"Rambus" Q2 FY2026 Earnings Call - Record $207M Revenue Driven by DDR5 Leadership and Hyperscaler IP Wins

Conference Operator: Welcome to the Rambus second quarter fiscal 2026 earnings conference call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question and answer session. If you would like to ask a question, you may press star one on your touch phone at any time. If anyone should require assistance during the conference, please press star zero at any time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Sumeet Gagneja, Chief Financial Officer. You may begin your conference.

Sumeet Gagneja, Chief Financial Officer, Rambus: Thank you, operator, and welcome to the Rambus second quarter 2026 results conference call. I am Sumeet Gagneja, Chief Financial Officer at Rambus, and on the call today with me is Luc Seraphin, our CEO. The press release for the results that we will be discussing today has been filed with SEC on Form 8-K. We are webcasting this call along with the slides that we will reference during portions of today’s call. A replay of this call will be available on our website beginning today at 5:00 P.M. Pacific Time. Our discussion today will contain forward-looking statements, including our expectations regarding projected financial results, financial prospects, market growth, demand for our solutions, other market factors, including reflections of the geopolitical and macroeconomic environment, amongst other items.

These statements are subject to risk and uncertainties that may be discussed during the call and more fully described in the documents we filed with SEC, including our 8-Ks, 10-Qs, and 10-Ks. These forward-looking statements may differ materially from our actual results, and we are under no obligation to update these statements. In an effort to provide greater clarity on the financials, we are using both GAAP and non-GAAP financial presentations in both our press release and on this call. A reconciliation of these non-GAAP financials to the most directly comparable GAAP measures has been included in our press release, in our slide presentation, and on our website at rambus.com on the investor relations page under financial releases. I would like to note a change in how we present our results going forward.

Since the adoption of ASC 606, we have disclosed licensing billings, an operational metric that bridges the difference between GAAP revenue and actual billings to our licenses. This was an important metric in the initial years after ASC 606 adoption, when the delta between royalties revenue and licensing billings was material. As the difference is now minimal and we expect to remain so, we will focus our financial results and guidance on an ASC 606 revenue basis going forward. The order of the call today will be as follows. Luc will start with an overview of the business. I will discuss our financial results and then we end with Q&As. I will now turn the call over to Luc to provide an overview of the quarter. Luc?

Luc Seraphin, Chief Executive Officer, Rambus: Thank you, Sumeet. Good afternoon, everyone, and thank you for joining us. Before we begin, I’d like to take a moment to welcome Sumeet Gagneja to his first earnings call as Rambus Chief Financial Officer. Sumeet brings more than two decades of leadership experience in the semiconductor industry and a wealth of knowledge in the data center ecosystem. Since joining Rambus, he has quickly become a valued member of the leadership team, and we are very pleased to have him on board. Welcome, Sumeet. With that, let’s turn to our results. Rambus had an excellent second quarter, delivering a new all-time high in revenue and non-GAAP earnings and beating the high end of our guidance ranges. Fueled by record product revenue and strong contributions from our diversified revenue streams, this quarter marks the first time we have exceeded $200 million in revenue.

These results reflect our sustained execution and leadership across our expanding portfolio of chips and IP. We also generated solid cash from operations, underscoring the strength of our business model and enabling us to continue investing in our product roadmap to drive long-term growth. This combination of record performance, disciplined execution, and sustained investment positions Rambus to capitalize on the exciting market trends in data center and AI. AI continues to drive a fundamental evolution in computing. As inference and agentic use cases scale, workloads are becoming more diverse, more persistent, and more memory intensive. To support these workloads, AI infrastructure deployments are becoming more complex and heterogeneous, combining a mix of traditional and AI server platforms. This is accelerating demand for CPU-based servers to support orchestration, data management, and real-time execution at scale, while increasing requirements for memory capacity, bandwidth, and power efficiency.

These trends align directly with our strengths and are driving new opportunities for richer chip content and broader adoption of our industry-leading IP. Let me turn to our quarterly business results. Starting with chips, product revenue reached a new record of $99 million, up 22% year-over-year, and we expect another quarter of double-digit growth in Q3. This reflects our continued leadership in DDR5 RCDs, strong execution, and growing traction in new products. Looking ahead, we see increasing customer adoption and remain well positioned to support the ramp of next-generation platforms as they enter the market. We continue to execute well across our DDR5 roadmap. We expanded our portfolio with complete chipsets for DDR5 9600 client and server memory modules, further extending our leadership in high-speed memory interface solutions.

Our new DDR5 9600 client chipset enables top-of-the-line performance for emerging AI PCs and leverages the same high-speed memory interface expertise we have developed across multiple generations of server platforms as technology requirements increasingly waterfall from the data center into high-performance client systems. For servers, our new DDR5 9600 RDIMM chipset, built around our sixth generation RCD and PMIC5030, supports the next level of memory performance required by advanced CPU-based server platforms. As core counts, memory channels, and bandwidth requirements increase, solutions like these are essential to enabling higher system throughput and power-efficient performance. Importantly, our server chip solutions support the expanding range of new and existing processor and system architectures, positioning us to benefit from increasing memory requirements across the industry.

Together, these additions expand the breadth of our DDR5 roadmap and demonstrate our continued enablement of higher performance, improved signal integrity, and advanced power management across both data center and client applications. As AI workloads continue to diversify, there is increasing demand for novel memory architectures with application-specific performance, capacity, and power requirements. We are addressing these needs through products like our complete chipsets for MRDIMM and LPDDR5X SOCAMM2 and remain on track to intercept the market as these architectures gain adoption. Supported by active engagements across customers and ecosystem partners, we are expanding our roadmap of differentiated memory subsystem solutions to help shape the next generation of server modules. This reinforces our opportunity for increased chip content and sustained growth in 2027 and beyond.

Turning now to silicon IP, we delivered another strong quarter with increasing customer traction and key design wins across hyperscalers, custom silicon companies, and emerging AI semiconductor developers. As AI infrastructure scales, chip development cycles are accelerating, and performance requirements are pushing beyond industry standard specifications. Customers are building advanced SoCs for high-performance AI systems, driving robust demand for our differentiated IP solutions, spanning advanced memory, connectivity, and security IP. We also have a growing number of deep architectural engagements ahead of standards being finalized to help our customers be first to market with state-of-the-art performance. This includes an exciting design win with a tier 1 U.S. hyperscaler for next generation HBM in future AI chips. These engagements are a great testament to the strategic importance of our premium IP portfolio.

The growth of custom silicon for acceleration and connectivity remains an important long-term trend, particularly among hyperscalers and leading AI infrastructure companies. As customers optimize hardware for their own workloads, software stacks, and deployment requirements, they need Rambus advanced IP to help them deliver performance, power efficiency, and reliability at scale. Secure connectivity is also an increasingly important part of the overall architecture, and Rambus’ proven security IP is foundational to enabling trusted high-performance data movement across distributed AI infrastructure. During the quarter, we also expanded our AI IP solutions with PCIe 7 switch IP supporting 128 giga transfer per second. This solution is designed to support the next generation of AI scale up and scale out architectures, where high bandwidth, low latency connectivity is critical to overall system performance. As AI infrastructure scales, Rambus IP is in great demand, enabling faster, more efficient, and more secure data movement.

With our strong customer partnerships and deep architectural engagements, we are enabling the future of advanced AI hardware. In summary, Rambus delivered an excellent second quarter with record revenue and earnings. Our results reflect the strength of our product leadership, the depth of our customer relationships, and our ability to execute in markets that continue to present significant opportunities for growth. Looking ahead, we are well-positioned for the major trends reshaping data center and AI infrastructure. As AI scales and agentic workloads drive greater demand for CPU-based servers and memory, Rambus chips and IP are enabling the performance, connectivity, and security customers need to build the next generations of advanced computing systems. We remain confident in our strategy, our roadmap, and our ability to drive strong growth in 2026 and beyond. As always, I want to thank our customers, partners, and employees for their continued trust and support.

Now I turn the call over to Sumeet to walk us through the financials. Sumeet?

Sumeet Gagneja, Chief Financial Officer, Rambus: Thank you, Luc, good afternoon, everyone. Before I enter the quarter, I want to say how excited I am to be here and how much I’ve appreciated the warm welcome from the team. Having spent the past several weeks meeting with our employees and investors, I have come away with a clear conviction. We have differentiated technology, deep customer relationships, and meaningful long-term growth opportunities ahead. As CFO, my focus is straightforward: drive profitable growth through disciplined financial execution, allocate capital thoughtfully, and provide shareholders with transparent and consistent communication. Let me turn to our second quarter financial results. As I noted earlier, because the difference between royalties revenue and licensing billing is now minimal, we will focus our financial results and guidance solely on an ASC 606 revenue basis.

We delivered Q2 revenue and non-GAAP earnings per share exceeding our Q2 guidance driven by strong contributions across our diversified revenue streams. Revenue for the second quarter was $207.4 million, which is up 20% year-over-year and up 15% sequentially, led by strong performances from our product and royalties revenue. Product revenue was $99.2 million, which is up 22% year-over-year and up 13% sequentially. Royalties revenue was $84.2 million. Contract and other revenue was $24 million, consisting primarily of silicon IP. As a reminder, only a portion of our silicon IP revenue is reflected in contract and other revenue, and the remaining portion is reported in royalties revenue. Total non-GAAP operating costs, including cost of goods sold for the quarter, were $113.7 million. Operating expenses of $73.5 million were up sequentially due to higher SG&A expenses. Interest and other income for the quarter was $6.8 million.

Using an assumed non-GAAP tax rate of 16%, non-GAAP net income for the quarter was $84.4 million, resulting in Q2 non-GAAP earnings per share of $0.77, which is up 24% year-over-year and up 21% sequentially. Let me turn to the balance sheet details. We ended the quarter with cash equivalents, and marketable securities totaling $825 million, up $39 million from Q1 with solid operating cash flow of $61 million, partially offset by $12 million in capital expenditures and $9 million of net equity outflows. Inventory increased by $16 million during the quarter as we leveraged the strength of our balance sheet to support future product ramps and provide customers with greater supply assurance in the coming quarters. Free cash flow in the quarter was $49 million. Let me now turn to our non-GAAP outlook for the third quarter.

As a reminder, the forward-looking guidance reflects our best estimates at this time, and our actual results could differ materially from what I’m about to review. We expect revenue in the third quarter to be between $210 million and $216 million. We expect product revenue to be between $110 million and $116 million, a sequential increase of 14% at the midpoint of guidance. We expect royalties revenue to be between $69 million and $75 million, and we expect contract and other revenues to be between $25 million and $31 million. We expect Q3 non-GAAP total operating costs, which include cost of sales, to be between $119 million and $115 million. We expect Q3 capital expenditures to be approximately $13 million. Non-GAAP operating results for the third quarter are expected to be between a profit of $91 million and $101 million. For non-GAAP interest and other income, we expect $7 million of interest income.

Assuming non-GAAP tax rate of 16% and Q3 share count of 110 million diluted shares outstanding, we expect Q3 non-GAAP earning per share range between $0.75 and $0.82. In closing, we delivered a strong quarter reflecting the diversification of our business and contributions across our revenue streams. Our third quarter outlook reflects continued sequential growth in both revenue and earnings per share, supported by sustained momentum across the business. We remain firmly focused on driving long-term shareholder value through disciplined execution, thoughtful capital allocation, and consistent operational performance. Before we open the call to questions, I want to thank our employees for their continued dedication and execution, our customers for their trusted partnership, and our investors for their ongoing support and confidence in Rambus. With that, I’ll turn the call back to our operator to begin Q&A. Could we have our first question, please?

Conference Operator: Thank you. Ladies and gentlemen, if you have a question, please press star one on your touch phone. We request to limit yourselves to one question and one follow-up. Your first question comes from the line of Kevin Cassidy with Rosenblatt Securities. Your line is open.

Kevin Cassidy, Analyst, Rosenblatt Securities: Yes. Congratulations on the great results and thanks for taking my question. Just to confirm, did you have any capacity issues during the quarter? Any orders you weren’t able to meet?

Luc Seraphin, Chief Executive Officer, Rambus: Hi, Kevin. No, we didn’t have any capacity issue in the second quarter. We continue to see tightness in the supply chain. We continue to see lead times increasing, but we didn’t have any capacity issue in Q2. We have built strong relationships with our suppliers, and at this point in time, we are able to serve the market demand.

Kevin Cassidy, Analyst, Rosenblatt Securities: Okay, great. Just because it’s topical today, China-based CXMT had a big splash today. Is Rambus involved with CXMT, either on the IP side or product side?

Luc Seraphin, Chief Executive Officer, Rambus: Yes. It’s great news for CXMT. I think they’re going to be a strong player in the market. Every company that builds memory has to have a license agreement with us, and they’re one of them. We’re very pleased with their success, and that’s going to be a good thing for us in the long run as well.

Kevin Cassidy, Analyst, Rosenblatt Securities: Okay, great. Thank you.

Luc Seraphin, Chief Executive Officer, Rambus: Thank you, Kevin.

Conference Operator: Your next question comes from the line of Sebastian Nagy with William Blair. Your line is open.

Sebastian Nagy, Analyst, William Blair: Good afternoon. Thank you for taking my questions. Maybe just for the first one, could you update us on your expectation for the ramp of MRDIMM? AMD is in production with the Venice CPU today. Sounds like servers will start shipping in Q4. Are you starting to get any better visibility into how much of the market will go down the MRDIMM route versus sticking with more traditional RDIMMs?

Luc Seraphin, Chief Executive Officer, Rambus: Yeah, thank you. We do continue to see MRDIMM as a material opportunity. As you said, the timing is going to be dependent on the platform adoption, when the servers go to market and whether those servers, what percentage of MRDIMM are they going to use as compared to a standard DIMM. We are excited by the opportunity. At this point in time, we will not overcall the adoption curve before the platforms actually ramps and we get feedback from the market. The contribution for Q4 is going to be minimal. We continue to ship to our customers for these early system buildups, and a more material contribution is going to happen in 2027, when both platforms from the CPU guys ramp in the market in earnest.

Sebastian Nagy, Analyst, William Blair: Got it. Okay, great. That’s helpful. Maybe for my follow-up, one of the concerns that we’re hearing more about from investors is just the risk of potentially over-ordering in this very tight memory supply environment. Are you seeing any signs of inventory buildup at your customers, or what kind of signals are you looking at that gives you some confidence this is not happening right now?

Luc Seraphin, Chief Executive Officer, Rambus: We don’t see any signs of our customers building inventory for the concerns that you expressed. This said, however, we are building some inventory on critical products that we believe are going to ramp in Q3, Q4, and early next year as we do see our lead times lengthening, given the tightness in the supply chain. No inventory buildup from our customers. We build strategic inventory for the products that we believe are going to contribute to our growth in the next few quarters.

Sebastian Nagy, Analyst, William Blair: Great. Thank you, Luc.

Luc Seraphin, Chief Executive Officer, Rambus: Thank you.

Conference Operator: Your next question comes from the line of Gary Mobley with StoneX. Your line is open.

Gary Mobley, Analyst, StoneX: Hi, guys. Thanks so much for taking my question and let me extend my congratulations on the snap back in your product revenue. Relating to that, I think you’ve always stated, at least so far this year, that typically you see seasonal strength in the second half of the year, that’s certainly reflected in your Q3 guidance. You’re obviously building inventory, I assume, in preparation to feel strong demand. We’ve also heard from the server processor supply chain that volumes continue to exceed expectations. I’m curious to know what kind of visibility you have currently versus, say, last quarter, and what kind of visibility you have looking into the fourth quarter in terms of the continued strength.

Luc Seraphin, Chief Executive Officer, Rambus: Thank you, Gary. I think our confidence is continuing to build. One of the reasons is the use of CPU and agentic AI is certainly a demand driver, we sense this with our customers. Our guide for Q3 shows another 20% growth year-over-year compared to last year. This is a good sign as well. We want to be reasonable, though, in terms of guiding beyond one quarter for two reasons. The same reasons. One is the timing of ramp of the platforms. We hear good things, they have to ramp. The second one is the supply tightness. We believe our second half is going to be stronger than our first half. We’re going to see the same dynamic as we saw in prior years. We will continue to guide quarter by quarter.

Gary Mobley, Analyst, StoneX: Thanks for that, Luc. As a follow-up, I wanted to ask about the silicon IP business. If I’m not mistaken, you’ve been pretty steady in assuming that business is about $130 million. Correct me if I’m wrong, you’ve consistently and seemingly delivered upside to that number, at least through the first half of the year. What’s your most up-to-date view on the performance of the silicon IP business, whether it be expressed in growth or dollar terms?

Luc Seraphin, Chief Executive Officer, Rambus: We continue to see that business growing 10%-15% a year. I would say that this is another business where our confidence in that number is continuing to build. Again, with the inference and agentic AI coming up into the market, we do see a lot of our customers building custom solutions that use our IP, whether it’s on the interconnect side, on the security side, or on the memory side. Our confidence is building up, and we’re confident in this 10%-15% growth going forward. It also gives us comfort as well in terms of the strategy we’re using with trying to stay at the bleeding edge of technology on these interconnect memory or security IPs. That allows us to engage with customers very early and gives us a longer-term visibility into that growth.

Again, I would say we still see that business growing 10%-15% a year, but our confidence in that growth continues to grow. We had a great quarter in Q2, in particular, as you could see.

Gary Mobley, Analyst, StoneX: Excellent. Appreciate it.

Luc Seraphin, Chief Executive Officer, Rambus: Thank you, Gary.

Conference Operator: Your next question comes from the line of Aaron Rakers with Wells Fargo. Your line is open.

Aaron Rakers, Analyst, Wells Fargo: Yeah. Thanks for taking the questions. I guess my first question is, earlier was asked about MR-DIMMs, but there’s just a lot of architecture stuff going on in memory or the memory subsystems in general. I’m curious, Luc, as you think about MR-DIMMs and you maybe juxtapose that relative to, let’s say, CXL. What is the company’s views on CXL now that we’ve seen Meta endorse the technology? There’s other inklings that other hype

Luc Seraphin, Chief Executive Officer, Rambus: That’s the excitement around MR-DIMM. When it comes to CXL, we are very supportive of CXL as a very important internet protocol. It’s not a shape, it’s an interconnect protocol, excuse me. I think it’s going to play a role in the AI evolution. In particular, in agentic AI, it’s going to play a role on managing the memory stack or the memory pyramid and moving from cold memory to hot memory. That’s still, I would say, an interconnect protocol and not a product. It remains very relevant to our silicon IP business. At the product chip level, because we actually talk to the people who build those products, we continue to see a fragmented market from a product standpoint, with many deployments looking ASIC-like or customer-specific products. Our positions with respect to CXL remains the same.

We will continue to enable the ecosystem with our IP engagement, that’s why we’re building confidence on our IP business, we’ll continue to monitor the traction there. We will continue also to focus our product investment where we see, I would say, the strongest market opportunity for scaling, and in particular, on standard products. Again, we play a critical role in the deployment in the ecosystem through our IP business, we’re monitoring the product business. At this point in time, we see this as a custom ASIC business that is fragmented for us. From the product standpoint, we’d rather invest into standard products at this point in time.

Aaron Rakers, Analyst, Wells Fargo: Yep. That makes a lot of sense. Appreciate that. As a quick follow-up, I know you referenced it in your prepared remarks that you were engaged with a hyperscaler on some of the IP and some future generation, I’m guessing, XPUs or programs that they have in place. I’m curious, is that changing? That opportunity set of your business, is that necessarily a new dynamic? Or any thoughts on hyperscalers being direct, real customers and driving some incremental growth for Rambus?

Luc Seraphin, Chief Executive Officer, Rambus: Yes, Aaron, that’s a very good question. I think the trend we see is that hyperscalers are playing a growing role in defining their own architectures, whether they build the products themselves or whether they have ASIC companies or product companies building the products for themselves. They want to stay competitive and move fast, their role in defining the architectures on complex subsystems, like the memory subsystems, is becoming more and more important. They work very early with us, for example, before even the other specifications are complete to make sure that we can meet their system requirements. Once this is done, they can use that to either build their own products or actually have Semiconductor building their own products against those high-end specifications. The trend that I see here is that these technologies actually proliferate.

Once a hyperscaler has decided upon a particular implementation of a memory controller, for example, then that proliferates into their own ecosystem. That, again, is one of the reasons we feel confident in the growth rate of our IP business.

Aaron Rakers, Analyst, Wells Fargo: Yep. Thank you.

Luc Seraphin, Chief Executive Officer, Rambus: Thank you, Aaron.

Conference Operator: Your next question comes from the line of Kevin Garrigan with Jefferies. Your line is open.

Kevin Garrigan, Analyst, Jefferies: Yeah. Hey, team. Thanks for taking my questions and congrats on the results. Hey, I may have missed it, but can you just talk about how much of your revenue was from companion chips or new product revenue this quarter?

Luc Seraphin, Chief Executive Officer, Rambus: In the first quarter, we indicated that our products, I would say these new products, were in a low double-digit % of the product revenue. We continue to be at that type of rate, and we continue to ramp those products into the market. It’s going to be in the mid double-digit % by the end of Q4. We are on that trajectory. Remember, this is on a growing revenue base for the product side. It actually is growing quite nicely, but it has to go through the qualification process with our customers’ customers, and ecosystem. It’s never going to be a step function, but we do have momentum there across the board, and we’re happy with the performance of those products.

Kevin Garrigan, Analyst, Jefferies: Yep. Okay. Great. That makes ton of sense. I get a lot of questions about just LPDDR-based servers, and you guys now have your SOCAMM2 chipset, and I believe just SOCAMM in general has lower content overall versus RDIMM and MRDIMM. As the industry kind of shifts or potentially shifts towards more LPDDR-based server modules, does that kind of cannibalize your RDIMM or MRDIMM opportunity at all?

Luc Seraphin, Chief Executive Officer, Rambus: That’s a great question. I wouldn’t say that the industry is shifting to LPDDR. I think LPDDR is actually an incremental opportunity for servers. We believe that DDR will remain dominant, where server grade scale, capacity, reliability, serviceability are required. That’s going to be continuing to be dominant in the server space. LPDDR and SOCAMM have a role to play where power efficiency is really, really important. We see this as complementary. We talk a lot about the AI market becoming heterogeneous. This is one aspect of that. Our SOCAMM2 gives us a seat at the table. We have a chipset for the current generation. To the extent that LPDDR is adopted more in the future with future generations, we will continue to develop chipset there. I think the content is going to continue to increase, as the complexity increase.

We do see this as an opportunity. We said in the last call, the revenue outlook in the short run is modest, but the strategic importance is really high for us.

Kevin Garrigan, Analyst, Jefferies: Yep. Okay, perfect. Thanks, Luc.

Luc Seraphin, Chief Executive Officer, Rambus: Thank you.

Conference Operator: Your next question comes from the line of Tristan Gerra with Baird. Your line is open.

Tristan Gerra, Analyst, Baird: Hi, good afternoon. The 20% year-over-year increase in product revenue guidance that you provided, is that a good reflection of the unit demand that you see for x86 CPU, in light of AMD provided a raising their x86 CPU CAGR to a 50% over the next several years, I understand this includes pricing. Is 20% kind of a good proxy in terms of unit that you expect, for CPU and then on top of that, you’re layering additional channel count?

Luc Seraphin, Chief Executive Officer, Rambus: Thank you, Tristan. Yes, it’s good that you remind that the way we look at our business is unit-based more than dollar-based, as we do not see the same pricing dynamics than the CPU or the memory guys have. That’s the nature of a standard product business. If you look at our business, we grew 20% year-over-year. Next quarter, we’re going to see the same type of growth year-over-year. The first quarter, despite the manufacturing issue we had, it was 15% higher than the same quarter a year earlier. We are on that trend. The server market view in terms of units, has changed positively. I would say last quarter, we would say was mid to high single-digit growth. Now it’s double-digit growth. Gartner mentions 12% growth.

We believe that we’re growing faster than that. It’s coming from a combination of the channel accounts, also the initial contribution of new products. Remember, on the channel accounts, we always make the same reflection. It’s a great trend for us, but it’s not a step function. We had AMD at 12 channels. Intel moved from 8 to 12. The whole market is going to move to 16. All of that are pointing in the right direction, and the secular trend is really, really good. That’s not a step function. I would say that we’re growing faster than market. We continue to believe we are growing faster than market. All of these factors come into play.

Tristan Gerra, Analyst, Baird: Okay, great. As my follow-up, for next year, do you think that we could see an acceleration from that 20% year-over-year growth, given the dynamic that you’ve mentioned? Is that something that you will be able to get sufficient supply? If you could also talk about any potential mix changes that you’re seeing, and anything that could impact ASPs given the supply constraint in DRAM and the potential this has in terms of DRAM content and CPU usage.

Luc Seraphin, Chief Executive Officer, Rambus: As we said earlier, we don’t guide beyond the current quarter. The data is so dynamic. I would say there are a few things to take into consideration when we look into 2027. I think the PCIe 5.0, DDR5 is going to grow in earnest. That’s the time where the market will have moved to 16 channel per CPU. That’s a good thing. This is the trend we were talking about. This is also, as we said earlier, when MRDIMM is going to start to kick in in the market. That’s another good thing. We continue to see growing contribution from our companionship and the client space. From a demand standpoint, the environment is very positive when we look at 2027. This being said, the supply constraints will continue to be there in 2027.

When we talk to our suppliers, we work with them. That’s the situation that is going to last with us for some time now. We have to take this into account when we look at the potential of our business and as well as the platform timing. By experience, we know that platform ramps typically take a little bit longer than what people anticipate. When we look and we guide, and again, we cannot guide beyond one quarter, when we look at the business, we feel very comfortable with the underlying assumptions on the demand side. We are prudent with respect to platform timing and supply, in particular. At this point in time, because we have standard products, we don’t see any opportunity, I would say, for price increases, because this is what you were talking about.

We want to stay competitive and maintain or continue to increase our share in the DIMM markets.

Tristan Gerra, Analyst, Baird: Great. Very useful. Thank you very much.

Luc Seraphin, Chief Executive Officer, Rambus: Thank you.

Conference Operator: Your next question comes from the line of Mark Lipacis with Evercore ISI. Your line is open.

Mark Lipacis, Analyst, Evercore ISI: Hi. Thanks for taking the questions. First question is, I think there is a framework to think about CPUs ramping in data centers along three dimensions. One would be CPU head nodes next to the GPU or accelerators. One would be CPUs kind of standalone agentic AI CPUs. The third one would be CPUs, in standard server configurations supporting legacy workloads like database. Should we think about a different framework for your silicon content opportunity in either of these three categories, or is the MRDIMM opportunity, does it ramp more obviously in one of these versus the other? That’s the first question, then I had a follow-up. Thanks.

Luc Seraphin, Chief Executive Officer, Rambus: Yeah, that’s a good framework to look at this. I would say that every segment that you described have their own requirements. In head nodes, we see sometimes the emergence of, or where people are starting to look at very high bandwidth, low power. That was one of the driver for the thoughts around SOCAMM. If we put the questions of platform RAMs and DRAM pricing on the side for a moment, that could be a good candidate for MRDIMM types of solutions, close to the GPU’s HBM, where you need a lot of memory there. That could be an option.

Standard servers, I would say, whether they’re used for a legacy or agentic AI, would have more standard solutions. In agentic AI, the latency is becoming very important. You have to build the key value cache But then once you have to pull from that key value cache, you need to be very fast. Latency becomes very important, and we see those servers actually using the maximum number of channels, not necessarily with the highest, I would say, capacity to maintain that latency smaller or shorter. One of the strengths we have is we have a good understanding of those trade-offs, whether it’s through our product business or our IP business. If you look at our roadmap, we’re trying to have solutions for each one of those segments.

The question we have, as usual is, we have to understand the ramp profile of each one of them, as well as, I keep saying, the supply constraints we’re going to have in 2026 and 2027.

Mark Lipacis, Analyst, Evercore ISI: Okay. Got you. That’s a very helpful framework, Luc. Then the design win with a hyperscaler for next-gen chip, just to be clear, is this a product design win for you, or is this IP?

Luc Seraphin, Chief Executive Officer, Rambus: It’s an IP design win for a company that designs a product.

Mark Lipacis, Analyst, Evercore ISI: Got you.

Luc Seraphin, Chief Executive Officer, Rambus: It’s someone building a SoC, if you wish, or providing a spec for SoC for others to build. We provide critical IP in that SoC. We see that trend, with the requirements of AI as it moves to agentic AI, the requirements for high-speed or the best performance, I would say, are accelerating. This is a trend that we’re seeing, that we’re talking more and more directly to the hyperscalers and develop with them the architecture, then it proliferates into people building the silicon. This is an IP win.

Mark Lipacis, Analyst, Evercore ISI: Got you. Would that be a royalty-based opportunity for you or licensed by program?

Luc Seraphin, Chief Executive Officer, Rambus: Like most of our silicon IP business, it’s a license or multi-license, meaning that anyone who’s going to use that architecture in any product, we have an opportunity for a license. It’s not volume-based, and typically, the volumes might not be necessarily high on big chips, but it’s a license base, which is typical with our silicon IP business and the silicon IP business in the market.

Mark Lipacis, Analyst, Evercore ISI: Okay, that’s very helpful. Thank you. The last question, you mentioned the PCI Express Gen 7, I believe, IP. What is the time frame for seeing revenues from that product?

Luc Seraphin, Chief Executive Officer, Rambus: It’s a similar business model as the one we talked about HBM controllers. This is, again, a similar trend where customers are working with us ahead of the specifications being finalized or as the specifications are being finalized. It’s a license opportunity for us, which we will see very quickly, in the coming quarters. Because it’s a licensing business, right? It doesn’t need to ramp in the market. It’s very well ahead of the end products ramping in the market.

Mark Lipacis, Analyst, Evercore ISI: You could get license revenues well ahead-

Luc Seraphin, Chief Executive Officer, Rambus: Yeah

Mark Lipacis, Analyst, Evercore ISI: of this end product shipping from that. Got you. Okay.

Luc Seraphin, Chief Executive Officer, Rambus: Yes. That’s typical for our IP business. We engage very early. We get the license as we engage, and then our customers build their chips, and it can take them 12, 18, 24 months before the product actually goes into the market. We see the revenue much earlier than that. What we see as well is the trend, because we understand what people are building and why they’re building it, and that gives us a very good insight as to where the market is going.

Mark Lipacis, Analyst, Evercore ISI: Got you. All right. Very helpful. Thank you for all the insight.

Luc Seraphin, Chief Executive Officer, Rambus: Thank you.

Mark Lipacis, Analyst, Evercore ISI: Appreciate it.

Luc Seraphin, Chief Executive Officer, Rambus: Thank you.

Conference Operator: Your next question comes from the line of Mehdi Hosseini with SIG. Your line is open.

Mehdi Hosseini, Analyst, SIG: Yes. Thanks for taking my question. All the good questions have already been asked. I just have a couple of follow-ups. Starting off with Luc. I looked at the slide number seven, and it’s very exciting that the chipset, especially for memory interface, is diversifying. What I wanted to ask you is how do you see, or what gives the confidence that this, combined with additional silicon IP, is going to help you with the growth acceleration? We have gone through the DDR5, and you have done a great job of carving out market share in SPD companionship. As I look into next year and I think about agentic AI and the Arm-based solution where number of channel per CPU is not really high priority, at the same time, you have all of these exotic chipset architecture coming to the market.

What is it that you see that will give you the confidence that you can actually grow revenue at a higher rate? I have a follow-up.

Luc Seraphin, Chief Executive Officer, Rambus: Yeah. Thank you, Mehdi. I think, as we said earlier, we believe that we have a very strong secular setup for our business. If you look at it and you look into next year, the market will be entirely DDR5. As we move from that transition from DDR4 to DDR5, we’ll continue to see an acceleration of the DDR5 sub-generations, which gives us additional opportunities to grow, share on the core business. In the prepared remarks, we talked about introducing PCIe 6.0. PCIe 5.0 is not in market yet, and we’re introducing PCIe 6.0 for after that. Every generation gives us an opportunity to gain share. On the companionships, we have a great growth opportunity there. We talked about increasing the percentage of revenue from our companionship, there’s still a lot of room to increase that in 2027. That’s another vector for us.

MRDIMM with four times the silicon content on the module is another vector. We’re starting to see more and more platforms on the client side. All the seeds that we have planted over the last two years are actually going to grow into something quite solid in 2027. I’m very confident in the setup from a demand standpoint. Now, if you look at the silicon IP business, although this is a license-based business, not a volume-based business, we do see this trend with hyperscalers defining their own products with advanced IP, which is also a source of growth for us. I am confident that we can grow. I know I said it, I’ll say it again.

I think the challenge next year for the industry, not only for us, is going to be the tightness of the supply chain, but we’re working with our suppliers to address that as early as we can.

Mehdi Hosseini, Analyst, SIG: Sure. If part of the strategy is to increase market share, does that mean that your product revenue gross margin is actually going to remain in the low 60%? Because that’s what’s been a trend despite double-digit product revenue. The gross margin is in the low 60. Is there a trade-off here?

Luc Seraphin, Chief Executive Officer, Rambus: Our model remains 60%-65%. We do see fluctuations from quarter-to-quarter. We like to see the product margin looked at on an annual basis at the end of the year, because with short-term supply constraints, mix, and all of that, it can fluctuate from quarter-to-quarter.

Mehdi Hosseini, Analyst, SIG: Got it. Thank you.

Sumeet Gagneja, Chief Financial Officer, Rambus: If I may add to that, Luc covered it. Just to reinforce that, on a quarterly basis, you may see that our gross margin may fluctuate based on product mix and other factors. Recently, as you know, we’ve been operating in the 60%-63% gross margin, our long-term model of 60-65 remains intact.

Mehdi Hosseini, Analyst, SIG: Got it. Thanks for details.

Conference Operator: At this time, there are no further questions. This concludes the question and answer session. I would now like to turn the conference back over to the company.

Luc Seraphin, Chief Executive Officer, Rambus: I’d like to thank everyone who has joined us today for your continued time and support. We look forward to speaking with you again soon. Thank you.

Sumeet Gagneja, Chief Financial Officer, Rambus: Yeah. Thanks, everyone.

Conference Operator: Thank you. This now concludes today’s conference.