Rambus (NASDAQ:RMBS) executives on the company’s fiscal fourth-quarter and full-year 2025 earnings call highlighted record annual revenue and earnings, strong momentum in DDR5-related products, and continued confidence in growth prospects tied to AI and data center demand. Management also addressed a one-time supply chain disruption expected to pressure product revenue in the first quarter of 2026, but said the underlying business trajectory remains intact.
Full-year 2025 closes with record revenue, earnings, and cash generation
CEO Luc Seraphin said 2025 was “an excellent year,” with a strong fourth quarter culminating in record revenue and earnings for the full year. He emphasized that Rambus’ diversified portfolio was a core strength, with each business contributing meaningfully, and noted the company delivered a new annual high in cash from operations that supports continued investment in product roadmaps and market expansion.
Fourth-quarter results beat expectations as product revenue hits another record
On a non-GAAP basis, Rambus posted fourth-quarter revenue of $190.2 million, which Lynch said was above expectations. Key revenue components included:
- Royalty revenue: $71.7 million
- Licensing billings (operational metric): $71.5 million
- Product revenue: $96.8 million, a record quarter and up 32% year-over-year
- Contract and other revenue: $21.8 million, consisting predominantly of Silicon IP
Total operating costs in the quarter, including cost of goods sold, were $103.2 million. Operating expenses were $64.9 million, flat sequentially and in line with expectations. Interest and other income was $6.4 million. Using an assumed flat tax rate of 20% for non-GAAP pre-tax income, non-GAAP net income for the quarter was $74.7 million.
Rambus ended the quarter with $761.8 million in cash, cash equivalents, and marketable securities, up from the prior quarter, primarily driven by record quarterly cash from operations of $99.8 million. Fourth-quarter free cash flow was $91.2 million, with capital expenditures of $8.6 million and depreciation expense of $8.4 million.
AI, servers, and DDR5 adoption frame market opportunity
Seraphin said both AI and traditional server markets remained strong in 2025, driven by the need for higher compute and memory performance as workloads grow more complex and inference expands into new use cases, including “agentic and physical AI.” He said this environment contributed to further DDR5 adoption and supported demand for other high-performance memory and interconnect technologies.
Management also described an industry dynamic of faster product cycles, with customers increasingly operating on one-year cadences, which Seraphin said increases the need for cutting-edge merchant and custom solutions and accelerates customer design cycles. He added that Rambus saw increasing design wins and customer engagement around its latest-generation HBM4, GDDR7, and PCIe 7 digital IP, alongside security IP.
In Q&A, Seraphin contextualized the company’s expectation to “grow faster than market” in 2026 by noting a range of industry growth estimates for servers. He said Rambus tends to align with Gartner’s view of roughly 8% server market growth, citing potential supply constraints—particularly on the memory side—as a reason for a more prudent baseline.
Supply chain disruption to pressure Q1 product revenue, with recovery expected in Q2
A major focus of the call was a supply chain issue expected to affect first-quarter 2026 product revenue. Seraphin said the company identified a back-end manufacturing issue with one of its outsourced semiconductor assembly and test (OSAT) partners in Q4. He said the issue affected an “extremely low number of parts,” which made the root cause harder to reproduce, but that Rambus identified the cause and implemented corrective actions with supply chain partners.
Seraphin explained the company took two key actions: it pulled forward “fresh material from inventory” that had been staged for Q1 to meet strong Q4 customer demand, and it quarantined potentially impacted production material “out of an abundance of caution,” retesting it with enhanced screening. He said those steps strained capacity in what he described as a tighter supply environment, contributing to the Q1 impact.
In response to analyst questions, Seraphin said there was no reputational damage with customers, describing close coordination with suppliers and customers and emphasizing quality processes. He also clarified the issue affected only RCD products—specifically older versions—and did not affect companion chips.
Lynch quantified the expected revenue impact, stating it would be “around low double-digit $ million” in what is already a seasonally softer quarter. He added that the company expects to replenish inventory by the end of Q1 and return to strong growth in Q2.
Market share gains, new products, and platform timing
On DDR5 RCD market share, Seraphin said Rambus believes it ended 2025 in the “mid-40%” range for DDR5, up from the “early 40s” in 2024. He noted DDR5 is increasing its share of the overall market as DDR4 declines.
Lynch provided updates on newer product contributions, saying new products grew from low single-digit contribution to total product revenue in the first half of 2025 to upper single digits in Q4. Looking to Q1, he said he expects new products to grow to about a double-digit contribution of product revenue, with PMIC described as the largest contributor. He added that customers value interoperability between RCD and PMIC.
Regarding DDR5 RCD generational mix, Seraphin said Gen 2 was predominant in Q4 and Gen 3 was starting to ramp. For 2026, he said the company expects Gen 3 to continue to grow and likely become the predominant DDR5 version during the year, while Gen 4 is expected to have more limited adoption due to a different core. He said the next major step will be Gen 5, which depends on the rollout of next-generation platforms from Intel and AMD.
Management also discussed timing for MRDIMM, stating the ramp depends on the rollout of Intel and AMD platforms. Seraphin said Rambus expects MRDIMM to ramp toward the end of the year, with initial contribution toward the end of the calendar year and “the main contribution” in 2027.
When asked about exposure to the client market, Seraphin said it remains minimal today, noting that adoption of certain client-related chips is limited to the high end of the market. He said the vast majority of the business is in data center, though he added that power and clock management will be important in client over the long run.
For the first quarter of 2026, Rambus guided non-GAAP revenue to $172 million to $178 million, with royalty revenue expected at $61 million to $67 million and licensing billings at $66 million to $72 million. The company guided to non-GAAP EPS of $0.56 to $0.64, using a projected diluted share count of 110 million. Lynch also said the company expects a 2026 pro forma tax rate of 16%, driven by tax legislation changes last year.
About Rambus (NASDAQ:RMBS)
Rambus Inc is a technology licensing company specializing in semiconductor and system-level interface solutions. Founded in 1990 by Stanford University researchers Mike Farmwald and Mark Horowitz, Rambus established its headquarters in Sunnyvale, California. The company initially gained prominence by developing high-speed DRAM interface technology and securing a broad patent portfolio covering memory architecture, data signaling and power management innovations.
Today, Rambus licenses its proprietary intellectual property (IP) to semiconductor companies, original equipment manufacturers (OEMs) and system integrators worldwide.
