for less than what we paid. In addition, in connection with any asset sales or divestitures, we may be required to provide certain representations, warranties, licenses and/or covenants to buyers. While we would seek to ensure the accuracy of such
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representations and warranties and fulfillment of any ongoing obligations, we may not be completely successful and consequently may be subject to claims by a purchaser of such assets or related erosion of revenue or loss of customers.
If our counterparties are unable to fulfill their financial and other obligations to us, our business and results of operations may be affected adversely.
Any downturn in economic conditions or other business factors could threaten the financial health of our counterparties, including companies with which we have entered into licensing, asset/product sale and/or settlement agreements, and their ability to fulfill their financial and other obligations to us. Such financial pressures on our counterparties may eventually lead to bankruptcy proceedings or other attempts to avoid financial obligations that are due to us. Because bankruptcy courts have the power to modify or cancel contracts of the petitioner which remain subject to future performance and alter or discharge payment obligations related to pre-petition debts, we may receive less than all of the payments that we would otherwise be entitled to receive from any such counterparty as a result of bankruptcy proceedings.
If we are unable to attract and retain qualified personnel globally, our business and operations could suffer.
Our success is dependent upon our ability to identify, attract, compensate, motivate and retain qualified personnel, especially engineers, senior management and other key personnel. The loss of the services of any key employees could be disruptive to our development efforts, business relationships and strategy and could cause our business and operations to suffer. In addition, the current regulatory environment related to immigration is uncertain, including with respect to the availability of H1-B and other visas. If a new or revised visa program is implemented, it may impact our ability to attract and retain qualified personnel.
All of our officers and other U.S. employees are at-will employees, which means they may terminate their employment relationship with us at any time, and their knowledge of our business and industry would be extremely difficult to replace. Any changes in our senior management team in particular, even in the ordinary course of business, may be disruptive to our business. While we seek to manage these transitions carefully, including by establishing strong processes and procedures and succession planning, such changes may result in a loss of institutional knowledge and cause disruptions to our business. If our senior management team fails to work together effectively or execute our plans and strategies on a timely basis as a result of management turnover or otherwise, our business could be harmed.
Our future success depends in large part upon the continued service and enhancement of our management team and our employees. If there are unexpected changes in management, such changes could be disruptive and could negatively affect our sales, operations, culture, future recruiting efforts and strategic direction. Competition for qualified executives is intense, and if we are unable to compensate our key talent appropriately and continue expanding our management team, or successfully integrate new additions to our management team in a manner that enables us to scale our business and operations effectively, our ability to operate effectively and efficiently could be limited or negatively impacted. In addition, changes in key management positions may temporarily affect our financial performance and results of operations as new management becomes familiar with our business, processes and strategy. The loss of any of our key personnel, or our inability to attract, integrate and retain qualified employees who join us organically and through acquisitions, could require us to dedicate significant financial and other resources to such personnel matters, disrupt our operations and seriously harm our operations and business.
Our operations are subject to risks of natural disasters, acts of war, terrorism, widespread illness, security breaches or incidents at our domestic and international locations, any one of which could result in a business stoppage and negatively affect our operating results.
Our business operations depend on our ability to maintain and protect our facilities, computer systems and personnel, which are primarily located in the San Francisco Bay Area in the United States, Bulgaria, Canada, France, India, the Netherlands, South Korea and Taiwan. The San Francisco Bay Area is in close proximity to known earthquake fault zones and sites of recent historic wildfires. Our facilities and transportation for our employees are susceptible to damage from earthquakes and other natural disasters such as fires, floods, droughts, extreme temperatures and similar events. Should a catastrophe disable our facilities, we do not have readily available alternative facilities from which we could conduct our business, so any resultant
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work stoppage could have a negative effect on our operating results. We also rely on our network infrastructure and technology systems for operational support and business activities which are subject to physical and cyber damage, and also susceptible to other related vulnerabilities common to networks and computer systems.
New epidemics, pandemics or outbreaks of novel diseases may arise at any time and may adversely affect the economies and financial markets of many countries, resulting in an economic downturn that may impact overall technology spending, demand for our products and our operating results. Furthermore, such disruption in the global financial markets may reduce our ability to access capital or our customers’ ability to pay us for past or future purchases, which could negatively affect our liquidity.
We and our suppliers could be affected by laws and regulations enacted in response to concerns regarding climate change, conflict minerals, responsible sourcing practices, public health crises, contagious disease outbreaks or other matters, which could limit the supply of our materials and/or increase the cost. Environmental regulations could limit our ability to procure or use certain chemicals or materials in our operations or products. In addition, disruptions in transportation lines could delay our receipt of materials.
Acts of terrorism, climate-change related risk, widespread illness or global pandemics, international conflict, war and any event that causes failures or interruption in our network infrastructure, technology systems or supply chain could have a negative effect at our international and domestic facilities and/or those of our suppliers and could harm our business, financial condition and operating results.
We rely upon the accuracy of our customers’ recordkeeping, and any inaccuracies or payment disputes for amounts owed to us under our licensing agreements may harm our results of operations.
Many of our license agreements require our customers to document the manufacture and sale of products that incorporate our technology and report this data to us on a quarterly basis. While licenses with such terms give us the right to audit books and records of our customers to verify this information, audits rarely are undertaken because they can be expensive, time consuming and potentially detrimental to our ongoing business relationship with our customers. Therefore, we typically rely on the accuracy of the reports from customers without independently verifying the information in them. Our failure to audit our customers’ books and records may result in our receiving more or less royalties revenue than we are entitled to under the terms of our license agreements. If we conduct royalty audits in the future, such audits may trigger disagreements over contract terms with our customers and such disagreements could hamper customer relations, divert the efforts and attention of our management from normal operations and impact our business operations and financial condition.
Our business and operating results could be harmed if we undertake any restructuring activities.
From time to time, we may undertake restructurings of our business, including discontinuing certain products, services and technologies and planned reductions in force. There are several factors that could cause restructurings to have adverse effects on our business, financial condition and results of operations. These include potential disruption of our operations, the development of our technology, the deliveries to our customers and other aspects of our business. Loss of sales, service and engineering talent, in particular, could damage our business. Any restructuring would require substantial management time and attention and may divert management from other important work. Employee reductions or other restructuring activities also would cause us to incur restructuring and related expenses such as severance expenses. Moreover, we could encounter delays in executing any restructuring plans, which could cause further disruption and additional unanticipated expense.
Problems with our information systems could interfere with our business and could adversely impact our operations.
We rely on our information systems and those of third parties for fulfilling licensing and contractual obligations, processing customer orders, delivering products, providing services and support to our customers, billing and tracking our customer orders, performing accounting operations and otherwise running our business. If our systems fail, our disaster and data recovery planning and capacity may prove insufficient to enable timely recovery of important functions and business records. Any disruption in our information systems and those of the third parties upon whom we rely could have a significant impact on our business. Additionally, our information systems may not support new business models and initiatives, including with respect to
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AI, and significant investments could be required in order to upgrade them. Delays in adapting our information systems to address new business models and accounting standards could limit the success or result in the failure of such initiatives and impair the effectiveness of our internal controls. Even if we do not encounter these adverse effects, the implementation of these enhancements may be much more costly than we anticipated. If we are unable to successfully implement the information systems enhancements as planned, our operating results could be negatively impacted.
Certain software we use is from open source code sources, which, under certain circumstances, may lead to unintended consequences and therefore could materially adversely affect our business, financial condition, operating results and cash flow.
We use open source software in our operations and services and we intend to continue to use open source software in the future. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their products or alleging that these companies have violated the terms of an open source license. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software or alleging that we have violated the terms of an open source license. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote additional research and development resources to change our solutions. In addition, if we were to combine our proprietary software solutions with open source software in certain manners, we could, under certain open source licenses, be required to publicly release the source code of our proprietary software solutions. If we inappropriately use open source software, we may be required to re-engineer our solutions, discontinue the sale of our solutions, release the source code of our proprietary software to the public at no cost or take other remedial actions. There is a risk that open source licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our solutions, which could adversely affect our business, operating results and financial condition.
In the future, we may fail to maintain an effective system of internal control over financial reporting or adequate disclosure controls and procedures, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.
If we are not able to comply with the requirements of the Sarbanes-Oxley Act or if we are unable to maintain effective internal control over financial reporting and disclosure controls and procedures, we may not be able to produce timely and accurate financial statements or guarantee that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Any failure of our internal control over financial reporting or disclosure controls and procedures could result in material misstatements of our consolidated financial statements, which could cause our investors to lose confidence in our publicly reported information, cause the market price of our stock to decline, expose us to sanctions or investigations by the SEC or other regulatory authorities, or impact our results of operations.
Unanticipated changes in our tax rates or in the tax laws, treaties and regulations could expose us to additional income tax liabilities, which could affect our operating results and financial condition.
We are subject to income taxes in both the United States and various foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes and, in the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain. Our effective tax rate could be adversely affected by several factors, many of which are outside of our control, including changes in the mix of earnings and losses in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws, rates, treaties and regulations or the interpretation of the same, changes to the financial accounting rules for income taxes, the outcome of current and future tax audits, examinations or administrative appeals and certain non-deductible expenses. For example, on September 18, 2025, the South Korean Supreme Court ruled that the use of any patents in South Korea constitutes domestic source income under the South Korea–U.S. Tax Treaty, even if such patents are not registered with the patent office in South Korea. As a result of this ruling, we determined that it is not more likely than not that the withholding taxes we paid in South Korea are recoverable. Our tax determinations are regularly subject to audit by tax authorities and developments in those audits could adversely affect our income tax provision, and we are currently undergoing such audits of certain of our tax returns. Although
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we believe that our tax estimates are reasonable, the final determination of tax audits or tax disputes may be different from what is reflected in our historical income tax provisions, which could affect our operating results.
The Organization for Economic Cooperation and Development (“OECD”) has proposed imposing a 15% global minimum tax under the Pillar Two Model Rules (“Pillar Two”), and this proposal has been adopted or is being considered by a number of countries. Additionally, on June 28, 2025, the G7 released a joint statement that it had reached an understanding with the United States for a side-by-side system based on certain accepted principles, including that U.S.-parented groups, such as ours, would be exempt from certain provisions of Pillar Two. In January 2026, the OECD released additional Administrative Guidance introducing new permanent safe harbors, including a Simplified Effective Tax Rate Safe Harbour and a Side-by-Side Safe Harbour, that are intended to reduce compliance burdens during Pillar Two implementation. These developments may further reduce compliance requirements and clarify how U.S.-parented groups are treated under the global minimum tax framework. However, any Pillar Two tax law changes, including these two Safe Harbours, are subject to legislative enactment by foreign jurisdictions. The potential effects of Pillar Two may vary depending on the specific provisions implemented by each jurisdiction, and could affect our effective tax rate and our operating results.
In addition, many jurisdictions, including the United States, are actively considering changes to existing tax laws or have proposed or enacted new laws, such as the recently enacted U.S. federal tax legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), that have or could increase our tax obligations in countries where we do business or cause us to change the way we operate our business. Any of these developments or changes in U.S. federal, state or international tax laws or tax rulings could adversely affect our effective tax rate and our operating results.
Risks Associated with Litigation, Regulation and Our Intellectual Property
We are subject to various government restrictions and regulations, including on the sale of products and services that use encryption and other technology, those related to privacy, other consumer protection matters, other import/export controls and national security matters.
Various countries have adopted controls, license requirements and restrictions on the export, import and use of products or services that contain encryption technology. In addition, governmental agencies have proposed additional requirements for encryption technology, such as requiring the escrow and governmental recovery of private encryption keys. Restrictions on the sale or distribution of products or services containing encryption technology may impact our ability to license data security technologies to the manufacturers and providers of such products and services in certain markets or may require us or our customers to make changes to the licensed data security technology that is embedded in such products to comply with such restrictions. Government restrictions, or changes to the products or services of our customers to comply with such restrictions, could delay or prevent the acceptance and use of such customers’ products and services. In addition, the United States and other countries have imposed export controls that prohibit the export of encryption and other technology to certain countries, entities and individuals. Our failure to comply with export and use regulations concerning encryption and other technology could subject us to sanctions and penalties, including fines, and suspension or revocation of export or import privileges. Additionally, climate change concerns and the potential resulting environmental impact may result in new environmental, health and safety laws and regulations that may affect us, our suppliers and our customers. Such laws or regulations could cause us to incur additional direct costs for compliance, as well as increased indirect costs resulting from our customers, suppliers or both incurring additional compliance costs that are passed on to us. These costs may adversely impact our results of operations and financial condition.
We are subject to a variety of laws and regulations in the United States, the European Union and other jurisdictions that involve, for example, user privacy, data protection and security, content, consumer protection and “conflict minerals” disclosure. Privacy and data protection regimes implemented in the European Union, the United Kingdom, California and other jurisdictions have been enacted that include penalties for noncompliance that potentially could run into the tens of millions of dollars. Other jurisdictions, including numerous states, countries and the U.S. federal government, are also contemplating such legislation. Existing and potential future laws and regulations relating to these matters may require us to modify our practices with respect to the collection, use, disclosure and other processing of data. Existing and proposed laws and regulations relating
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to these matters can be costly and challenging to comply with and can delay or impede the development of new products, result in negative publicity, increase our operating costs and subject us to claims or other remedies.
Litigation and government proceedings could affect our business in materially negative ways.
We have been and may be subject to legal claims or regulatory matters involving consumer, stockholder class action and derivative, employment, competition, IP and other issues on a global basis. Litigation, such as we experienced in our history, can be lengthy, expensive and disruptive to our operations, and results cannot be predicted with certainty. An adverse decision could include monetary damages or, in cases for which injunctive relief is sought, an injunction prohibiting us from manufacturing or selling one or more of our products or technologies. If we were to receive an unfavorable ruling on a matter, our business, operating results or financial condition could be materially harmed.
We have in the past, and may in the future, become engaged in litigation stemming from our efforts to protect and enforce our patents and IP and make other claims, which could adversely affect our IP rights, distract our management and cause substantial expenses and declines in our revenue and stock price.
We seek to diligently protect our IP rights and will continue to do so. While we are not currently involved in IP litigation, any future litigation, whether or not determined in our favor or settled by us, would be expected to be costly, may cause delays applicable to our business (including delays in negotiating licenses with other actual or potential customers), would be expected to discourage future design partners, would tend to impair adoption of our existing technologies and would divert the efforts and attention of our management and technical personnel from other business operations. In addition, we may be unsuccessful in any litigation, including if we have difficulty obtaining the cooperation of former employees and agents who were involved in our business during the relevant periods related to our litigation and are now needed to assist in cases or testify on our behalf. Furthermore, any adverse determination or other resolution in litigation could result in our losing certain rights beyond the rights at issue in a particular case, including, among other things: our being effectively barred from suing others for violating certain or all of our IP rights; our patents being held invalid or unenforceable or not infringed; our being subjected to significant liabilities; our being required to seek licenses from third parties; our being prevented from licensing our patented technology; or our being required to renegotiate with current customers on a temporary or permanent basis.
From time to time, we are subject to proceedings by government agencies that may result in adverse determinations against us and could cause our revenue to decline substantially.
An adverse resolution by or with a governmental agency could result in severe limitations on our ability to protect and license our IP and could cause our revenue to decline substantially. Third parties have and may attempt to use adverse findings by a government agency to limit our ability to enforce or license our patents in private litigation, to challenge or otherwise act against us with respect to such government agency proceedings.
Further, third parties have sought and may seek review and reconsideration of the patentability of inventions claimed in certain of our patents by the U.S. Patent and Trademark Office (“USPTO”) and/or the European Patent Office (the “EPO”). Any re-examination or inter partes review proceedings may be initiated by the USPTO’s Patent Trial and Appeal Board (“PTAB”). The PTAB and the related former Board of Patent Appeals and Interferences have previously issued decisions in a few cases, finding some challenged claims of our patents to be valid and others to be invalid. Decisions of the PTAB are subject to further USPTO proceedings and/or appeal to the Court of Appeals for the Federal Circuit. A final adverse decision, not subject to further review and/or appeal, could invalidate some or all of the challenged patent claims and could also result in additional adverse consequences affecting other related U.S. or European patents, including in any IP litigation. If a significant number of such patents are impaired, our ability to enforce or license our IP would be significantly weakened and could cause our revenue to decline substantially.
The pendency of any governmental agency acting as described above may impair our ability to enforce or license our patents or collect royalties from existing or potential customers, as any litigation opponents may attempt to use such proceedings to delay or otherwise impair any pending cases and our existing or potential customers may await the final outcome of any proceedings before agreeing to new licenses or to paying royalties.
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Litigation or other third-party claims of IP infringement could require us to expend substantial resources and could prevent us from developing or licensing our technology on a cost-effective basis.
Our research and development and product programs are in highly competitive fields in which numerous third parties have issued patents and patent applications with claims closely related to the subject matter of our programs. We and/or our customers may be named as a defendant in lawsuits claiming that our technology infringes upon the IP rights of third parties. As we develop additional products and technology, we may face claims of infringement of various patents and other IP rights by third parties. In the event of a third-party claim or a successful infringement action against us, we may be required to pay substantial damages, to stop developing and licensing our infringing technology, to develop non-infringing technology and to obtain licenses, which could result in our paying substantial royalties or our granting of cross licenses to our technologies. We may not be able to obtain licenses from other parties at a reasonable cost, or at all, which could cause us to expend substantial resources, or result in delays in, or the cancellation of, new products. Moreover, customers and/or suppliers of our products may seek indemnification for alleged infringement of IP rights. We could be liable for direct and consequential damages and expenses including attorneys’ fees. A future obligation to indemnify our customers and/or suppliers may harm our business, financial condition and operating results.
If we are unable to protect our inventions successfully through the issuance and enforcement of patents, our operating results could be adversely affected.
We have an active program to protect our proprietary inventions through the filing of patents. There can be no assurance, however, that:
If any of the above were to occur, our operating results could be adversely affected.
Furthermore, patent reform legislation, such as the Leahy-Smith America Invents Act, could increase the uncertainties and costs surrounding the prosecution of any patent applications and the enforcement or defense of our licensed patents. The federal courts, the USPTO, the Federal Trade Commission and the U.S. International Trade Commission have also taken certain actions and issued rulings that have been viewed as unfavorable to patentees. While we cannot predict what form any new patent reform laws or regulations may ultimately take, or what impact recent or future reforms may have on our business, any laws or regulations that restrict or negatively impact our ability to enforce our patent rights against third parties could have a material adverse effect on our business.
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In addition, our patents will continue to expire according to their terms, with expected expiration dates ranging from 2026 to 2044. Our failure to continuously develop or acquire successful innovations and obtain patents on those innovations could significantly harm our business, financial condition, results of operations or cash flows.
Our inability to protect the IP we create and own would cause our business to suffer.
We rely primarily on a combination of license, development and nondisclosure agreements, trademark, trade secret and copyright law and contractual provisions to protect our non-patent IP rights. If we fail to protect these IP rights, our customers and others may seek to use our technology without the payment of license fees and royalties, which could weaken our competitive position, reduce our operating results and increase the likelihood of costly litigation. The growth of our business depends in part on the use of our IP in the products of third parties and our ability to enforce IP rights against them to obtain appropriate compensation. In addition, effective trade secret protection may be unavailable or limited in certain foreign countries. Although we intend to protect our rights vigorously, if we fail or are otherwise unable to do so, our business will suffer.
Effective protection of trademarks, copyrights, domain names, patent rights and other IP rights is expensive and difficult to maintain, both in terms of application and maintenance costs, as well as the costs of defending and enforcing those rights. The efforts we have taken to protect our IP rights may not be sufficient or effective. Our IP rights may be infringed, misappropriated or challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. In addition, the laws or practices of certain countries do not protect our proprietary rights to the same extent as do the laws of the United States. Significant impairments of our IP rights, and limitations on our ability to assert our IP rights against others, could have a material and adverse effect on our business.
Third parties may claim that our products or services infringe on their IP rights, exposing us to litigation that, regardless of merit, may be costly to defend.
Our success and ability to compete are also dependent upon our ability to operate without infringing upon the patent, trademark and other IP rights of others. Third parties may claim that our current or future products or services infringe upon their IP rights. Defense of any such claim, with or without merit, could be time consuming, divert management’s attention from our business operations and result in significant expenses. We cannot assure you that we would be successful in defending against any such claims. In addition, parties making these claims may be able to obtain injunctive or other equitable relief affecting our ability to commercialize the products that incorporate the challenged IP. As a result of such claims, we may be required to obtain licenses from third parties, develop alternative technology or redesign our products. We cannot be sure that such licenses would be available on terms acceptable to us, if at all. We also may not have sufficient indemnification from our applicable vendors, if any. If a successful claim is made against us and we are unable to develop or license alternative technology, our business, financial condition, operating results and cash flows could be materially adversely affected.
Any dispute regarding our products or services may require us to indemnify certain customers, the cost of which could severely hamper our business operations and financial condition.
In any potential dispute involving our products, our customers could also become the target of litigation. Some of our agreements provide for indemnification, and some require us to provide technical support and information to a customer that is involved in litigation involving use of our technology. In addition, we may be exposed to indemnification obligations, risks and liabilities that were unknown at the time that we acquired assets or businesses for our operations. Any of these indemnification and support obligations could result in substantial and material expenses. In addition to the time and expense required for us to indemnify or supply such support to our customers, a customer’s development, marketing and sales of licensed semiconductors, mobile communications and data security technologies could be severely disrupted or shut down as a result of litigation, which in turn could severely hamper our business operations and financial condition as a result of lower or no royalty payments.
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Warranty, service level agreement and product liability claims brought against us could cause us to incur significant costs and adversely affect our operating results, as well as our reputation and relationships with customers.
We may from time to time be subject to warranty, service level agreement and product liability claims with regard to product performance and our services. We could incur material losses as a result of warranty, support, repair or replacement costs in response to customer complaints or in connection with the resolution of contemplated or actual legal proceedings relating to such claims. In addition to potential losses arising from claims and related legal proceedings, warranty and product liability claims could affect our reputation and our relationship with customers. We also may not have sufficient indemnification from our applicable vendors, if any. We generally attempt to limit the maximum amount of indemnification or liability that we could be exposed to under our contracts, however, this is not always possible.
Participation in standards setting organizations may subject us to IP licensing requirements or limitations that could adversely affect our business and prospects.
In the course of our participation in the development of emerging standards for some of our present and future products, we may be obligated to grant to all other participants a license to our patents that are essential to the practice of those standards on reasonable and non-discriminatory, or RAND, terms, or on a royalty-free basis. As a result of such obligations, we may be required to license our patents or other IP to others in the future, which could limit the value of the patents and effectiveness of our patents against competitors.
Risks Associated with Capitalization Matters
The price of our common stock may continue to fluctuate.
Our common stock is listed on The Nasdaq Global Select Market under the symbol “RMBS.” The trading price of our common stock has at times experienced price volatility and may continue to fluctuate significantly in response to various factors, some of which are beyond our control. Some of these factors include:
In addition, the stock market in general, and prices for companies in our industry in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. The trading price of our common stock may fluctuate widely due to various factors, including, but not limited to, actual or anticipated fluctuations in our financial condition and operating results, changes in financial forecasts or estimates by us or financial or other market estimates and
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ratings by securities and other analysts, changes in our capital structure, including issuance of additional debt or equity to the public, interest rate changes, regulatory changes, news regarding our products or products of our competitors and broad market and industry fluctuations.
Investors in our common stock may not realize any return on their investment in us and may lose some or all of their investment. Volatility in the trading price of our common stock could also result in the filing of securities class action litigation matters, which could result in substantial costs and the diversion of management time and resources.
Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.
Changing laws, regulations and standards relating to corporate governance and public disclosure have historically created uncertainty for companies such as ours. Any new or changed laws, regulations and standards are subject to varying interpretations due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
Our amended and restated certificate of incorporation and amended and restated bylaws, Delaware law and certain other agreements contain provisions that could discourage transactions resulting in a change in control, which may negatively affect the market price of our common stock.
Our amended and restated certificate of incorporation, our amended and restated bylaws and Delaware law contain provisions that might enable our management to discourage, delay or prevent a change in control. In addition, these provisions could limit the price that investors would be willing to pay in the future for shares of our common stock. Pursuant to such provisions:
We are also subject to Section 203 of the Delaware General Corporation Law, which provides, subject to enumerated exceptions, that if a person acquires 15% or more of our outstanding voting stock, the person is an “interested stockholder” and may not engage in any “business combination” with us for a period of three years from the time the person acquired 15% or more of our outstanding voting stock.
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Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware and the federal district courts of the United States will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court in Delaware or the federal district court for the District of Delaware) is the exclusive forum for the following (except for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction):
This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction.
Our amended and restated bylaws further provide that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.
These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions. There is uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings. It is possible that a court could find these types of provisions to be inapplicable or unenforceable, and if a court were to find either exclusive-forum provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business.
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Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk Management and Strategy
We conduct periodic risk assessments to identify cybersecurity threats, as well as assessments in the event of a material change in our business practices that may affect information systems that are vulnerable to such cybersecurity threats. These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems and safeguards in place to manage such risks.
Following these risk assessments, if material risks and/or gaps are identified, we will re-design, implement and maintain reasonable safeguards to minimize identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards. We devote significant resources and designate high-level personnel, including our Chief Information Security Officer who reports to our Chief Information Officer, to manage the risk assessment and mitigation process.
As part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards, in collaboration with IT. Personnel at all levels and departments are made aware of cybersecurity issues through trainings.
Governance
Our Chief Information Officer, Chief Information Security Officer and our Security Team, which includes Security Engineers, our Senior Manager of Cybersecurity and our Chief Information Security Officer, are primarily responsible to assess and manage our material risks from cybersecurity threats.
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has over twenty years of experience in security leadership over all aspects of cybersecurity, including security operations, security incident management and cybersecurity governance, policies and procedures, as well as deep expertise in defense in depth, zero trust security architectures and security controls for perimeter, network, endpoint, application and data security layers.
Our
In the event of a cybersecurity incident, our Chief Information Security Officer and our Security Team are equipped with a well-defined incident response plan to guide response actions. This incident response plan includes immediate actions to mitigate the impact of the incident, long-term strategies for remediation and prevention of future incidents, and provides for internal notification of the incident to functional areas, as well as senior leadership and the Cyber Risk and/or Audit Committees of our board of directors, as appropriate.
Our Chief Information Security Officer also provides quarterly briefings to the Cyber Risk Committee regarding our company’s cybersecurity risks and activities, including any recent cybersecurity incidents of interest and related responses, cybersecurity systems testing, applicable activities of third parties, and the like. Our Cyber Risk Committee provides regular updates to the
Item 2. Properties
We lease our corporate headquarters in San Jose, California, occupying approximately 89,000 square feet, which includes executive, administrative, research and development, sales and marketing and service personnel. We also lease approximately 89,000 square feet of office space in India, which includes administrative, research and development and service personnel. Furthermore, we lease offices in other locations, including Canada, China, Finland, France, South Korea, the Netherlands and the United States, which include research and development and sales and marketing personnel.
We believe our current office space meets our operational needs. We anticipate that suitable replacement or additional space will be accessible on commercially reasonable terms when required.
Item 3. Legal Proceedings
We are not currently a party to any material pending legal proceeding; however, from time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business, operating results, financial position or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management attention and resources and other factors.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is listed on The NASDAQ Global Select Market under the symbol “RMBS.”
The graph below compares the cumulative five-year total return of holders of Rambus Inc.’s common stock with the cumulative total returns of the NASDAQ Composite index and the RDG Semiconductor Composite index. The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2020 to December 31, 2025.
Fiscal years ending:
|
|
Base Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
12/31/20 |
|
|
12/31/21 |
|
|
12/31/22 |
|
|
12/31/23 |
|
|
12/31/24 |
|
|
12/31/25 |
|
||||||
Rambus Inc. |
|
$ |
100.00 |
|
|
$ |
168.33 |
|
|
$ |
205.15 |
|
|
$ |
390.89 |
|
|
$ |
302.75 |
|
|
$ |
526.29 |
|
NASDAQ Composite |
|
$ |
100.00 |
|
|
$ |
122.18 |
|
|
$ |
82.43 |
|
|
$ |
119.22 |
|
|
$ |
154.48 |
|
|
$ |
187.14 |
|
RDG Semiconductor Composite |
|
$ |
100.00 |
|
|
$ |
151.13 |
|
|
$ |
94.36 |
|
|
$ |
190.82 |
|
|
$ |
338.08 |
|
|
$ |
477.05 |
|
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Information regarding our securities authorized for issuance under equity compensation plans will be included in Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” of this report on Form 10-K.
As of January 31, 2026, there were 436 holders of record of our common stock. Since many of the shares of our common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders represented by these record holders.
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We have never paid or declared any cash dividends on our common stock or other securities.
Share Repurchase Programs
On October 29, 2020, our board of directors (the “Board”) approved the 2020 Repurchase Program authorizing the repurchase of up to an aggregate of 20.0 million shares (the “2020 Repurchase Program”). Share repurchases under the 2020 Repurchase Program may be made through the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules, and regulations. There is no expiration date applicable to the 2020 Repurchase Program.
The following table provides information relating to repurchases of our common stock for the three months ended December 31, 2025:
Period |
|
Total |
|
|
Average |
|
|
Total Number |
|
|
Maximum |
|
||||
Cumulative shares repurchased as of September 30, 2025 |
|
|
14,437,037 |
|
|
$ |
32.49 |
|
|
|
14,437,037 |
|
|
|
5,562,963 |
|
November 1, 2025 - November 30, 2025 |
|
|
14,752 |
|
|
$ |
88.41 |
|
|
|
14,752 |
|
|
|
5,548,211 |
|
Cumulative shares repurchased as of December 31, 2025 |
|
|
14,451,789 |
|
|
|
|
|
|
14,451,789 |
|
|
|
|
||
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Recent Sales of Unregistered Equity Securities
None.
Item 6. Reserved
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 as described in more detail under “Note Regarding Forward-Looking Statements.” Our forward-looking statements are based on current expectations, forecasts and assumptions and are subject to risks, uncertainties and changes in condition, significance, value and effect. As a result of the factors described herein, and in the documents incorporated herein by reference, including, in particular, those factors described under “Risk Factors,” we undertake no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this report with the Securities and Exchange Commission.
The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes that are included elsewhere in this report.
Business Overview
Rambus is a global semiconductor company providing industry-leading chips and silicon IP for data-intensive computing systems, focusing on data center and artificial intelligence (“AI”) infrastructure.
As a pioneer with over three decades of advanced semiconductor design experience, Rambus is at the forefront of enabling the next era of AI-driven computing, addressing the critical challenges of signal and power integrity at increasingly extreme data rates in the data center, edge and client markets. We are a leader in high-performance memory subsystems, offering a balanced and diverse portfolio of products, IP and patents that maximize performance and security in computationally intensive systems.
The ongoing proliferation of AI is placing unprecedented demands on computing infrastructure, requiring massive amounts of processor performance and extremely high memory bandwidth. As workloads grow in size and diversity, system performance becomes memory bound, making the memory interface technology a critical determinant of overall throughput. This persistent gap between processor performance and memory subsystem capabilities remains one of the largest bottlenecks in high performance compute systems. In addition, power management is increasingly important to optimize system efficiency and thermals as the power-performance demands continue to rise.
Rambus is well positioned to address these challenges. Leveraging our deep expertise in memory technology and innovative architectures, we provide industry-leading memory interface chips that enable the highest bandwidth, capacity and power efficient server memory modules, maximizing memory performance and reliability for the most demanding data-intensive workloads. Beyond the data center, server-class technologies are waterfalling into client devices to bring these same benefits to end-user systems, such as AI personal computers (“PCs”).
Our strategic objectives include focusing our product portfolio and research around our core strength in semiconductors, optimizing operational efficiency and leveraging strong cash generation to reinvest for growth. We continue to maximize synergies across our businesses and customer base, leveraging the significant overlap in our ecosystem of customers, partners and influencers. Our product and technology roadmap, as well as our go-to-market strategy, are driven by the application-specific requirements of our focus markets.
Executive Summary
Our continued execution delivered strong results during fiscal year 2025, driven by increased demand for our memory interface chips and stability from our royalties revenue.
Highlights from our annual results for the year ended December 31, 2025 were as follows:
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We delivered record product revenue of $347.8 million in 2025 which increased by approximately 41% as compared to 2024. We also generated record cash provided by operating activities of $360.0 million in 2025. We delivered strong execution across our memory and interface portfolio. We strengthened our leadership in DDR5 RCD and expanded the adoption of our new products. We also expanded into high-performance and AI PCs through the launch of our complete client chipset. In addition, we achieved strong customer momentum across our HBM4, GDDR7, and PCIe 7.0 digital IP families, as well as our security IP, reinforcing our position as a key enabler of next-generation data center and AI architectures. Finally, further fueling our continuous technology investment, we successfully secured and extended key patent licensing agreements, providing a strong foundation for sustained cash generation and consistent return of value to our stockholders.
Operational Highlights
Revenue Sources
The Company’s consolidated revenue is comprised of product revenue, royalties, and contract and other revenue.
Product revenue consists primarily of memory interface chips and is increasing in strategic significance. Our memory interface chips are sold to major DRAM manufacturers, Micron, Samsung and SK hynix, as well as directly to system manufacturers and cloud providers, for integration into server memory modules. Product revenue accounted for 49%, 44% and 49% of our consolidated revenue for the years ended December 31, 2025, 2024 and 2023, respectively.
Royalties revenue is primarily derived from our patent licenses, through which we provide our customers certain rights to our broad worldwide portfolio of patented inventions. Our patent licenses enable our customers to use a portion of our patent portfolio in their own digital electronics products. The licenses typically range in duration up to ten years and may define the specific field of use where our customers may utilize our inventions in their products. Royalties may be structured as fixed, variable or a hybrid of fixed and variable royalty payments. Leading semiconductor and electronic system companies such as AMD, Amlogic, Broadcom, CXMT, IBM, Infineon, Kioxia, Marvell, MediaTek, Micron, Nanya, Nuvoton, NVIDIA, Phison, Qualcomm, Samsung, Silicon Motion, SK hynix, Socionext, STMicroelectronics, Toshiba, Western Digital and Winbond have licensed our patents. The vast majority of our patents originate from our internal research and development efforts. Additionally, from time to time, we enter into agreements to sell certain patent assets under agreements which may also include subsequent profit-sharing. The sale of these patents, as well as the subsequent profit-sharing, are included as part of our royalties revenue. Revenue from royalties accounted for 40%, 41% and 32% of our consolidated revenue for the years ended December 31, 2025, 2024 and 2023, respectively.
Contract and other revenue consists primarily of Silicon IP, which is comprised of our high-speed interface and security IP. Revenue sources under contract and other include our IP core licenses, software licenses and related implementation, support and maintenance fees and engineering services fees. The timing and amounts invoiced to customers can vary significantly depending on specific contract terms and can therefore have a significant impact on deferred revenue or accounts receivable in any given period. Contract and other revenue accounted for 11%, 15% and 19% of our consolidated revenue for the years ended December 31, 2025, 2024 and 2023, respectively.
Costs and Expenses
Cost of product revenue mainly includes costs attributable to the sale of memory interface chip products. Cost of product revenue increased approximately $38.8 million for the year ended December 31, 2025 as compared to 2024, primarily due to higher sales volumes of our memory interface chips.
Cost of contract and other revenue reflects the portion of the total engineering costs which are specifically devoted to individual customer development and support services. Cost of contract and other revenue remained relatively flat for the year ended December 31, 2025 as compared to 2024.
Total research and development expenses increased approximately $24.8 million for the year ended December 31, 2025 as compared to 2024. The increase was driven by continued investment in our research and development initiatives and primarily reflected higher headcount-related expenses of $18.9 million and stock-based compensation expense of $4.3 million.
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Depreciation expense also increased $2.5 million. These increases were partially offset by a $2.6 million decrease in prototyping costs.
Total sales, general and administrative costs increased approximately $11.2 million for the year ended December 31, 2025 as compared to 2024. The increase was primarily driven by higher headcount-related expenses of $6.6 million and stock-based compensation expense of $4.9 million. Depreciation expense also increased $1.1 million, and sales and marketing activities increased $0.8 million. These increases were partially offset by a $2.2 million decrease in consulting expense.
Trends
There are a number of trends that may have a material impact on us in the future, including but not limited to, the evolution of memory technology, adoption of security solutions, the use and adoption of our inventions or technologies generally, industry consolidation and global economic conditions with the resulting impact on sales of consumer electronic systems. Additionally, there is ongoing uncertainty and volatility in future revenue and costs due to various macroeconomic events, such as tariffs and global inflation, which could have a significant impact on our business and operating results.
We have a high degree of revenue concentration. Our top five customers represented 66% of our revenue in 2025 and 62% in both 2024 and 2023. The level of concentration and particular customers which account for this concentration have varied in the past and may vary in the future as a result of demand for our semiconductor products, timing of new contracts, expiration of existing contracts, as well as timing of contract expirations and renewals, industry consolidation and the volumes and prices at which the customers have recently sold to their customers. These variations are expected to continue in the foreseeable future.
Our revenue from companies headquartered outside of the United States accounted for 82% of total revenue in 2025 as compared to 64% in 2024 and 62% in 2023. We expect that revenue derived from international customers will continue to represent a significant portion of our total revenue in the future. Currently, our revenue from international customers is predominantly denominated in U.S. dollars. For additional information concerning international revenue, refer to Note 7, “Segments and Major Customers,” of Notes to Consolidated Financial Statements of this Form 10-K.
The royalties we receive from our semiconductor customers are partly a function of the adoption of our technologies by system companies. Many system companies purchase semiconductors containing our technologies from our customers and do not have a direct contractual relationship with us. Our customers generally do not provide us with details as to the identity or volume of licensed semiconductors purchased by particular system companies. As a result, we face difficulty in analyzing the extent to which our future revenue will be dependent upon particular system companies.
As a part of our overall business strategy, we evaluate businesses and technologies for potential acquisitions that are aligned with our core business and designed to supplement our growth. Similarly, we evaluate our current businesses and technologies that are not aligned with our core business for potential divestitures. We expect to continue to evaluate and potentially enter into strategic acquisitions or divestitures which will impact our business and operating results.
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Results of Operations
The following table sets forth, for the periods indicated, the percentage of total revenue represented by certain items reflected in our consolidated statements of income:
|
|
Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Revenue: |
|
|
|
|
|
|
|
|
|
|||
Product revenue |
|
|
49.1 |
% |
|
|
44.4 |
% |
|
|
48.7 |
% |
Royalties |
|
|
39.5 |
% |
|
|
40.6 |
% |
|
|
32.6 |
% |
Contract and other revenue |
|
|
11.4 |
% |
|
|
15.0 |
% |
|
|
18.7 |
% |
Total revenue |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|||
Cost of product revenue |
|
|
19.0 |
% |
|
|
17.2 |
% |
|
|
18.3 |
% |
Cost of contract and other revenue |
|
|
0.4 |
% |
|
|
0.5 |
% |
|
|
1.2 |
% |
Amortization of acquired intangible assets |
|
|
1.0 |
% |
|
|
2.0 |
% |
|
|
2.9 |
% |
Total cost of revenue |
|
|
20.4 |
% |
|
|
19.7 |
% |
|
|
22.4 |
% |
Gross profit |
|
|
79.6 |
% |
|
|
80.3 |
% |
|
|
77.6 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
26.5 |
% |
|
|
29.3 |
% |
|
|
34.0 |
% |
Sales, general and administrative |
|
|
16.3 |
% |
|
|
18.7 |
% |
|
|
23.5 |
% |
Amortization of acquired intangible assets |
|
|
— |
% |
|
|
0.1 |
% |
|
|
0.3 |
% |
Restructuring and other charges |
|
|
— |
% |
|
|
— |
% |
|
|
2.0 |
% |
Gain on divestiture |
|
|
— |
% |
|
|
— |
% |
|
|
(19.7 |
)% |
Impairment of assets |
|
|
— |
% |
|
|
0.2 |
% |
|
|
2.2 |
% |
Change in fair value of earn-out liability |
|
|
— |
% |
|
|
(0.9 |
)% |
|
|
2.0 |
% |
Total operating expenses |
|
|
42.8 |
% |
|
|
47.4 |
% |
|
|
44.3 |
% |
Operating income |
|
|
36.8 |
% |
|
|
32.9 |
% |
|
|
33.3 |
% |
Interest income and other income (expense), net |
|
|
3.3 |
% |
|
|
3.3 |
% |
|
|
2.5 |
% |
Loss on fair value adjustment of derivatives, net |
|
|
— |
% |
|
|
— |
% |
|
|
(0.1 |
)% |
Gain on sale of non-marketable equity security |
|
|
— |
% |
|
|
— |
% |
|
|
5.2 |
% |
Interest expense |
|
|
(0.2 |
)% |
|
|
(0.3 |
)% |
|
|
(0.3 |
)% |
Interest and other income (expense), net |
|
|
3.1 |
% |
|
|
3.0 |
% |
|
|
7.3 |
% |
Income before income taxes |
|
|
39.9 |
% |
|
|
35.9 |
% |
|
|
40.6 |
% |
Provision for (benefit from) income taxes |
|
|
7.3 |
% |
|
|
3.6 |
% |
|
|
(31.8 |
)% |
Net income |
|
|
32.6 |
% |
|
|
32.3 |
% |
|
|
72.4 |
% |
Revenue
|
|
Years Ended December 31, |
|
|
2024 to 2025 |
|
|
2023 to 2024 |
|
|||||||||||
(Dollars in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Change |
|
|||||
Total Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Product revenue |
|
$ |
347.8 |
|
|
$ |
246.8 |
|
|
$ |
224.6 |
|
|
|
40.9 |
% |
|
|
9.9 |
% |
Royalties |
|
|
279.4 |
|
|
|
226.2 |
|
|
|
150.1 |
|
|
|
23.5 |
% |
|
|
50.7 |
% |
Contract and other revenue |
|
|
80.4 |
|
|
|
83.6 |
|
|
|
86.4 |
|
|
|
(3.8 |
)% |
|
|
(3.2 |
)% |
Total revenue |
|
$ |
707.6 |
|
|
$ |
556.6 |
|
|
$ |
461.1 |
|
|
|
27.1 |
% |
|
|
20.7 |
% |
Product Revenue
Product revenue consists primarily of revenue from the sale of memory products. Product revenue increased by approximately $101.0 million for the year ended December 31, 2025 as compared to 2024. Product revenue increased by approximately $22.2 million for the year ended December 31, 2024 as compared to 2023. The increases were due to higher sales of memory interface chips, as well as contributions from new products.
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Growth in our product revenue is dependent on, among other things, our ability to continue to obtain orders from customers, develop and sell new products, maintain adequate supply in order to meet our customers’ demand and mitigate any supply chain and economic disruption.
Royalties
Royalties revenue, which includes patent and technology license royalties, increased approximately $53.2 million for the year ended December 31, 2025 as compared to 2024. Royalties revenue increased approximately $76.1 million for the year ended December 31, 2024 as compared to 2023. The increases were primarily due to the timing and structure of license agreements and renewals.
We are continuously in negotiations for licenses with prospective customers. We expect royalties revenue will continue to vary from period to period based on our success in adding new customers, renewing or extending existing agreements, as well as the level of variation in our customers’ reported shipment volumes, sales price and product mix, offset in part by the proportion of customer payments that are fixed or hybrid in nature.
Contract and Other Revenue
Contract and other revenue consists of revenue from technology development projects. Contract and other revenue decreased approximately $3.2 million for the year ended December 31, 2025 as compared to 2024, due to lower revenue associated with our Silicon IP offerings. Contract and other revenue decreased approximately $2.8 million for the year ended December 31, 2024 as compared to 2023, primarily attributed to the sale of our PHY IP group in the third quarter of 2023.
We believe that contract and other revenue will fluctuate over time based on our ongoing technology development contractual requirements, the amount of work performed, the timing of completing engineering deliverables and the changes to work required, as well as new technology development contracts booked in the future.
Cost of Product Revenue
|
|
Years Ended December 31, |
|
|
2024 to 2025 |
|
|
2023 to 2024 |
|
|||||||||||
(Dollars in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Change |
|
|||||
Cost of product revenue |
|
$ |
134.7 |
|
|
$ |
95.9 |
|
|
$ |
84.5 |
|
|
|
40.5 |
% |
|
|
13.5 |
% |
Cost of product revenue mainly includes costs attributable to the sale of memory interface chip products. Cost of product revenue increased approximately $38.8 million for the year ended December 31, 2025 as compared to 2024. Cost of product revenue increased approximately $11.4 million for the year ended December 31, 2024 as compared to 2023. The increases were primarily due to higher sales volumes of our memory interface chips.
In the near term, we expect cost of product revenue to fluctuate due to changes in product mix and the timing of orders.
Cost of Contract and Other Revenue
|
|
Years Ended December 31, |
|
|
2024 to 2025 |
|
|
2023 to 2024 |
|
|||||||||||
(Dollars in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Change |
|
|||||
Cost of contract and other revenue |
|
$ |
2.9 |
|
|
$ |
3.0 |
|
|
$ |
5.4 |
|
|
|
(5.7 |
)% |
|
|
(44.0 |
)% |
Cost of contract and other revenue reflects the portion of the total engineering costs which are specifically devoted to individual customer development and support services. Cost of contract and other revenue remained relatively flat for the year ended December 31, 2025 as compared to 2024. Cost of contract and other revenue decreased approximately $2.4 million for the year ended December 31, 2024 as compared to 2023, primarily due to lower engineering services associated with the contracts and the sale of our PHY IP group in the third quarter of 2023.
In the near term, we expect cost of contract and other revenue to vary from period to period based on varying revenue recognized from contract and other revenue.
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Table of Contents
Research and Development Expenses
|
|
Years Ended December 31, |
|
|
2024 to 2025 |
|
|
2023 to 2024 |
|
|||||||||||
(Dollars in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Change |
|
|||||
Research and development expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Research and development expenses, |
|
$ |
167.1 |
|
|
$ |
146.6 |
|
|
$ |
141.9 |
|
|
|
14.0 |
% |
|
|
3.2 |
% |
Stock-based compensation |
|
|
20.6 |
|
|
|
16.3 |
|
|
|
14.9 |
|
|
|
26.0 |
% |
|
|
9.9 |
% |
Total research and development expenses |
|
$ |
187.7 |
|
|
$ |
162.9 |
|
|
$ |
156.8 |
|
|
|
15.2 |
% |
|
|
3.9 |
% |
Research and development expenses are those expenses incurred for the development of applicable technologies.
Total research and development expenses increased approximately $24.8 million for the year ended December 31, 2025 as compared to 2024. The increase was driven by continued investment in our research and development initiatives and primarily reflected higher headcount-related expenses of $18.9 million and stock-based compensation expense of $4.3 million. Depreciation expense also increased $2.5 million. These increases were partially offset by a $2.6 million decrease in prototyping costs.
Total research and development expenses increased approximately $6.1 million for the year ended December 31, 2024 as compared to 2023. The fluctuation was primarily driven by growth in our research and development initiatives, offset by decreases attributable to the sale of our PHY IP group in the third quarter of 2023. The increase was primarily due to increases in prototyping costs of $4.4 million, allocated facility expenses of $2.5 million, headcount-related expenses of $2.2 million, stock-based compensation expense of $1.5 million, as well as lower engineering costs allocated to cost of revenue of $2.4 million, offset by decreases in software EDA tool subscriptions of $4.9 million, consulting expenses of $0.7 million, retention bonus expense related to acquisitions of $0.7 million and depreciation expense of $0.5 million.
We will continue to make investments in the infrastructure and technologies required to maintain our product innovation in semiconductor, security and other technologies.
Sales, General and Administrative Expenses
|
|
Years Ended December 31, |
|
|
2024 to 2025 |
|
|
2023 to 2024 |
|
|||||||||||
(Dollars in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Change |
|
|||||
Sales, general and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Sales, general and administrative expenses, |
|
$ |
82.4 |
|
|
$ |
76.1 |
|
|
$ |
78.6 |
|
|
|
8.2 |
% |
|
|
(3.2 |
)% |
Stock-based compensation |
|
|
32.9 |
|
|
|
28.0 |
|
|
|
29.5 |
|
|
|
17.6 |
% |
|
|
(5.3 |
)% |
Total sales, general and administrative expenses |
|
$ |
115.3 |
|
|
$ |
104.1 |
|
|
$ |
108.1 |
|
|
|
10.8 |
% |
|
|
(3.7 |
)% |
Sales, general and administrative expenses include expenses and costs associated with trade shows, public relations, advertising, litigation, general legal, insurance and other sales, marketing and administrative efforts. Consistent with our business model, our licensing, sales and marketing activities aim to develop or strengthen relationships with potential new and current customers. In addition, we work with current customers through marketing, sales and technical efforts to drive adoption of their products that use our innovations and solutions, by system companies. Due to the long business development cycles we face and the semi-fixed nature of sales, general and administrative expenses in a given period, these expenses generally do not correlate to the level of revenue in that period or in comparable recent or future periods.
Total sales, general and administrative costs increased approximately $11.2 million for the year ended December 31, 2025 as compared to 2024. The increase was primarily driven by higher headcount-related expenses of $6.6 million and stock-based compensation expense of $4.9 million. Depreciation expense also increased $1.1 million, and sales and marketing activities increased $0.8 million. These increases were partially offset by a $2.2 million decrease in consulting expense.
Total sales, general and administrative costs decreased approximately $4.0 million for the year ended December 31, 2024 as compared to 2023, primarily due to lower rent and facility expenses allocated to sales, general and administrative expenses of $3.8 million, stock-based compensation expense of $1.6 million, accounting and audit fees of $1.0 million and
45
Table of Contents
acquisition-related costs (including retention bonus expenses) of $0.8 million, offset by increases in consulting expense of $1.4 million, headcount-related expenses of $1.0 million and legal expenses of $0.7 million.
In the future, sales, general and administrative expenses will vary from period to period based on the trade shows, advertising, legal, acquisition and other sales, marketing and administrative activities undertaken, and the change in sales, marketing and administrative headcount in any given period.
Amortization of Acquired Intangible Assets
|
|
Years Ended December 31, |
|
|
2024 to 2025 |
|
|
2023 to 2024 |
|
|||||||||||
(Dollars in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Change |
|
|||||
Amortization of acquired intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Amortization of acquired intangible assets included in total cost of revenue |
|
$ |
6.9 |
|
|
$ |
11.2 |
|
|
$ |
13.5 |
|
|
|
(38.6 |
)% |
|
|
(17.2 |
)% |
Amortization of acquired intangible assets included in total operating expenses |
|
|
— |
|
|
|
0.5 |
|
|
|
1.2 |
|
|
|
(100.0 |
)% |
|
|
(58.4 |
)% |
Total amortization of acquired intangible assets |
|
$ |
6.9 |
|
|
$ |
11.7 |
|
|
$ |
14.7 |
|
|
|
(41.3 |
)% |
|
|
(20.6 |
)% |
Amortization expense is related to various acquired IP.
Total amortization of acquired intangible assets decreased approximately $4.8 million for the year ended December 31, 2025 as compared to 2024. Total amortization of acquired intangible assets decreased approximately $3.0 million for the year ended December 31, 2024 as compared to 2023. The decreases in both periods were primarily due to certain intangible assets being fully amortized. Refer to Note 6, “Intangible Assets, Net” of Notes to Consolidated Financial Statements of this Form 10-K for additional information.
Restructuring and Other Charges
In June 2023, we initiated a restructuring program to reduce overall expenses to improve future profitability by reducing our overall spending (the “2023 Restructuring Plan”). In connection with this restructuring program, we initiated a plan resulting in a reduction of 42 employees. During the year ended December 31, 2023, we recorded charges of approximately $9.4 million related to the reduction in workforce, as well as write-downs of obligations related to certain IP development costs and software licenses for engineering development tools. The 2023 Restructuring Plan was substantially completed in the fourth quarter of 2023. Refer to Note 17, “Restructuring and Other Charges,” of Notes to Consolidated Financial Statements of this Form 10-K for additional information.
Gain on Divestiture
In July 2023, we entered into an asset purchase agreement (the “Purchase Agreement”) with Cadence Design Systems, Inc. (the “Purchaser”), pursuant to which we agreed to sell certain assets and the Purchaser agreed to assume certain liabilities from us, in each case with respect to our PHY IP group. The decision to sell this portion of our business reflected the ongoing review of our core semiconductor business to focus on our development of digital IP and chips, including novel memory solutions for high-performance computing, to support the continued evolution of the data center and AI.
Consequently, we recognized a net gain of approximately $90.8 million during the year ended December 31, 2023. Refer to Note 20, “Divestiture,” of Notes to Consolidated Financial Statements of this Form 10-K for additional information.
Impairment of Assets
|
|
Years Ended December 31, |
|
|
2024 to 2025 |
|
|
2023 to 2024 |
|
|||||||||||
(Dollars in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Change |
|
|||||
Impairment of assets |
|
$ |
— |
|
|
$ |
1.1 |
|
|
$ |
10.0 |
|
|
|
(100.0 |
)% |
|
|
(89.3 |
)% |
46
Table of Contents
During the year ended December 31, 2024, we recorded a charge of approximately $1.1 million in our Consolidated Statement of Income of this Form 10-K, related to the write-off of certain fixed assets no longer in use and for which we determined they had no alternate economic use.
Concurrent with the sale of our PHY IP group to Cadence, we recorded a charge of approximately $10.0 million in our Consolidated Statement of Income for the year ended December 31, 2023. The charge was primarily related to the accelerated amortization of software licenses that were not directly part of the PHY IP disposal group, but where acceleration was warranted due to the lower headcount and corresponding excess capacity for such licenses. Refer to Note 20, “Divestiture,” of Notes to Consolidated Financial Statements of this Form 10-K for additional information.
Change in Fair Value of Earn-Out Liability
|
|
Years Ended December 31, |
|
|
2024 to 2025 |
|
|
2023 to 2024 |
|
|||||||||||
(Dollars in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Change |
|
|||||
Change in fair value of earn-out liability |
|
$ |
— |
|
|
$ |
(5.0 |
) |
|
$ |
9.2 |
|
|
|
(100.0 |
)% |
|
|
(154.6 |
)% |
The changes in the fair value of the earn-out liability related to the 2021 acquisition of the PLDA Group (“PLDA”), which was subject to certain revenue targets of the acquired business for a period of three years from the date of acquisition, and which was settled annually in shares of our common stock based on the fair value of that common stock fixed at the time we acquired PLDA. The fair value of the earn-out liability was remeasured each quarter, depending on the acquired business’s revenue performance relative to target over the applicable period, and adjusted to reflect changes in the per share value of our common stock.
During the years ended December 31, 2024 and 2023, we remeasured the fair value of the earn-out liability, which resulted in a reduction of $5.0 million and additional expense of $9.2 million, respectively, in our Consolidated Statements of Income of this Form 10-K. The final earn-out was achieved in the third quarter of 2024 and fully paid during the fourth quarter of 2024.
Interest and Other Income (Expense), Net
|
|
Years Ended December 31, |
|
|
2024 to 2025 |
|
|
2023 to 2024 |
|
|||||||||||
(Dollars in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Change |
|
|||||
Interest income and other income (expense), net |
|
$ |
23.1 |
|
|
$ |
18.5 |
|
|
$ |
11.3 |
|
|
|
25.3 |
% |
|
|
62.9 |
% |
Loss on fair value adjustment of derivatives, net |
|
|
— |
|
|
|
— |
|
|
|
(0.2 |
) |
|
NM* |
|
|
|
100.0 |
% |
|
Gain on sale of non-marketable equity security |
|
|
— |
|
|
|
— |
|
|
|
23.9 |
|
|
NM* |
|
|
|
(100.0 |
)% |
|
Interest expense |
|
|
(1.4 |
) |
|
|
(1.4 |
) |
|
|
(1.5 |
) |
|
|
(3.0 |
)% |
|
|
(5.0 |
)% |
Interest and other income (expense), net |
|
$ |
21.7 |
|
|
$ |
17.1 |
|
|
$ |
33.5 |
|
|
|
27.6 |
% |
|
|
(49.2 |
)% |
* NM — percentage is not meaningful
Interest income and other income (expense), net, includes interest income from our investment portfolio and from the significant financing component of licensing agreements, as well as any gains or losses from the re-measurement of our monetary assets or liabilities denominated in foreign currencies. For the years ended December 31, 2025, 2024 and 2023, interest income and other income (expense), net, consisted primarily of interest income from our investment portfolio.
We made an investment in a non-marketable equity security of a private company in 2018. We accounted for this investment under the equity method of accounting and recorded our share of the income (loss). During the fourth quarter of 2023, we sold our 25% ownership share in the equity investment for approximately $25.0 million, which was included, net of withholding taxes paid, in prepaid and other current assets in our Consolidated Balance Sheet as of December 31, 2023. We recognized a net gain of approximately $23.9 million related to the sale in our Consolidated Statement of Income for the year ended December 31, 2023 after offsetting $1.1 million of transaction costs from the $25.0 million selling price. Refer to Note 9, “Fair Value of Financial Instruments,” of Notes to Consolidated Financial Statements of this Form 10-K for additional information.
Interest expense consists primarily of interest expense associated with long-term software licenses for the years ended December 31, 2025, 2024 and 2023.
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Table of Contents
Interest expense remained flat for the years ended December 31, 2025, 2024 and 2023.
Provision for (Benefit from) Income Taxes
|
|
Years Ended December 31, |
|
|
2024 to 2025 |
|
|
2023 to 2024 |
|
|||||||||||
(Dollars in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
Change |
|
|||||
Provision for (benefit from) income taxes |
|
$ |
51.5 |
|
|
$ |
20.2 |
|
|
$ |
(146.7 |
) |
|
|
154.7 |
% |
|
|
(113.8 |
)% |
Effective tax rate |
|
|
18.3 |
% |
|
|
10.1 |
% |
|
|
(78.4 |
)% |
|
|
|
|
|
|
||
Our effective tax rate for the year ended December 31, 2025 differed from the U.S. statutory rate primarily due to foreign tax credits and the tax effect of stock-based compensation, partially offset by foreign withholding taxes.
Our effective tax rate for the year ended December 31, 2024 differed from the U.S. statutory rate primarily due to foreign-derived intangible income deductions and the tax effect of stock-based compensation.
We recorded a provision for income taxes of $51.5 million for the year ended December 31, 2025, which was primarily driven by the statutory tax expense for domestic and foreign jurisdictions for 2025, including withholding taxes, offset by tax benefits from excess stock-based compensation deductions, research and development tax credits and foreign tax credits. Our provision for income taxes for the year ended December 31, 2025 includes the impact from the tax legislation, referred to as the One Big Beautiful Bill Act (“OBBBA”), which was enacted in the third quarter of 2025 and is further discussed below. For the year ended December 31, 2025, we paid withholding taxes of $22.0 million.
We recorded a provision for income taxes of $20.2 million for the year ended December 31, 2024, which was primarily driven by the statutory tax expense for domestic and foreign jurisdictions for 2024, including withholding taxes, offset by tax benefits from excess stock-based compensation deductions and foreign-derived intangible income deductions. For the year ended December 31, 2024, we paid withholding taxes of $20.6 million.
We periodically evaluate the realizability of our net deferred tax assets based on all available evidence, both positive and negative. The realizability of our net deferred tax assets is dependent on our ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. During 2023, based on all available positive and negative evidence, we determined that it was appropriate to release the valuation allowance on the majority of our U.S. federal and other state deferred tax assets. We recognized a $177.9 million tax benefit during the year ended December 31, 2023 as a result of the valuation allowance release.
Upon considering the relative impact of all evidence during 2025, both negative and positive and the weight accorded to each, we concluded that it was more likely than not that the majority of our deferred tax assets would be realizable, with the exception of primarily our California research and development credits that have not met the “more likely than not” realization threshold criteria. As a result, we continue to maintain a valuation allowance on only those deferred tax assets that we do not think will be realizable.
We have U.S. federal deferred tax assets related to research and development credits, foreign tax credits and other tax attributes that can be used to offset U.S. federal taxable income in future periods. These credit carryforwards will expire if they are not used within certain time periods. It is possible that some or all of these attributes could ultimately expire unused.
On July 4, 2025, the United States enacted federal tax legislation commonly referred to as the OBBBA. Included in this legislation are provisions that allow for the immediate expensing of domestic United States research and development expenses, immediate expensing of certain capital expenditures and other changes to the U.S. taxation of profits derived from foreign operations. As a result of the enactment of the legislation, there was an increase to our tax expense, primarily related to changes in the taxation of profits derived from foreign operations and, more specifically, a lower foreign-derived intangible income deduction. We project our effective tax rate to decrease in 2026 due to the impact from the new tax legislation, particularly related to the foreign-derived intangible income deduction.
On September 18, 2025, the South Korean Supreme Court ruled that the use of any patents in South Korea constitutes domestic source income under the South Korea–U.S. Tax Treaty, even if such patents are not registered with the patent office
48
Table of Contents
in South Korea. Based on this ruling, patent license royalties are subject to South Korean withholding tax if the patents are used in South Korea. As a result of this ruling, we determined that it is not more likely than not that withholding taxes paid in South Korea are recoverable. Consequently, we recorded an uncertain tax position reserve on the $82.7 million of outstanding refund claims relating to the period from the fourth quarter of 2018 through the third quarter of 2023, reducing the previously recorded long-term taxes receivable for these refund claims to zero, as we determined it is not more likely than not that the withholding taxes paid in South Korea are recoverable. We also removed the $32.2 million long-term taxes receivable previously recorded for withholding taxes paid during the fourth quarter of 2023 through the second quarter of 2025. As a result, the total long-term taxes receivable balance of $114.9 million, excluding interest, was reduced to zero in the third quarter of 2025. Consequently, the related long-term taxes payable of $114.9 million, excluding interest, was also reduced to zero, resulting in zero tax expense impact.
Liquidity and Capital Resources
(In millions) |
|
December 31, |
|
|
December 31, |
|
||
Cash and cash equivalents |
|
$ |
182.8 |
|
|
$ |
99.8 |
|
Marketable securities |
|
|
579.0 |
|
|
|
382.0 |
|
Total cash, cash equivalents and marketable securities |
|
$ |
761.8 |
|
|
$ |
481.8 |
|
|
|
Years Ended December 31, |
|
|||||||||
(In millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Net cash provided by operating activities |
|
$ |
360.0 |
|
|
$ |
230.6 |
|
|
$ |
195.8 |
|
Net cash used in investing activities |
|
$ |
(223.1 |
) |
|
$ |
(56.7 |
) |
|
$ |
(57.4 |
) |
Net cash used in financing activities |
|
$ |
(54.4 |
) |
|
$ |
(168.0 |
) |
|
$ |
(169.6 |
) |
Liquidity
We currently anticipate that existing cash, cash equivalents and marketable securities balances and cash flows from operations will be adequate to meet our cash needs for at least the next 12 months. Additionally, the majority of our cash and cash equivalents are in the United States. Our cash needs for the year ended December 31, 2025 were funded primarily from cash collected from our customers.
We do not anticipate any liquidity constraints as a result of either the current credit environment or investment fair value fluctuations. Additionally, we have the intent and we believe we have the ability to hold our debt investments that have unrealized losses in accumulated other comprehensive gain (loss) for a sufficient period of time to allow for recovery of the principal amounts invested. We continually monitor the credit risk in our portfolio and mitigate our credit risk exposures in accordance with our policies.
As a part of our overall business strategy, from time to time we evaluate businesses and technologies for potential acquisitions that are aligned with our core business and designed to supplement our growth.
To provide us with more flexibility in returning capital to our stockholders, on October 29, 2020, our Board approved a share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million shares (the “2020 Repurchase Program”). Share repurchases under the 2020 Repurchase Program may be made through the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules and regulations. There is no expiration date applicable to the 2020 Repurchase Program. During the years ended December 31, 2025, 2024 and 2023, we repurchased shares of our common stock under the 2020 Repurchase Program as discussed in the “Share Repurchase Program” section below.
Operating Activities
Cash provided by operating activities of $360.0 million for the year ended December 31, 2025 was primarily attributable to the cash generated from product sales, customer licensing and engineering services fees. Changes in operating assets and liabilities for the year ended December 31, 2025 primarily included increases in accounts payable, income taxes payable, deferred revenue, and accrued salaries and benefits and other liabilities, offset by increases in accounts receivable, income taxes
49
Table of Contents
receivable, and prepaids and other current assets. Additionally, changes in operating assets and liabilities excludes the impact of the non-cash write-down of income taxes receivable and offsetting income taxes payable of $118.9 million (including interest) related to South Korea withholding taxes as discussed in “Provision for (Benefit from) Income Taxes” section above.
Cash provided by operating activities of $230.6 million for the year ended December 31, 2024 was primarily attributable to cash generated from customer licensing, product sales and engineering services fees. Changes in operating assets and liabilities for the year ended December 31, 2024 primarily included decreases in unbilled receivables, prepaids and other current assets and an increase in income taxes payable, offset by increases in accounts receivable, inventories and income taxes receivable.
Cash provided by operating activities of $195.8 million for the year ended December 31, 2023 was primarily attributable to cash generated from customer licensing, product sales and engineering services fees. Changes in operating assets and liabilities for the year ended December 31, 2023 primarily included a decrease in unbilled receivables and an increase in other current liabilities, offset by increases in income taxes receivable, accounts receivable, inventories, prepaids and other assets, as well as decreases in income taxes payable, accounts payable, deferred revenue and accrued salaries and benefits.
Investing Activities
Cash used in investing activities of $223.1 million for the year ended December 31, 2025 consisted of purchases of available-for-sale marketable securities of $666.3 million and $26.8 million paid to acquire property and equipment, offset by proceeds from the maturities of available-for-sale marketable securities of $470.0 million.
Cash used in investing activities of $56.7 million for the year ended December 31, 2024 consisted of purchases of available-for-sale marketable securities of $415.4 million and $30.7 million paid to acquire property and equipment, offset by proceeds from the maturities and sales of available-for-sale marketable securities of $280.8 million and $85.7 million, respectively, and net proceeds from the sale of a non-marketable equity security of $22.8 million.
Cash used in investing activities of $57.4 million for the year ended December 31, 2023 consisted of purchases of available-for-sale marketable securities of $434.2 million and $23.2 million paid to acquire property and equipment, offset by proceeds from sale and maturities of available-for-sale marketable securities of $117.8 million and $175.9 million, respectively, and the sale of our PHY IP group of $106.3 million.
Financing Activities
Cash used in financing activities of $54.4 million for the year ended December 31, 2025 was primarily due to $41.9 million in payments of taxes related to net share settlement of equity awards, $12.3 million paid under installment payment arrangements to acquire fixed assets and an aggregate payment of $7.1 million as part of our share repurchases in 2025, offset by $6.9 million in proceeds from the issuance of common stock under equity incentive plans.
Cash used in financing activities of $168.0 million for the year ended December 31, 2024 was primarily due to an aggregate payment of $113.3 million as part of our 2024 ASR program and the 2023 Buying Plan (includes $0.2 million in fees related to the ASR program), $41.3 million in payments of taxes related to net share settlement of equity awards and $16.4 million paid under installment payment arrangements to acquire fixed assets, offset by $5.5 million in proceeds from the issuance of common stock under equity incentive plans.
Cash used in financing activities of $169.6 million for the year ended December 31, 2023 was primarily due to an aggregate payment of $100.5 million as part of our 2020 Repurchase Program (includes $100.3 million related to the 2023 ASR program and $0.2 million related to the 2023 Buying Plan), $38.3 million in payments of taxes related to net share settlement of equity awards, $16.2 million paid under installment payment arrangements to acquire fixed assets, $10.7 million paid for the retirement of the remaining outstanding warrants, $10.4 million in aggregate principal amount paid upon maturity of the remaining outstanding 2023 Notes, offset by $9.0 million in proceeds from the issuance of common stock under equity incentive plans.
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Contractual Obligations
As of December 31, 2025, our material contractual obligations were as follows:
(In thousands) |
|
Total |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
||||
Contractual obligations (1) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Software licenses (3) |
|
$ |
40,090 |
|
|
$ |
17,088 |
|
|
$ |
16,230 |
|
|
$ |
6,772 |
|
Other contractual obligations |
|
|
138 |
|
|
|
138 |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
40,228 |
|
|
$ |
17,226 |
|
|
$ |
16,230 |
|
|
$ |
6,772 |
|
Share Repurchase Programs
On October 29, 2020, our Board approved the 2020 Repurchase Program authorizing the repurchase of up to an aggregate of 20.0 million shares. Share repurchases under the 2020 Repurchase Program may be made through the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules and regulations. There is no expiration date applicable to the 2020 Repurchase Program.
On August 10, 2023, we entered into the 2023 ASR Program with Royal Bank of Canada (“RBC”) (the “2023 ASR Program”). Under the 2023 ASR Program, we pre-paid to RBC the $100.0 million purchase price for our common stock and, in turn, we received an initial delivery of approximately 1.6 million shares of our common stock from RBC on August 11, 2023, which were retired and recorded as a $80.0 million reduction to stockholders’ equity. The remaining $20.0 million of the initial payment was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to our stock. On September 22, 2023, the accelerated share repurchase program was completed and we received an additional 0.2 million shares of our common stock, which were retired, as the final settlement of the 2023 ASR Program.
On February 29, 2024, we entered into the 2024 ASR Program with RBC (the “2024 ASR Program”). Under the 2024 ASR Program, we pre-paid to RBC the $50.0 million purchase price for our common stock and, in turn, we received an initial delivery of approximately 0.7 million shares of our common stock from RBC on March 1, 2024, which were retired and recorded as a $40.0 million reduction to stockholders’ equity. The remaining $10.0 million of the initial payment was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to our stock. On March 18, 2024, the accelerated share repurchase program was completed and we received an additional 0.1 million shares of our common stock, which were retired, as the final settlement of the 2024 ASR Program.
On November 2, 2023, we entered into a share repurchase plan (the “2023 Buying Plan”) with RBC Capital Markets, LLC (“RBCCM”). Under the 2023 Buying Plan, RBCCM commenced purchases for a 12-month period starting on November 2, 2023 and ending on November 1, 2024, with a provision to terminate sooner pursuant to the 2023 Buying Plan (the “Repurchase Period”). During the Repurchase Period, RBCCM was authorized to purchase an aggregate amount of $50.0 million of our common stock, and its execution was dependent on our stock price reaching certain levels. Share repurchases could not exceed $25.0 million in a quarter. During the year ended December 31, 2023, an immaterial amount of shares was repurchased, retired and recorded as a reduction to stockholders’ equity. During the first quarter of 2024, the 2023 Buying Plan was amended and as a result, no purchases were made from the 2023 Buying Plan during the period from March 1, 2024 to March 28, 2024, while the 2024 ASR Program was in effect. During the third quarter of 2024, the 2023 Buying Plan was further amended to allow RBCCM to purchase an aggregate amount of $100.0 million of our common stock during the Repurchase Period, not to exceed $50.0 million in a quarter. The execution of share repurchases was dependent on our stock price reaching certain levels. During the year ended December 31, 2024, we repurchased approximately 1.4 million shares for
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approximately $63.1 million as part of the 2023 Buying Plan, which were retired and recorded as a reduction to stockholders’ equity.
During the year ended December 31, 2025, we entered into share repurchase plans (the “2025 Buying Plans”) with Mizuho Securities USA, LLC (“Mizuho”), pursuant to which Mizuho may repurchase shares of our common stock from February 6, 2025 through March 31, 2026, with provisions to terminate sooner. The execution of share repurchases is dependent on our stock price reaching certain levels. During the year ended December 31, 2025, we repurchased 0.1 million shares for approximately $7.1 million as part of the 2025 Buying Plans, which were retired and recorded as a reduction to stockholders’ equity.
As of December 31, 2025, there remained an outstanding authorization to repurchase approximately 5.5 million shares of our outstanding common stock under the 2020 Repurchase Program.
We record share repurchases as a reduction to stockholders’ equity. We record a portion of the purchase price of the repurchased shares as a decrease (increase) to retained earnings (accumulated deficit) when the price of the shares repurchased exceeds the average original proceeds per share received from the issuance of common stock.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, investments, income taxes, litigation and other contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Revenue Recognition
Overview
We recognize revenue upon transfer of control of promised goods and services in an amount that reflects the consideration we expect to receive in exchange for those goods and services. Goods and services that are distinct are accounted for as separate performance obligations.
Where an arrangement includes multiple performance obligations, the transaction price is allocated to these on a relative standalone selling price basis. We have established standalone selling prices for the majority of our distinct offerings - specifically, the same pricing methodology is consistently applied to all licensing arrangements; all service offerings are priced within tightly controlled bands and all contracts that include support and maintenance state a renewal rate or price that is systematically enforced. For certain contracts, we utilize the residual approach to estimate standalone selling prices primarily for service offerings sold to customers at highly variable pricing.
Our revenue consists of product, royalties and contract and other revenue. Products primarily consist of memory interface chips sold directly and indirectly to module manufacturers and OEMs worldwide through multiple channels, including our direct sales force and distributors. Royalties revenue consists of patent and technology license royalties. Contract and other revenue consists of software license fees, engineering fees associated with integration of our technology solutions into our customers’ products and support and maintenance fees.
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Product Revenue
Product revenue is recognized upon shipment of product to customers, net of accruals for estimated sales returns and allowances, and to distributors, net of accruals for price protection and rights of return on products unsold by the distributors. We transact with direct customers primarily pursuant to standard purchase orders for delivery of products and generally allow customers to cancel or change purchase orders within limited notice periods prior to the scheduled shipment date.
Royalties Revenue
Our patent and technology licensing arrangements generally range between one year and ten years in duration and generally grant the licensee the right to use applicable portions of our entire IP portfolio as it evolves over time. These arrangements do not typically grant the licensee the right to terminate for convenience and where such rights exist, termination is prospective, with no refund of fees already paid or cancellation of fees already incurred by the licensee.
Patent and technology licensing arrangements result in fixed payments received over time, with guaranteed minimum payments on occasion, variable payments calculated based on the licensee’s sale or use of the IP, or a mix of fixed and variable payments.
Contract and Other Revenue
Contract and other revenue consists of software license fees and engineering fees associated with integration of our technology solutions into our customers’ products, and support and maintenance.
An initial software arrangement may consist of a term-based or perpetual license, significant software customization services and support and maintenance services that include post-implementation customer support and the right to unspecified software updates and enhancements on a when and if available basis. We recognize license and customization services revenue at a point in time when final delivery is made or based on an over time model, depending on the nature and amount of customization. For the over time model, we recognize revenue over time by measuring the progress toward complete satisfaction of that performance obligation.
We recognize support and maintenance revenue over the time those services are provided.
Significant Judgments
We apply significant judgment when determining the amount and timing of revenue from our contracts with customers, based on our estimate of the man-months necessary for completing development and customization services. We have adequate tools and controls in place, and substantial experience and expertise in timely and accurately tracking man-months incurred in completing customization and other professional services, and quantifying significant changes in estimates.
We recognize revenue on variable fee licensing arrangements on the basis of estimated sales and usage, which we then adjust to actual results when we receive the final related reports from our customers.
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Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Goodwill is not subject to amortization, but is subject to at least an annual assessment for impairment. We perform our impairment analysis of goodwill on an annual basis during the fourth quarter of the year unless conditions arise that warrant a more frequent evaluation.
When goodwill is assessed for impairment, we have the option to perform an assessment of qualitative factors of impairment (optional assessment) prior to necessitating a quantitative impairment test. Should the optional assessment be used for any given year, qualitative factors to consider for a reporting unit include: cost factors; financial performance; legal, regulatory, contractual, political, business or other factors; entity specific factors; industry and market considerations; macroeconomic conditions; and other relevant events and factors affecting the reporting unit. If we determine in the qualitative assessment that it is more likely than not that the fair value of the reporting unit is less than its carrying value, a quantitative test is then performed. Otherwise, no further testing is required. For a reporting unit tested using a quantitative approach, we compare the fair value of the reporting unit with the carrying amount of the reporting unit, including goodwill. The fair value of the reporting unit is estimated using an income approach.
Under the income approach, we measure fair value of the reporting unit based on a projected cash flow method using a discount rate determined by our management which is commensurate with the risk inherent in its current business model. Our discounted cash flow projections are based on annual financial forecasts developed internally by us for use in managing our business. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, then the amount of goodwill impairment will be the amount by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.
Intangible Assets
Intangible assets are comprised of existing technology, customer contracts and contractual relationships, and other finite-lived and indefinite-lived intangible assets. Identifiable intangible assets resulting from the acquisitions of entities accounted for using the purchase method of accounting are estimated by management based on the fair value of assets received. Identifiable finite-lived intangible assets are amortized over the period of estimated benefit using the straight-line method, with estimated useful lives ranging from six months to ten years.
Acquired indefinite-lived intangible assets related to our IPR&D are capitalized and subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project, we make a separate determination of the useful life of the acquired indefinite-lived intangible assets and the related amortization is recorded as an expense over the estimated useful life of the specific projects. Indefinite-lived intangible assets are subject to at least an annual assessment for impairment, applying a fair-value based test. We first perform a qualitative assessment to determine whether it is more likely than not (more than 50% likelihood) that the indefinite-lived intangible assets are impaired. If after assessing the totality of events and circumstances and their potential effect on significant inputs to the fair value determination, we determine that it is more likely than not that the indefinite-lived intangible assets are impaired, then we perform a quantitative impairment test by comparing the fair value of the intangible assets with its carrying amount. We measure fair value of the indefinite-lived intangible assets under the income approach based on a projected cash flow method using a discount rate determined by our management which is commensurate with the risk inherent in our current business model. Our discounted cash flow projections are based on our annual financial forecasts developed internally by our management for use in managing our business. If the fair value of the indefinite-lived intangible assets exceeds its carrying value, the indefinite-lived intangible assets are not impaired and no further testing is required. If the implied fair value of the indefinite-lived intangible assets is less than the carrying value, the difference is recorded as an impairment loss.
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Income Taxes
As part of preparing our consolidated financial statements, we are required to calculate the income tax expense (benefit) which relates to the pretax income or loss for the period. In addition, we are required to assess the realization of the deferred tax asset or liability to be included in the Consolidated Balance Sheet as of the reporting dates.
As of December 31, 2025, our Consolidated Balance Sheet included net deferred tax assets, before valuation allowance, of approximately $132.6 million, which consists of net operating loss carryovers, tax credit carryovers, capitalized research, amortization, employee stock-based compensation expenses, certain liabilities and certain assets. As of December 31, 2025, we have a valuation allowance of $29.0 million, resulting in net deferred tax assets of $103.6 million.
We periodically evaluate the realizability of our net deferred tax assets based on all available evidence, both positive and negative. The realizability of our net deferred tax assets is dependent on our ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. Our position on the realizability of our net deferred tax assets has not changed based on our review of all available evidence for 2024 and 2025.
We maintain liabilities for uncertain tax positions within our long-term income taxes payable accounts and as a reduction to existing deferred tax assets or other refundable taxes to the extent tax attributes are available to offset such liabilities. These liabilities involve judgment and estimation and are monitored by us based on the best information available including changes in tax regulations, the outcome of relevant court cases and other information.
The calculation of our tax liabilities involves uncertainties in the application of complex tax regulations. Although ASC 740, “Income Taxes,” provides further clarification on the accounting for uncertainty in income taxes, significant judgment is required by us. If the ultimate resolution of tax uncertainties is different from what is currently estimated, it could materially affect income tax expense.
Recent Accounting Pronouncements
Refer to Note 3, “Recent Accounting Pronouncements,” of Notes to Consolidated Financial Statements of this Form 10-K for a discussion of recent accounting pronouncements, including the respective expected dates of adoption.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to financial market risks, primarily arising from the effect of interest rate fluctuations on our investment portfolio. Interest rate fluctuation may arise from changes in the market’s view of the quality of the security issuer, the overall economic outlook and the time to maturity of our portfolio. We mitigate this risk by investing only in highly rated, liquid instruments. Securities with original maturities of one year or less must be rated by two of the three industry standard rating agencies as follows: A1 by Standard & Poor’s, P1 by Moody’s and/or F-1 by Fitch. Securities with original maturities of greater than one year must be rated by two of the following industry standard rating agencies as follows: AA- by Standard & Poor’s, Aa3 by Moody’s and/or AA- by Fitch. By corporate investment policy, we limit the amount of exposure to $15.0 million or 10% of the portfolio, whichever is lower, for any single non-U.S. Government issuer. A single U.S. Agency can represent up to 25% of the portfolio. No more than 20% of the total portfolio may be invested in the securities of an industry sector, with money market fund investments evaluated separately. Our policy requires that at least 10% of the portfolio be in securities with a maturity of 90 days or less. We may make investments in time deposits, U.S. government-sponsored obligations and corporate bonds, commercial paper and notes with maturities up to 36 months. We bias our investment portfolio to shorter maturities. The majority of our investments are U.S. dollar denominated.
Our policy specifically prohibits trading securities for the sole purpose of realizing trading profits, however we may liquidate a portion of our portfolio if we experience unforeseen liquidity requirements. In such a case, if the environment has been one of rising interest rates, we may experience a realized loss. Similarly, if the environment has been one of declining interest rates, we may experience a realized gain. As of December 31, 2025, we had an investment portfolio of fixed income marketable securities of $694.0 million, including cash equivalents and time deposits. If market interest rates were to increase
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immediately and uniformly by 1.0% from the levels as of December 31, 2025, the fair value of the portfolio would decline by approximately $3.6 million. Actual results may differ materially from this sensitivity analysis.
We invoice the majority of our customers in U.S. dollars. Although the fluctuation of currency exchange rates may impact our customers, and thus indirectly impact us, we do not attempt to hedge this indirect and speculative risk, other than as noted in the paragraph below. Our overseas operations consist primarily of international business operations in France, the Netherlands and the United Kingdom, design centers in Bulgaria, Canada, India and Finland, business development and operations activities in South Korea and Taiwan and business development activities in China. We monitor our foreign currency exposure. As of December 31, 2025, we believe our foreign currency exposure is not material enough to warrant foreign currency hedging.
Item 8. Financial Statements and Supplementary Data
Refer to Item 15, “Exhibits and Financial Statement Schedules,” of this Form 10-K for required financial statements and supplementary data.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2025, our disclosure controls and procedures were effective.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, our management used the criteria set forth in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, our management has concluded that, as of December 31, 2025, our internal control over financial reporting was effective.
The effectiveness of our internal control over financial reporting for the year ended December 31, 2025 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which appears herein.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended December 31, 2025 that materially affected, or that we believe are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
Securities Trading Plans of Directors and Executive Officers
During our last fiscal quarter, the below directors and/or officers, as defined in Rule 16a-1(f) under the Exchange Act, adopted a “Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K. Each of the Rule 10b5-1 trading arrangements were entered into during an open insider trading window and are intended to satisfy the affirmative defense in Rule 10b5-1(c)(1) under the Exchange Act and the Company’s policies regarding insider transactions.
Name |
|
Title |
|
Adopted or |
|
Adoption Date |
|
Expiration Date |
|
Total Number of |
|
|
|
|
|
|
|
Up to |
|
||||||
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
|
|
|
|
|
Up to |
|
||||||
Other than as disclosed above, no other directors or officers, as defined in Rule 16a-1(f) under the Exchange Act,
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information responsive to this item is incorporated herein by reference to our Proxy Statement for our 2026 annual meeting of stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. The information under the heading “Our Executive Officers” in Part I, Item 1 of this Annual Report on Form 10-K is also incorporated herein by reference.
Item 11. Executive Compensation
The information responsive to this item is incorporated herein by reference to our Proxy Statement for our 2026 annual meeting of stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information responsive to this item is incorporated herein by reference to our Proxy Statement for our 2026 annual meeting of stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information responsive to this item is incorporated herein by reference to our Proxy Statement for our 2026 annual meeting of stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
Item 14. Principal Accountant Fees and Services
The information responsive to this item is incorporated herein by reference to our Proxy Statement for our 2026 annual meeting of stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
The following consolidated financial statements of the Registrant and Reports of Independent Registered Public Accounting Firms, are included herewith:
|
Page |
Reports of Independent Registered Public Accounting Firms (PCAOB ID No. |
60 |
Consolidated Balance Sheets as of December 31, 2025 and 2024 |
63 |
Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023 |
64 |
Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023 |
65 |
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025, 2024 and 2023 |
66 |
Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023 |
67 |
Notes to Consolidated Financial Statements |
69 |
All schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or the notes thereto.
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Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Rambus Inc.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Rambus Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
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preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Sufficiency of audit evidence over revenue
As discussed in Notes 2 and 4 to the consolidated financial statements, the Company’s revenue is generated from contracts with customers and is mainly comprised of product revenue, royalties, and contract and other revenue. The Company’s process to account for and recognize revenue differs across revenue streams. The Company recorded $707.6 million of total revenue for the year-ended December 31, 2025.
We identified the evaluation of the sufficiency of audit evidence over revenue as a critical audit matter. Evaluating the nature and extent of audit evidence obtained over each revenue stream required subjective auditor judgment due to the separate processes to account for and recognize revenue, including identification and evaluation of contract terms.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over each revenue stream. For each revenue stream, we evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s revenue recognition process, including controls over the Company’s identification and evaluation of contract terms. We performed a software-assisted data analysis to test relationships among certain revenue transactions. For a selection of revenue transactions, we evaluated the Company’s assessment of the contract terms impacting the timing of revenue recognition. For a sample of revenue transactions, we (1) assessed the accounting for consistency with the Company’s accounting policies, including timing of revenue recognition and (2) compared the recorded amounts for consistency to underlying documentation, including customer contracts. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.
We have served as the Company’s auditor since 2024.
/s/
February 18, 2026
61
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Rambus Inc.
Opinion on the Financial Statements
We have audited the consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows of Rambus Inc. and its subsidiaries (the “Company”) for the year ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/
February 23, 2024, except for the change in the manner in which the Company accounts for segments discussed in Note 3 to the consolidated financial statements, as to which the date is February 24, 2025.
We served as the Company’s auditor from 1991 to 2024.
62
Table of Contents
RAMBUS INC.
CONSOLIDATED BALANCE SHEETS
|
|
December 31, |
|
|||||
(In thousands, except shares and per share amounts) |
|
2025 |
|
|
2024 |
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Marketable securities |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
|
||
Unbilled receivables |
|
|
|
|
|
|
||
Inventories |
|
|
|
|
|
|
||
Prepaids and other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
|
|
|
|
|
||
Deferred tax assets |
|
|
|
|
|
|
||
Income taxes receivable |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
LIABILITIES & STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued salaries and benefits |
|
|
|
|
|
|
||
Deferred revenue |
|
|
|
|
|
|
||
EDA tools software licenses liability |
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-term operating lease liabilities |
|
|
|
|
|
|
||
Long-term income taxes payable |
|
|
|
|
|
|
||
Long-term EDA tools software licenses liability |
|
|
|
|
|
|
||
Other long-term liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Stockholders’ equity: |
|
|
|
|
|
|
||
Convertible preferred stock, $ |
|
|
|
|
|
|
||
Authorized: |
|
|
|
|
|
|
||
Common stock, $ |
|
|
|
|
|
|
||
Authorized: |
|
|
|
|
|
|
||
Additional paid in capital |
|
|
|
|
|
|
||
Retained earnings (accumulated deficit) |
|
|
|
|
|
( |
) |
|
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Total stockholders’ equity |
|
|
|
|
|
|
||
Total liabilities and stockholders’ equity |
|
$ |
|
|
$ |
|
||
Refer to Notes to Consolidated Financial Statements
63
Table of Contents
RAMBUS INC.
CONSOLIDATED STATEMENTS OF INCOME
|
|
Years Ended December 31, |
|
|||||||||
(In thousands, except per share amounts) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Revenue: |
|
|
|
|
|
|
|
|
|
|||
Product revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Royalties |
|
|
|
|
|
|
|
|
|
|||
Contract and other revenue |
|
|
|
|
|
|
|
|
|
|||
Total revenue |
|
|
|
|
|
|
|
|
|
|||
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|||
Cost of product revenue |
|
|
|
|
|
|
|
|
|
|||
Cost of contract and other revenue |
|
|
|
|
|
|
|
|
|
|||
Amortization of acquired intangible assets |
|
|
|
|
|
|
|
|
|
|||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|||
Gross profit |
|
|
|
|
|
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
|
|
|
|
|
|
|
|||
Sales, general and administrative |
|
|
|
|
|
|
|
|
|
|||
Amortization of acquired intangible assets |
|
|
|
|
|
|
|
|
|
|||
Restructuring and other charges |
|
|
|
|
|
|
|
|
|
|||
Gain on divestiture |
|
|
|
|
|
|
|
|
( |
) |
||
Impairment of assets |
|
|
|
|
|
|
|
|
|
|||
Change in fair value of earn-out liability |
|
|
|
|
|
( |
) |
|
|
|
||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|||
Operating income |
|
|
|
|
|
|
|
|
|
|||
Interest income and other income (expense), net |
|
|
|
|
|
|
|
|
|
|||
Loss on fair value adjustment of derivatives, net |
|
|
|
|
|
|
|
|
( |
) |
||
Gain on sale of non-marketable equity security |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest and other income (expense), net |
|
|
|
|
|
|
|
|
|
|||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|||
Provision for (benefit from) income taxes |
|
|
|
|
|
|
|
|
( |
) |
||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net income per share: |
|
|
|
|
|
|
|
|
|
|||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Weighted-average shares used in per share calculations: |
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
|
|
|
|
|
|
|
|||
Diluted |
|
|
|
|
|
|
|
|
|
|||
Refer to Notes to Consolidated Financial Statements
64
Table of Contents
RAMBUS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
Years Ended December 31, |
|
|||||||||
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|||
Foreign currency translation adjustment |
|
|
|
|
|
( |
) |
|
|
|
||
Unrealized gain on marketable securities, net of tax |
|
|
|
|
|
|
|
|
|
|||
Total comprehensive income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Refer to Notes to Consolidated Financial Statements
65
Table of Contents
RAMBUS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(In thousands) |
|
Shares |
|
|
Amount |
|
|
Additional |
|
|
Retained Earnings (Accumulated |
|
|
Accumulated |
|
|
Total |
|
||||||
Balances as of December 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Unrealized gain on marketable securities, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Common stock issued under employee stock plans, net of withholding taxes |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
Repurchase and retirement of common stock under repurchase program |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Issuance of common stock in connection with the payments of year 1 and year 2 earn-out related to the PLDA Group acquisition |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock in connection with the maturity of the convertible senior notes related to the settlement of the in-the-money conversion feature of the convertible senior notes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Exercise of the convertible senior note hedges in connection with the conversion of convertible senior notes and retirement of the corresponding shares |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
Retirement of warrants |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balances as of December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Unrealized gain on marketable securities, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Common stock issued under employee stock plans, net of withholding taxes |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
Repurchase and retirement of common stock under repurchase program (includes excise tax) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Issuance of common stock in connection with the payment of year 3 earn-out related to the PLDA Group acquisition |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Balances as of December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Unrealized gain on marketable securities, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Common stock issued under employee stock plans, net of withholding taxes |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
Repurchase and retirement of common stock under repurchase program |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balances as of December 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Refer to Notes to Consolidated Financial Statements
66
Table of Contents
RAMBUS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Years Ended December 31, |
|
|||||||||
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|||
Depreciation |
|
|
|
|
|
|
|
|
|
|||
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|||
Loss on fair value adjustment of derivatives, net |
|
|
|
|
|
|
|
|
|
|||
Deferred income taxes |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Gain on divestiture |
|
|
|
|
|
|
|
|
( |
) |
||
Gain on sale of non-marketable equity security |
|
|
|
|
|
|
|
|
( |
) |
||
Impairment of assets |
|
|
|
|
|
|
|
|
|
|||
Change in fair value of earn-out liability |
|
|
|
|
|
( |
) |
|
|
|
||
Other |
|
|
|
|
|
|
|
|
|
|||
Change in operating assets and liabilities, net of effects of disposition: |
|
|
|
|
|
|
|
|
|
|||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unbilled receivables |
|
|
|
|
|
|
|
|
|
|||
Prepaid expenses and other assets |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Inventories |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Income taxes receivable(1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
|
|
|
( |
) |
||
Accrued salaries and benefits and other liabilities |
|
|
|
|
|
|
|
|
|
|||
Income taxes payable(1) |
|
|
|
|
|
|
|
|
|
|||
Deferred revenue |
|
|
|
|
|
|
|
|
( |
) |
||
Operating lease liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Purchases of marketable securities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Maturities of marketable securities |
|
|
|
|
|
|
|
|
|
|||
Proceeds from sale of marketable securities |
|
|
|
|
|
|
|
|
|
|||
Proceeds from sale of non-marketable equity security |
|
|
|
|
|
|
|
|
|
|||
Proceeds from divestiture |
|
|
|
|
|
|
|
|
|
|||
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|||
Proceeds received from issuance of common stock under employee stock plans |
|
|
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Payments of taxes related to net share settlement of equity awards |
|
|
( |
) |
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|
( |
) |
|
|
( |
) |
Payments under installment payment arrangements |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Payments for settlement and repurchase of convertible senior notes |
|
|
|
|
|
|
|
|
( |
) |
||
Payments for settlement of warrants |
|
|
|
|
|
|
|
|
( |
) |
||
Payment of deferred purchase consideration from acquisition |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Repurchase and retirement of common stock, including prepayment under accelerated share repurchase program in 2024 and 2023 |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
|
|
|
( |
) |
|
|
|
||
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
|
|
|
( |
) |
||
Cash, cash equivalents and restricted cash at beginning of year (2) |
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|||
(1) Excludes non-cash write-down of income taxes receivable and release of income taxes payable of $
(2) Includes a restricted cash balance of approximately $
67
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|
|
Years Ended December 31, |
|
|||||||||
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Supplemental disclosure of cash flow information: |
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|
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|
|
|
|
|
|||
Cash paid during the period for: |
|
|
|
|
|
|
|
|
|
|||
Interest |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Income taxes, net of refunds |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|||
Property and equipment received and accrued in accounts payable and other liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Issuance of common stock in connection with the payments of earn-out related to the PLDA Group acquisition |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Operating lease right-of-use assets obtained in exchange for operating lease obligations |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Refer to Notes to Consolidated Financial Statements
68
Table of Contents
RAMBUS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Formation and Business of the Company
Rambus Inc. (“Rambus” or the “Company”) was incorporated in California in March 1990 and reincorporated in Delaware in March 1997. Rambus is a global semiconductor company providing industry-leading chips and silicon intellectual property (“IP”) for data-intensive computing systems, focusing on data center and artificial intelligence (“AI”) infrastructure.
With over three decades of advanced semiconductor design experience, the Company is at the forefront of enabling the next era of AI-driven computing, addressing the critical challenges of signal and power integrity at increasingly extreme data rates in the data center, edge and client markets. The Company is a leader in high-performance memory subsystems, offering a balanced and diverse portfolio of product, IP and patents that maximize performance and security in computationally intensive systems.
The Company provides industry-leading memory interface chips that enable the highest bandwidth, capacity and power efficient server memory modules, maximizing memory performance and reliability for the most demanding data-intensive workloads. Beyond the data center, server-class technologies are waterfalling into client devices to bring these same benefits to end-user systems, such as AI personal computers (“PCs”).
The Company generates revenue by selling its semiconductor chips and licensing its IP products and inventions to market-leading companies.
2. Summary of Significant Accounting Policies
Financial Statement Presentation
The accompanying consolidated financial statements include the accounts of Rambus and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated on the accompanying consolidated financial statements. Rambus accounts for investments in entities where it owns more than 20% and has significant influence (but not control) over the investee's operations using the equity method. These investments are classified under other assets.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.
Reclassifications
Certain prior-year balances were reclassified to conform to the current year’s presentation. None of these reclassifications had an impact on reported net income or cash flows for any of the periods presented.
Revenue Recognition
The Company recognizes revenue upon transfer of control of promised goods and services in an amount that reflects the consideration it expects to receive in exchange for those goods and services. Goods and services that are distinct are accounted for as separate performance obligations.
Where an arrangement includes multiple performance obligations, the transaction price is allocated to these on a relative standalone selling price basis. The Company has established standalone selling prices for the majority of its distinct offerings - specifically, the same pricing methodology is consistently applied to all licensing arrangements; all service offerings are priced within tightly controlled bands and all contracts that include support and maintenance state a renewal rate or price that is
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
systematically enforced. For certain contracts, the Company utilizes the residual approach to estimate standalone selling prices primarily for service offerings sold to customers at highly variable pricing.
The Company’s revenue consists of product, royalties and contract and other revenue. Products primarily consist of memory interface chips sold directly and indirectly to module manufacturers and OEMs worldwide through multiple channels, including its direct sales force and distributors. Royalties revenue consists of patent and technology license royalties. Contract and other revenue consists of software license fees, engineering fees associated with integration of the Company’s technology solutions into its customers’ products and support and maintenance fees.
Product Revenue
Product revenue is recognized upon shipment of product to customers, net of accruals for estimated sales returns and allowances, and to distributors, net of accruals for price protection and rights of return on products unsold by the distributors. The Company transacts with direct customers primarily pursuant to standard purchase orders for delivery of products and generally allows customers to cancel or change purchase orders within limited notice periods prior to the scheduled shipment date.
Royalties Revenue
Rambus’ patent and technology licensing arrangements generally range between
Patent and technology licensing arrangements result in fixed payments received over time, with guaranteed minimum payments on occasion, variable payments calculated based on the licensee’s sale or use of the IP, or a mix of fixed and variable payments.
Contract and Other Revenue
Contract and other revenue consists of software license fees and engineering fees associated with integration of the Company’s technology solutions into its customers’ products, and support and maintenance.
An initial software arrangement may consist of a term-based or perpetual license, significant software customization services and support and maintenance services that include post-implementation customer support and the right to unspecified software updates and enhancements on a when and if available basis. The Company recognizes license and customization services revenue at a point in time when final delivery is made or based on an over time model, depending on the nature and amount of customization. For the over time model, the Company recognizes revenue over time by measuring the progress toward complete satisfaction of that performance obligation.
The Company recognizes support and maintenance revenue over the time those services are provided.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Significant Judgments
The Company applies significant judgment when determining the amount and timing of revenue from the Company’s contracts with customers, based on its estimate of the man-months necessary for completing development and customization services. The Company has adequate tools and controls in place, and substantial experience and expertise in timely and accurately tracking man-months incurred in completing customization and other professional services, and quantifying significant changes in estimates.
The Company recognizes revenue on variable fee licensing arrangements on the basis of estimated sales and usage, which the Company then adjusts to actual results when it receives the final related reports from its customers.
Contract Balances
Timing of revenue recognition may differ from the timing of invoicing to the Company’s customers. The Company records contract assets when revenue is recognized prior to invoicing, and a contract liability when revenue is recognized subsequent to invoicing. The contract assets are transferred to receivables when the billing occurs.
Cost of Revenue
Cost of revenue includes cost of professional services, materials, including cost of wafers processed by third-party foundries, costs associated with packaging and assembly, test and shipping, cost of personnel, including stock-based compensation, and equipment associated with manufacturing support, logistics and quality assurance, warranty costs, amortization of existing technology, write-down of inventories, amortization of production mask costs, overhead and an allocated portion of occupancy costs.
Leases
The Company leases office space, domestically and internationally, under operating leases. The Company’s leases have remaining lease terms generally between
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Goodwill is not subject to amortization, but is subject to at least an annual assessment for impairment. The Company performs its impairment analysis of goodwill on an annual basis during the fourth quarter of the year unless conditions arise that warrant a more frequent evaluation.
When goodwill is assessed for impairment, the Company has the option to perform an assessment of qualitative factors of impairment (optional assessment) prior to necessitating a quantitative impairment test. Should the optional assessment be used for any given year, qualitative factors to consider for a reporting unit include: cost factors; financial performance; legal, regulatory, contractual, political, business or other factors; entity specific factors; industry and market considerations; macroeconomic conditions; and other relevant events and factors affecting the reporting unit. If the Company determines in the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
qualitative assessment that it is more likely than not that the fair value of the reporting unit is less than its carrying value, a quantitative test is then performed. Otherwise, no further testing is required. For a reporting unit tested using a quantitative approach, the Company compares the fair value of the reporting unit with the carrying amount of the reporting unit, including goodwill. The fair value of the reporting unit is estimated using an income approach.
Under the income approach, the Company measures fair value of the reporting unit based on a projected cash flow method using a discount rate determined by its management which is commensurate with the risk inherent in its current business model. The Company’s discounted cash flow projections are based on annual financial forecasts developed internally by management for use in managing its business. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, then the amount of goodwill impairment will be the amount by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.
The Company performed its annual goodwill impairment analysis as of December 31, 2025 and determined that there was
Intangible Assets
Intangible assets are comprised of existing technology, customer contracts and contractual relationships, and other finite-lived and indefinite-lived intangible assets. Identifiable intangible assets resulting from the acquisitions of entities accounted for using the purchase method of accounting are estimated by management based on the fair value of assets received. Identifiable finite-lived intangible assets are amortized over the period of estimated benefit using the straight-line method, with estimated useful lives ranging from
Acquired indefinite-lived intangible assets related to the Company’s in-process research and development (“IPR&D”) are capitalized and subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project, the Company makes a separate determination of the useful life of the acquired indefinite-lived intangible assets and the related amortization is recorded as an expense over the estimated useful life of the specific projects. Indefinite-lived intangible assets are subject to at least an annual assessment for impairment, applying a fair-value based test. The Company first performs a qualitative assessment to determine whether it is more likely than not (more than 50% likelihood) that the indefinite-lived intangible assets are impaired. If after assessing the totality of events and circumstances and their potential effect on significant inputs to the fair value determination, the Company determines that it is more likely than not that the indefinite-lived intangible assets are impaired, then the Company performs a quantitative impairment test by comparing the fair value of the intangible assets with its carrying amount. The Company measures fair value of the indefinite-lived intangible assets under the income approach based on a projected cash flow method using a discount rate determined by its management which is commensurate with the risk inherent in its current business model. The Company’s discounted cash flow projections are based on its annual financial forecasts developed internally by management for use in managing its business. If the fair value of the indefinite-lived intangible assets exceeds its carrying value, the indefinite-lived intangible assets are not impaired and no further testing is required. If the implied fair value of the indefinite-lived intangible assets is less than the carrying value, the difference is recorded as an impairment loss.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is computed using standard cost, which approximates actual cost, on a first-in, first-out basis. Inventories are reduced for write-downs based on periodic reviews for evidence of excess or obsolete parts. The write-down is based on comparison between inventory on hand and estimated future sales for each specific product. Once written down, inventory write-downs are not reversed until the inventory is sold or scrapped. Inventory write-downs are also established when conditions indicate that the net realizable value is less than cost due to physical deterioration, obsolescence, changes in price level or other causes.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Property and Equipment
Property and equipment include computer software, computer equipment, leasehold improvements, machinery, and furniture and fixtures. Computer software, computer equipment, machinery, and furniture and fixtures are stated at cost and generally depreciated on a straight-line basis over an estimated useful life of to
Finite-Lived Asset Impairment
The Company evaluates finite-lived assets (including property and equipment and intangible assets) for impairment whenever events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. The carrying value is not recoverable if it exceeds the undiscounted cash flows resulting from the use of the asset group and its eventual disposition. The Company’s estimates of future cash flows attributable to its asset groups require significant judgment based on its historical and anticipated results and are subject to many factors. Factors that the Company considers important which could trigger an impairment review include significant negative industry or economic trends, significant loss of clients and significant changes in the manner of its use of the acquired assets or the strategy for its overall business.
When the Company determines that the carrying value of an asset group may not be recoverable based upon the existence of one or more of the above indicators of impairment, the Company measures the potential impairment based on a projected discounted cash flow method using a discount rate determined by the Company to be commensurate with the risk inherent in the Company’s current business model. An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its fair value. The impairment charge is recorded to reduce the pre-impairment carrying amount of the assets based on the relative carrying amount of those assets, though not to reduce the carrying amount of an asset below its fair value. Different assumptions and judgments could materially affect the calculation of the fair value of the assets. During 2025, 2024 and 2023, the Company did
Income Taxes
Income taxes are accounted for using an asset and liability approach, which requires the recognition of deferred tax assets and liabilities for expected future tax events that have been recognized differently in the Company’s consolidated financial statements and tax returns. The measurement of current and deferred tax assets and liabilities is based on provisions of the enacted tax law and the effects of future changes in tax laws or rates are not anticipated. A valuation allowance is established when necessary to reduce deferred tax assets to the amount of future tax benefit that is more likely than not to be realized.
In addition, the calculation of the Company’s tax liabilities involves uncertainties in the application of complex tax regulations. As a result, the Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in its tax return. The company recognizes the benefit from a tax position only if it is more-likely-than-not that the position would be sustained upon audit based solely on the technical merits of the tax position.
Stock-Based Compensation and Equity Incentive Plans
The Company maintains stock plans covering a broad range of equity grants including stock options, nonvested equity stock and equity stock units and performance-based instruments. In addition, the Company sponsors an Employee Stock Purchase Plan (“ESPP”), whereby eligible employees are entitled to purchase common stock semi-annually, by means of limited payroll deductions, at a
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Cash and Cash Equivalents
Cash equivalents are investments with original maturity of three months or less at the date of purchase. The Company maintains its cash balances with high-quality financial institutions. Cash equivalents are invested in highly rated, liquid money market securities, time deposits and certain U.S. government sponsored obligations.
Marketable Securities
Rambus invests its excess cash and cash equivalents primarily in U.S. government-sponsored obligations, corporate bonds, commercial paper and notes, time deposits and money market funds that mature within
Fair Value of Financial Instruments
The fair value measurement statement defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, and requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires that fair value measurement be classified and disclosed in one of the following three categories:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company uses unadjusted quotes to determine fair value. The financial assets in Level 1 include money market funds.
Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. The Company uses observable pricing inputs including benchmark yields, reported trades and broker/dealer quotes. The financial assets in Level 2 include U.S. government bonds and notes, and corporate bonds, commercial paper and notes.
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). When determining fair value, the Company considers the principal or most advantageous market in which the Company would transact, and the Company considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of non-performance.
The Company does not have any financial assets or liabilities in Level 3 as of December 31, 2025 and 2024. Refer to Note 9, “Fair Value of Financial Instruments,” for additional information.
The carrying value of cash equivalents, accounts receivable and accounts payable approximate their fair values due to their relatively short maturities as of December 31, 2025 and 2024.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company’s financial instruments are measured and recorded at fair value, except for equity method investments and convertible notes. Marketable securities are comprised of available-for-sale securities that are reported at fair value with the related unrealized gains and losses included in accumulated other comprehensive income (loss), a component of stockholders’ equity, net of tax. Fair value of the marketable securities is determined based on quoted market prices.
The Company’s non-financial assets, such as goodwill, intangible assets and property and equipment, are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized. The Company’s equity method investments were initially recognized at cost, and the carrying amount was increased or decreased to recognize the Company’s share of the profit or loss of the investee after the date of acquisition. The Company’s share of the investee’s profit or loss was recognized in interest and other income (expense), net in the Company’s Consolidated Statements of Income. Distributions received from an investee reduced the carrying amount of the investment.
Research and Development
Costs incurred in research and development, which include engineering expenses, such as salaries and related benefits, stock-based compensation, depreciation, professional services and overhead expenses related to the general development of the Company’s products, are expensed as incurred.
Computation of Earnings Per Share
Basic earnings per share is calculated by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the earnings by the weighted-average number of common shares and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of incremental common shares issuable upon exercise of stock options, employee stock purchases, restricted stock and restricted stock units, and shares issuable upon the conversion of convertible notes. The dilutive effect of outstanding shares is reflected in diluted earnings per share by application of the treasury stock method, or the if-converted method for the in-the-money conversion benefit feature of the 2023 Notes. This method includes consideration of the amounts to be paid by the employees, the amount of excess tax benefits that would be recognized in equity if the instrument was exercised and the amount of unrecognized stock-based compensation related to future services. No potentially dilutive common shares are included in the computation of diluted earnings per share amount when a net loss is reported.
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, including foreign currency translation adjustments and unrealized gains and losses on marketable securities. Other comprehensive income (loss), net of tax, is presented in the Consolidated Statements of Comprehensive Income.
Credit Concentration
As of December 31, 2025 and 2024, the Company’s cash, cash equivalents and marketable securities were invested with various financial institutions in the form of corporate bonds, commercial paper and notes, money market funds, time deposits, U.S. Treasuries and U.S. Government Agencies. The Company’s exposure to market risk for changes in interest rates relates primarily to its investment portfolio. The Company places its investments with high-credit issuers and, by investment policy, attempts to limit the amount of credit exposure to any one issuer. As stated in the Company’s investment policy, it will ensure the safety and preservation of the Company’s invested funds by limiting default risk and market risk. The Company has certain investments denominated in foreign currencies and therefore is subject to foreign exchange risk from these assets. The Company holds cash, cash equivalents and marketable securities in excess of federally insured limits.
The Company mitigates default risk by investing in high credit quality securities and by positioning its portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only marketable securities with active secondary or resale markets to enable portfolio liquidity.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company’s accounts receivable are derived from revenue earned from customers located in the U.S. and internationally. Refer to Note 7, “Segments and Major Customers,” for additional information.
The Company’s unbilled receivables are collected from customers located in the U.S. and internationally. Refer to Note 4, “Revenue Recognition,” for additional information.
Foreign Currency Translation and Re-Measurement
The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in accumulated other comprehensive gain (loss) in the Company’s Consolidated Statements of Stockholders’ Equity. The Company’s subsidiaries that use the U.S. dollar as their functional currency re-measure monetary assets and liabilities at exchange rates in effect at the end of each period, and inventories, property and non-monetary assets and liabilities at historical rates. Additionally, foreign currency transaction gains and losses are included in interest income and other (income) expense, net, in the Company’s Consolidated Statements of Income and were not material in the periods presented.
3. Recent Accounting Pronouncements
Recent Accounting Pronouncements Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This guidance requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker. In addition, this ASU requires that all existing annual disclosures about segment profit or loss must be provided on an interim basis and clarifies that single reportable segment entities are subject to the disclosure requirement under Topic 280 in its entirety. This ASU is effective for annual reporting periods beginning after December 15, 2023, and interim reporting periods within annual reporting periods beginning after December 15, 2024. The Company
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance requires additional disclosures related to rate reconciliation, income taxes paid and other disclosures. For each annual period presented, public business entities are required to 1) disclose specific categories in the rate reconciliation and 2) provide additional information for reconciling items that meet a quantitative threshold. In addition, this ASU requires all reporting entities to disclose on an annual basis the amount of income taxes paid disaggregated by federal, state and foreign taxes, as well as the amount of income taxes paid disaggregated by individual jurisdictions which meet a quantitative threshold. This ASU is effective for annual reporting periods beginning after December 15, 2024. The amendments in this ASU should be applied on a prospective basis, with retrospective application permitted. The Company
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”).” This guidance requires public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods, including amounts of inventory purchases, employee compensation, and depreciation and amortization included in each income statement expense caption, as applicable. The ASU also requires a qualitative description of the amounts remaining in expense captions that are not separately disaggregated quantitatively, as well as disclosure of the total amount of selling expenses and, in annual reporting periods, the entity’s
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
definition of selling expenses. This ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU may be applied either on a prospective or retrospective basis. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” This guidance provides public business entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The practical expedient allows entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. This ASU is effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods. The amendments in this ASU should be applied on a prospective basis. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements,” which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This ASU is effective for annual reporting years beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its interim consolidated financial statements and related disclosures.
4. Revenue Recognition
Contract Balances
The contract assets are primarily related to the Company’s fixed fee IP licensing arrangements and rights to consideration for performance obligations delivered but not billed as of December 31, 2025.
The Company’s contract balances were as follows:
|
|
As of December 31, |
|
|||||
(In thousands) |
|
2025 |
|
|
2024 |
|
||
Unbilled receivables |
|
$ |
|
|
$ |
|
||
Deferred revenue |
|
|
|
|
|
|
||
During the years ended December 31, 2025 and December 31, 2024, the Company recognized $
Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. Contracted but unsatisfied performance obligations were approximately $
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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Earnings Per Share
The following table sets forth the computation of basic and diluted net income per share:
|
|
Years Ended December 31, |
|
|||||||||
(In thousands, except per share amounts) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Net income per share: |
|
|
|
|
|
|
|
|
|
|||
Numerator: |
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Denominator: |
|
|
|
|
|
|
|
|
|
|||
Weighted-average common shares outstanding - basic |
|
|
|
|
|
|
|
|
|
|||
Effect of potentially dilutive common shares |
|
|
|
|
|
|
|
|
|
|||
Weighted-average common shares outstanding - diluted |
|
|
|
|
|
|
|
|
|
|||
Basic net income per share |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Diluted net income per share |
|
$ |
|
|
$ |
|
|
$ |
|
|||
In the first quarter of 2023, the Company settled the conversion of the remaining $
6. Intangible Assets, Net
The components of the Company’s intangible assets as of December 31, 2025 and December 31, 2024 were as follows:
|
|
|
|
As of December 31, 2025 |
|
|||||||||
(In thousands, except useful life) |
|
Useful Life |
|
Gross Carrying |
|
|
Accumulated |
|
|
Net Carrying |
|
|||
Existing technology |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Customer contracts and contractual relationships |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Non-compete agreements and trademarks |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total intangible assets |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
As of December 31, 2024 |
|
|||||||||
(In thousands, except useful life) |
|
Useful Life |
|
Gross Carrying |
|
|
Accumulated |
|
|
Net Carrying |
|
|||
Existing technology |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Customer contracts and contractual relationships |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Non-compete agreements and trademarks |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total intangible assets |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
78
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Amortization expense for intangible assets for the years ended December 31, 2025, 2024 and 2023 was $
The estimated future amortization expense of intangible assets as of December 31, 2025 was as follows (in thousands):
Years Ending December 31: |
|
Amount |
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Total intangible assets |
|
$ |
|
|
7. Segments and Major Customers
Operating segments are based upon the Company’s internal organization structure, the manner in which its operations are managed, the criteria used by its Chief Operating Decision Maker (“CODM”) to evaluate segment performance and availability of separate financial information regularly reviewed for resource allocation and performance assessment.
The Company has determined its CODM to be the (“CEO”). The CEO reviews financial information presented on a consolidated basis for purposes of managing the business, allocating resources, making operating decisions and assessing financial performance. On this basis, the Company is organized and operates as a single segment within the semiconductor space. As of December 31, 2025, the Company has a operating and reportable segment.
The significant expenses that are regularly provided to the CODM and reconciliations to the consolidated net income for the years ended December 31, 2025, 2024 and 2023, respectively, were as follows:
|
|
Years Ended December 31, |
|
|||||||||
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Adjusted cost of revenue (1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Adjusted research and development (2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Adjusted sales, general and administrative (3) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other segment items: |
|
|
|
|
|
|
|
|
|
|||
Stock-based compensation expenses (4) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of acquired intangible assets (4) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Impairment of assets |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Acquisition & divestiture-related costs (5) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest and other income (expense), net |
|
|
|
|
|
|
|
|
|
|||
Change in fair value of earn-out liability |
|
|
|
|
|
|
|
|
( |
) |
||
Restructuring charges |
|
|
|
|
|
|
|
|
( |
) |
||
Gain on divestiture |
|
|
|
|
|
|
|
|
|
|||
Other (6) |
|
|
|
|
|
|
|
|
( |
) |
||
Provision for (benefit from) income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
79
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following represents the Company’s significant expenses related to research and development expenses and sales, general and administrative expenses, as shown above, for the years ended December 31, 2025, 2024 and 2023:
|
|
Years Ended December 31, |
|
|||||||||
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Payroll and benefits |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Variable research and development expenses (1) |
|
|
|
|
|
|
|
|
|
|||
Professional fees |
|
|
|
|
|
|
|
|
|
|||
Temporary labor services and consulting expenses |
|
|
|
|
|
|
|
|
|
|||
Facilities costs |
|
|
|
|
|
|
|
|
|
|||
Amortization and depreciation |
|
|
|
|
|
|
|
|
|
|||
Other expenses |
|
|
|
|
|
|
|
|
|
|||
Total adjusted operating expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The measure of segment assets is reported on the Company’s Consolidated Balance Sheets as total consolidated assets.
Accounts receivable from the Company’s major customers representing 10% or more of total accounts receivable as of December 31, 2025 and 2024, respectively, was as follows:
|
|
As of December 31, |
|
|||||
Customer |
|
2025 |
|
|
2024 |
|
||
Customer 1 |
|
|
% |
|
|
% |
||
Customer 2 |
|
|
% |
|
|
% |
||
|
|
Years Ended December 31, |
|
|||||||||
Customer |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Customer A |
|
|
% |
|
|
% |
|
|
% |
|||
Customer B |
|
|
% |
|
|
% |
|
|
% |
|||
Customer C |
|
* |
|
|
|
% |
|
* |
|
|||
* Customer accounted for less than 10% of total revenue in the period.
Revenue from customers in the geographic regions based on the location of contracting parties was as follows:
|
|
Years Ended December 31, |
|
|||||||||
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
South Korea |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Singapore |
|
|
|
|
|
|
|
|
|
|||
United States |
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|||
As of December 31, 2025, of the $
80
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Marketable Securities
All cash equivalents and marketable securities are classified as available-for-sale.
|
|
As of December 31, 2025 |
|
|||||||||||||
(In thousands) |
|
Fair Value |
|
|
Amortized |
|
|
Gross |
|
|
Gross |
|
||||
Cash |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government bonds and notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds, commercial paper and notes |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Time deposits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government bonds and notes |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Non-U.S. Government bonds and notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds, commercial paper and notes |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total marketable securities |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total cash, cash equivalents and marketable securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
|
|
As of December 31, 2024 |
|
|||||||||||||
(In thousands) |
|
Fair Value |
|
|
Amortized |
|
|
Gross |
|
|
Gross |
|
||||
Cash |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds, commercial paper and notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Time deposits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government bonds and notes |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Corporate bonds, commercial paper and notes |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total marketable securities |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total cash, cash equivalents and marketable securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
Available-for-sale securities are reported at fair value on the balance sheets and were classified along with cash as follows:
|
|
As of December 31, |
|
|||||
(In thousands) |
|
2025 |
|
|
2024 |
|
||
Cash |
|
$ |
|
|
$ |
|
||
Cash equivalents |
|
|
|
|
|
|
||
Total cash and cash equivalents |
|
|
|
|
|
|
||
Marketable securities |
|
|
|
|
|
|
||
Total cash, cash equivalents and marketable securities |
|
$ |
|
|
$ |
|
||
The Company continues to invest in highly rated, liquid debt securities. The Company holds all of its marketable securities as available-for-sale, marks them to market and regularly reviews its portfolio to ensure adherence to its investment policy and to monitor individual investments for risk analysis, proper valuation and impairment.
81
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The estimated fair value and gross unrealized losses of cash equivalents and marketable securities classified by the length of time that the securities have been in a continuous unrealized loss position as of December 31, 2025 and 2024 are as follows:
|
|
Fair Value |
|
|
Gross Unrealized Losses |
|
||||||||||
(In thousands) |
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
||||
Less than 12 months |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government bonds and notes |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
Corporate bonds, commercial paper and notes |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Total cash equivalents and marketable securities in a continuous unrealized loss position for less than 12 months |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
12 months or greater |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government bonds and notes |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Corporate bonds, commercial paper and notes |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total marketable securities in a continuous unrealized loss position for 12 months or greater |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total cash equivalents and marketable securities in a continuous unrealized loss position |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
The gross unrealized losses as of December 31, 2025 and 2024 were not material in relation to the Company’s total available-for-sale portfolio. The gross unrealized losses can be primarily attributed to a combination of market conditions as well as the demand for and duration of the U.S. government-sponsored obligations and corporate bonds, commercial paper and notes. The Company reasonably believes that there is no need to sell these investments and that it can recover the amortized cost of these investments. The Company has found no evidence of impairment due to credit losses in its portfolio. Therefore, these unrealized losses were recorded in other comprehensive income. The Company cannot provide any assurance that its portfolio of cash, cash equivalents and marketable securities will not be impacted by adverse conditions in the financial markets, which may require the Company in the future to record an impairment charge for credit losses which could adversely impact its financial results.
The contractual maturities of cash equivalents (excluding money market funds which have no maturity) and marketable securities are summarized as follows:
(In thousands) |
|
December 31, |
|
|
Due in less than one year |
|
$ |
|
|
Due from one year through three years |
|
|
|
|
Total |
|
$ |
|
|
Refer to Note 9, “Fair Value of Financial Instruments,” for a discussion regarding the fair value of the Company’s cash equivalents and marketable securities.
82
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Fair Value of Financial Instruments
The following table presents the financial instruments and liabilities that are carried at fair value and summarizes their valuation by the respective pricing levels detailed in Note 2, “Summary of Significant Accounting Policies,” as of December 31, 2025 and 2024:
|
|
As of December 31, 2025 |
|
|||||||||||||
(In thousands) |
|
Total |
|
|
Quoted Market |
|
|
Significant |
|
|
Significant |
|
||||
Assets carried at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Time deposits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government bonds and notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-U.S. Government bonds and notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds, commercial paper and notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets carried at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
As of December 31, 2024 |
|
|||||||||||||
(In thousands) |
|
Total |
|
|
Quoted Market |
|
|
Significant |
|
|
Significant |
|
||||
Assets carried at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Time deposits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government bonds and notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds, commercial paper and notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets carried at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company’s liabilities related to earn-out consideration are classified within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs.
|
|
Years Ended December 31, |
|
|||||
(In thousands) |
|
2024 |
|
|
2023 |
|
||
Balance as of beginning of period |
|
$ |
|
|
$ |
|
||
Change in fair value of earn-out liability due to remeasurement |
|
|
( |
) |
|
|
|
|
Change in fair value of earn-out liability due to achievement of revenue target |
|
|
( |
) |
|
|
( |
) |
Balance as of end of period |
|
$ |
|
|
$ |
|
||
For the years ended December 31, 2024 and 2023, the changes in the fair value of the earn-out liability related to the 2021 acquisition of PLDA, which was subject to certain revenue targets of the acquired business for a period of three years from the date of acquisition, and which was settled annually in shares of the Company’s common stock based on the fair value of that common stock fixed at the time the Company acquired PLDA. The fair value of the earn-out liability was remeasured each quarter, depending on the acquired business’s revenue performance relative to target over the applicable period, and adjusted to reflect changes in the per share value of the Company’s common stock. The Company classified its liability for the contingent earn-out liability related to the PLDA acquisition within Level 3 of the fair value hierarchy because the fair value calculation included significant unobservable inputs, such as revenue forecast, revenue volatility, equity volatility and weighted average cost of capital. During the years ended December 31, 2024 and 2023, the Company remeasured the fair value of the earn-out
83
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
liability, which resulted in a reduction of $
The Company monitors its investments for impairment and records appropriate reductions in carrying value when necessary. During the years ended December 31, 2025 and 2024, the Company recorded no other-than-temporary impairment charges on its investments.
In 2018, the Company made an investment in a non-marketable equity security of a private company. This investment was accounted for under the equity method of accounting, and the Company accounted for its equity method share of the income on a quarterly basis. During the fourth quarter of 2023, the Company sold its
During the years ended December 31, 2025 and 2024, there were no transfers of financial instruments between different categories of fair value.
10. Leases
The Company has a lease agreement with 237 North First Street Holdings, LLC for an office space located at 4453 North First Street in San Jose, California (the “Lease”). The Lease has a term of 128 months from the amended commencement date in April 2020. The annual base rent increases each year to certain fixed amounts over the course of the term. In addition to the base rent, the Company will also pay operating expenses, insurance expenses, real estate taxes and a management fee. The Lease allows for an option to expand, wherein the Company has the right of first refusal to rent additional space in the building. The Company has a one-time option to extend the Lease for a period of 60 months and may elect to terminate the Lease, via written notice to the Landlord, in the event the office space is damaged or destroyed. These options were not recognized as part of operating lease right-of-use assets and operating lease liabilities.
The table below reconciles the undiscounted cash flows for the first five years and total of the remaining years to the operating lease liabilities recorded in the Consolidated Balance Sheet as of December 31, 2025 (in thousands):
Years ending December 31, |
|
Amount |
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total minimum lease payments |
|
|
|
|
Less: amount of lease payments representing interest |
|
|
( |
) |
Present value of future minimum lease payments |
|
|
|
|
Less: current obligations under leases |
|
|
( |
) |
Long-term lease obligations |
|
$ |
|
|
As of December 31, 2025, the weighted-average remaining lease term for the Company’s operating leases was
84
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Operating lease costs included in research and development and selling, general and administrative costs in the Company’s Consolidated Statements of Income were $
Cash paid for amounts included in the measurement of operating lease liabilities were $
11. Balance Sheet Details
Inventories (1)
Inventories consisted of the following:
|
|
As of December 31, |
|
|||||
(In thousands) |
|
2025 |
|
|
2024 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Property and Equipment, net
Property and equipment, net is comprised of the following:
|
|
As of December 31, |
|
|||||
(In thousands) |
|
2025 |
|
|
2024 |
|
||
Computer software |
|
$ |
|
|
$ |
|
||
Computer equipment |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Machinery |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Property and equipment, gross |
|
|
|
|
|
|
||
Less accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation expense for the years ended December 31, 2025, 2024 and 2023 was $
Other Current Liabilities
Other current liabilities are comprised of the following:
|
|
As of December 31, |
|
|||||
(In thousands) |
|
2025 |
|
|
2024 |
|
||
Price protection liability |
|
$ |
|
|
$ |
|
||
Other current liabilities |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
85
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss is comprised of the following:
|
|
As of December 31, |
|
|||||
(In thousands) |
|
2025 |
|
|
2024 |
|
||
Foreign currency translation adjustments |
|
$ |
( |
) |
|
$ |
( |
) |
Unrealized gain (loss) on available-for-sale securities, net of tax |
|
|
|
|
|
( |
) |
|
Total |
|
$ |
( |
) |
|
$ |
( |
) |
12. Convertible Notes
The Company did not have any convertible notes outstanding as of December 31, 2025 and 2024.
During the first quarter of 2023, the holders of the remaining $
In connection with the settlement of the conversion of the remaining 2023 Notes, the Company received
13. Commitments and Contingencies
As of December 31, 2025, the Company’s material contractual obligations were as follows:
(In thousands) |
|
Total |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
||||
Contractual obligations (1) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Software licenses (3) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other contractual obligations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Indemnifications
From time to time, the Company indemnifies certain customers as a necessary means of doing business. Indemnification covers customers for losses suffered or incurred by them as a result of any patent, copyright or other IP infringement or any other claim by any third party arising as a result of the applicable agreement with the Company. The Company generally attempts to limit the maximum amount of indemnification that the Company could be required to make under these agreements to the amount of fees received by the Company, however, this may not always be possible. The fair value of the liability as of December 31, 2025 and 2024, respectively, was not material.
86
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Equity Incentive Plans and Stock-Based Compensation
Equity Incentive Plans
The Company has two equity incentive plans under which grants are currently outstanding: the 2015 Equity Incentive Plan (the “2015 Plan”) and the 2019 Inducement Equity Incentive Plan (the “2019 Inducement Plan”). The 2015 Plan and 2019 Inducement Plan were the Company’s only plans for providing stock-based incentive awards to eligible employees, executive officers, non-employee directors and consultants as of December 31, 2025. Grants under all plans typically have a requisite service period of
A summary of shares available for grant under the Company’s plans is as follows:
|
|
Shares Available |
|
|
Total shares available for grant as of December 31, 2022 |
|
|
|
|
Increase in shares approved for issuance (1) |
|
|
|
|
Nonvested equity stock and stock units granted (2) (3) |
|
|
( |
) |
Nonvested equity stock and stock units forfeited (2) |
|
|
|
|
Total shares available for grant as of December 31, 2023 |
|
|
|
|
Stock options expired |
|
|
|
|
Nonvested equity stock and stock units granted (2) (3) |
|
|
( |
) |
Nonvested equity stock and stock units forfeited (2) |
|
|
|
|
Total shares available for grant as of December 31, 2024 |
|
|
|
|
Nonvested equity stock and stock units granted (2) (3) |
|
|
( |
) |
Nonvested equity stock and stock units forfeited (2) |
|
|
|
|
Total shares available for grant as of December 31, 2025 |
|
|
|
|
87
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
General Stock Option Information
The following table summarizes stock option activity under the Company’s equity incentive plans for the years ended December 31, 2025, 2024 and 2023 and information regarding stock options outstanding and vested as of December 31, 2025:
|
|
Options Outstanding |
|
|
|
|
|
|
|
|||||||
|
|
Number of |
|
|
Weighted- |
|
|
Weighted- |
|
|
Aggregate |
|
||||
Outstanding as of December 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Options exercised |
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|||
Outstanding as of December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Options exercised |
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|||
Options expired |
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|||
Outstanding as of December 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Options exercised |
|
|
( |
) |
|
$ |
|
|
|
|
|
$ |
|
|||
Outstanding and vested as of December 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Employee Stock Purchase Plan
During the years ended December 31, 2025, 2024 and 2023, the Company had
The Company issued
Stock-Based Compensation
Stock Options
There were no stock options granted during the years ended December 31, 2025, 2024 and 2023, respectively.
As of December 31, 2023, all compensation cost net of expected forfeitures, related to unvested stock-based compensation arrangements granted under the stock option plans had been fully recognized. As a result, there was no stock-based compensation expense related to stock options for the years ended December 31, 2025 and 2024. Stock-based compensation expense related to stock options was immaterial for the year ended December 31, 2023.
The total fair value of options vested for the year ended December 31, 2023 was $
Employee Stock Purchase Plan
For the years ended December 31, 2025, 2024 and 2023, the Company recorded stock-based compensation expenses related to the 2015 ESPP of $
As of December 31, 2025, there was $
88
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Valuation Assumptions
The Company estimates the fair value of stock awards using the Black-Scholes-Merton model (“BSM model”). The BSM model determines the fair value of stock-based compensation and is affected by the Company’s stock price on the date of the grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include expected volatility, expected life of the award, expected dividend rate and expected risk-free rate of return. The assumptions for expected volatility and expected life are the two assumptions that significantly affect the grant-date fair value. If actual results differ significantly from these estimates, stock-based compensation expense and the Company’s results of operations could be materially impacted.
The fair value of stock awards is estimated as of the grant date using the BSM option-pricing model assuming a dividend yield of
|
|
Employee Stock Purchase Plan for |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Employee Stock Purchase Plan |
|
|
|
|
|
|
|
|
|
|||
Expected stock price volatility |
|
|
|
|
|
|
||||||
Risk free interest rate |
|
|
|
|
|
|
||||||
Expected term (in years) |
|
|
|
|
|
|
|
|
|
|||
Weighted-average fair value of purchase rights granted under the purchase plan |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Expected Stock Price Volatility: Given the volume of market activity in its market traded options, the Company determined that it would use the implied volatility of its nearest-to-the-money traded options. The Company believes that the use of implied volatility is more reflective of market conditions and a better indicator of expected volatility than historical volatility. If there is not sufficient volume in its market traded options, the Company will use an equally weighted blend of historical and implied volatility.
Risk-free Interest Rate: The Company bases the risk-free interest rate used in the BSM valuation method on implied yield currently available on the U.S. Treasury zero-coupon issues with an equivalent term. Where the expected terms of the Company’s stock-based awards do not correspond with the terms for which interest rates are quoted, the Company uses an approximation based on rates on the closest term currently available.
Expected Term: The expected term of options granted represents the period of time that options granted are expected to be outstanding. The expected term was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. The expected term of ESPP grants is based upon the length of each respective purchase period.
Nonvested Equity Stock and Stock Units
The Company grants nonvested equity stock units to officers, employees and directors. For each of the years ended December 31, 2025, 2024 and 2023, the Company granted nonvested equity stock units totaling
89
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the years ended December 31, 2025, 2024 and 2023, the Company recorded stock-based compensation expense of approximately $
Unrecognized compensation cost related to all nonvested equity stock grants, net of estimated forfeitures, was approximately $
The following table reflects the activity related to nonvested equity stock and stock units for the years ended December 31, 2025, 2024 and 2023:
Nonvested Equity Stock and Stock Units |
|
Shares |
|
|
Weighted-Average |
|
||
Nonvested as of December 31, 2022 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Nonvested as of December 31, 2023 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Nonvested as of December 31, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Nonvested as of December 31, 2025 |
|
|
|
|
$ |
|
||
15. Stockholders’ Equity
Share Repurchase Programs
On October 29, 2020, the Company’s board of directors (the “Board”) approved a share repurchase program authorizing the repurchase of up to an aggregate of
On August 10, 2023, the Company entered into an accelerated share repurchase program with Royal Bank of Canada (“RBC”) (the “2023 ASR Program”). Under the 2023 ASR Program, the Company pre-paid to RBC the $
On February 29, 2024, the Company entered into an accelerated share repurchase program with RBC (the “2024 ASR Program”). Under the 2024 ASR Program, the Company pre-paid to RBC the $
90
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
the Company’s stock. On March 18, 2024, the accelerated share repurchase program was completed and the Company received an additional
On November 2, 2023, the Company entered into a share repurchase plan (the “2023 Buying Plan”) with RBC Capital Markets, LLC (“RBCCM”). Under the 2023 Buying Plan, RBCCM commenced purchases for a 12-month period starting on November 2, 2023 and ending on November 1, 2024, with a provision to terminate sooner pursuant to the 2023 Buying Plan (the “Repurchase Period”). During the Repurchase Period, RBCCM was authorized to purchase an aggregate amount of $
During the year ended December 31, 2025, the Company entered into share repurchase plans (the “2025 Buying Plans”) with Mizuho Securities USA, LLC (“Mizuho”), pursuant to which Mizuho may repurchase shares of the Company's common stock from February 6, 2025 through March 31, 2026, with provisions to terminate sooner. The execution of share repurchases is dependent on the Company’s stock price reaching certain levels. During the year ended December 31, 2025, the Company repurchased
As of December 31, 2025, there remained an outstanding authorization to repurchase approximately
The Company records share repurchases as a reduction to stockholders’ equity. The Company records a portion of the purchase price of the repurchased shares as a decrease (increase) to retained earnings (accumulated deficit) when the price of the shares repurchased exceeds the average original proceeds per share received from the issuance of common stock in accordance with its accounting policy. During the years ended December 31, 2024 and 2023, the cumulative price of $
16. Benefit Plans
The Company has a 401(k) Plan (the “401(k) Plan”) qualified under Section 401(k) of the Internal Revenue Code of 1986. Each eligible employee may elect to contribute up to
91
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. Restructuring and Other Charges
2023 Restructuring Plan
In June 2023, the Company initiated a restructuring program to reduce overall expenses to improve future profitability by reducing the Company’s overall spending (the “2023 Restructuring Plan”). In connection with this restructuring program, the Company initiated a plan resulting in a reduction of
18. Income Taxes
Income before taxes consisted of the following:
|
|
Years Ended December 31, |
|
|||||||||
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Domestic |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Foreign |
|
|
|
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
The provision for (benefit from) income taxes was comprised of:
|
|
Years Ended December 31, |
|
|||||||||
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Federal: |
|
|
|
|
|
|
|
|
|
|||
Current |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Deferred |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
State: |
|
|
|
|
|
|
|
|
|
|||
Current |
|
|
( |
) |
|
|
|
|
|
|
||
Deferred |
|
|
|
|
|
|
|
|
( |
) |
||
Foreign: |
|
|
|
|
|
|
|
|
|
|||
Current |
|
|
|
|
|
|
|
|
( |
) |
||
Deferred |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
92
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The table below provides the updated requirements of ASU 2023-09 for 2025. See Note 3, “Recent Accounting Pronouncements,” for additional details on the adoption of ASU 2023-09.
The effective income tax rate for the year ended December 31, 2025 differs from the statutory federal income tax rate as follows:
|
|
Year Ended December 31, 2025 |
|
|||||
(In thousands, except percentages) |
|
$ |
|
|
% |
|
||
Provision for income taxes at U.S. federal statutory rate |
|
$ |
|
|
|
% |
||
State and local income tax expense |
|
|
|
|
|
|
||
Foreign tax effects: |
|
|
|
|
|
|
||
South Korea |
|
|
|
|
|
|
||
Withholding tax |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Other foreign jurisdictions |
|
|
|
|
|
|
||
Effect of cross-border tax laws: |
|
|
|
|
|
|
||
Foreign-derived intangible income deduction |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
|
||
Tax credits: |
|
|
|
|
|
|
||
Research and development credit |
|
|
( |
) |
|
|
( |
) |
Foreign tax credit |
|
|
( |
) |
|
|
( |
) |
Valuation allowances |
|
|
|
|
|
|
||
Non-taxable or non-deductible items: |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
( |
) |
|
|
( |
) |
Section 162(m) limitation |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Changes in unrecognized tax benefits |
|
|
|
|
|
|
||
Other adjustments |
|
|
( |
) |
|
|
( |
) |
Total tax provision and effective tax rate |
|
$ |
|
|
|
% |
||
|
|
Years Ended December 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
U.S. federal statutory rate |
|
|
% |
|
|
% |
||
State income tax expense (benefit) |
|
|
|
|
|
( |
) |
|
Withholding tax |
|
|
|
|
|
|
||
Foreign rate differential |
|
|
( |
) |
|
|
( |
) |
Research and development credit |
|
|
( |
) |
|
|
( |
) |
Executive compensation |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
( |
) |
|
|
( |
) |
Foreign tax credit |
|
|
( |
) |
|
|
( |
) |
Foreign-derived intangible income deduction |
|
|
( |
) |
|
|
( |
) |
Acquisition |
|
|
( |
) |
|
|
|
|
Other |
|
|
|
|
|
|
||
Valuation allowance |
|
|
|
|
( |
) |
||
|
|
|
% |
|
|
( |
)% |
|
93
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The components of the net deferred tax assets (liabilities) were as follows:
|
|
As of December 31, |
|
|||||
(In thousands) |
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Lease liabilities |
|
$ |
|
|
$ |
|
||
Other timing differences, accruals and reserves |
|
|
|
|
|
|
||
Deferred equity compensation |
|
|
|
|
|
|
||
Net operating loss carryovers |
|
|
|
|
|
|
||
Capitalized research |
|
|
|
|
|
|
||
Tax credits |
|
|
|
|
|
|
||
Total gross deferred tax assets |
|
|
|
|
|
|
||
Deferred tax liabilities: |
|
|
|
|
|
|
||
Lease right-of-use assets |
|
|
( |
) |
|
|
( |
) |
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Total gross deferred tax liabilities |
|
|
( |
) |
|
|
( |
) |
Total net deferred tax assets |
|
|
|
|
|
|
||
Valuation allowance |
|
|
( |
) |
|
|
( |
) |
Net deferred tax assets |
|
$ |
|
|
$ |
|
||
|
|
As of December 31, |
|
|||||
(In thousands) |
|
2025 |
|
|
2024 |
|
||
Reported as: |
|
|
|
|
|
|
||
Non-current deferred tax assets |
|
$ |
|
|
$ |
|
||
Non-current deferred tax liabilities |
|
|
( |
) |
|
|
( |
) |
Net deferred tax assets |
|
$ |
|
|
$ |
|
||
Income Tax Payments
Disclosed below is a summary of income taxes paid, net of refunds, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025:
(In thousands) |
|
Income Taxes Paid |
|
|
U.S. federal |
|
$ |
|
|
U.S. state and local |
|
|
|
|
Foreign: |
|
|
|
|
South Korea |
|
|
|
|
Taiwan |
|
|
|
|
Other |
|
|
|
|
Total income taxes paid |
|
$ |
|
|
The Company periodically evaluates the realizability of its net deferred tax assets based on all available evidence, both positive and negative. The realizability of the Company’s net deferred tax assets is dependent on its ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. During 2023, based on all available positive and negative evidence, the Company determined that it was appropriate to release the valuation allowance on the majority of the Company’s U.S. federal and other state deferred tax assets. The Company recognized a $
Upon considering the relative impact of all evidence during 2025, both negative and positive, and the weight accorded to each, the Company concluded that it was more likely than not that the majority of its deferred tax assets would be realizable, with the exception of primarily its California research and development credits that have not met the “more likely than not” realization threshold criteria. As a result, the Company continues to maintain a valuation allowance on only those deferred tax assets that it does not think will be realizable.
94
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents the tax valuation allowance information for the years ended December 31, 2025, 2024 and 2023:
(In thousands) |
|
Balance at |
|
|
Charged to |
|
|
Charged to |
|
|
Valuation |
|
|
Balance at |
|
|||||
Tax Valuation Allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Year ended December 31, 2023 |
|
$ |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
$ |
|
|||
Year ended December 31, 2024 |
|
$ |
|
|
|
|
|
|
( |
) |
|
|
|
|
$ |
|
||||
Year ended December 31, 2025 |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
* Amounts not charged to operations are charged to other comprehensive income or retained earnings.
As of December 31, 2025, the Company had California net operating loss carryforwards of $
In the event of a change in ownership, as defined under federal and state tax laws, the Company’s net operating loss and tax credit carryforwards could be subject to annual limitations. The annual limitations could result in the expiration of the net operating loss and tax credit carryforwards prior to utilization.
As of December 31, 2025, the Company had $
On September 18, 2025, the South Korean Supreme Court ruled that the use of any patents in South Korea constitutes domestic source income under the South Korea–U.S. Tax Treaty, even if such patents are not registered with the patent office in South Korea. Based on this ruling, patent license royalties are subject to South Korean withholding tax if the patents are used in South Korea. As a result of this ruling, Rambus determined that it is not more likely than not that withholding taxes paid in South Korea are recoverable.
The Company previously filed refund claims for withholding taxes paid in South Korea in the amount of $
As a result of the September 2025 ruling, the Company recorded an uncertain tax position reserve on the $
95
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
of 2023 through the second quarter of 2025. As a result, the total long-term taxes receivable balance of $
Additionally, the Company’s future effective tax rates could be adversely affected by earnings being higher than anticipated in countries where the Company has higher statutory rates or lower than anticipated in countries where it has lower statutory rates, by changes in valuation of its deferred tax assets and liabilities or by changes in tax laws or interpretations of those laws.
As of December 31, 2024, the Company had $
A reconciliation of the beginning and ending amounts of unrecognized income tax benefits for the years ended December 31, 2025, 2024 and 2023 was as follows:
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Years Ended December 31, |
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(In thousands) |
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2025 |
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2024 |
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2023 |
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Balance as of January 1 |
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$ |
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$ |
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$ |
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Tax positions related to current year: |
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Additions |
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Tax positions related to prior years: |
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Additions |
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Reductions |
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( |
) |
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( |
) |
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( |
) |
Balance as of December 31 |
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$ |
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$ |
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$ |
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The Company recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision (benefit). As of December 31, 2025 and 2024, an immaterial amount of interest and penalties was included in long-term income taxes payable.
Rambus files income tax returns for the U.S., California, India and various other state and foreign jurisdictions. The U.S. federal returns are subject to examination from 2022 and forward. The Company’s 2023 federal return is currently under audit by the Internal Revenue Service. The California returns are subject to examination from 2021 and forward. In addition, any research and development credit carryforward or net operating loss carryforward generated in prior years and utilized in these or future years may also be subject to examination. The India returns are under examination by the Indian tax administration for tax years beginning with 2011, except for 2012 through 2016, which were assessed in the Company’s favor, and are subject to examination from 2017 and forward. These examinations may result in proposed adjustments to the income taxes as filed during these periods. Management regularly assesses the likelihood of outcomes resulting from income tax examinations to determine the adequacy of their provision for income taxes and believes their provision for unrecognized tax benefits is adequate.
As of December 31, 2025, no other income taxes (state or foreign) have been provided on undistributed earnings of approximately $
On July 4, 2025, the United States enacted federal tax legislation commonly referred to as the OBBBA. Included in this legislation are provisions that allow for the immediate expensing of domestic United States research and development expenses, immediate expensing of certain capital expenditures and other changes to the U.S. taxation of profits derived from foreign operations. As a result of the enactment of the legislation, there was an increase to tax expense, primarily related to
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
changes in the taxation of profits derived from foreign operations and, more specifically, the foreign-derived intangible income deduction.
19. Litigation and Contingent Liability
Rambus is not currently a party to any material pending legal proceeding; however, from time to time, Rambus may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business, operating results, financial position or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management attention and resources and other factors.
The Company records a contingent liability when it is probable that a loss has been incurred and the amount is reasonably estimable in accordance with accounting for contingencies.
20. Divestiture
2023 Divestiture
In July 2023, the Company entered into an asset purchase agreement (the “Purchase Agreement”) with Cadence Design Systems, Inc. (the “Purchaser”), pursuant to which the Company agreed to sell certain assets and the Purchaser agreed to assume certain liabilities from the Company, in each case with respect to the Company’s PHY IP group, for $
The Transaction was completed on September 6, 2023 and resulted in net proceeds of approximately $
The divestiture of the PHY IP group did not represent a strategic shift that would have a major effect on the Company’s consolidated results of operations, and therefore its results of operations were not reported as discontinued operations.
Concurrent with the Transaction, the Company also recorded a charge of approximately $
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21. Subsequent Event
On February 4, 2026, Desmond Lynch, Senior Vice President, Chief Financial Officer of the Company notified the Company that he was resigning with an effective date as of February 27, 2026, to pursue another professional opportunity. In connection with and effective upon Mr. Lynch’s departure, the Company is appointing John Allen to the position of Vice President, Interim Chief Financial Officer. Mr. Allen will also continue to serve in his current role of the Company’s Chief Accounting Officer.
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INDEX TO EXHIBITS
Exhibit Number |
|
Description of Document |
3.1(1) |
|
Amended and Restated Certificate of Incorporation of Registrant dated April 27, 2023. |
3.2(1) |
|
Amended and Restated Bylaws of Registrant dated April 27, 2023. |
4.1(2) |
|
Form of Registrant’s Common Stock Certificate. |
4.2(3) |
|
Description of Securities. |
10.1(4)* |
|
Form of Indemnification Agreement entered into by Registrant with each of its directors and executive officers. |
10.2(5)* |
|
Form of Change of Control Severance Agreement, Agreement entered into by Registrant with each of its named executive officers other than its chief executive officer. |
10.3(6)* |
|
2006 Equity Incentive Plan, as amended. |
10.4(6)* |
|
Forms of agreements under the 2006 Equity Incentive Plan, as amended. |
10.5(1)* |
|
2015 Equity Incentive Plan, as amended. |
10.6(7)* |
|
Form of Restricted Stock Unit Agreement (2015 Equity Incentive Plan). |
10.7(7)* |
|
Form of Stock Option Agreement (2015 Equity Incentive Plan). |
10.8(8)* |
|
2015 Employee Stock Purchase Plan, as amended. |
10.9(9)+ |
|
Settlement Agreement, dated January 19, 2010, among Registrant, Samsung Electronics Co., Ltd, Samsung Electronics America, Inc., Samsung Semiconductor, Inc. and Samsung Austin Semiconductor, L.P. |
10.10(9)+
|
|
Semiconductor Patent License Agreement, dated January 19, 2010, between Registrant and Samsung Electronics Co., Ltd. |
10.11(10)* |
|
Employment Agreement between the Company and Luc Seraphin, dated October 25, 2018. |
10.12(10)* |
|
Amended and Restated Change of Control Severance Agreement between the Company and Luc Seraphin, dated October 25, 2018. |
10.13(9)+ |
|
Settlement Agreement, dated June 11, 2013, among Registrant, SK hynix and certain SK hynix affiliates. |
10.14(9)+ |
|
Semiconductor Patent License Agreement, dated June 11, 2013, between Registrant and SK hynix. |
10.15(9)+
|
|
Settlement Agreement, dated December 9, 2013, between Rambus Inc., Micron Technology, Inc. and certain Micron affiliates. |
10.16(9)+
|
|
Semiconductor Patent License Agreement, dated December 9, 2013, between Rambus, Inc. and Micron Technology, Inc. |
10.17(9)+
|
|
Amendment to Semiconductor Patent License Agreement, dated December 30, 2013, by and between Rambus Inc. and Samsung Electronics Co., Ltd. |
10.18(9)+
|
|
Amendment 1 to Semiconductor Patent License Agreement, dated June 17, 2015, by and between Rambus Inc. and SK hynix Inc. |
10.19(11) |
|
Lease agreement between Rambus Inc. and 237 North First Street Holdings, LLC, dated July 8, 2019. |
10.20(12)* |
|
Offer Letter, dated August 9, 2019, by and between Rambus Inc. and Sean Fan. |
10.21(12)* |
|
2019 Inducement Equity Incentive Plan. |
10.22(12)* |
|
Form of Restricted Stock Unit Agreement (2019 Inducement Equity Incentive Plan). |
10.23(12)* |
|
Form of Performance Based Restricted Stock Unit Agreement (2019 Inducement Equity Incentive Plan). |
10.24(13) |
|
First Amendment to Net Lease Agreement dated April 22, 2020 relating to the New San Jose Headquarters Location between Rambus Inc. and 237 North First Street Holdings, LLC. |
10.25(14)+ |
|
Amendment No. 1 to Semiconductor Patent License Agreement, dated September 2, 2020, between Rambus, Inc. and Micron Technology, Inc. |
10.26(15)+ |
|
Amendment No. 2, dated December 15, 2020, to the Semiconductor Patent License Agreement between Rambus Inc. and Micron Technology, Inc. |
10.27(16)+ |
|
Amendment No. 2, dated October 27, 2022, to the Semiconductor Patent License Agreement, dated January 19, 2010, between Registrant and Samsung Electronics Co., Ltd. |
10.28(17)+ |
|
Amendment 2 to Semiconductor Patent License Agreement, dated March 31, 2023, between Registrant and SK hynix. |
10.29(9)+ |
|
Amendment 3 to Semiconductor Patent License Agreement, dated December 10, 2024, between Registrant and Micron Technology, Inc. |
10.30 |
|
Employment Agreement between the Company and John Allen, dated February 12, 2026. |
19.1(9) |
|
|
21.1(9) |
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Subsidiaries of Registrant. |
23.1 |
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm. |
99
Table of Contents
Exhibit Number |
|
Description of Document |
23.2 |
|
Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm. |
24.1 |
|
Power of Attorney (included on the signature page to this Annual Report on Form 10-K). |
31.1 |
|
Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 |
|
Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1† |
|
Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2† |
|
Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
97.1(9)* |
|
Compensation Recovery Policy, as adopted on July 27, 2023. |
101.INS |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.
+ Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10).
† The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.
(1) Incorporated by reference to the Form 8-K filed on May 2, 2023.
(2) Incorporated by reference to the Form S-1/A (file no. 333-22885) filed on April 24, 1997.
(3) Incorporated by reference to the Form 10-K filed on February 23, 2024.
(4) Incorporated by reference to the Form 10-Q filed on May 7, 2021.
(5) Incorporated by reference to the Form 8-K filed on March 9, 2015.
(6) Incorporated by reference to the Form 8-K filed on April 30, 2014.
(7) Incorporated by reference to the Form 10-Q filed on July 23, 2015.
(8) Incorporated by reference to the Form 8-K filed on May 6, 2020.
(9) Incorporated by reference to the Form 10-K filed on February 24, 2025.
(10) Incorporated by reference to the Form 8-K filed on October 29, 2018.
(11) Incorporated by reference to the Form 10-Q filed on August 2, 2019.
(12) Incorporated by reference to the Form 8-K filed on August 28, 2019.
(13) Incorporated by reference to the Form 10-Q filed on August 7, 2020.
(14) Incorporated by reference to the Form 10-Q filed on November 6, 2020.
(15) Incorporated by reference to the Form 10-K filed on February 26, 2021.
(16) Incorporated by reference to the Form 10-K filed on February 24, 2023.
(17) Incorporated by reference to the Form 10-Q filed on May 5, 2023.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RAMBUS INC. |
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|
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By: |
/s/ Desmond Lynch |
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Desmond Lynch |
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Senior Vice President, Finance and Chief Financial Officer |
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(Principal Financial Officer) |
Date: February 18, 2026
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Luc Seraphin, Desmond Lynch and John Shinn as his true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments to this Annual Report on Form 10-K, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith and (iii) take any and all actions that may be necessary or appropriate to be done, as fully for all intents and purposes as he might or could do in person, hereby approving, ratifying and confirming all that such agent, proxy and attorney-in-fact or any of his substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature |
Title |
Date |
|
|
|
/s/ LUC SERAPHIN |
Chief Executive Officer, President and Director (Principal Executive Officer) |
February 18, 2026 |
Luc Seraphin |
|
|
|
|
|
/s/ DESMOND LYNCH |
Senior Vice President, Finance and Chief Financial Officer (Principal Financial Officer) |
February 18, 2026 |
Desmond Lynch |
|
|
|
|
|
/s/ JOHN ALLEN |
Vice President, Accounting and Chief Accounting Officer (Principal Accounting Officer) |
February 18, 2026 |
John Allen |
|
|
|
|
|
/s/ CHARLES KISSNER |
Chairman of the Board of Directors |
February 18, 2026 |
Charles Kissner |
|
|
|
|
|
/s/ EMIKO HIGASHI |
Director |
February 18, 2026 |
Emiko Higashi |
|
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/s/ STEVEN LAUB |
Director |
February 18, 2026 |
Steven Laub |
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/s/ VICTOR PENG |
Director |
February 18, 2026 |
Victor Peng |
|
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/s/ MEERA RAO |
Director |
February 18, 2026 |
Meera Rao |
|
|
|
|
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/s/ NECIP SAYINER |
Director |
February 18, 2026 |
Necip Sayiner |
|
|
|
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|
/s/ ERIC STANG |
Director |
February 18, 2026 |
Eric Stang |
|
|
102
FAQ
What is Rambus (RMBS) core business focus in this 10-K?
How much did Rambus (RMBS) spend on R&D in 2025?
How concentrated is Rambus (RMBS) customer base?
What portion of Rambus (RMBS) revenue comes from outside the U.S.?
How many employees and patents does Rambus (RMBS) report?
What are key risks Rambus (RMBS) highlights related to AI demand?
What governance or leadership changes does Rambus (RMBS) disclose?
