Rambus Inc 2026 Q3 Earnings Call

Thank you, operator, and welcome to Rambus's third quarter 2026 results conference call. I am Sumeet Gagneja, chief financial officer at Rambus. On the call with me today is Luc Seraphin, our CEO. The press release for the results that we will be discussing today has been filed with the 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 for projected financial results and prospects, market growth, demand for our solutions, and the potential effects of geopolitical and macroeconomic conditions.

These statements are subject to risks and uncertainties that may be discussed during this call and are more fully described in our 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 our press release and on the call today, we present both GAAP and non-GAAP financial measures to provide greater clarity regarding our financial performance. 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. The order of the call today will be as follows.

Luc will begin with an overview of the business, followed by my review of the financial results, and then we will open the call to Q&A. I will now turn the call over to Luc to provide an overview of the quarter.

Luc? Thank you, Sumeet. Good afternoon, everyone, and thank you for joining us.

In Q3, we delivered a truly exceptional quarter. Revenue and non-GAAP earnings both reached new record highs and exceeded the top end of our guidance ranges. Strong customer demand fueled record product revenue and cash from operations, and we expect an even stronger product performance in Q4. We introduced new chip and Silicon IP products that extend our leadership in data center and AI infrastructure. In addition, as complexity and pace accelerate in semiconductor development for AI, we are also investing in the tools and infrastructure that will keep us on the leading edge of technology. As such, we engaged with a fellow pioneer in the ecosystem and announced an exciting new partnership that propels us into the age of Agentic AI agent-driven chip and IP design.

As we continue to invest in our future, we are also pleased to have completed a $100 million accelerated share repurchase. This demonstrates the strength of our business model and our ability to return value to our stockholders while advancing our product roadmap to drive long-term growth. Taken together, the results and progress we delivered this quarter reflect the strength and long-term resilience of a strategy we have pursued over many years. Investing in technology leadership, anticipating the key trends transforming the data center, and positioning the company to capture the opportunities those trends create. Our strategy is producing strong results today while at the same time laying the foundation for future growth. As we outlined over previous quarters, AI continues to create strong tailwinds for Rambus across our businesses.

As frontier AI training continues to advance and inference scales across a growing range of applications, customers require increasingly sophisticated memory and infrastructure architectures to move, manage, and secure growing volumes of data. Agentic AI is accelerating this trend as deployments evolve toward more distributed and heterogeneous architectures that require greater coordination across systems. At the same time, orchestration of always-on workloads puts greater demands on the CPU, lifting CPU to GPU ratios and driving requirements for more main memory bandwidth and capacity across the data center. The latest Agentic AI implementations amplify this need even further by assigning dedicated compute and memory resources to individual users or agents. All this creates accelerating demand for Rambus products and IP throughout the memory subsystem and across the broader infrastructure stack.

While we continue to invest in the fundamental R&D and product roadmap required to address the ever-growing demand of memory management efficiency in the long run. Now, let me turn to the quarterly results, starting with products. We delivered a new all-time high in quarterly product revenue, reaching approximately $114 million, up 15% sequentially and 22% year over year. Our leadership in DDR5 RCDs and growing adoption of new generation products fueled our record results. We are seeing strong demand across multiple generations of RCDs, supporting our outlook for another record quarter of product revenue in Q4, which we expect to grow more than 30% year over year. Looking ahead, we have a strong pipeline of products aligned with upcoming platform ramps, positioning us well for next generation of server platforms.

As part of that pipeline, we are pleased to share that our sixth generation RCD, announced early in Q3, which supports DDR5-9600, is now sampling broadly with customers and is being very well received. We continue to execute successfully on our roadmap, recently expanding our product portfolio with an industry-leading PMIC for the upcoming LPDDR6 SOCAMM2. Earlier this year, we introduced our first SOCAMM2 chipset that supports LPDDR5X. This new PMIC solution extends our server memory product roadmap to LPDDR6 and reinforces our leadership in advanced server memory power management. It was developed in close collaboration with customers and ecosystem partners to enhance memory subsystem power efficiency and help scale tokens per watt for AI workloads. We identified early on that power management would be critical to the success of AI deployments and have been investing in this area for many years.

We are proud of our progress and continued leadership in this space. We have consistently said that as memory speeds increase and server architectures become more sophisticated and heterogeneous, the memory subsystem will require additional intelligence, power management, and control functionality. Our roadmap is designed to address this evolution across both DDR and LPDDR-based memory with timing management, power management, and security management, creating opportunities for Rambus to participate in increasing module chip content over time. In addition, DDR-based server platforms are expanding from 8 memory channels to 12 to 16 channels, increasing the maximum available memory bandwidth and capacity. This raises the number of modules supported in a server and amplifies demand as platforms progress. Today, Rambus offers complete chipsets across all major industry standard DDR5 and LPDDR server memory module architectures.

This broad portfolio positions us well for future server platforms and allows customers to leverage Rambus solutions across a growing range of memory architectures and deployment models. Looking ahead, we believe we are exceptionally well positioned for future server generations and for the continued expansion of memory-intensive AI infrastructure. Turning now to Silicon IP, we delivered a very strong quarter with key design wins across our Silicon IP portfolio. The strength of those wins, combined with expanding strategic engagement across the industry, including custom silicon makers and hyperscalers, reinforces our confidence in the long-term growth of opportunity for the Silicon IP business and for Rambus. One of the defining characteristics of today's market is the rapid growth of custom silicon. The expansion of AI is fueling a new wave of custom silicon development.

Hyperscalers, AI infrastructure providers, and emerging semiconductor companies are designing increasingly differentiated architectures and tailored silicon optimized for their own environments. These systems depend on advanced memory technologies, high-speed interconnects, and trusted security, creating significant opportunities for Rambus Silicon IP. During the quarter, we drove increasing ecosystem engagement and new Tier 1 design wins for next generation HBM, supported by our deep architectural engagements ahead of standards being finalized. We continue to see increasing interest in PCIe controller and switch IP for scale-up and scale-out connectivity solutions as customers seek higher levels of performance and efficiency across rapidly expanding AI infrastructure. The importance of bleeding-edge IP continues to increase as customers pursue differentiated performance, power efficiency, and time-to-market advantages. As a result, we are engaging earlier in the architectural planning cycle with both our customers as well as our customers' customers and participating in a broader set of strategic programs.

Leading-edge memory and connectivity are fundamental to performance. As AI infrastructure scales and becomes more heterogeneous, hardware-based security foundation is becoming fundamental. Agentic AI relies on distributed computing architectures that execute workloads across multiple systems, which increases the available attack surface for adversaries, a growing concern in the current environment. As a pioneer and long-time leader in hardware-based security, Rambus IP solutions address that risk by providing a trusted foundation for the entire system and enhancing protection for valuable data and infrastructure. Building on our industry-leading security offerings, we recently added a new root of trust solution designed specifically for AI and data center deployments that supports the Caliptra specification. Caliptra was developed by key leading technology companies to establish a common hardware security foundation for data center class SoCs and reflects the growing recognition that hardware-based security is essential for next-generation infrastructure.