RAMBUS INC (RMBS)

Item 2. 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 (1) our Unaudited Condensed Consolidated Financial Statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q, and (2) our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended December 31, 2025 included in the Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on February 18, 2026.

Rambus is a trademark of Rambus Inc. Other trademarks that may be mentioned in this quarterly report on Form 10-Q are the property of their respective owners.

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.

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Executive Summary

We delivered strong second quarter 2026 results, driven by continued demand for our memory interface chips, momentum in Silicon IP and stable royalties revenue.

Key second quarter 2026 financial results included:

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Revenue of $207.4 million;

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Operating expenses of $92.7 million;

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Diluted net income per share of $0.61; and

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Net cash provided by operating activities of $61.2 million.

We achieved quarterly product revenue of $99.2 million in the second quarter of 2026, which increased by approximately 22% as compared to the same period in 2025, reflecting strong execution in our memory and interface portfolio. We also expanded our product and IP offerings for next-generation AI platforms, including the LPDDR5X SOCAMM2 server module chipset.

Operational Highlights

Revenue Sources

Our consolidated revenue is comprised of product revenue, royalties revenue 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 and client memory modules. Product revenue accounted for 48% of our consolidated revenue for both the three and six months ended June 30, 2026, as compared to 47% for both the three and six months ended June 30, 2025.

Royalties revenue is derived in part from our patent licenses and in part from our Silicon IP technology licenses. Our licenses enable our customers to use a portion of our intellectual property 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. Our Silicon IP technology licensees include a broad set of companies, ranging from well-established to leading startup semiconductor companies. The vast majority of our intellectual property originates 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% of our consolidated revenue for both the three and six months ended June 30, 2026, as compared to 40% and 42% for the three and six months ended June 30, 2025, respectively.

Contract and other revenue consists primarily of Silicon IP technology development projects related to our high-speed interface and security IP. Revenue sources under contract and other revenue 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 12% of our consolidated revenue for both the three and six months ended June 30, 2026, as compared to 13% and 11% for the three and six months ended June 30, 2025, respectively.

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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 $7.2 million and $10.3 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The increases were 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 increased $0.2 million and $0.7 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The increases were primarily due to higher engineering services associated with the contracts.

Total research and development expenses for the three months ended June 30, 2026 increased approximately $4.8 million as compared to the same period in 2025. The increase was primarily driven by continued investment in our research and development initiatives and primarily reflected higher headcount-related expenses of $2.2 million and an increase in stock-based compensation expenses of $0.7 million. In addition, prototyping costs and depreciation expense increased by $1.2 million and $0.6 million, respectively. Total research and development expenses for the six months ended June 30, 2026 increased approximately $12.3 million as compared to the same period in 2025. The increase was primarily driven by continued investment in our research and development initiatives and primarily reflected higher headcount-related expenses of $6.2 million and an increase in stock-based compensation expenses of $1.4 million. In addition, prototyping costs and depreciation expense increased by $2.6 million and $1.6 million, respectively.

Total sales, general and administrative expenses for the three months ended June 30, 2026 increased approximately $10.2 million as compared to the same period in 2025, due to increases in professional fees of $7.0 million, payroll-related expenses of $1.5 million and stock-based compensation expenses of $1.0 million. Total sales, general and administrative expenses for the six months ended June 30, 2026 increased approximately $13.7 million as compared to the same period in 2025, due to increases in professional fees of $8.8 million, payroll-related expenses of $3.6 million and recruiting expenses of $0.6 million.

Intellectual Property

As of June 30, 2026, our semiconductor, security and other technologies are covered by 2,010 U.S. and foreign patents. Additionally, we have 476 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 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. 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.

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

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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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Revenue of $707.6 million;

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Operating expenses of $303.0 million;

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Diluted net income per share of $2.11; and

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Net cash provided by operating activities of $360.0 million.

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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 d

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