~~Table of Contents~~

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2023

¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-22339

RAMBUS INC.

(Exact name of registrant as specified in its charter)



Delaware						94-3112828
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

~~1050 Enterprise Way, Suite 700~~

~~Sunnyvale, California~~

4453 North First Street

~~94089~~

Suite 100

San Jose

California

95134

(Address of principal executive offices)

(ZIP Code)

Registrant’s telephone number, including area code:

(408) 462-8000

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $.001 Par Value	RMBS	The Nasdaq Stock Market LLC
		(The Nasdaq Global Select Market)

Securities registered pursuant to Section 12(g) of the Act:

None

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. Yes ý☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ 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). Yes ý☒ No o☐

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.

Large accelerated filer

☒

Accelerated filer

☐

~~Large accelerated filer~~ ý

~~Accelerated filer~~ o

Non-accelerated filero ~~(Do not check if a smaller reporting company)~~

☐

Smaller reporting companyo

☐

Emerging growth companyo

☐

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 ~~7(a)(2)(B)~~13(a) of the ~~Securities~~Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act). Yes o☐ No ý☒

The number of shares outstanding of the registrant’s Common Stock, par value $.001 per share, was ~~109,778,058~~107,509,241 as of September 30, ~~2017~~.2023.

RAMBUS INC.

TABLE OF CONTENTS



		PAGE
Note Regarding Forward-Looking Statements		4
PART I. FINANCIAL INFORMATION		6
Item 1. Financial Statements (Unaudited):		6
Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2023 and December 31, ~~2016~~2022		6
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2017~~2023 and ~~2016~~2022		7
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, ~~2017~~2023 and ~~2016~~2022		8
Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022		9
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2023 and ~~2016~~2022		910
Notes to Unaudited Condensed Consolidated Financial Statements		1011
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2628
Item 3. Quantitative and Qualitative Disclosures ~~about~~About Market Risk		4041
Item 4. Controls and Procedures		4041
PART II. OTHER INFORMATION		4143
Item 1. Legal Proceedings		4143
Item 1A. Risk Factors		4143
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		5463
Item 3. Defaults Upon Senior Securities		5464
Item 4. Mine Safety Disclosures		5464
Item 5. Other Information		5565
Item 6. Exhibits		66
~~Item 6. Exhibits~~Signature		5567
~~Signature~~	56
~~Exhibit Index~~	57

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly 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. These forward-looking statements include, without limitation, predictions regarding the following aspects of our future:

•Success in the markets of our products and services or our customers’ products;

•Sources of competition;

•Research and development costs and improvements in technology;

•Sources, amounts and concentration of revenue, including royalties;

•Success in signing and renewing customer agreements, including license agreements;

•The timing of completing engineering deliverables and the changes to work required;

•Success in obtaining new technology development contracts booked in the future;

•Success in adding and maintaining new customers;

•Success in obtaining orders from our customers, and our ability to meet our customers’ demands;

•Success in entering and growth in new markets;

•Levels of variation in our customers’ reported shipment volumes, sales prices, and product mix;

•Variation in contract and other revenue, based on varying revenue recognized from contract and other revenue;

•Implications of short-term or long-term increases in our research and development expenses;

•Short-term increases in cost of product revenue;

•Variation in our sales, general and administrative expenses;

•Terms of our licenses and amounts owed under license agreements;

•Technology product development;

•Perceived or actual changes in the quality of our products;

•Dispositions, acquisitions, mergers or strategic transactions and our related integration ~~efforts, including our acquisitions of Smart Card Software Ltd., the assets of Semtech Corporation's Snowbush IP group and Inphi Corporation's Memory Interconnect Business;~~efforts;

•Impairment of goodwill and long-lived assets;

•Pricing policies of our customers;

•Changes in our strategy and business model, including the expansion of our portfolio of inventions, products, software, services and solutions to address additional markets in ~~lighting,~~ memory, chip ~~mobile payments, smart ticketing~~ and security;

•Deterioration of financial health of commercial counterparties and their ability to meet their obligations to us;

•Effects of security breaches or failures in our or our customers’ products and services on our business;

•Engineering, sales, ~~and~~legal, advertising, marketing, general and administration, and other expenses;

•Contract revenue;

•Operating results;

•Continued product revenue growth, specifically in connection with the growth in sales of our memory interface chips;

•International licenses, operations and expansion;

•Effects of changes in the economy and credit market on our industry and business;

•Effects of natural disasters, climate change, and extreme weather events on our supply chain;

•Ability to identify, attract, motivate and retain qualified personnel;

•Effects of government regulations on our industry and business;

•Manufacturing, shipping and supply partners, supply chain availability and/or sale and distribution channels;

•Growth in our business;

•Methods, estimates and judgments in accounting policies;

•Adoption of new accounting ~~pronouncements, including our expectations regarding the new revenue recognition standard on our financial position, results of operations or cash flows;~~pronouncements;

•Effective tax ~~rates;~~rates, including as a result of recent U.S. tax legislation;

•Restructurings and plans of termination;

•Realization of deferred tax assets/release of deferred tax valuation allowance;

•Trading price of our common stock;

•Internal control environment;

~~The level and terms of our outstanding debt and the repayment or financing of such debt;~~

•Protection of intellectual ~~property;~~property (“IP”);

•Any changes in laws, agency actions and judicial rulings that may impact the ability to enforce ~~intellectual property~~our IP rights;

•Indemnification and technical support obligations;

•Equity repurchase ~~plans;~~programs;

•Issuances of debt or equity securities, which could involve restrictive covenants or be dilutive to our existing stockholders;

•Effects of fluctuations in interest rates and currency exchange rates;

•Effects of a rising rate of inflation;

•Effects of U.S. government restrictions on exports with China;

•Effects of current and future uncertainty in the worldwide economy, including major central bank policies and worldwide changes in credit markets;

•Effects of changes in macroeconomic conditions, increased risk of recession, and geopolitical issues;

•Management of supply chain risks; and

•Outcome and effect of potential future ~~intellectual property~~IP litigation and other significant ~~litigation; and~~

~~Likelihood of paying dividends.~~litigation.

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 Part ~~II:~~II, 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.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

RAMBUS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In thousands, except shares and par value)	September 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	131,957	$	125,334
Marketable securities	243,588		187,892
Accounts receivable	65,101		55,368
Unbilled receivables	64,252		125,698
Inventories	34,615		20,900

Prepaids and other current assets	11,112		12,022

Total current assets	550,625		527,214
Intangible assets, net	32,015		50,880
Goodwill	286,812		292,040
Property, plant and equipment, net	73,466		86,255
Operating lease right-of-use assets	20,964		24,143
Unbilled receivables	3,479		25,222
Deferred tax assets	131,020		3,031
Income taxes receivable	84,487		1,064
Other assets	1,463		2,745
Total assets	$	1,184,331	$	1,012,594
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	15,682	$	24,815
Accrued salaries and benefits	13,076		20,502

Convertible notes	—		10,378
Deferred revenue	17,459		23,861

Income taxes payable	8,638		18,137
Operating lease liabilities	4,174		5,024

Other current liabilities	25,167		23,992
Total current liabilities	84,196		126,709


Long-term operating lease liabilities	26,117		29,079
Long-term income taxes payable	77,655		5,892
Deferred tax liabilities	5,819		24,964
Other long-term liabilities	34,978		46,653
Total liabilities	228,765		233,297
Commitments and contingencies (Notes 8, 10 and 14)
Stockholders’ equity:
Convertible preferred stock, $0.001 par value:
Authorized: 5,000,000 shares; issued and outstanding: no shares at September 30, 2023 and December 31, 2022	—		—
Common stock, $0.001 par value:
Authorized: 500,000,000 shares; issued and outstanding: 107,509,241 shares at September 30, 2023 and 107,610,356 shares at December 31, 2022	108		108
Additional paid-in capital	1,301,905		1,297,408
Accumulated deficit	(344,079)		(513,256)
Accumulated other comprehensive loss	(2,368)		(4,963)
Total stockholders’ equity	955,566		779,297
Total liabilities and stockholders’ equity	$	1,184,331	$	1,012,594

September 30,
2017 December 31,
2016

(In thousands, except shares
and par value)
ASSETS

Current assets:

Cash and cash equivalents $ 182,345
$ 135,294
Marketable securities 1,287
36,888
Accounts receivable 49,799
21,099
Inventories 5,015
5,633
Prepaids and other current assets 10,998
17,867
Total current assets 249,444
216,781
Intangible assets, net 102,545
132,388
Goodwill 209,318
204,794
Property, plant and equipment, net 54,035
58,442
Deferred tax assets 206,503
168,342
Other assets 2,283
2,749
Total assets $ 824,128
$ 783,496
LIABILITIES & STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable $ 7,016
$ 9,793
Accrued salaries and benefits 12,278
14,177
Convertible notes, short-term 131,490
—
Deferred revenue 21,224
16,932
Other current liabilities 10,731
10,399
Total current liabilities 182,739
51,301
Convertible notes, long-term —
126,167
Long-term imputed financing obligation 37,471
38,029
Other long-term liabilities 14,381
15,217
Total liabilities 234,591
230,714
Commitments and contingencies (Notes 9 and 13)

Stockholders’ equity:

Convertible preferred stock, $.001 par value:

Authorized: 5,000,000 shares

Issued and outstanding: no shares at September 30, 2017 and December 31, 2016 —
—
Common stock, $.001 par value:

Authorized: 500,000,000 shares

Issued and outstanding: 109,778,058 shares at September 30, 2017 and 111,053,734 shares at December 31, 2016 110
111
Additional paid-in capital 1,187,987
1,181,230
Accumulated deficit (592,863 ) (615,051 )
Accumulated other comprehensive loss (5,697 ) (13,508 )
Total stockholders’ equity 589,537
552,782
Total liabilities and stockholders’ equity $ 824,128
$ 783,496

~~See~~Refer to Notes to Unaudited Condensed Consolidated Financial Statements

RAMBUS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands, except per share amounts)	2023		2022		2023		2022
Revenue:
Product revenue	$	52,181	$	58,619	$	170,934	$	159,890
Royalties	28,857		29,878		97,698		108,380
Contract and other revenue	24,260		23,747		70,260		64,156
Total revenue	105,298		112,244		338,892		332,426
Cost of revenue:
Cost of product revenue	19,388		21,953		64,554		60,767
Cost of contract and other revenue	1,295		1,455		4,280		3,053
Amortization of acquired intangible assets	3,349		3,576		10,472		10,375
Total cost of revenue	24,032		26,984		79,306		74,195
Gross profit	81,266		85,260		259,586		258,231
Operating expenses (benefits):
Research and development	37,368		39,295		120,842		118,648
Sales, general and administrative	25,333		26,198		82,484		79,409

Amortization of acquired intangible assets	258		433		1,022		1,259
Restructuring and other charges (benefit)	(100)		—		9,394		—
Gain on divestiture	(90,843)		—		(90,843)		—
Impairment of assets	10,045		—		10,045		—
Change in fair value of earn-out liability	(5,666)		2,411		8,134		(1,889)


Total operating expenses (benefits)	(23,605)		68,337		141,078		197,427
Operating income	104,871		16,923		118,508		60,804
Interest income and other income (expense), net	2,715		2,838		7,112		6,936
Gain on fair value of equity security	—		3,547		—		3,547
Loss on extinguishment of debt	—		(17,129)		—		(83,626)
Loss on fair value adjustment of derivatives, net	—		(2,302)		(240)		(10,585)


Interest expense	(356)		(437)		(1,113)		(1,390)
Interest and other income (expense), net	2,359		(13,483)		5,759		(85,118)
Income (loss) before income taxes	107,230		3,440		124,267		(24,314)
Provision for (benefit from) income taxes	4,032		2,501		(151,092)		5,945
Net income (loss)	$	103,198	$	939	$	275,359	$	(30,259)
Net income (loss) per share:
Basic	$	0.95	$	0.01	$	2.54	$	(0.27)
Diluted	$	0.93	$	0.01	$	2.48	$	(0.27)
Weighted-average shares used in per share calculation:
Basic	108,317		109,968		108,412		110,102
Diluted	110,775		111,962		111,179		110,102

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(In thousands, except per share amounts)
Revenue:

Royalties $ 72,787
$ 68,298
$ 211,733
$ 194,010
Product revenue 8,661
7,092
27,966
14,306
Contract and other revenue 17,686
14,465
51,506
30,722
Total revenue 99,134
89,855
291,205
239,038
Operating costs and expenses:

Cost of product revenue*

5,152
7,031
17,882
12,581
Cost of contract and other revenue 14,456
12,393
43,274
33,139
Research and development* 36,196
33,820
109,718
91,100
Sales, general and administrative* 26,799
24,795
82,122
69,679
Gain from sale of intellectual property (479 ) —
(479 ) —
Gain from settlement —
—
—
(579 )
Total operating costs and expenses 82,124
78,039
252,517
205,920
Operating income 17,010
11,816
38,688
33,118
Interest income and other income (expense), net 208
142
491
1,522
Interest expense (3,287 ) (3,193 ) (9,754 ) (9,497 )
Interest and other income (expense), net (3,079 ) (3,051 ) (9,263 ) (7,975 )
Income before income taxes 13,931
8,765
29,425
25,143
Provision for income taxes 6,236
4,254
16,119
14,878
Net income $ 7,695
$ 4,511
$ 13,306
$ 10,265
Net income per share:

Basic $ 0.07
$ 0.04
$ 0.12
$ 0.09
Diluted $ 0.07
$ 0.04
$ 0.12
$ 0.09
Weighted average shares used in per share calculation:

Basic 109,555
110,214
110,353
109,951
Diluted 113,119
113,723
113,861
112,805

* Includes stock-based compensation:

Cost of product revenue $ 20
$ 14
$ 53
$ 42
Research and development $ 2,969
$ 2,337
$ 9,048
$ 6,526
Sales, general and administrative $ 3,975
$ 3,092
$ 11,068
$ 8,788

~~See~~Refer to Notes to Unaudited Condensed Consolidated Financial Statements

RAMBUS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Net income (loss)	$	103,198	$	939	$	275,359	$	(30,259)
Other comprehensive income (loss):
Foreign currency translation adjustment	(166)		(1,018)		164		(1,987)
Unrealized gain (loss) on marketable securities, net of tax	827		(12)		2,431		(3,329)
Total comprehensive income (loss)	$	103,859	$	(91)	$	277,954	$	(35,575)

Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands) 2017 2016 2017 2016
Net income $ 7,695
$ 4,511
$ 13,306
$ 10,265
Other comprehensive income (loss):

Foreign currency translation adjustment 2,581
(2,704 ) 7,177
(8,903 )
Unrealized gain (loss) on marketable securities, net of tax 339
(374 ) 634
(745 )
Total comprehensive income $ 10,615
$ 1,433
$ 21,117
$ 617

~~See~~Refer to Notes to Unaudited Condensed Consolidated Financial Statements

RAMBUS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


	For the Three Months Ended September 30, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss
(In thousands)	Shares	Amount								Total
Balances at June 30, 2023	109,131	$	109	$	1,301,013	$	(352,535)	$	(3,029)	$	945,558
Net income	—	—		—		103,198		—		103,198
Foreign currency translation adjustment	—	—		—		—		(166)		(166)
Unrealized gain on marketable securities, net of tax	—	—		—		—		827		827
Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan, net of withholding taxes	233	—		(3,366)		—		—		(3,366)

Repurchase and retirement of common stock under repurchase program	(1,855)	(1)		(5,781)		(94,742)		—		(100,524)
Stock-based compensation	—	—		10,039		—		—		10,039






Balances at September 30, 2023	107,509	$	108	$	1,301,905	$	(344,079)	$	(2,368)	$	955,566

	For the Three Months Ended September 30, 2022
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss
(In thousands)	Shares	Amount								Total
Balances at June 30, 2022	110,528	$	111	$	1,283,789	$	(440,004)	$	(5,738)	$	838,158
Net income	—	—		—		939		—		939
Foreign currency translation adjustment	—	—		—		—		(1,018)		(1,018)
Unrealized loss on marketable securities, net of tax	—	—		—		—		(12)		(12)
Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan, net of withholding taxes	86	—		(980)		—		—		(980)

Repurchase and retirement of common stock under repurchase program	(3,132)	(4)		(30,075)		(70,333)		—		(100,412)
Stock-based compensation	—	—		8,872		—		—		8,872
Retirement of convertible senior note hedges	—	—		16,404		—		—		16,404
Retirement of warrants	—	—		(12,067)		—		—		(12,067)


Balances at September 30, 2022	107,482	$	107	$	1,265,943	$	(509,398)	$	(6,768)	$	749,884

	For the Nine Months Ended September 30, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss
(In thousands)	Shares	Amount								Total
Balances at December 31, 2022	107,610	$	108	$	1,297,408	$	(513,256)	$	(4,963)	$	779,297
Net income	—	—		—		275,359		—		275,359
Foreign currency translation adjustment	—	—		—		—		164		164
Unrealized gain on marketable securities, net of tax	—	—		—		—		2,431		2,431
Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan, net of withholding taxes	1,556	1		(30,204)		—		—		(30,203)
Repurchase and retirement of common stock under repurchase program	(1,855)	(1)		(5,781)		(94,742)		—		(100,524)
Stock-based compensation	—	—		34,477		—		—		34,477
Issuance of common stock in connection with the payment of year 1 earn-out related to the PLDA Group acquisition	198	—		5,022		—		—		5,022
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	284	—		—		—		—		—
Exercise of the convertible senior note hedges in connection with the conversion of convertible senior notes and retirement of the corresponding shares	(284)	—		11,440		(11,440)		—		—

Retirement of warrants	—	—		(10,457)		—		—		(10,457)

Balances at September 30, 2023	107,509	$	108	$	1,301,905	$	(344,079)	$	(2,368)	$	955,566

	For the Nine Months Ended September 30, 2022
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss
(In thousands)	Shares	Amount								Total
Balances at December 31, 2021	109,292	$	109	$	1,298,966	$	(435,227)	$	(1,452)	$	862,396
Net loss	—	—		—		(30,259)		—		(30,259)
Foreign currency translation adjustment	—	—		—		—		(1,987)		(1,987)
Unrealized loss on marketable securities, net of tax	—	—		—		—		(3,329)		(3,329)
Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan, net of withholding taxes	1,322	2		(13,681)		—		—		(13,679)

Repurchase and retirement of common stock under repurchase program	(3,132)	(4)		(30,075)		(70,333)		—		(100,412)
Stock-based compensation	—	—		25,286		—		—		25,286
Retirement of convertible senior note hedges	—	—		78,415		—		—		78,415
Retirement of warrants	—	—		(58,423)		—		—		(58,423)
Cumulative effect adjustment from the adoption of ASC 2020-06	—	—		(34,545)		26,421		—		(8,124)

Balances at September 30, 2022	107,482	$	107	$	1,265,943	$	(509,398)	$	(6,768)	$	749,884

Refer to Notes to Unaudited Condensed Consolidated Financial Statements

RAMBUS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended
	September 30,
(In thousands)	2023		2022
Cash flows from operating activities:
Net income (loss)	$	275,359	$	(30,259)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation	34,477		25,286
Depreciation	26,608		23,107
Amortization of intangible assets	11,494		11,634

Loss on extinguishment of debt	—		83,626
Loss on fair value adjustment of derivatives, net	240		10,585
Impairment of assets	10,045		—
Gain on divestiture	(90,843)		—
Deferred income taxes	(147,144)		1,680

Gain on fair value of equity security	—		(3,547)



Change in fair value of earn-out liability	8,134		(1,889)
Other	649		2,187


Change in operating assets and liabilities, net of effects of acquisition/disposition:
Accounts receivable	(10,984)		6,689
Unbilled receivables	81,418		78,914
Prepaids and other current assets	785		984
Inventories	(13,715)		(5,679)
Income taxes receivable	(83,423)		202
Accounts payable	(7,436)		8,682
Accrued salaries and benefits and other liabilities	(7,596)		(10,811)
Income taxes payable	61,736		(15,352)
Deferred revenue	(4,783)		(1,709)
Operating lease liabilities	(4,085)		(5,226)
Net cash provided by operating activities	140,936		179,104
Cash flows from investing activities:
Purchases of property, plant, and equipment	(22,454)		(12,650)
Acquisition of intangible assets	—		(3,000)

Purchases of marketable securities	(298,289)		(80,969)
Maturities of marketable securities	127,467		53,358

Proceeds from sales of marketable securities	117,798		276,687
Proceeds from divestiture	106,347		—



Acquisition of business, net of cash acquired	—		(15,932)
Net cash provided by investing activities	30,869		217,494
Cash flows from financing activities:
Proceeds received from issuance of common stock under employee stock plans	6,453		3,775
Payments of taxes on restricted stock units	(36,656)		(17,454)
Payments under installment payment arrangements	(11,323)		(10,472)
Payments for settlement and repurchase of convertible senior notes	(10,381)		(258,060)
Proceeds from retirement of convertible senior note hedges	—		91,729

Payments for settlement of warrants	(10,697)		(69,528)
Payment of deferred purchase consideration from acquisition	(2,450)		—

Repurchase and retirement of common stock, including prepayment under accelerated share repurchase program	(100,325)		(100,412)
Net cash used in financing activities	(165,379)		(360,422)
Effect of exchange rate changes on cash and cash equivalents	(163)		(2,519)
Net increase in cash, cash equivalents and restricted cash	6,263		33,657
Cash, cash equivalents and restricted cash at beginning of period	125,694		108,264
Cash, cash equivalents and restricted cash at end of period	$	131,957	$	141,921

Non-cash operating, investing and financing activities:
Property, plant and equipment received and accrued in accounts payable and other liabilities	$	26,013	$	32,540
Issuance of common stock in connection with the payment of year 1 earn-out related to the PLDA Group acquisition	$	5,022	$	—
Operating lease right-of-use assets obtained in exchange for operating lease obligations	$	273	$	5,663


Reconciliation of the cash, cash equivalents and restricted cash balances as of September 30, 2023 and December 31, 2022:
	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	131,957	$	125,334
Restricted cash	—		360
Cash, cash equivalents and restricted cash	$	131,957	$	125,694

Nine Months Ended
September 30,
2017 2016
(In thousands)
Cash flows from operating activities:

Net income $ 13,306
$ 10,265
Adjustments to reconcile net income to net cash provided by operating activities:

Stock-based compensation 20,169
15,356
Depreciation 9,971
9,388
Amortization of intangible assets 31,436
26,045
Non-cash interest expense and amortization of convertible debt issuance costs 5,324
5,025
Deferred income taxes (4,108 ) (4,157 )
Excess tax benefits from stock-based compensation —
(927 )
(Gain) loss from disposal of property, plant and equipment 169
(29 )
Effect of exchange rate on assumed cash liability from acquisition —
(985 )
Change in operating assets and liabilities, net of impact of acquisitions:

Accounts receivable (23,656 ) 333
Prepaid expenses and other assets 6,824
(3,143 )
Inventories 617
(744 )
Accounts payable (2,795 ) 2,302
Accrued salaries and benefits and other liabilities (2,658 ) (4,772 )
Deferred revenue 3,248
7,532
Net cash provided by operating activities 57,847
61,489
Cash flows from investing activities:

Purchases of property, plant and equipment (5,444 ) (4,750 )
Acquisition of intangible assets (120 ) —
Purchases of marketable securities —
(54,869 )
Maturities of marketable securities 32,048
85,746
Proceeds from sale of marketable securities 4,450
50,546
Proceeds from sale of property, plant and equipment 28
—
Acquisitions of businesses, net of cash acquired —
(202,523 )
Net cash provided by (used in) investing activities 30,962
(125,850 )
Cash flows from financing activities:
Proceeds received from issuance of common stock under employee stock plans 10,792
12,277
Principal payments against lease financing obligation (625 ) (476 )
Payments of taxes on restricted stock units (3,525 ) (1,861 )
Repurchase and retirement of common stock, including prepayment under accelerated
share repurchase program
(50,036 ) —
Excess tax benefits from stock-based compensation —
927
Net cash provided by (used in) financing activities (43,394 ) 10,867
Effect of exchange rate changes on cash and cash equivalents 1,636
(791 )
Net increase (decrease) in cash and cash equivalents 47,051
(54,285 )
Cash and cash equivalents at beginning of period 135,294
143,764
Cash and cash equivalents at end of period $ 182,345
$ 89,479

Non-cash investing activities during the period:

Property, plant and equipment received and accrued in accounts payable and other liabilities $ 1,294
$ 1,344
Non-cash financing activities during the period:
Additional purchase consideration from acquisition $ —
$ 10,779

~~See~~Refer to Notes to Unaudited Condensed Consolidated Financial Statements

RAMBUS INC.

NOTES TO UNAUDITEDCONDENSEDCONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying ~~unaudited condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements include the accounts of Rambus Inc. (“Rambus” or the “Company”) and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the accompanying ~~unaudited condensed consolidated financial statements.~~Unaudited Condensed Consolidated Financial Statements.

In the opinion of management, the ~~unaudited condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements include all adjustments (consisting only of normal recurring items) necessary to state fairly the financial position and results of operations for each interim period presented. Interim results are not necessarily indicative of results for a full year.

The ~~unaudited condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) applicable to interim financial information. Certain information and ~~Note~~note disclosures included in the financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been omitted in these interim statements pursuant to such SEC rules and regulations. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto in Form 10-K for the year ended December 31, ~~2016~~.

~~Operating Segment Definitions~~

Operating segments are based upon Rambus' 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 determined its CODM to be the Chief Executive Officer and determined its operating segments to be: (1) Memory and Interfaces Division ("MID"), which focuses on the design, development, manufacturing through partnerships and licensing of technology and solutions that is related to memory and interfaces; (2) Rambus Security Division ("RSD"), which focuses on the design, development, deployment and licensing of technologies for chip, system and in-field application security, anti-counterfeiting, smart ticketing and mobile payments; (3) Emerging Solutions Division ("ESD"), which includes the Rambus Labs team, the computational sensing and imaging group as well as the development efforts in the area of emerging technologies; and (4) Rambus Lighting Division ("RLD"), which focuses on the design, development and licensing of technologies for advanced LED-based lighting solutions.

For the three and nine months ended September 30, 2017, only MID and RSD were reportable segments as each of them met the quantitative thresholds for disclosure as a reportable segment. The results of the remaining other operating segments were shown under “Other.”2022.

Reclassifications

Certain ~~prior periods' amounts~~prior-year balances were reclassified to conform to the current year’s presentation. None of these reclassifications had an impact on reported net income (loss) or cash flows for any of the periods presented. ~~Product revenue and~~

2. Revenue Recognition

Contract Balances

The contract assets are primarily related ~~cost of product revenue were reclassified from contract and other revenue and cost of contract and other revenue, respectively. Refer~~ to the ~~Unaudited Condensed Consolidated Statements~~Company’s fixed fee IP licensing arrangements and rights to consideration for performance obligations delivered but not billed as of ~~Operations.~~September 30, 2023.

The Company’s contract balances were as follows:

~~2. Recent Accounting Pronouncements~~


	As of
(In thousands)	September 30, 2023		December 31, 2022
Unbilled receivables	$	67,731	$	150,920
Deferred revenue	18,336		25,421

~~In July 2017,~~During the ~~Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-11,"Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815)." The amendments in Part I~~nine months ended September 30, 2023, the Company recognized $19.3 million of this ASU change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entitiesrevenue that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial

conversion features (in Subtopic 470-20, Debt-Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this ASU recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending contentwas included in the ~~FASB codification, to a scope exception. Those amendments do not have an accounting effect. This ASU is effective for interim and annual reporting periods beginning after~~contract balances as of December ~~15, 2018. Early adoption is permitted, including adoption in an interim period. The~~31, 2022. During the nine months ended September 30, 2022, the Company ~~is currently evaluating the impact~~recognized $21.7 million of revenue that ~~this guidance will have on its consolidated financial statements.~~

In May 2017, the FASB issued ASU No. 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting," which amends the scope of modification accounting for share-based payment arrangements. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. This ASU is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08, "Receivables - Nonrefundable Fees and Other Costs (Topic 310): Premium Amortization on Purchased Callable Debt Securities," which amends the amortization period for certain purchased callable debt securities held at a premium. This ASU will shorten the amortization period for the premium to be amortized to the earliest call date. This ASU does not apply to securities held at a discount, which will continue to be amortized to maturity. This ASU is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which removes Step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business." The amendment seeks to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. This ASU is effective for interim and annual reporting periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied prospectively on or after the effective dates. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

~~In August 2016, the FASB issued ASU No. 2016-15 which amends the guidance on the classification of certain cash receipts and payments~~was included in the statement of cash flows. This ASU is effective for annual and interim reporting periods beginning after December 15, 2017 and is applied retrospectively. Early adoption is permitted including adoption in an interim period. The Company is currently evaluating the impact that this guidance will have on its financial condition and results of operations.

In June 2016, the FASB issued ASU No. 2016-13. The purpose of this ASU is to require a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. Credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact that this guidance will have on its financial condition and results of operations.

In March 2016, the FASB issued ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting." This ASU simplifies the accounting for share-based payment transactions including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification in the statement of cash flows. The updated standard no longer requires cash flows related to excess tax benefits to be presented as a financing activity separate from other income tax cash flows. The update also allows entities to repurchase more of an employee's shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments to taxing authorities made on an employee's behalf for withheld shares should be presented as a financing activity on the statement of cash flows, and provides for an accounting policy election to account for forfeitures as they occur. The Company adopted this ASU on January 1, 2017. The impact of the adoption is as follows:

•This ASU requires excess tax benefits to be recognized regardless of whether the benefit reduces taxes payable. The adoption of this guidance on a modified retrospective basis resulted in the recognition of a cumulative-effect adjustment of $38.2 million that reduced the Company's accumulated deficit and increased its deferred tax assetscontract balances as of ~~January 1, 2017. The previously unrecognized California excess tax effects were recorded as a deferred tax asset net of a valuation allowance.~~December 31, 2021.

Remaining Performance Obligations

•~~The Company has elected~~Revenue allocated to ~~continue~~remaining performance obligations represents the transaction price allocated to estimate forfeitures expected to occur to determine the amount of stock-based compensation cost to be recognized in each period. As such, the guidance relating to forfeitures did not have an impact on its accumulated deficit as of January 1, 2017.

•~~Additionally, the Company anticipates the potential for increased periodic volatility in future effective tax rates as a result of the continued application of ASU No. 2016-09.~~

In February 2016, the FASB issued ASU No. 2016-02, "Leases." This ASU requires lessees to recognize right-of-use assets and liabilities for operating leases, initially measured at the present value of the lease payments, on the balance sheet. In addition, it requires lessees to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. This ASU will become effective for the Company in the first quarter of fiscal year 2019, and requires adoption using a modified retrospective approach. The Company is evaluating the impact of adopting this new accounting standard update on its consolidated financial statements and related disclosures and anticipates this new guidance will materially impact the Company’s financial statements given the Company has a significant number of operating leases.

In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory (Topic 330)," which applies to inventory that is measured using first-in, first-out (“FIFO”) or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out (“LIFO”). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company adopted this ASU on January 1, 2017. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

~~In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers~~(Topic 606) (“Standard”). The core principle of the Standard is for a company to recognize revenue for goods or services transferred to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. To do so, a company will be required to exercise more judgment and make more estimates than under current guidance, including in identifying the performance obligations included in the arrangement, estimating and revising the variable consideration, if any, to be included in the transaction price and allocating the transaction price to distinct performance obligations. The FASB further clarified the Standard by issuing ASU No. 2016-10 (Identifying Performance Obligations and Licensing); ASU No. 2016-12 (Narrow-Scope Improvements and Practical Expedients); and ASU No. 2016-20 (Technical Corrections and Improvements).

The Standard may be applied retrospectively to each prior period presented (full retrospective method) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective method). The Standard, as amended, is effective for the Company on January 1, 2018. The Company has yet to make a final decision regarding the adoption method it will use but believes it will adopt the Standard on a full retrospective basis, with a cumulative-effect adjustment to the opening balance of retained earnings on January 1, 2016 determined on the basis of the impact of the Standard on the accounting for contracts that are ~~not completed as of~~unsatisfied, or partially unsatisfied, which includes unearned revenue and amounts that ~~date.~~

Although the Company has yet to finalize its evaluation and quantification of the effects that the Standard will have on its consolidated financial statements, and to finalize the design and implementation of related changes to its policies, procedures and controls, the Company expects the Standard to materially impact the timing of revenue recognition for its fixed-fee intellectual property (IP) licensing arrangements (including certain fixed-fee agreements that license the Company's existing IP portfolio as well as IP added to this portfolio during the license term) as a majority of such revenue would be recognized at inception of the license term, as opposed to over time as is the case under current U.S. GAAP, and the Company will be ~~required to compute~~invoiced and recognize interest income over time as control over the IP generally transfers significantly in advance of cash being received from customers. In addition, the Company is currently assessing its minimum guarantee contracts to determine whether, under the Standard, revenue should be recognized at contract inception or over the contract term. The Company expects that any change to current revenue recognition practices may significantly increase volatility in its quarterly revenue trends.

In accordance with existing U.S. GAAP, the Company currently recognizes revenue from per-unit royalty-based IP licenses in the period the licensee reports its sales, generally in the quarter after the underlying sales by the licensee occurred. On adoption of the Standard, such royalties will be recognized as revenue ~~during the period~~ in future periods. Contracted but unsatisfied performance obligations were approximately $20.0 million as of September 30, 2023, which the ~~licensee's sales are estimated~~Company primarily expects to ~~have occurred, which will result in an adjustment to revenue when actual amounts are subsequently reported by~~recognize over the ~~Company's licensees.~~next 2 years.

As~~part of the Company’s assessment and implementation plan, the Company is evaluating and implementing changes to its policies, procedures and controls.~~

3. Earnings (Loss) Per Share

Basic earnings (loss) per share is calculated by dividing the net income (loss) by the ~~weighted average~~weighted-average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the earnings by the ~~weighted average~~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.~~method, or the if-converted method for the in-the-money conversion 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 the equity if the instrument was exercised and the amount of unrecognized stock-based compensation related to future services. No potential dilutive common shares are included in the computation of any diluted per share amount when a net loss is reported.

The following table sets forth the computation of basic and diluted net income (loss) per share:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands, except per share amounts)	2023		2022		2023		2022
Net income (loss) per share:
Numerator:
Net income (loss)	$	103,198	$	939	$	275,359	$	(30,259)
Denominator:
Weighted-average shares outstanding - basic	108,317		109,968		108,412		110,102
Effect of potentially dilutive common shares	2,458		1,994		2,767		—
Weighted-average shares outstanding - diluted	110,775		111,962		111,179		110,102
Basic net income (loss) per share	$	0.95	$	0.01	$	2.54	$	(0.27)
Diluted net income (loss) per share	$	0.93	$	0.01	$	2.48	$	(0.27)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income per share: (In thousands, except per share amounts)
Numerator:

Net income $ 7,695
$ 4,511
$ 13,306
$ 10,265
Denominator:
Weighted-average shares outstanding - basic 109,555
110,214
110,353
109,951
Effect of potential dilutive common shares 3,564
3,509
3,508
2,854
Weighted-average shares outstanding - diluted 113,119
113,723
113,861
112,805
Basic net income per share $ 0.07
$ 0.04
$ 0.12
$ 0.09
Diluted net income per share $ 0.07
$ 0.04
$ 0.12
$ 0.09

~~For the three months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, options to purchase approximately~~ ~~1.8 million~~ ~~and~~ ~~1.8 million~~ ~~shares, respectively, and for~~During the nine months ended September 30, ~~2017 and 2016, options to purchase approximately 1.9 million and 2.2 million shares, respectively,~~2022, the following potentially dilutive securities were excluded from the calculation of diluted net loss per share attributable to the Company’s common stockholders because ~~they were~~the impact of including them would have been anti-dilutive ~~after considering proceeds from~~(in thousands):


												Nine Months Ended
												September 30,
(In thousands)												2022
Stock options												274
Restricted stock units												1,951
Potentially issuable shares related to the in-the-money conversion feature of convertible notes												146
Contingently issuable ESPP shares												12
Total												2,383

The shares in the tables above did not include the principal amount of the Company’s 2023 Notes (“the 2023 Notes”) as the principal amount of the 2023 Notes must be paid in cash. The Company settled the conversion of the remaining $10.4 million aggregate principal amount of the 2023 Notes in the first quarter of 2023. Accordingly, the Company delivered approximately 0.3 million shares of the Company's common stock as settlement related to the in-the-money conversion feature of the 2023 Notes and received an equal amount of shares due to the settlement of the convertible senior note hedges. The Company included dilutive instruments exercised during the period in the denominator of diluted earnings (loss) per share for the period prior to exercise, and ~~related unrecognized stock-based compensation expense.~~thereafter, the Company included the actual shares issued in the denominator for both basic and diluted earnings (loss) per share.

4. Intangible Assets and Goodwill

Goodwill

The following tables present goodwill information for ~~each~~the nine months ended September 30, 2023:


(In thousands)	As of December 31, 2022		Divestiture of Goodwill (1)		As of September 30, 2023
Total goodwill	$	292,040	$	(5,228)	$	286,812

(1) In September 2023, the Company divested its PHY IP group, which resulted in the Company recognizing a decrease in goodwill based on the relative fair value of the ~~reportable segments~~Company’s single reporting unit in proportion to the fair value of the divested PHY IP group. Refer to Note 17, “Divestiture,” for ~~the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017~~:additional information.

Reportable Segment: As of December 31, 2016 Additions to Goodwill (1) Impairment of Goodwill Effect of Exchange Rates (2) As of September 30, 2017
(In thousands)
MID $ 66,643
$ —
$ —
$ —
$ 66,643
RSD 138,151
803
—
3,721
142,675
Total $ 204,794
$ 803
$ —
$ 3,721
$ 209,318

~~(1) During the first quarter of 2017, the Company corrected an immaterial error related to an overstatement in prepaids and other current assets that originated in 2016.~~

~~(2) Effect of exchange rates relates to foreign currency translation adjustments for the period.~~

As of
September 30, 2017
Reportable Segment: Gross Carrying Amount Accumulated Impairment Losses Net Carrying Amount
(In thousands)
MID $ 66,643
$ —
$ 66,643
RSD 142,675
—
142,675
Other 21,770
(21,770 ) —
Total $ 231,088
$ (21,770 ) $ 209,318

Intangible Assets, Net

The components of the Company’s intangible assets as of September 30, ~~2017~~2023 and December 31, ~~2016~~2022 were as follows:


		As of September 30, 2023
(In thousands)	Useful Life	Gross Carrying Amount (1)		Accumulated Amortization (1)		Net Carrying Amount
Existing technology (1)	3 to 10 years	$	286,712	$	(262,663)	$	24,049
Customer contracts and contractual relationships (1)	0.5 to 10 years	37,496		(36,930)		566
Trademarks	3 years	300		(300)		—
In-process research and development (“IPR&D”) (1)	Not applicable	7,400		—		7,400
Total intangible assets		$	331,908	$	(299,893)	$	32,015

(1) In September 2023, the Company disposed of approximately $7.4 million of net intangible assets (including $3.8 million of IPR&D) in connection with the divestiture of the Company’s PHY IP group. Refer to Note 17, “Divestiture,” for additional information.


											As of December 31, 2022
		As of September 30, 2017
	Useful Life	Gross Carrying Amount (1)		Accumulated Amortization			Net Carrying Amount
		(In thousands)
(In thousands)									(In thousands)	Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Existing technology	3 to 10 years	$	258,792	$	(183,590	)	$	75,202	Existing technology	3 to 10 years	$	299,925	$	(261,708)	$	38,217
Customer contracts and contractual relationships	1 to 10 years	68,376		(46,133		)	22,243		Customer contracts and contractual relationships	0.5 to 10 years	37,996		(36,533)		1,463
Non-compete agreements and trademarks	3 years	300		(300		)	—
In-process research and development	Not applicable	5,100		—			5,100
Trademarks									Trademarks	3 years	300		(300)		—
IPR&D									IPR&D	Not applicable	11,200		—		11,200
Total intangible assets		$	332,568	$	(230,023	)	$	102,545	Total intangible assets		$	349,421	$	(298,541)	$	50,880

~~(1) The change in gross carrying amount reflects the effects of exchange rates during the period.~~

As of December 31, 2016
Useful Life
Gross Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount
(In thousands)
Existing technology 3 to 10 years $ 256,656
$ (156,577 ) $ 100,079
Customer contracts and contractual relationships 1 to 10 years 65,109
(37,900 ) 27,209
Non-compete agreements and trademarks 3 years 300
(300 ) —
In-process research and development Not applicable 5,100
—
5,100
Total intangible assets $ 327,165
$ (194,777 ) $ 132,388

~~During~~Amortization expense for intangible assets for the three and nine months ended September 30, 2017, the Company acquired patents related to its memory technology for an immaterial amount. During the three and nine months ended September 30, 2016, the Company did not sell any intangible assets.

Included in customer contracts and contractual relationships are favorable contracts which are acquired software and service agreements where the Company has no performance obligations. Cash received from these acquired favorable contracts reduces the favorable contract intangible asset. For the three months ended ~~September 30, 2017~~ ~~and 2016, the Company received $0.5~~2023 was $3.6 million and $0.6 million, respectively, related to the favorable contracts. For the nine months ended September 30, 2017 and 2016, the Company received $2.8 million and $4.7 million, respectively, related to the favorable contracts. As of ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, the net balance of the favorable contract intangible assets was~~ ~~$2.2 million~~ ~~and $3.6 million, respectively.~~

~~Amortization expense for intangible assets for the~~ ~~three and nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~was~~ ~~$10.5 million~~ ~~and $31.4~~$11.5 million, respectively. Amortization expense for intangible assets for the three and nine months ended September 30, ~~2016,~~2022 was ~~$10.2~~$4.0 million and ~~$26.0~~$11.6 million, respectively.

The estimated future amortization of intangible assets as of September 30, ~~2017~~2023 was as follows ~~(amounts in~~(in thousands):


Years Ending December 31:	Amount
2023 (remaining three months)	$	3,513
2024	11,468
2025	5,430
2026	3,742
2027	462
Thereafter	—
Total amortizable purchased intangible assets	24,615
IPR&D	7,400
Total intangible assets	$	32,015

Years Ending December 31: Amount
2017 (remaining 3 months) $ 11,775
2018 29,624
2019 19,877
2020 19,133
2021 12,653
Thereafter 9,483
$ 102,545

It is reasonably possible that the businesses could perform significantly below the Company's expectations or a deterioration of market and economic conditions could occur. This would adversely impact the Company's ability to meet its projected results, which could cause the goodwill in any of its reporting units or long-lived assets in any of its asset groups to become impaired. Significant differences between these estimates and actual cash flows could materially affect the Company's future financial results. If the Company determines that its goodwill or long-lived assets are impaired, it would be required to record a non-cash charge that could have a material adverse effect on its results of operations and financial position.

5.Segments and Major Customers

~~For~~Operating segments are based upon the ~~three~~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 ~~nine~~ ~~months ended~~ ~~September 30, 2017, MID~~availability of separate financial information regularly reviewed for resource allocation and ~~RSD were reportable segments as each of them met the quantitative thresholds for disclosure as a reportable segment. The results of the remaining operating segments were shown under “Other.”~~performance assessment.

The Company ~~evaluates~~has determined its CODM to be the ~~performance~~Chief Executive Officer (“CEO”). The CEO reviews financial information presented on a consolidated basis for purposes of ~~its segments based on~~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 ~~operating income (loss), which is defined as revenue minus segment operating expenses. Segment operating expenses are comprised~~within the semiconductor space. As of ~~direct operating expenses.~~

Segment operating expenses do not include sales, general and administrative expenses and the allocation of certain expenses managed at the corporate level, such as stock-based compensation, amortization, and certain bonus and acquisition costs. The “Reconciling Items” category includes these unallocated sales, general and administrative expenses as well as corporate level expenses.

~~The tables below present reported segment operating income (loss) for the~~ ~~three and nine~~ ~~months ended~~ September 30, ~~2017~~ ~~and~~ ~~2016, respectively.~~

For the Three Months Ended September 30, 2017 For the Nine Months Ended September 30, 2017
MID RSD Other Total MID RSD Other Total
(In thousands) (In thousands)
Revenues $ 68,787
$ 26,312
$ 4,035
$ 99,134
$ 206,784
$ 72,883
$ 11,538
$ 291,205
Segment operating expenses 21,130
11,796
7,802
40,728
65,187
36,409
25,191
126,787
Segment operating income (loss) $ 47,657
$ 14,516
$ (3,767 ) $ 58,406
$ 141,597
$ 36,474
$ (13,653 ) $ 164,418
Reconciling items

(41,396 )

(125,730 )
Operating income

$ 17,010

$ 38,688
Interest and other income (expense), net

(3,079 )

(9,263 )
Income before income taxes

$ 13,931

$ 29,425

For the Three Months Ended September 30, 2016 For the Nine Months Ended September 30, 2016
MID RSD Other Total MID RSD Other Total
(In thousands) (In thousands)
Revenues $ 63,142
$ 22,532
$ 4,181
$ 89,855
$ 171,154
$ 53,040
$ 14,844
$ 239,038
Segment operating expenses 20,060
12,493
6,840
39,393
44,797
37,507
21,594
103,898
Segment operating income (loss) $ 43,082
$ 10,039
$ (2,659 ) $ 50,462
$ 126,357
$ 15,533
$ (6,750 ) $ 135,140
Reconciling items

(38,646 )

(102,022 )
Operating income

$ 11,816

$ 33,118
Interest and other income (expense), net

(3,051 )

(7,975 )
Income before income taxes

$ 8,765

$ 25,143

~~The Company’s CODM does not review information regarding assets on an operating segment basis. Additionally,~~2023, the Company ~~does not record intersegment revenue or expense.~~has a single operating and reportable segment.

Accounts receivable from the ~~Company's~~Company’s major customers representing 10% or more of total accounts receivable at September 30, ~~2017~~2023 and December 31, ~~2016,~~2022, respectively, was as follows:

As of
Customer September 30, 2017 December 31, 2016
Customer 1 (RSD reportable segment) *
17 %
Customer 2 (Other segment) *
12 %
Customer 3 (MID reportable segment) 12 % 13 %
Customer 4 (MID reportable segment) 19 % *
Customer 5 (MID reportable segment) 10 % *


	As of
Customer	September 30, 2023		December 31, 2022
Customer 1	47	%	*
Customer 2	24	%	14	%
Customer 3	*		23	%
Customer 4	*		16	%

* Customer accounted for less than 10% of total accounts receivable in the ~~period~~period.

Revenue from the Company’s major customers representing 10% or more of total revenue for the three and nine months ended September 30, ~~2017~~2023 and ~~2016~~,2022, respectively, was as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Customer	2023		2022		2023		2022
Customer A	29	%	*		26	%	*
Customer B	25	%	20	%	18	%	21	%
Customer C	*		20	%	*		16	%
Customer D	*		12	%	*		13	%

Three Months Ended Nine Months Ended
September 30, September 30,
Customer 2017 2016 2017 2016
Customer A (MID and RSD reportable segments) 18 % 17 % 17 % 20 %
Customer B (MID reportable segment) 12 % 19 % 13 % 20 %
Customer C (MID reportable segment) 13 % 13 % 13 % 13 %

* 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:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
USA	$	32,347	$	70,284	$	131,415	$	193,253
South Korea	38,228		1,081		100,985		5,118
Singapore	16,325		10,498		42,371		50,262



Other	18,398		30,381		64,121		83,793
Total	$	105,298	$	112,244	$	338,892	$	332,426

Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands) 2017 2016 2017 2016
South Korea $ 29,476
$ 32,519
$ 86,736
$ 95,604
USA 43,532
32,951
123,115
84,835
Japan 4,933
9,551
18,508
20,449
Europe 9,160
4,271
17,850
12,362
Canada 933
1,162
3,353
2,544
Singapore 4,927
4,429
17,563
13,574
Asia-Other 6,173
4,972
24,080
9,670
Total $ 99,134
$ 89,855
$ 291,205
$ 239,038

6. Marketable Securities

Rambus invests its excess cash and cash equivalents primarily in money market funds, time deposits, U.S. government-sponsored obligations, ~~commercial paper,~~and corporate notes, bonds and ~~bonds, money market funds and municipal notes and bonds~~commercial paper that mature within three years. ~~As of~~

~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, all of the Company’s cash equivalents and marketable securities had a remaining maturity of less than~~ ~~one year~~.

All cash equivalents and marketable securities are classified as available-for-sale. Total cash, cash equivalents and marketable securities are summarized as follows:


	As of September 30, 2023
(In thousands)	Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses
Cash	$	87,745	$	87,745	$	—	$	—
Cash equivalents:
Money market funds	14,129		14,129		—		—
U.S. Government bonds and notes	11,885		11,886		1		(2)
Corporate notes, bonds and commercial paper	18,198		18,198		1		(1)
Total cash equivalents	44,212		44,213		2		(3)
Total cash and cash equivalents	131,957		131,958		2		(3)
Marketable securities:
Time deposits	9,746		9,746		—		—
U.S. Government bonds and notes	131,142		131,562		6		(426)
Corporate notes, bonds and commercial paper	102,700		103,464		2		(766)
Total marketable securities	243,588		244,772		8		(1,192)
Total cash, cash equivalents and marketable securities	$	375,545	$	376,730	$	10	$	(1,195)

As of September 30, 2017
(In thousands) Fair Value
Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Weighted
Rate of
Return
Money market funds $ 12,882
$ 12,882
$ —
$ —
0.90 %
U.S. Government bonds and notes 30,489
30,491
—
(2 ) 0.95 %
Corporate notes, bonds, commercial paper and other 98,887
98,900
—
(13 ) 1.13 %
Total cash equivalents and marketable securities 142,258
142,273
—
(15 )
Cash 41,374
41,374
—
—

Total cash, cash equivalents and marketable securities $ 183,632
$ 183,647
$ —
$ (15 )


	As of December 31, 2022
(In thousands)	Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses
Cash	$	94,737	$	94,737	$	—	$	—
Cash equivalents:
Money market funds	15,763		15,763		—		—
Corporate notes, bonds and commercial paper	14,834		14,838		—		(4)
Total cash equivalents	30,597		30,601		—		(4)
Total cash and cash equivalents	125,334		125,338		—		(4)
Marketable securities:
U.S. Government bonds and notes	96,371		98,250		1		(1,880)
Corporate notes, bonds and commercial paper	91,521		93,254		7		(1,740)
Total marketable securities	187,892		191,504		8		(3,620)
Total cash, cash equivalents and marketable securities	$	313,226	$	316,842	$	8	$	(3,624)

As of December 31, 2016
(In thousands) Fair Value
Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Weighted
Rate of
Return
Money market funds $ 10,681
$ 10,681
$ —
$ —
0.41 %
U.S. Government bonds and notes 48,292
48,291
1
—
0.39 %
Corporate notes, bonds, commercial paper and other 62,178
62,199
—
(21 ) 0.66 %
Total cash equivalents and marketable securities 121,151
121,171
1
(21 )
Cash 51,031
51,031
—
—

Total cash, cash equivalents and marketable securities $ 172,182
$ 172,202
$ 1
$ (21 )

Available-for-sale securities are reported at fair value on the balance sheets and classified along with cash as follows:


	As of
(In thousands)	September 30, 2023		December 31, 2022
Cash	$	87,745	$	94,737
Cash equivalents	44,212		30,597
Total cash and cash equivalents	131,957		125,334
Marketable securities	243,588		187,892
Total cash, cash equivalents and marketable securities	$	375,545	$	313,226

As of
September 30,
2017 December 31,
2016
(In thousands)
Cash equivalents $ 140,971
$ 84,263
Short term marketable securities 1,287
36,888
Total cash equivalents and marketable securities 142,258
121,151
Cash 41,374
51,031
Total cash, cash equivalents and marketable securities $ 183,632
$ 172,182

The Company continues to invest in highly rated ~~quality,~~and highly liquid debt securities. ~~As of~~ ~~September 30, 2017, these securities have a remaining maturity of less than one year.~~ 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 ~~unrealized losses that may be other than temporary.~~impairment.

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 at September 30, ~~2017~~2023 and December 31, ~~2016~~2022 are as follows:


	Fair Value				Gross Unrealized Losses
(In thousands)	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Less than 12 months
U.S. Government bonds and notes	$	58,506	$	28,893	$	(116)	$	(23)
Corporate notes, bonds and commercial paper	84,655		45,538		(147)		(35)
Total cash equivalents and marketable securities in a continuous unrealized loss position for less than 12 months	143,161		74,431		(263)		(58)
12 months or greater
U.S. Government bonds and notes	19,595		62,588		(312)		(1,857)
Corporate notes, bonds and commercial paper	17,168		49,559		(620)		(1,709)
Total cash equivalents and marketable securities in a continuous unrealized loss position for 12 months or greater	36,763		112,147		(932)		(3,566)
Total cash equivalents and marketable securities in a continuous unrealized loss position	$	179,924	$	186,578	$	(1,195)	$	(3,624)

Fair Value Gross Unrealized Loss
September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016
(In thousands)
Less than one year

U.S. Government bonds and notes $ 27,489
$ 18,395
$ (2 ) $ —
Corporate notes, bonds and commercial paper 97,600
54,377
(13 ) (21 )
Total Corporate notes, bonds, and commercial paper and U.S. Government bonds and notes $ 125,089
$ 72,772
$ (15 ) $ (21 )

The gross unrealized ~~loss~~losses at September 30, ~~2017~~2023 and December 31, ~~2016~~ ~~was~~2022 were not material in relation to the Company’s total available-for-sale portfolio. The gross unrealized ~~loss~~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 notes and bonds. ~~There~~The Company reasonably believes that there is no need to sell these investments and ~~the Company believes~~ 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. However, the~~income (loss). 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.

~~See~~The contractual maturities of cash equivalents (excluding money market funds which have no maturity) and marketable securities are summarized as follows:



(In thousands)	September 30, 2023
Due less than one year	$	266,769
Due from one year through three years	6,902
Total	$	273,671

Refer to Note 7, “Fair Value of Financial Instruments,” for a discussion regarding the fair value of the Company’s cash equivalents and marketable securities.

7. Fair Value of Financial Instruments

The following table presents the financial instruments and liabilities that are carried at fair value and summarizes ~~the~~their valuation ~~of its cash equivalents and marketable securities~~ by the ~~above~~respective pricing levels as of September 30, ~~2017~~2023 and December 31, ~~2016~~:2022:


	As of September 30, 2023
(In thousands)	Total		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets carried at fair value
Money market funds	$	14,129	$	14,129	$	—	$	—
Time deposits	9,746		—		9,746		—
U.S. Government bonds and notes	143,027		—		143,027		—
Corporate notes, bonds and commercial paper	120,898		—		120,898		—
Total assets carried at fair value	$	287,800	$	14,129	$	273,671	$	—
Liabilities carried at fair value
Earn-out consideration related to PLDA acquisition	$	11,400	$	—	$	—	$	11,400
Total liabilities carried at fair value	$	11,400	$	—	$	—	$	11,400


	As of December 31, 2022
(In thousands)	Total		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets carried at fair value
Money market funds	$	15,763	$	15,763	$	—	$	—
U.S. Government bonds and notes	96,371		—		96,371		—
Corporate notes, bonds and commercial paper	106,355		—		106,355		—
Total available-for-sale securities	$	218,489	$	15,763	$	202,726	$	—
Liabilities carried at fair value
Earn-out consideration related to PLDA acquisition	$	14,800	$	—	$	—	$	14,800
Total liabilities carried at fair value	$	14,800	$	—	$	—	$	14,800

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. The following table presents additional information about liabilities measured at fair value for which the Company utilizes Level 3 inputs to determine fair value, as of September 30, 2023 and 2022.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
Balance as of beginning of period	$	28,600	$	12,600	$	14,800	$	16,900

Change in fair value of earn-out liability due to remeasurement	(5,666)		2,411		8,134		(1,889)
Change in fair value of earn-out liability due to achievement of revenue target	(11,534)		(5,211)		(11,534)		(5,211)

Balance as of end of period	$	11,400	$	9,800	$	11,400	$	9,800

For the three and nine months ended September 30, 2023 and 2022, the changes in the fair value of the earn-out liability related to the 2021 acquisition of PLDA Group (“PLDA”), which is subject to certain revenue targets of the acquired business for a period of three years from the date of acquisition, and which is 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 is 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 has classified its liability for the contingent earn-out consideration related to the PLDA acquisition within Level 3 of the fair value hierarchy because the fair value calculation includes significant unobservable inputs. During the three and nine months ended

As of September 30, 2017
Total
Quoted
Market
Prices in
Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
(In thousands)
Money market funds $ 12,882
$ 12,882
$ —
$ —
U.S. Government bonds and notes 30,489
—
30,489
—
Corporate notes, bonds, commercial paper and other 98,887
1,287
97,600
—
Total available-for-sale securities $ 142,258
$ 14,169
$ 128,089
$ —

As of December 31, 2016
Total
Quoted
Market
Prices in
Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
(In thousands)
Money market funds $ 10,681
$ 10,681
$ —
$ —
U.S. Government bonds and notes 48,292
—
48,292
—
Corporate notes, bonds, commercial paper and other 62,178
303
61,875
—
Total available-for-sale securities $ 121,151
$ 10,984
$ 110,167
$ —

September 30, 2023, the Company remeasured the fair value of the earn-out liability, which resulted in a gain of $5.7 million and additional expense of $8.1 million, respectively, in the Company’s Unaudited Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2022, the Company remeasured the fair value of the earn-out liability, which resulted in additional expense of $2.4 million and a gain of $1.9 million, respectively, in the Company’s Unaudited Condensed Consolidated Statements of Operations.

The Company monitors its investments for ~~other-than-temporary~~ impairment and records appropriate reductions in carrying value when necessary. The Company monitors its investments for other-than-temporary losses by considering current factors,

including the economic environment, market conditions, operational performance and other specific factors relating to the business underlying the investment, reductions in carrying values when necessary and the Company’s ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery in the market. Any other-than-temporary loss is reported under “Interest and other income (expense), net” in the ~~condensed consolidated statement~~Unaudited Condensed Consolidated Statements of ~~operations.~~Operations.

~~For~~During the second half of 2018, the Company made an investment in a non-marketable equity security of a private company. This equity investment is accounted for under the equity method of accounting, and the Company accounts for its equity method share of the income (loss) on a quarterly basis. As of September 30, 2023, the carrying value of the Company’s 25.0% ownership percentage was reduced to zero as the carrying value had been adjusted by an equal and offsetting amount of the Company’s share of the investee’s cumulative losses. As of December 31, 2022, the carrying value of the Company’s 25.0% ownership percentage was $0.5 million, which was included in other assets in the accompanying Unaudited Condensed Consolidated Balance Sheets. The Company recorded immaterial amounts in its Unaudited Condensed Consolidated Statements of Operations representing its share of the investee’s loss for the nine months ended September 30, 2023 and 2022.

During the three and nine months ended September 30, ~~2017~~2023 and ~~2016~~,2022, there were no transfers of financial instruments between different categories of fair value.

The following table presents the financial instruments that are not carried at fair value but require fair value disclosure as of ~~September 30, 2017~~ ~~and~~ December 31, ~~2016~~:2022:


	As of December 31, 2022
(In thousands)		Face Value		Carrying Value		Fair Value
1.375% Convertible Senior Notes due 2023 (the “2023 Notes”)		$	10,381	$	10,378	$	19,625

As of September 30, 2017 As of December 31, 2016
(In thousands)
Face
Value

Carrying
Value
Fair Value
Face
Value

Carrying
Value
Fair Value
1.125% Convertible Senior Notes due 2018 (the "2018 Notes") $ 138,000
$ 131,490
$ 163,737
$ 138,000
$ 126,167
$ 173,961

The fair value of the convertible notes at ~~each balance sheet date is~~December 31, 2022 was determined based on recent quoted market prices for these notes which is a ~~level~~Level 2 measurement. As discussed in Note ~~8, "Convertible~~9, “Convertible Notes,~~" as~~”the Company settled the remaining $10.4 million aggregate principal amount of ~~September 30, 2017~~, the ~~2018~~2023 Notes ~~are~~during the first quarter of 2023. As of December 31, 2022, the 2023 Notes were carried at their face value of ~~$138.0~~$10.4 million,, less any ~~unamortized debt discount and~~ unamortized debt issuance costs. The carrying value of other financial instruments, including accounts receivable, accounts payable and other liabilities, ~~approximates~~approximated fair value due to their short maturities.

8. Leases

The Company leases office space, domestically and internationally, under operating leases. The Company’s leases have remaining lease terms generally between one year and seven years. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities and long-term operating lease liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheets. The Company does not have any finance leases.

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 on the Unaudited Condensed Consolidated Balance Sheet as of September 30, 2023 (in thousands):


Years ending December 31,	Amount
2023 (remaining three months)	$	1,412
2024	5,483
2025	5,338
2026	5,564
2027	4,742
Thereafter	12,996
Total minimum lease payments	35,535
Less: amount of lease payments representing interest	(5,244)
Present value of future minimum lease payments	30,291
Less: current obligations under leases	(4,174)
Long-term lease obligations	$	26,117

As of September 30, 2023, the weighted-average remaining lease term for the Company’s operating leases was 6.6 years and the weighted-average discount rate used to determine the present value of the Company’s operating leases was 5.6%.

Operating lease costs included in research and development and selling, general and administrative costs on the Unaudited Condensed Consolidated Statements of Operations were $1.3 million and $1.9 million for the three months ended September 30, 2023 and 2022, respectively. Operating lease costs included in research and development and selling, general and administrative costs on the Unaudited Condensed Consolidated Statements of Operations were $4.7 million and $5.6 million for the nine months ended September 30, 2023 and 2022, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities were $5.2 million and $6.7 million for the nine months ended September 30, 2023 and 2022, respectively.

9. Convertible Notes

The Company’s convertible notes are shown in the following table:

(In thousands) As of September 30, 2017 As of December 31, 2016
1.125% Convertible Senior Notes due 2018 $ 138,000
$ 138,000
Unamortized discount (6,014 ) (10,913 )
Unamortized debt issuance costs (496 ) (920 )
Total convertible notes $ 131,490
$ 126,167
Less current portion 131,490
—
Total long-term convertible notes $ —
$ 126,167


	As of
(In thousands)	September 30, 2023		December 31, 2022
2023 Notes	$	—	$	10,381




Unamortized debt issuance costs — 2023 Notes	—		(3)

Total convertible notes	—		10,378
Less current portion	—		10,378
Total long-term convertible notes	$	—	$	—

During the first quarter of 2023, the holders of the remaining $10.4 million aggregate principal amount of the 2023 Notes elected to convert the notes pursuant to the original terms of the conversion feature. Accordingly, upon maturity, the Company paid $10.4 million in cash to settle the aggregate principal amount of the 2023 Notes and delivered approximately 0.3 million shares of the Company's common stock to settle the conversion spread.

In connection with the settlement of the conversion of the remaining 2023 Notes, the Company received 0.3 million shares of the Company’s common stock for the retirement of the remaining convertible senior note hedges and paid $10.7 million in cash for the retirement of the remaining warrants during the first quarter of 2023. Additionally, the retirement of the remaining warrants was subject to derivative accounting, resulting in a loss on fair value adjustment of derivatives of $0.2 million for the nine months ended September 30, ~~2017, the 2018 Notes were reclassed from a long-term liability to a short-term liability as they will be due on August 15, 2018.~~2023.

Interest expense related to the convertible notes ~~for the~~ ~~three and nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~ ~~was as follows:~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(In thousands)
2018 Notes coupon interest at a rate of 1.125% $ 388
$ 388
1,164
1,164
2018 Notes amortization of discount and debt issuance costs at an additional effective interest rate of 5.5% 1,801
1,699
5,324
5,025
Total interest expense on convertible notes $ 2,189
$ 2,087
$ 6,488
$ 6,189

~~9. Commitments and Contingencies~~

~~As of~~ ~~September 30, 2017, the Company’s material contractual obligations were as follows (in thousands):~~

Total
Remainder of 2017
2018 2019 2020 2021 Thereafter
Contractual obligations (1)

Imputed financing obligation (2) $ 17,511
$ 1,593
$ 6,447
$ 6,602
$ 2,869
$ —
$ —
Leases and other contractual obligations 28,336
3,020
6,000
5,631
4,662
4,793
4,230
Software licenses (3) 16,317
2,609
10,176
3,532
—
—
—
Convertible notes 138,000
—
138,000
—
—
—
—
Interest payments related to convertible notes 1,552
—
1,552
—
—
—
—
Total $ 201,716
$ 7,222
$ 162,175
$ 15,765
$ 7,531
$ 4,793
$ 4,230

~~(1)~~

The above table does not reflect possible payments in connection with uncertain tax benefits of approximately $22.9 million including $20.7 million recorded as a reduction of long-term deferred tax assets and $2.2 million in long-term income taxes payable as of September 30, 2017. As noted below in Note 12, “Income Taxes,” although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, the Company cannot reasonably estimate the outcome at this time.

~~(2)~~

With respect to the imputed financing obligation, the main components of the difference between the amount reflected in the contractual obligations table and the amount reflected on the unaudited condensed consolidated balance sheets are the interest on the imputed financing obligation and the estimated common area expenses over the future periods. The amount includes the amended Ohio lease and the amended Sunnyvale lease.


~~(3)~~	~~The Company has commitments with various software vendors for non-cancellable agreements generally having terms longer than~~ ~~one~~ ~~year.~~

~~Building lease expense was approximately $1.2 million and $3.2 million~~ for the three and nine months ended September 30, ~~2017, respectively. Building lease expense~~2023 and 2022 was ~~approximately $1.1 million~~as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2023		2022		2023		2022
2023 Notes coupon interest at a rate of 1.375%	$	—	$	90	$	12	$	575
2023 Notes amortization of debt issuance cost	—		33		3		184
Total interest expense on convertible notes	$	—	$	123	$	15	$	759

10. Commitments and ~~$2.7 million for the three and nine months ended~~Contingencies

As of September 30, ~~2016, respectively. Deferred rent~~2023, the Company’s material contractual obligations were as follows:


(In thousands)	Total		Remainder of 2023		2024		2025		2026		2027
Contractual obligations (1) (2)
Software licenses (3)	$	29,847	$	5,262	$	16,502	$	8,083	$	—	$	—
Other contractual obligations	1,800		600		1,200		—		—		—
Acquisition retention bonuses (4) (5)	879		—		550		329		—		—


Total	$	32,526	$	5,862	$	18,252	$	8,412	$	—	$	—

(1) The above table does not reflect possible payments in connection with unrecognized tax benefits of ~~$0.5~~approximately $104.4 million, including $27.4 million recorded as a reduction of long-term deferred tax assets and ~~$0.5~~$77.0 million in long-term income taxes payable as of September 30, ~~2017 and December 31, 2016, respectively,~~2023. As noted below in Note 13, “Income Taxes,” although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, the Company cannot reasonably estimate the outcome at this time.

(2) For the Company’s lease commitments as of September 30, 2023, refer to Note 8, “Leases.”

(3) The Company has commitments with various software vendors for agreements generally having terms longer than one year. As of September 30, 2023, approximately $16.0 million of the fair value of the software licenses was included ~~primarily~~ in other current ~~liabilities.~~liabilities and $11.1 million was included in other long-term liabilities, in the accompanying Unaudited Condensed Consolidated Balance Sheet.

~~Indemnification~~(4) In connection with the acquisitions of Hardent in the second quarter of 2022 and PLDA in the third quarter of 2021, the Company is obligated to pay retention bonuses to certain employees subject to certain eligibility and acceleration provisions, including the condition of employment.

(5) In connection with the acquisition of AnalogX in the third quarter of 2021, the Company was obligated to pay retention bonuses to certain employees subject to certain eligibility and acceleration provisions, including the condition of employment. In September 2023, the Company divested its PHY IP group, which includes AnalogX and resulted in the Company recognizing an immaterial decrease related to the remaining AnalogX acquisition retention bonus liability. Refer to Note 17, “Divestiture,” for additional information.

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 intellectual property (“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 ~~or liability~~ that the Company could be ~~exposed~~required to make under these agreements to the amount of fees received by the Company, however, this ismay not always be possible. The fair value of the liability as of September 30, ~~2017~~2023 and December 31, ~~2016 is~~2022, respectively, was not material.

~~10.~~

11. Equity Incentive Plans and Stock-Based Compensation

As of September 30, 2017, 5,287,247 shares of the 35,400,000 cumulative shares approved under both the current 2015 Equity Incentive Plan (the “2015 Plan”) and past 2006 Equity Incentive Plan (the “2006 Plan”) remain available for grant, which included an increase of 4,000,000 shares approved under the 2015 Plan. On April 23, 2015, the Company's stockholders approved the 2015 Plan, which authorizes 4,000,000 shares for future issuance plus the number of shares that remained available for grant under the 2006 Plan as of the effective date of the 2015 Plan. The 2015 Plan became effective and replaced the 2006 Plan on April 23, 2015. The 2015 Plan was the Company’s only plan for providing stock-based incentive awards to eligible employees, executive officers, non-employee directors and consultants as of September 30, 2017. No further awards will be made under the 2006 Plan, but the 2006 Plan will continue to govern awards previously granted under it. In addition, any shares subject to stock options or other awards granted under the 2006 Plan that on or after the effective date of the 2015 Plan are forfeited, cancelled, exchanged or surrendered or terminate under the 2006 Plan will become available for grant under the 2015 Plan.

A summary of shares available for grant under the Company’s plans is as follows:



	Shares Available for Grant
~~Shares~~Total shares available for grant as of December 31, ~~2016~~2022	~~7,305,368~~	7,655,769
~~Stock options granted~~ Increase in shares approved for issuance (1)	~~(498,426~~	)5,210,000
~~Stock options forfeited~~	~~1,858,653~~


Nonvested equity stock and stock units granted ~~(1)~~ (2) (3)	~~(4,376,615~~	)(2,022,315)
Nonvested equity stock and stock units forfeited ~~(1)~~(2)	~~998,267~~	1,070,338
Total shares available for grant as of September 30, ~~2017~~2023	~~5,287,247~~	11,913,792


~~(1)~~	For purposes of determining the number of shares available for grant under the 2015 Plan against the maximum number of shares authorized, each share of restricted stock granted reduces the number of shares available for grant by 1.5 shares and each share of restricted stock forfeited increases shares available for grant by 1.5 shares.


~~(2)~~	Amount includes 394,853 shares that have been reserved for potential future issuance related to certain performance unit awards granted in the first and third quarters of 2017 and discussed under the section titled "Nonvested Equity Stock and Stock Units" below.

(1) On April 27, 2023, the Company’s stockholders approved these additional shares to be reserved for issuance under the 2015 Equity Incentive Plan (the “2015 Plan”).

(2) For purposes of determining the number of shares available for grant under the 2015 Plan against the maximum number of shares authorized, each restricted stock unit granted prior to April 27, 2023 reduces the number of shares available for grant by 1.5 shares and each restricted stock unit forfeited increases shares available for grant by 1.5 shares. Each restricted stock unit granted on or after April 27, 2023 reduces the number of shares available for grant by 1.0 shares and each restricted stock unit forfeited increases shares available for grant by 1.0 shares.

(3) Amount includes approximately 0.2 million shares that have been reserved for potential future issuance related to certain performance unit awards granted in the first quarter of 2023 and discussed under the section titled “Nonvested Equity Stock and Stock Units” below.

General Stock Option Information

The following table summarizes stock option activity under the ~~2006 Plan and 2015 Plan~~Company’s equity incentive plans for the nine months ended September 30, ~~2017~~2023 and information regarding stock options outstanding, exercisable, and vested and expected to vest as of September 30, ~~2017.~~2023.

Options Outstanding

Number of
Shares

Weighted
Average
Exercise Price
Per Share

Weighted
Average
Remaining
Contractual
Term (years)

Aggregate
Intrinsic
Value
(In thousands, except per share amounts)
Outstanding as of December 31, 2016 7,008,833
$ 9.34

Options granted 498,426
$ 12.74

Options exercised (989,613 ) $ 7.12

Options forfeited (1,858,653 ) $ 10.54

Outstanding as of September 30, 2017 4,658,993
$ 9.69
5.64 $ 19,594
Vested or expected to vest at September 30, 2017 4,592,934
$ 9.66
5.46 $ 19,533
Options exercisable at September 30, 2017 3,621,650
$ 9.13
4.87 $ 17,843

No stock options that contain a market condition were granted during the three and nine months ended September 30, 2017. As of September 30, 2017 and December 31, 2016, there were 50,000 and 1,135,000, respectively, stock options outstanding that require the Company to achieve minimum market conditions in order for the options to become exercisable. The fair values of the options granted with a market condition were calculated, on their respective grant dates, using a binomial valuation model, which estimates the potential outcome of reaching the market condition based on simulated future stock prices.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value for in-the-money options at September 30, 2017, based on the $13.35 closing stock price of Rambus’ common stock on September 29, 2017 on the NASDAQ Global Select Market, which would have been received by the option holders had all option holders exercised their options as of that date. The total number of in-the-money options outstanding and exercisable as of September 30, 2017 was 4,156,223 and 3,132,148, respectively.


	Options Outstanding
(In thousands, except shares, per share amounts and years)	Number of Shares	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2022	432,443	$	11.60

Options exercised	(268,289)	$	11.49		$	3,082

Outstanding as of September 30, 2023	164,154	$	11.79	3.70	$	7,223
Vested or expected to vest at September 30, 2023	164,154	$	11.79	3.70	$	7,223
Options exercisable at September 30, 2023	162,487	$	11.77	3.67	$	7,153

Employee Stock Purchase Plan

Under the 2015 Employee Stock Purchase Plan ("(“2015 ~~ESPP"~~ESPP”), the Company issued ~~361,994~~120,569 shares at a price of ~~$10.33~~$27.91 per share and 161,254 shares at a price of $19.97 per share during the nine months ended September 30, ~~2017. Under the 2015 ESPP, the Company issued 340,349 shares at a price of $8.96 per share during the nine months ended September 30, 2016.~~2023 and 2022, respectively. As of September 30, ~~2017, 1,089,649~~2023, approximately 2.4 million shares under the 2015 ESPP ~~remain~~remained available for issuance.

Stock-Based Compensation

For the nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, the Company maintained stock plans covering a broad range of potential equity grants including stock options, nonvested equity stock and equity stock units and ~~performance based~~performance-based instruments. In addition, the Company sponsors the 2015 ESPP, whereby eligible employees are entitled to purchase common stock semi-annually, by means of limited payroll deductions, at a 15% discount from the fair market value of the common stock as of specific dates.

Stock Options

~~During the three months ended September 30, 2017, the Company did not grant any~~There were no stock ~~options. During~~options granted during the nine months ended September 30, ~~2017, the Company granted 498,426 stock options with an estimated total grant-date fair value of $2.1 million. During the three~~2023 and ~~nine months ended September 30, 2017, the Company recorded stock-based~~2022, respectively. Stock-based compensation expense related to stock options ~~of $0.7 million and $2.1 million, respectively.~~

~~During the three months ended September 30, 2016, the Company did not grant any stock options. During~~was immaterial for the nine months ended September 30, ~~2016, the Company granted 440,000 stock options with an estimated total grant-date fair value of $2.1 million. During the three~~2023 and ~~nine months ended September 30, 2016, the Company recorded stock-based compensation expense related to stock options of $1.0 million and $3.3 million, respectively.~~2022.

As of September 30, ~~2017,~~2023, there was ~~$4.0 million~~an immaterial amount of total unrecognized compensation cost, net of expected forfeitures, related to non-vested stock-based compensation arrangements granted under the stock option plans. That cost is expected to be recognized over a weighted-average period of ~~2.4 years. The total fair value of shares vested as of September 30, 2017 was $18.9 million.~~

The total intrinsic value of options exercised was $1.9 million and $5.7 million for the three and nine months ended September 30, 2017, respectively. The total intrinsic value of options exercised was $3.0 million and $7.0 million for the three and nine months ended September 30, 2016, respectively. Intrinsic value is the total value of exercised shares based on the price of the Company’s common stock at the time of exercise less the cash received from the employees to exercise the options.

~~During the nine months ended September 30, 2017, net proceeds from employee stock option exercises totaled approximately $7.1 million.~~one month.

Employee Stock Purchase Plan

For the three and nine months ended September 30, ~~2017,~~2023, the Company recorded stock-based compensation expense related to the 2015 ESPP of $0.5 million and $1.5 million, respectively. For the three and nine months ended September 30, 2022, the Company recorded stock-based compensation expense related to the 2015 ESPP of $0.4 million and ~~$1.3 million, respectively. For the three and nine months ended September 30, 2016, the Company recorded compensation expense related to the 2015 ESPP of $0.3 million and $1.1~~$1.2 million, respectively. As of September 30, ~~2017,~~2023, there was ~~$0.1~~$0.2 million of total unrecognized compensation cost related to stock-based compensation arrangements granted under the 2015 ESPP. That cost is expected to be recognized over one month.

Tax benefits realized as a result of employee stock option exercises, stock purchase plan purchases, and vesting of equity stock and stock units for the three and nine months ended September 30, 2017 calculated in accordance with accounting for share-based payments were $0.2 million and $0.8 million, respectively. There were no tax benefits realized as a result of employee stock option exercises, stock purchase plan purchases, and vesting of equity stock and stock units for the three and nine months ended September 30, 2016 calculated in accordance with accounting for share-based payments.

~~Valuation Assumptions~~

The fair value of stock awards is estimated as of the grant date using the Black-Scholes-Merton (“BSM”) option-pricing model assuming a dividend yield of 0% and the additional weighted-average assumptions as listed in the table below.

~~The following table presents the weighted-average assumptions used to estimate the fair value of stock options granted that contain only service conditions in the periods presented.~~

Stock Option Plan
Nine Months Ended
September 30,
2017 2016
Stock Option Plan

Expected stock price volatility 32 % 36 %
Risk free interest rate 1.8% - 1.9%
1.7 %
Expected term (in years) 5.3 - 5.4
6.1
Weighted-average fair value of stock options granted to employees $ 4.12
$ 4.66

~~There were no stock options granted during the three months ended September 30, 2017 and 2016.~~

Employee Stock Purchase Plan
Nine Months Ended
September 30,
2017 2016
Employee Stock Purchase Plan

Expected stock price volatility 27 % 33 %
Risk free interest rate 0.98 % 0.41 %
Expected term (in years) 0.5
0.5
Weighted-average fair value of purchase rights granted under the purchase plan $ 2.87
$ 2.86

Nonvested Equity Stock and Stock Units

The Company grants nonvested equity stock units to officers, employees and directors. During the three ~~and~~months ended September 30, 2023, the Company granted an immaterial amount of nonvested equity stock units. During the nine months ended September 30, ~~2017,~~2023, the Company granted nonvested equity stock units totaling ~~463,346 and 2,654,508 shares under the 2015 Plan.~~approximately 1.2 million shares. During the three and nine months ended September 30, ~~2016,~~2022, the Company granted nonvested equity stock units totaling ~~884,724~~approximately 0.5 million and ~~2,909,364~~2.2 million shares, ~~under the 2015 Plan.~~respectively. These awards have a service condition, generally a service period of four years, except in the case of grants to directors, for which the service period is 1one year. For the three and nine months ended September 30, ~~2017,~~2023, the nonvested equity stock units were valued at the date of grant giving them a fair value of approximately ~~$6.0~~$2.1 million and ~~$34.1 million.~~$57.3 million, respectively. For the three and nine months ended September 30, ~~2016,~~2022, the nonvested equity stock units were valued at the date of grant giving them a fair value of approximately ~~$12.6~~$12.8 million and ~~$37.6 million.~~$61.8 million, respectively. During the first ~~quarters~~quarter of ~~2017~~2023 and ~~2016,~~2022, the Company granted performance unit awards to certain ~~Company~~company executive officers with vesting subject to the achievement of certain performance and/or market conditions. The ultimate number of performance units that can be earned can range from 0% to ~~150%~~200% of target depending on performance relative to target over the applicable period. The shares earned will vest on the third or fourth anniversary of the date of ~~grant.~~grant. The ~~Company's~~Company’s shares available for grant have been reduced to reflect the shares that could be earned at ~~150% of~~the maximum target.

During the third quarter of 2017, the Company granted performance unit awards to a Company executive officer with vesting subject to the achievement of certain performance and market conditions. The ultimate number of performance units that can be earned can range from 0% to 150% of target depending on performance relative to target over the applicable period. The shares that will become eligible to vest will be measured over a three-year period ending on December 31, 2019, unless the performance period is shortened because of a change of control of the Company or a termination of the executive officer’s employment without cause. The Company's shares available for grant have been reduced to reflect the shares that could be earned at 150% of target. The fair value of the market condition of these performance units was calculated, on its respective grant date, using a binomial valuation model, which estimates the potential outcome of reaching the market condition based on simulated future stock prices. The stock-based compensation expense related to these awards will be recorded over the respective requisite service period of approximately 2.4 years. During the three months ended September 30, 2017, the achievement of the performance condition for these performance units was considered probable, and as a result, the Company recognized an immaterial amount of stock-based compensation expense related to these performance unit awards.

During the three and nine months ended September 30, 2017, the Company recorded $1.2 million and $3.1 million, respectively, of stock-based compensation expense related to all outstanding nonvested performance unit awards. During the

three and nine months ended September 30, 2016, the Company recorded $0.7 million and $2.0 million, respectively, of stock-based compensation expense related to all outstanding nonvested performance unit awards.

For the three and nine months ended September 30, ~~2017,~~2023, the Company recorded stock-based compensation expense of approximately ~~$5.9~~$9.5 million and ~~$16.7~~$32.9 million, respectively, primarily related to all outstanding nonvested equity stock grants. For the three and nine months ended September 30, ~~2016,~~2022, the Company recorded stock-based compensation expense of approximately ~~$4.1~~$8.5 million and ~~$10.9~~$24.0 million, respectively, related to all outstanding nonvested equity stock grants.

Unrecognized stock-based compensation related to all nonvested equity stock grants, net of estimated forfeitures, was approximately ~~$46.4~~$73.0 million at September 30, ~~2017.~~2023. This amount is expected to be recognized over a ~~weighted average~~weighted-average period of ~~2.5~~2.1 years.

The following table reflects the activity related to nonvested equity stock and stock units for the nine months ended September 30, ~~2017:~~2023:


Nonvested Equity Stock and Stock Units	Shares	Weighted- Average Grant-Date Fair Value
Nonvested at December 31, 2022	4,718,060	$	22.78
Granted	1,208,954	$	46.39
Vested	(1,718,642)	$	24.13
Forfeited	(690,141)	$	28.04
Nonvested at September 30, 2023	3,518,231	$	32.28

Nonvested Equity Stock and Stock Units Shares
Weighted-
Average
Grant-Date
Fair Value
Nonvested at December 31, 2016 4,863,056
$ 12.33
Granted 2,654,508
$ 12.84
Vested (835,776 ) $ 12.23
Forfeited (636,732 ) $ 12.51
Nonvested at September 30, 2017 6,045,056
$ 12.55

~~11.~~12.Stockholders’ Equity

Share Repurchase Program

~~During~~On October 29, 2020, the ~~nine~~ ~~months ended~~ ~~September 30, 2017, the Company repurchased shares~~Company’s board of ~~its common stock under its share repurchase program as discussed below.~~

~~On January 21, 2015, the Company's Board~~directors (the “Board”) approved a share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million ~~shares.~~shares (the “2020 Repurchase Program”). Share repurchases under the ~~plan~~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 ~~plan.~~2020 Repurchase Program. During the nine months ended September 30, 2023, the Company repurchased shares of its common stock under the 2020 Repurchase Program as discussed below.

On ~~May 1, 2017,~~August 10, 2023, the Company ~~initiated~~entered into an accelerated share repurchase program with ~~Barclays~~Royal Bank ~~PLC.~~of Canada (“RBC”) (the “2023 ASR Program”). The ~~accelerated share repurchase program is~~2023 ASR Program was part of the ~~broader~~ share repurchase program previously authorized by the ~~Company's~~ Board on ~~January 21, 2015.~~October 29, 2020. Under the ~~accelerated share repurchase program,~~2023 ASR Program, the Company pre-paid to ~~Barclays Bank PLC,~~RBC the ~~$50.0~~$100.0 million purchase price for its common stock and, in turn, the Company received an initial delivery of approximately ~~3.2~~1.6 million shares of its common stock from ~~Barclays Bank PLC, in the second quarter of 2017,~~RBC on August 11, 2023, which were retired and recorded as ~~a $40.0~~an $80.0 million reduction to ~~stockholders'~~stockholders’ equity. The remaining ~~$10.0~~$20.0 million of the initial payment was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to the ~~Company's~~Company’s stock. ~~The number~~On September 22, 2023, the accelerated share repurchase program was completed and the Company received an additional 0.2 million shares of its common stock, which were retired, as the final settlement of the 2023 ASR Program.

Effective January 1, 2023, the Company’s share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. Excise tax incurred is included in the cost of shares ~~to be ultimately purchased~~repurchased in the Unaudited Condensed Consolidated Statements of Stockholders’ Equity.

On September 9, 2022, the Company entered into an accelerated share repurchase program with Wells Fargo Bank, National Association (“Wells Fargo”) (the “2022 ASR Program”). The 2022 ASR Program was part of the share repurchase program previously authorized by the Board on October 29, 2020. Under the 2022 ASR Program, the Company ~~will be determined based on~~pre-paid to Wells Fargo the ~~volume weighted average~~$100.0 million purchase price for its common stock and, in turn, the Company received an initial delivery of approximately 3.1 million shares of its common stock from Wells Fargo in the third quarter of 2022, which were retired and recorded as an $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 the Company’s stock. During the fourth quarter of 2022, the 2022 ASR Program was completed and the Company received an additional 0.1 million shares of its common stock, ~~during~~which were retired, as the ~~terms~~final settlement of the ~~transaction, minus an agreed upon discount between the parties. The program is expected to be completed by November 2017.~~

2022 ASR Program.

As of September 30, ~~2017,~~2023, there remained an outstanding authorization to repurchase approximately ~~8.3~~7.9 million shares of the ~~Company's~~Company’s outstanding common stock under the ~~current share repurchase program.~~

2020 Repurchase Program.

The Company records ~~stock~~share repurchases as a reduction to stockholders’ equity. The Company records a portion of the purchase price of the repurchased shares as an increase to accumulated deficit when the price of the shares repurchased exceeds the average original proceeds per share received from the issuance of common ~~stock. During the nine months ended September 30, 2017, the cumulative price of $29.4 million was recorded as an increase to accumulated deficit.~~stock in accordance with its accounting policy.

~~12.~~13. Income Taxes

The Company recorded a provision for income taxes of ~~$6.2~~$4.0 million and ~~$4.3~~$2.5 million for the three months ended September 30, ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$16.1~~a provision for (benefit from) income taxes of $(151.1) million and ~~$14.9~~$5.9 million for the nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, respectively. The provision for income taxes for the three months ended September 30, 2023 was primarily driven by foreign withholding taxes and adjustments to the valuation allowance release on U.S. deferred tax assets due to a change in forecasted taxable income and expense, offset by tax benefits from excess stock-based compensation deductions. The benefit from income taxes for the nine months ended September 30, 2023 was primarily driven by the valuation allowance release on U.S. deferred tax assets, as well as tax benefits from excess stock-based compensation deductions, offset by foreign withholding taxes. The provision for income taxes for the three and nine months ended September 30, ~~2017 is primarily comprised~~2022 was driven by a combination of

the ~~Company's~~valuation allowance recorded on U.S. ~~federal, state and~~deferred tax assets, foreign withholding taxes, ~~and income~~the statutory tax expense ~~recognized from exercises and expiration of out-of-the-money fully vested shares from equity incentive plans. Similarly, the income taxes~~ for the ~~three~~foreign jurisdictions for 2022 and ~~nine~~indefinite-lived intangible tax amortization expense.

During the three months ended September 30, ~~2016 was primarily comprised of the Company's U.S. federal, state~~2023 and ~~foreign taxes and income tax expense recognized from exercises and expiration of shares from equity incentive plans.~~

~~During the three and nine months ended September 30, 2017,~~2022, the Company paid withholding taxes of ~~$4.7~~$5.4 million and ~~$15.6~~$5.5 million, respectively. During both the ~~three and~~ nine months ended September 30, ~~2016,~~2023 and 2022, the Company paid withholding taxes of ~~$5.5 million and $16.5 million, respectively.~~

As of September 30, 2017, the Company’s unaudited condensed consolidated balance sheets included net deferred tax assets, before valuation allowance, of approximately $225.0 million, which consists of net operating loss carryovers, tax credit carryovers, amortization, employee stock-based compensation expenses and certain liabilities, partially reduced by deferred tax liabilities associated with the convertible notes.$15.8 million.

The Company has 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 federal taxable income in future periods. These credit carryforwards will expire if they are not used within certain time periods. As of September 30, 2017, the Company determined that there is sufficient positive evidence to conclude that it is more likely than not sufficient taxable income will exist in the future allowing the Company to recognize these deferred tax assets. It is possible that some or all these attributes could ultimately expire unused. If facts and circumstances change in the future, the Company may determine at that time a valuation allowance is necessary. A valuation allowance would materially increase the Company's tax expense in the period applied and would adversely affect its results of operations and statements of financial condition. Changes in the Company's underlying facts or circumstances, such as the impact of the acquisitions, will be continually assessed and the Company will re-evaluate its position accordingly.

~~As of September 30, 2017, the Company continues to maintain a valuation allowance against the majority of its state deferred tax assets. Management~~ periodically evaluates the realizability of ~~the Company's~~its net deferred tax assets based on all available evidence, both positive and negative. The realizability of the ~~Company's~~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 the second quarter of 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 ~~continues~~recognized a $149.4 million discrete tax benefit during the three and six months ended June 30, 2023 as a result of the valuation allowance release.

During the second quarter of 2023, the Company reached a cumulative income position over the previous three years. The cumulative three-year income is considered positive evidence, which is considered objective and verifiable, and thus received significant weighting. Additional positive evidence considered by the Company in its assessment included recent utilization of tax attribute carryforwards and future forecasts of continued profitability in the United States. Negative evidence the Company

considered included economic uncertainties, including volatility of the industry, and the possibility of a recession or a decline in the market.

Upon considering the relative impact of all evidence during the second quarter of 2023, both negative and positive, and the weight accorded to ~~maintain a~~each, the Company concluded that it was more likely than not that the majority of its deferred tax ~~asset~~assets would be realizable, with the exception of primarily its California research and development credits and certain expiring federal tax credits that have not met the “more likely than not” realization threshold criteria. As a result, the Company released the related valuation allowance against the majority of ~~$29.0 million~~its federal and state deferred tax assets. The effect of the valuation allowance release is included as a component of the benefit from income taxes in the accompanying Unaudited Condensed Consolidated Statement of Operations.

When a change in valuation allowance is recognized during an interim period, the change in valuation allowance resulting from current year income is included in the annual effective tax rate and the release of valuation allowance supported by projections of future taxable income is recorded as a discrete provision for (benefit from) income taxes in the interim period. During the three months ended September 30, ~~2017.~~2023, the Company further adjusted its valuation allowance release as a result of a change in forecasted income and tax expense, primarily due to the sale of intangible assets as part of the PHY IP group divestiture. The Company recognized discrete tax expense of $4.4 million during the three months ended September 30, 2023, and it recognized a $145.1 million discrete tax benefit during the nine months ended September 30, 2023, as a result of the valuation allowance release.

The Company has 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.

The Company maintains liabilities for uncertain tax positions within its long-term income taxes payable accounts and as a reduction to existing deferred tax assets to the extent tax attributes are available to offset such liabilities. These liabilities involve judgment and estimation and are monitored by management based on the best information available including changes in tax regulations, the outcome of relevant court cases and other information.

As of ~~September 30, 2017,~~December 31, 2022, the Company had ~~approximately~~ ~~$22.9~~$164.5 million of unrecognized tax benefits including ~~$20.7~~$19.6 million recorded as a reduction of long-term deferred tax assets, $143.6 million recorded as a reduction of other assets associated with refundable withholding taxes previously withheld from licensees in South Korea, and ~~$2.2~~$1.3 million in recorded to long-term income taxes payable. ~~If recognized, approximately~~ ~~$2.2 million~~ ~~would be recorded as an income tax benefit.~~ As of ~~December 31, 2016~~,September 30, 2023, the Company had ~~$21.9~~approximately $179.5 million of unrecognized tax benefits, including ~~$19.7~~$27.4 million recorded as a reduction of long-term deferred tax assets, $75.1 million recorded as a reduction of other assets associated with refundable withholding taxes previously withheld from licensees in South Korea and ~~$2.2~~$77.0 million recorded in long-term income taxes payable. The decrease in the unrecognized tax benefits recorded as a reduction of other assets from December 31, 2022 to September 30, 2023, is due to the Company’s determination in the three months ended September 30, 2023, that it is more likely than not to succeed in its decision to request refund of Korean withholding tax for which refund claims were submitted in October 2023. The increase in unrecognized tax benefits recorded to long-term income taxes payable from December 31, 2022 to September 30, 2023 is primarily due to the Company’s decision to request refund of Korean withholding tax for which the Company claimed foreign tax credits in the United States. As a result of an analysis of court rulings and other settlement activities to date in South Korea, the Company has determined that it may be entitled to refund claims for foreign taxes previously withheld by licensees in South Korea. If the Company is successful in recovering the $152.6 million of refundable withholding taxes from South Korea, the refund will result in an offsetting reduction in U.S. foreign tax credits. The Company recognizes there are numerous risks and uncertainties associated with the ultimate collection of this refund. The Company previously maintained an offsetting reserve for the entire amount of refundable withholding taxes previously withheld in South Korea. During the three months ended September 30, 2023, the Company concluded it is more likely than not it will recover withholding taxes withheld during the past five years and accordingly filed a claim in October 2023 for refund of certain refundable withholding taxes, and recorded an income taxes receivable of $82.7 million with an offsetting long-term income taxes payable of $75.6 million and a reduction in long-term deferred tax assets of $7.1 million. The Company has not recorded a receivable for the portion of potentially available refunds for which a claim for refund has not been submitted or the Company does not intend to pursue at this time, as the Company does not at this time believe recovery of those taxes would be more likely than not if a refund claim were submitted. The Company continues to evaluate the potential for recovery of these taxes.

Although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, the Company cannot reasonably estimate the outcome at this time.

~~The Company recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision. At~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, an immaterial amount of interest and penalties is included in long-term income taxes payable.~~

Rambus files income tax returns for the U.S., California, India, the U.K., the Netherlands and various other state and foreign jurisdictions. The U.S. federal returns are subject to examination from 2014 and forward. The California returns are subject to examination from 2010 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 subject to examination from fiscal year ending March 2012 and forward. The Company is currently under examination by California for the 2010 and 2011 tax years and New York for the 2013, 2014 and 2015 tax years. The Company’s India subsidiary is under examination by the Indian tax administration for tax years beginning with 2011, except for 2014, which was assessed in the Company's favor. 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.

Additionally, the ~~Company's~~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.

~~13.~~

14. Litigation and Asserted Claims

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 ~~our~~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.

15. Derivative Instruments and Hedging Activities

In the first quarter of 2023, the Company began using foreign currency forward contracts (the “Contracts”) to manage the Company’s exposure related to certain foreign currency denominated monetary assets (the “Hedging Program”) and to minimize the related impact of foreign currency fluctuations on the Company’s earnings. The hedged monetary assets primarily consist of certain euro-denominated cash and accounts receivable balances. The Contracts mitigate the Company’s foreign currency exposure when the Contracts are settled at their maturity by generally offsetting the gains and losses generated by the re-measurement of the underlying monetary assets.

The Contracts are entered into at the end of each month and have a duration of approximately one month at inception. Due to the short duration of these Contracts, their fair value is deemed immaterial. As the Contracts are considered derivative instruments that are not designated and do not qualify as hedging instruments, any gains and losses resulting from changes in their fair value are recorded to interest income and other income (expense), net on the Company’s Unaudited Condensed Consolidated Statements of Operations. The Company does not use its Hedging Program for speculative or trading purposes.

The Contract outstanding as of September 30, 2023 was entered into by the Company on the last business day of the period. Given the relatively short duration such contracts are outstanding in relation to changes in potential market rates, the change in the fair value was deemed immaterial.

As of September 30, 2023, the total local currency amount of the outstanding Contract was €3.2 million, and its total notional value was $3.4 million. For the three and nine months ended September 30, 2023, any gains and losses resulting from changes in fair value of the Company’s Contracts were deemed immaterial.

16. Restructuring and Other Charges

2023 Restructuring Plan

In June 2023, the Company initiated a restructuring program to reduce overall expenses, which is expected 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 42 employees. During the nine months ended September 30, 2023, the Company recorded charges of approximately $9.4 million to “Restructuring and other charges” in its Unaudited Condensed Consolidated Statement of Operations, 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 is expected to be substantially completed in the fourth quarter of 2023.

The following table summarizes the 2023 Plan restructuring activities during the nine months ended September 30, 2023:


(In thousands)	Employee Severance and Related Benefits		Other Costs		Total
Liability at December 31, 2022	$	—	$	—	$	—
Charges	4,646		4,748		9,394
Non-cash items*	—		(948)		(948)
Payments	(4,066)		(2,000)		(6,066)
Liability at September 30, 2023	$	580	$	1,800	$	2,380

* The non-cash items of $0.9 million related to the write-down of software licenses for engineering development tools.

During the nine months ended September 30, 2022, the Company did not initiate any restructuring programs.

17. 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 $110.0 million in cash, subject to certain adjustments and certain closing conditions (the “Transaction”). The decision to sell this business reflects the evolution of the Company’s core semiconductor business to focus on the development of digital IP and chips, including novel memory solutions for high-performance computing, to support the continued advancement of the data center and artificial intelligence.

The Transaction was completed on September 6, 2023 and resulted in net proceeds of approximately $106.3 million, which consisted of the initial selling price of $110.0 million offset by approximately $3.7 million related to certain purchase price adjustments. The Company recognized a net gain on divestiture of the PHY IP group in the Unaudited Condensed Consolidated Statements of Operations of approximately $90.8 million during the three and nine months ended September 30, 2023. Transaction costs of approximately $1.4 million were included in the net gain of $90.8 million.

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 $10.0 million in the Company’s Unaudited Condensed Consolidated Statements of Operations. The charge was primarily related to the accelerated amortization of software licenses that were not part of the PHY IP disposal group.

18. Acquisition

Therewere no acquisitions during the nine months ended September 30, 2023.

2022 Acquisition

Hardent, Inc.

On May 20, 2022, (the “Closing Date”), the Company completed its acquisition of Hardent, a leading electronic design company, by acquiring all of its outstanding shares. The Company acquired Hardent for a total consideration of approximately $16.1 million, which consisted of $14.7 million in initial cash consideration paid at the Closing Date, $1.2 million deposited into an escrow account to fund indemnification obligations to be released within 18 months after the Closing Date, and $0.2 million deposited into an escrow account to fund other contractual provisions related to certain working capital adjustments. The addition of the technology and expertise from Hardent augments the Company’s CXL memory interconnect initiative.

As part of the acquisition, the Company agreed to pay certain Hardent employees approximately $1.2 million in cash over three years following the Closing Date (the “Retention Bonus”), to be paid in three equal installments on each of the dates that are 12 months, 24 months and 36 months following the Closing Date. The Retention Bonus payouts are subject to the condition of continued employment, therefore the Retention Bonus payouts will be treated as compensation and will be expensed ratably over the retention period.

The fair value of the intangible assets acquired was determined by management primarily by using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the existing technologies less charges representing the contribution of other assets to those cash

flows. The fair values of the remaining assets acquired and liabilities assumed approximated their carrying values at the Closing Date. The Company performed a valuation of the net assets acquired as of the Closing Date.

The total consideration from the acquisition was allocated as of the Closing Date, and reflects adjustments made during the measurement period, as follows:


(In thousands)	Total
Cash and cash equivalents	$	209

Accounts receivable	1,088
Unbilled receivables	239

Prepaid expenses and other current assets	16
Identified intangible assets	5,000

Goodwill	12,069



Accounts payable	(55)

Deferred revenue	(578)
Income taxes payable	(466)

Deferred tax liability	(1,325)
Other current liabilities	(56)
Total	$	16,141

The goodwill arising from the acquisition is primarily attributed to synergies related to the combination of new and complementary technologies of the Company and the assembled workforce of the acquired business. This goodwill was not deductible for tax purposes.

The identified intangible assets assumed in the acquisition of Hardent were recognized as follows based upon their estimated fair values as of the acquisition date:

Total

Estimated Weighted-Average Useful Life

(in thousands)

(in years)

Existing technology

4,800

5 years

Customer contracts and contractual relationships

200

2 years

Total

5,000

Unaudited Pro Forma Combined Consolidated Financial Information

The following pro forma financial information presents the combined results of operations for the Company and Hardent as if the acquisition had occurred on January 1, 2021. The pro forma financial information has been prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the acquisition actually taken place on January 1, 2021, and should not be taken as indicative of future consolidated operating results. Additionally, the pro forma financial results do not include any anticipated synergies or other expected benefits from the acquisition:


	Three Months Ended		Nine Months Ended
(In thousands)	September 30, 2022		September 30, 2022
Total revenue	$	112,244	$	335,485
Net income (loss)	$	1,170	$	(29,228)

The pro forma net income for 2022 was adjusted to exclude $0.2 million and $1.2 million of acquisition-related costs incurred during the three and nine months ended September 30, 2022. Consequently, the pro forma net income for 2021 was adjusted to include these costs.

Item 2. Management’s Discussion and Analysis of Financial Condition and Resultsof Operations

This report contains forward-looking statements within the meaning of Section 27Aof the Securities Act of 1933 and Section 21E of the Securities Exchange Act of1934 as described in more detail under “Note Regarding Forward-Looking Statements."” Our forward-lookingstatements are based on current expectations, forecasts and assumptions and aresubject to risks, uncertainties and changes in condition, significance, value andeffect. As a result of the factors described herein, and in the documentsincorporated herein by reference, including, in particular, those factors describedunder “Risk Factors,” we undertake no obligation to publicly disclose any revisionsto these forward-looking statements to reflect events or circumstances occurringsubsequent to filing this report with the Securities and Exchange Commission.

~~Rambus, CryptoFirewall~~^TM~~, CryptoMedia~~^TMThe following discussion and ~~CryptoManager~~^TManalysis should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and related notes that are ~~trademarks or registered trademarks~~included elsewhere in this report.

Rambusis 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 an industry-leading provider of chips, silicon IP and innovations that address the fundamental challenges of accelerating data and enable critical performance improvements for data center and other growing markets. The ongoing growth of the cloud, along with the widespread advancement of artificial intelligence (“AI”) and other data-intensive workloads, continue to drive an exponential increase in data usage and demands on data infrastructure. Creating fast and safe connections, both in and across systems, remains one of the most mission-critical design challenges limiting performance in advanced hardware for these markets.

As an industry pioneer with over 30 years of advanced semiconductor design experience, Rambus is ideally positioned to address the challenges of moving and protecting data. We are a leader in high-performance memory subsystems, providing chips, intellectual property (“IP”) and innovations that maximize the performance and security in data-intensive systems. Whether in the cloud, at the edge or in your hand, real-time and immersive applications depend on data throughput and integrity. Rambus products and innovations deliver the increased bandwidth, capacity and security required to meet the world’s data needs and drive ever-greater end-user experiences.

Our strategic objectives are focusing our product portfolio and research around our core strength in semiconductors, optimizing our operational efficiency, and leveraging our strong cash generation to re-invest 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. The Rambus 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

The Company’s continued execution delivered strong results during the third quarter of 2023, driven by the demand for our memory interface chips and our Silicon IP solutions, and continued stability from our royalties revenue.

Key third quarter 2023 financial results included:

•Revenue of $105.3 million;

•Operating benefits of $23.6 million; and

•Net cash provided by operating activities of $51.6 million.

During the third quarter, we completed a $100.0 million accelerated share repurchase program. We also completed the sale of ~~2017, we announced the industry’s first silicon-proven server DIMM buffer chipset capable~~our PHY IP group, strengthening our focus on chips and digital IPs. We produced quarterly product revenue of achieving the speeds expected for next-generation DDR5. Additionally, we teamed up with eftpos domestic debit card network in Australia to support the roll out of Apple Pay with tokenization software. Key 2017 third quarter financial results included:$52.2 million, which was primarily driven by our memory interface chips.

Operational Highlights

Revenue Sources

The Company’s consolidated revenue is comprised of ~~$99.1 million;~~

~~Total Operating Costs~~product revenue, royalties and ~~Expenses of $82.1 million;~~

~~Diluted net income per share of $0.07; and~~

~~Cash flows provided by operating activities of approximately $15 million.~~

~~Business Overview~~

~~Rambus creates innovative hardware and software technologies, driving advancements from the data center to the mobile edge. Our chips, customizable IP cores, patent licenses, software, services,~~contract and other ~~innovations improve the competitive advantage~~revenue.

Product revenue consists primarily of ~~our customers. We collaborate with the industry, partnering with leading ASIC~~memory interface chips. Our memory interface chips are sold to major DRAM manufacturers, Micron, Samsung and SoC designers, foundries, IP developers, processor companies, EDA companies and validation labs. Our innovations are integrated into a wide range of devices and systems, powering and securing diverse applications, including Big Data, Internet of Things, mobile, consumer and media platforms.

While we have historically focused our efforts on the development of technologies for memory, SerDes and other chip interfaces, we have expanded our portfolio of inventions and solutions to address chip and system security, mobile payments and smart ticketing. We intend to continue our growth into new technology fields, consistent with our mission to create value through our innovations and to make those technologies available through the shipment of products, the provisioning of services,SK hynix, as well as ~~our licensing business models. Key~~directly to ~~our efforts continues to be hiring~~system manufacturers and ~~retaining world-class inventors, scientists and engineers to lead the development and deployment of inventions and technology solutions~~cloud providers, for ~~our fields of focus.~~integration

Our strategy is to continue to augment our patent license business model to provide additional technology, products and services while creating and leveraging strategic synergies to increase revenue. In supportinto server memory modules. Product revenue accounted for 50% of our strategy, we acquired four businesses in 2016 in the fields of mobile payments, smart ticketing, memory buffer chips and SerDes IP cores. On January 25, 2016, our Security division completed the acquisition of Smart Card Software, Ltd. (“SCS”), a privately-held company incorporated in the United Kingdom,consolidated revenue for a pound sterling equivalent of $104.7 million in cash. Through this purchase we acquired two complementary businesses: Bell Identification Ltd., a leader in mobile payments, and Ecebs Ltd., a leading supplier of smart ticketing systems. We believe these businesses complement our security division by allowing us to extend our foundational security technology to offer differentiated, value-added security solutions to our customers.

On August 4, 2016, our Memory and Interfaces division completed the acquisition of all the assets of Inphi’s Memory Interconnect Business for $90 million in cash. The acquisition included product inventory, customer contracts, supply chain agreements and intellectual property. On August 5, 2016, our Memory and Interfaces division completed the acquisitioneach of the assets of Semtech Corporation’s Snowbush IP group for $32 million in cash. Snowbush IP, formerly part of Semtech’s Systems Innovation Group, is a provider of silicon-proven, high-performance serial link solutions. We believe these acquisitions strengthen our market position for memory buffer chip productsthree and ~~bolster our SerDes and IP offerings enabling us to better address the needs of the server, networking and data center market.~~

~~Organization~~

We have organized the business into four operational units: (1) Memory and Interfaces, or MID, which focuses on the design, development, manufacturing through partnerships and licensing of technology and solutions that is related to memory and interfaces; (2) Security, or RSD, which focuses on the design, development, deployment and licensing of technologies for chip, system and in-field application security, anti-counterfeiting, smart ticketing and mobile payments; (3) Emerging Solutions, or ESD, which encompasses our long-term research and development efforts in the area of emerging technologies; and (4) Lighting, or RLD, which focuses on the design, development and licensing of technologies for advanced LED-based lighting solutions. As ofnine months ended September 30, ~~2017, MID~~2023, as compared to 52% and ~~RSD met quantitative thresholds~~48% for ~~disclosure as reportable segments. Results for ESD~~the three and RLD are shown under “Other.” For additional information concerning segment reporting, see Note 5, “Segments and Major Customers,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q.nine months ended September 30, 2022.

~~Revenue Sources~~

~~Our inventions and technology solutions are offered to our customers through patent, technology, software and IP core licenses, as well as product sales and services. Today, our primary source of~~Royalty revenue is derived from our patent licenses, through which we provide our customers ~~a license~~certain rights to ~~use a certain portion of~~ our broad worldwide portfolio of patented inventions. ~~The license provides~~Our patent licenses enable our customers ~~with a defined right~~ to use a portion of our ~~innovations~~patent portfolio in ~~the customer’s~~their own digital electronics ~~products, systems or services, as applicable.~~products. The licenses ~~may also~~typically range in term up to ten years and define the specific field of use where our customers may ~~use or employ~~utilize our inventions in their products. ~~License agreements are~~Royalties may be structured ~~with~~as fixed, variable or a hybrid of fixed and variable royalty ~~payments over certain defined periods ranging for periods of up to ten years.~~payments. Leading ~~consumer product, industrial,~~ semiconductor and electronic system companies such as AMD, Broadcom, Cisco, ~~Freescale, Fujitsu, GE,~~CXMT, IBM, ~~Intel, LSI,~~Infineon, Kioxia, Marvell, MediaTek, Micron, Nanya, NVIDIA, Panasonic, Phison, Qualcomm, ~~Renesas,~~ Samsung, SK hynix, Socionext, STMicroelectronics, Toshiba, Western Digital, and ~~Xilinx~~Winbond have licensed our patents. The vast majority of our patents ~~were secured through~~originate from our internal research and development ~~efforts across all~~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 ~~business units. Royalties~~royalty revenue. Revenue from ~~patent licenses~~royalties accounted for ~~68%~~27% and ~~67%~~29% of our consolidated revenue for the three and nine months ended September 30, ~~2017, respectively,~~2023, as compared to ~~70%~~27% and ~~76%~~33% for the three and nine months ended September 30, ~~2016, respectively.~~2022.

We also offer our customers technology licenses to support the implementation and adoption of our technology in their products or services. Our customers include leading companies such as Eaton, GE, IBM, Panasonic, Qualcomm, Samsung, Sony and Toshiba. Our technology license offerings include a range of technologies for incorporation into our customers’ products and systems. We also offer a range of services as part of our technology licenses which can include know-how and technology transfer, product design and development, system integration, and other services. These technology license agreements may have both a fixed price (non-recurring) component and ongoing use fees and in some cases, royalties. Further, under technology licenses, our customers typically receive licenses to our patents necessary to implement these solutions in their products with specific rights and restrictions to the applicable patents elaborated in their individual contracts with us. Royalties from technology licenses accounted for 6% of our consolidated revenue for both the three and nine months ended September 30, 2017, as well as for the three and nine months ended September 30, 2016.

~~The remainder of our revenue is product revenue, contract services~~Contract and other revenue consists primarily of Silicon IP, which ~~includes~~is comprised of our ~~product sales,~~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 ~~account receivables~~accounts receivable in any given period. ~~Product~~Contract and other revenue accounted for 9%23% and ~~10%~~21% of our consolidated revenue for the three and nine months ended September 30, ~~2017, respectively,~~2023, as compared to 8%21% and 6%19% for the three and nine months ended September 30, ~~2016, respectively. Contract~~2022.

Costs and other revenue accounted for 18% of our consolidated revenue for both the three and nine months ended September 30, 2017, as compared to 16% and 13% for the three and nine months ended September 30, 2016, respectively. As we continue to execute on our strategy to augment our traditional patent licensing business model to provide additional technology, products and services, product revenue and related cost of product revenue were reclassified from contract and other revenue and cost of contract and other revenue, respectively, during the second quarter of 2017. Refer to the Unaudited Condensed Consolidated Statements of Operations of this Form 10-Q.

Expenses

Cost of product revenue decreased approximately $2.6 million for the three months ended September 30, ~~2017 decreased approximately $1.8 million~~2023 as compared to ~~$5.2 million from $7.0 million for~~ the same period in ~~2016~~2022, primarily due to ~~the absence of the $1.2 million related to the purchase accounting adjustment for inventory fair value step-up from the acquisition of the Memory Interconnect Business~~lower product revenue and a change in ~~the third quarter of 2016.~~product mix. Cost of product revenue increased approximately $3.8 million for the nine months ended September 30, ~~2017 increased approximately $5.3 million~~2023 as compared to ~~$17.9 million from $12.6 million for~~ the same period in ~~2016~~2022, primarily due to an increase in sales volumes of our memory interface chips, partially offset by a change in product mix during the period.

Cost of contract and other revenue decreased approximately $0.2 million for the three months ended September 30, 2023 as compared to the same period in 2022. Cost of contract and other revenue increased ~~cost of sales~~approximately $1.2 million for the nine months ended September 30, 2023 as compared to the same period in 2022. The decrease for the three months ended September 30, 2023 was primarily due to lower engineering services associated with the contracts. The increase for the nine months ended September 30, 2023 was primarily due to higher ~~sales of memory~~engineering services associated with the contracts.

Total research and ~~security products as we transition from legacy to new product lines.~~

~~Engineering expenses continue to play a key role in our efforts to maintain product innovations. Our engineering~~development expenses for the three months ended September 30, ~~2017 increased $4.5~~2023 decreased approximately $1.9 million as compared to the same period in ~~2016~~2022, primarily due to ~~increased~~decreased prototyping costs of ~~$1.9~~$1.2 million, ~~increased~~consulting expenses ~~related to software design tools~~ of ~~$1.5~~$0.5 million, ~~increased amortization costs~~bonus expenses of ~~$0.7 million, increased stock-based compensation expense of $0.6~~$0.5 million and ~~increased headcount related expenses~~software EDA tool subscriptions of $0.5 million, offset by ~~decreased bonus accrual expense of $0.7 million, decreased consulting~~an increase in headcount-related expenses of $0.5 ~~million~~million. Total research and ~~decreased depreciation expense of $0.5 million. Engineering~~development expenses for the nine months ended September 30, ~~2017~~2023 increased ~~$28.8~~approximately $2.2 million as compared to the same period in ~~2016~~2022, primarily due to increased ~~headcount related~~headcount-related expenses of ~~$8.9~~$2.2 million, ~~increased amortization~~stock-based compensation expenses of $1.6 million, depreciation expenses of $1.2 million, software EDA tool subscriptions of $1.0 million, facility expenses of $0.6 million, and allocated information technology costs of ~~$5.5~~$0.5 million, ~~increased~~offset by a decrease in consulting expenses of $1.4 million, retention bonus expenses related to ~~software design tools~~acquisitions of ~~$5.1~~$1.3 million, ~~increased stock-based compensation expense~~an increase in engineering costs allocated to cost of ~~$2.5~~revenue of $1.3 million, ~~increased~~ prototyping ~~costs of $2.4 million, increased consulting~~ costs of $0.9 million ~~increased travel costs~~and bonus expenses of ~~$0.6 million and increased bonus accrual expense of $0.5~~$0.4 million.

~~Sales,~~Total sales, general and administrative expenses for the three months ended September 30, ~~2017 increased $2.0~~2023 decreased approximately $0.9 million as compared to the same period in ~~2016~~2022, primarily due to ~~increased headcount related~~decreases in acquisition-related costs of $1.3 million, bonus expenses of ~~$1.0 million, increased stock-based compensation expense of $0.9 million, increased bonus accrual expense of $0.8 million, increased depreciation expense of $0.3~~$1.2 million and ~~increased sales~~rent and ~~marketing~~facility expenses of ~~$0.2~~$0.5 million, offset by ~~decreased~~increases in stock-based compensation expenses of $1.5 million and accounting and audit ~~costs~~fees of ~~$0.4 million, decreased acquisition related costs of $0.4 million and decreased consulting costs of $0.3~~$0.5 million. ~~Sales,~~Total sales, general and administrative expenses for the nine months ended September 30, ~~2017~~2023 increased ~~$12.4~~approximately $3.1 million as compared to the same period in ~~2016~~2022, primarily due to ~~the business acquisitions during 2016. This includes increased headcount related~~increases in stock-based compensation expenses of ~~$3.9~~$7.6 million, ~~increased bonus accrual expense~~headcount-related expenses of ~~$3.1~~$1.3 million ~~increased consulting~~and accounting and audit fees of $0.5 million, offset by decreases in acquisition-related costs of ~~$2.9~~$4.7 million, ~~increased stock-based compensation expense of $2.3 million, increased sales and marketing~~bonus expenses ~~of $2.0 million and increased travel costs~~related to acquisitions of $1.0 million, ~~offset by decreased acquisition related costs~~consulting expenses of ~~$3.0~~$0.5 million, recruiting expenses of $0.5 million and rent and facility expenses of $0.5 million.

Intellectual Property

As of September 30, ~~2017,~~2023, our semiconductor, ~~lighting,~~ security, and other technologies are covered by ~~2,088~~2,215 U.S. and foreign patents. Additionally, we have ~~589~~546 patent applications pending. Some of the patents and pending patent applications are derived

from a common parent patent application or are foreign counterpart patent applications. We ~~have a program to~~ 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 ~~and SerDes~~ technology, adoption of ~~mobile payment, smart ticketing and~~ security solutions, ~~adoption of LEDs in edge-lit general lighting,~~ 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.

We have a high degree of revenue concentration. Our top five customers ~~for each reporting period~~ represented approximately ~~57%~~63% and ~~56%~~59% of our revenue for the three and nine months ended September 30, ~~2017, respectively,~~2023, as compared to ~~59%~~61% and ~~65%~~57% for the three and nine months ended September 30, ~~2016,~~2022, respectively. For the three and nine months ended September 30, 2017, and for the three and nine months ended September 30, 2016, revenue from Micron, Samsung and SK hynix each accounted for 10% or more of our total revenue. While we expect Samsung, SK hynix and Micron to account for a significant portion of our ongoing licensing revenue, theThe particular customers which account for revenue concentration have varied from period-to-period as a result of the addition of new contracts, expiration of existing contracts, renewals of existing contracts, 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 approximately ~~56%~~69% and ~~58%~~61% of our total revenue for the three and nine months ended September 30, ~~2017, respectively,~~2023, as compared to ~~63%~~37% and ~~65%~~42% for the three and nine months ended September 30, ~~2016.~~2022. We expect that revenue derived from international customers will continue to represent a significant portion of our total revenue in the future. ~~To date, the majority of the~~Currently, our revenue from international customers ~~has been~~is predominantly denominated in U.S. dollars. However, to the extent that such customers’ sales to their customers are not denominated in U.S. dollars, any revenue that 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 revenue. We do not use financial instruments to hedge foreign exchange rate risk. For additional information concerning international revenue, ~~see~~refer to Note 5, “Segments and Major Customers,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q.

Our licensing cycle for new licensees as well as renewals for existing licensees is lengthy, costly and unpredictable without any degree of certainty. We may incur costs in any particular period before any associated revenue stream begins, if at all. Our lengthy license negotiation cycles could make our future revenue difficult to predict because we may not be successful in entering into licenses with our customers in the amounts projected, or on our anticipated timelines.

The semiconductor industry is intensely competitive and highly cyclical, limiting our visibility with respect to future sales. To the extent that macroeconomic fluctuations negatively affect our principal customers, the demand for our products and

~~technology may be significantly and adversely impacted and we may experience substantial period-to-period fluctuations in our operating results.~~

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.

Global demand for effective security technologies continues to increase. In particular, highly integrated devices such as smart phones are increasingly used for applications requiring security such as mobile payments, corporate information and user data. Our RSD operating segment is primarily focused on positioning its DPA countermeasures, CryptoMedia™, CryptoFirewall™ and CryptoManager™ technology solutions, and the introduction Several of ~~in-field applications mobile payments and smart ticketing solutions to~~ our ~~offerings to capitalize on these trends and growing adoption among technology partners and customers.~~

Engineering costs as well as sales, general and administrative expenses in the aggregate increased and cost of product revenue in the aggregate decreased in the third quarter of 2017 as compared to the same period in 2016. Cost of product revenue, engineering costs as well as sales, general and administrative expenses as a percentage of revenue decreasedlicensees have renewed or extended their license agreements with us during the nine months ended September 30, ~~2017 as compared to the same period in 2016. Cost of product revenue, engineering costs as well as sales, general~~2023, including SK hynix and administrative expenses in the aggregate increased during the nine months ended September 30, 2017 as compared to the same period in 2016. Cost of product revenue and engineering costs as a percentage of revenue increased and sales, general and administrative expenses as a percentage of revenue decreased during the nine months ended September 30, 2017 as compared to the same period in 2016. In the near term, we expect these costs in the aggregate to be higher as we intend to continue to make investments in the infrastructure and technologies required to increase our product innovation in semiconductor, security, mobile payments, smart cards and other technologies. In addition, while we have not been involved in material litigation since 2014, to the extent litigation is again necessary, our expectations on the amount and timing of any future general and administrative costs are uncertain.Socionext.

As a part of our overall business strategy, from time to time, we evaluate businesses and technologies for potential ~~acquisition~~acquisitions that are aligned with our core business and designed to supplement our growth, including the acquisition of Hardent in the second quarter of 2022 and the acquisitions of ~~SCS,~~AnalogX and PLDA in the ~~assets~~third quarter of ~~the Snowbush IP group and the Memory Interconnect Business.~~2021. Similarly, we evaluate our current businesses and technologies that are not aligned with our core business for potential ~~divestiture.~~

~~In May 2014,~~divestiture, such as the ~~Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers~~ ~~(Topic 606) (“Standard”). The Standard, as amended, is effective for us on January 1, 2018. We have yet~~sale of our PHY IP group to ~~make a final decision regarding~~Cadence in the ~~adoption method we will use, but we believe we will adopt the Standard on a full retrospective basis, with a cumulative-effect adjustment to the opening balance~~third quarter of retained earnings on January 1, 2016 determined on the basis of the impact of the Standard on the accounting for contracts that are not completed as of that date. Although we have yet to finalize our evaluation and quantification of the effects that the Standard will have on our consolidated financial statements, and to finalize the design and implementation of related changes to our policies, procedures and controls, we expect the Standard to materially impact the timing of revenue recognition for our fixed-fee intellectual property (IP) licensing arrangements (including certain fixed-fee agreements that license our existing IP portfolio as well as IP added to our portfolio during the license term) as a majority of such revenue would be recognized at inception of the license term, as opposed to over time as is the case under current U.S. GAAP, and we will be required to compute and recognize interest income over time as control over the IP generally transfers significantly in advance of cash being received from customers. We are also evaluating the form and content of any guidance that we may provide following implementation of the Standard and expect our guidance metrics to change.2023. We expect ~~that any change~~ to ~~current revenue recognition practices may significantly increase volatility in~~continue to evaluate and potentially enter into strategic acquisitions or divestitures which will impact our ~~quarterly revenue trends.~~business and operating results.

Results of Operations

The following table sets forth, for the periods indicated, the percentage of total revenue represented by certain items reflected inon our ~~unaudited condensed consolidated statements~~Unaudited Condensed Consolidated Statements of ~~operations:~~Operations:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Revenue:
Product revenue	49.6	%	52.2	%	50.5	%	48.1	%
Royalties	27.4	%	26.6	%	28.8	%	32.6	%
Contract and other revenue	23.0	%	21.2	%	20.7	%	19.3	%
Total revenue	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenue:
Cost of product revenue	18.4	%	19.5	%	19.0	%	18.3	%
Cost of contract and other revenue	1.2	%	1.3	%	1.3	%	0.9	%
Amortization of acquired intangible assets	3.2	%	3.2	%	3.1	%	3.1	%
Total cost of revenue	22.8	%	24.0	%	23.4	%	22.3	%
Gross profit	77.2	%	76.0	%	76.6	%	77.7	%
Operating expenses (benefits):
Research and development	35.5	%	35.0	%	35.6	%	35.7	%
Sales, general and administrative	24.1	%	23.3	%	24.3	%	23.9	%
Amortization of acquired intangible assets	0.3	%	0.4	%	0.3	%	0.4	%

Restructuring charges (benefit)	(0.1)	%	—	%	2.8	%	—	%
Gain on divestiture	(86.3)	%	—	%	(26.8)	%	—	%
Impairment of assets	9.5	%	—	%	3.0	%	—	%
Change in fair value of earn-out liability	(5.4)	%	2.1	%	2.4	%	(0.6)	%
Total operating expenses (benefits)	(22.4)	%	60.8	%	41.6	%	59.4	%
Operating income	99.6	%	15.2	%	35.0	%	18.3	%
Interest income and other income (expense), net	2.5	%	2.5	%	2.1	%	2.1	%
Gain on fair value of equity security	—	%	3.2	%	—	%	1.1	%
Loss on extinguishment of debt	—	%	(15.3)	%	—	%	(25.2)	%
Loss on fair value adjustment of derivatives, net	—	%	(2.1)	%	(0.1)	%	(3.2)	%
Interest expense	(0.3)	%	(0.4)	%	(0.3)	%	(0.4)	%
Interest and other income (expense), net	2.2	%	(12.1)	%	1.7	%	(25.6)	%
Income (loss) before income taxes	101.8	%	3.1	%	36.7	%	(7.3)	%
Provision for (benefit from) income taxes	3.8	%	2.3	%	(44.6)	%	1.8	%
Net income (loss)	98.0	%	0.8	%	81.3	%	(9.1)	%

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Revenue:

Royalties 73.4 % 76.0 % 72.7 % 81.2 %
Product revenue 8.7 % 7.9 % 9.6 % 6.0 %
Contract and other revenue 17.9 % 16.1 % 17.7 % 12.8 %
Total revenue 100.0 % 100.0 % 100.0 % 100.0 %
Operating costs and expenses:

Cost of product revenue* 5.2 % 7.8 % 6.1 % 5.2 %
Cost of contract and other revenue 14.6 % 13.8 % 14.9 % 13.9 %
Research and development* 36.5 % 37.7 % 37.7 % 38.1 %
Sales, general and administrative* 27.0 % 27.6 % 28.2 % 29.1 %
Gain from sale of intellectual property (0.5 )% — % (0.2 )% — %
Gain from settlement — % — % — % (0.2 )%
Total operating costs and expenses 82.8 % 86.9 % 86.7 % 86.1 %
Operating income 17.2 % 13.1 % 13.3 % 13.9 %
Interest income and other income (expense), net 0.2 % 0.2 % 0.2 % 0.6 %
Interest expense (3.3 )% (3.6 )% (3.4 )% (4.0 )%
Interest and other income (expense), net (3.1 )% (3.4 )% (3.2 )% (3.4 )%
Income before income taxes 14.1 % 9.7 % 10.1 % 10.5 %
Provision for income taxes 6.3 % 4.7 % 5.5 % 6.2 %
Net income 7.8 % 5.0 % 4.6 % 4.3 %

*~~Includes stock-based compensation:~~


	Three Months Ended						Nine Months Ended
	September 30,				Change in		September 30,				Change in
(Dollars in millions)	2023		2022		Percentage		2023		2022		Percentage
Total revenue:
Product revenue	$	52.2	$	58.6	(11.0)	%	$	170.9	$	159.9	6.9	%
Royalties	28.9		29.9		(3.4)	%	97.7		108.4		(9.9)	%
Contract and other revenue	24.2		23.7		2.2	%	70.3		64.2		9.5	%
Total revenue	$	105.3	$	112.2	(6.2)	%	$	338.9	$	332.5	1.9	%

Cost of product revenue 0.0 % 0.0 % 0.0 % 0.0 %
Research and development 3.0 % 2.6 % 3.1 % 2.7 %
Sales, general and administrative 4.0 % 3.4 % 3.8 % 3.7 %

Three Months Nine Months
Ended September 30, Change in Ended September 30, Change in
(Dollars in millions) 2017 2016 Percentage 2017 2016 Percentage
Total Revenue

Royalties $ 72.8
$ 68.3
6.6 % $ 211.7
$ 194.0
9.1 %
Product revenue 8.6
7.1
22.1 % 28.0
14.3
95.5 %
Contract and other revenue 17.7
14.5
22.3 % 51.5
30.7
67.7 %
Total revenue $ 99.1
$ 89.9
10.3 % $ 291.2
$ 239.0
21.8 %

~~Royalty~~Product Revenue

Product revenue consists of revenue from the sale of memory and security products.

~~Patent Licenses~~

~~Our patent royalties increased~~Product revenue decreased approximately ~~$3.9 million to $67.2~~$6.4 million for the three months ended September 30, ~~2017 from $63.3 million for~~2023 as compared to the same period in ~~2016.~~2022. The ~~increase~~decrease was due to ~~higher royalty~~lower sales of our memory interface chips. Product revenue ~~from a renewed license agreement with STMicroelectronics, Western Digital and various other customers, offset by lower royalty revenue from Broadcom, SK hynix, Xilinx, and various other customers.~~increased

~~Our patent royalties increased~~ approximately ~~$14.0 million to $194.5~~$11.0 million for the nine months ended September 30, ~~2017 from $180.5 million for~~2023 as compared to the same period in ~~2016.~~2022. The increase was due to higher sales of our memory interface chips.

Growth in our product revenue is dependent on, among other things, the industry transition to a new generation of memory, as well as our ability to continue to obtain orders from customers, meet our customers’ demands and mitigate any supply chain and economic disruption.

Royalties

Royalty revenue, which includes patent and technology license royalties, decreased approximately $1.0 million for the three months ended September 30, 2023 as compared to the same period in 2022. Our royalty revenue ~~from NVIDIA, a renewed~~decreased approximately $10.7 million for the nine months ended September 30, 2023 as compared to the same period in 2022. The decrease in both periods was primarily due to the timing and structure of license ~~agreement with STMicroelectronics, Western Digital, Winbond Electronics, and various other customers,~~renewals, partially offset by ~~lower royalty~~ revenue from ~~AMD, Broadcom, SK hynix, Xilinx, and various other customers.~~the sale of patent assets in the third quarter of 2023.

We are continuously in negotiations for licenses with prospective customers. We expect ~~patent royalties~~royalty 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'~~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.

~~Technology Licenses~~

Royalties from technology licenses increased approximately $0.6 million to $5.6 million for the three months ended September 30, 2017 from $5.0 million for the same period in 2016. The increase was due to higher royalties from various customers, offset by lower royalties from Eaton.

Royalties from technology licenses increased approximately $3.7 million to $17.2 million for the nine months ended September 30, 2017 from $13.5 million for the same period in 2016. The increase was primarily due to higher royalties from GLOBALFOUNDRIES and various other customers, offset by lower royalties from Eaton.

~~In the future, we expect technology royalties will continue to vary from period to period based on our customers’ shipment volumes, sales prices, and product mix.~~

~~Royalty Revenue by Reportable Segments~~

Royalty revenue from the MID reportable segment, which includes patent and technology license royalties, increased approximately $2.0 million to $56.6 million for the three months ended September 30, 2017 from $54.6 million for the same period in 2016. The increase was due to higher royalty revenue from a renewed license agreement with STMicroelectronics and various other customers, offset by lower royalty revenue from Broadcom, SK hynix, Xilinx, and various other customers.

Royalty revenue from the MID reportable segment increased approximately $10.2 million to $168.1 million for the nine months ended September 30, 2017 from $157.9 million for the same period in 2016. The increase was due to higher royalty revenue from a renewed license agreement with STMicroelectronics, Western Digital, Winbond Electronics, and various other customers, offset by lower royalty revenue from AMD, Broadcom, SK hynix, Xilinx, and various other customers.

Royalty revenue from the RSD reportable segment, which includes patent and technology license royalties, increased approximately $2.9 million to $15.5 million for the three months ended September 30, 2017 from $12.6 million for the same period in 2016. The increase was primarily due to higher royalty revenue from NVIDIA and various other customers, offset by lower royalty revenue from Xilinx.

Royalty revenue from the RSD reportable segment increased approximately $9.1 million to $42.3 million for the nine months ended September 30, 2017 from $33.2 million for the same period in 2016. The increase was primarily due to higher royalty revenue from NVIDIA, Western Digital and various other customers, offset by lower royalty revenue from Xilinx.

Royalty revenue from the Other segment was immaterial for both the three months ended September 30, 2017 and 2016, and decreased period over period due to decreased royalties from technology licenses associated with lower shipments of lighting products.

Royalty revenue from the Other segment decreased approximately $1.6 million to $1.3 million for the nine months ended September 30, 2017 from $2.9 million for the same period in 2016. The decrease is due to lower royalties from technology licenses associated with lower shipments of lighting products.

~~Product Revenue~~

Product revenue consists of revenue from the sale of memory, security and lighting products. Product revenue increased approximately $1.5 million to $8.6 million for the three months ended September 30, 2017 from $7.1 million for the same period in 2016. The increase was primarily due to higher sales of memory products from the Memory Interconnect Business acquisition in the third quarter of 2016.

Product revenue increased approximately $13.7 million to $28.0 million for the nine months ended September 30, 2017 from $14.3 million for the same period in 2016. The increase was primarily due to sales of security products to Qualcomm and memory products from the Memory Interconnect Business.

We believe that product revenue will continue to increase in 2017. Our ability to continue to grow product revenue is dependent on, among other things, our ability to continue to obtain orders from customers and our ability to meet our customers' demands.

~~Product Revenue by Reportable Segments~~

Product revenue from the MID reportable segment increased approximately $0.9 million to $5.1 million for the three months ended September 30, 2017 from $4.2 million for the same period in 2016, due to higher sales of memory products from the Memory Interconnect Business acquisition.

Product revenue from the MID reportable segment increased approximately $10.9 million to $15.1 million for the nine months ended September 30, 2017 from $4.2 million for the same period in 2016, due to higher sales of memory products from the Memory Interconnect Business acquisition.

~~Product revenue from the RSD reportable segment was immaterial for both the three months ended September 30, 2017 and 2016, and increased period over period due to higher sales of security products.~~

Product revenue from the RSD reportable segment increased approximately $1.8 million to $5.0 million for the nine months ended September 30, 2017 from $3.2 million for the same period in 2016, primarily due to higher revenue from Qualcomm, offset by lower sales to various other customers.

Product revenue from the Other segment increased approximately $0.3 million to $2.7 million for the three months ended September 30, 2017 from $2.4 million for the same period in 2016, due to higher sales of light guide products.

Product revenue from the Other segment increased approximately $0.9 million to $7.8 million for the nine months ended September 30, 2017 from $6.9 million for the same period in 2016. The increase was primarily due to higher sales of light guide products.

Contract and Other Revenue

Contract and other revenue ~~consist~~consists of revenue from technology development projects. Contract and other revenue increased approximately ~~$3.2 million to $17.7~~$0.5 million for the three months ended September 30, ~~2017 from $14.5 million for~~2023 as compared to the same period in ~~2016. The increase was primarily due to increased memory and security technology development projects, including revenue from the acquisitions during 2016.~~

2022. Contract and other revenue increased approximately ~~$20.8 million to $51.5~~$6.1 million for the nine months ended September 30, ~~2017 from $30.7 million for~~2023 as compared to the same period in ~~2016.~~2022. The ~~increase~~increases in both periods was primarily due to ~~increased memory and security technology development projects, including~~higher revenue ~~from the acquisitions during 2016, offset by decreased revenue from lighting technology development projects.~~associated with our Silicon IP offerings.

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.

~~Contract~~Cost of Product Revenue


	Three Months Ended						Nine Months Ended
	September 30,				Change in		September 30,				Change in
(Dollars in millions)	2023		2022		Percentage		2023		2022		Percentage
Cost of product revenue	$	19.4	$	22.0	(11.7)	%	$	64.6	$	60.8	6.2	%

Cost of product revenue are costs attributable to the sale of memory and ~~Other Revenue by Reportable Segments~~

~~Contract and other~~security products. Cost of product revenue ~~from the MID reportable segment increased~~decreased approximately ~~$2.7 million to $7.0~~$2.6 million for the three months ended September 30, ~~2017 from $4.3 million for~~2023 as compared to the same period in ~~2016,~~2022, primarily due to ~~higher~~lower product revenue ~~from Samsung~~ and ~~other memory technology projects, including~~a change in product mix. Cost of product revenue ~~from the acquisitions in 2016, offset by lower revenue from GLOBALFOUNDRIES.~~

~~Contract and other revenue from the MID reportable segment~~ increased ~~$14.4 million to $23.5~~approximately $3.8 million for the nine months ended September 30, ~~2017 from $9.1 million for~~2023 as compared to the same period in ~~2016,~~2022, primarily due to ~~higher revenue from GLOBALFOUNDRIES, Samsung and other~~an increase in sales volumes of our memory ~~technology projects, including revenue from~~interface chips, partially offset by a change in product mix during the ~~acquisitions in 2016.~~

Contract and other revenue from the RSD reportable segment increased approximately $0.5 million to $9.9 million for the three months ended September 30, 2017 from $9.4 million for the same period in 2016, primarily due to higher revenue from Renesas and various other security technology development projects, including revenue from the acquisitions in 2016.

Contract and other revenue from the RSD reportable segment increased approximately $9.0 million to $25.5 million for the nine months ended September 30, 2017 from $16.5 million for the same period in 2016, primarily due to higher revenue from Renesas and other security technology development projects, including revenue from the acquisitions in 2016.

~~Contract and other revenue from the Other segment was immaterial for both the three months ended September 30, 2017 and 2016, and remained flat period over~~ period.

Contract and other revenue from the Other segment decreased approximately $2.6 million to $2.4 million for the nine months ended September 30, 2017 from $5.0 million for the same period in 2016. The decrease was primarily due to decreased revenue from lighting technology development projects.

~~Cost of product revenue:~~

Three Months Ended Nine Months Ended
September 30, Change in September 30, Change in
(Dollars in millions) 2017 2016 Percentage 2017 2016 Percentage
Cost of product revenue $ 5.2
$ 7.0
(26.7 )% $ 17.9
$ 12.6
42.1 %

Cost of product revenue decreased approximately $1.8 million to $5.2 million for the three months ended September 30, 2017 from $7.0 million for the same period in 2016 primarily due to the absence of the $1.2 million related to the purchase accounting adjustment for inventory fair value step-up from the acquisition of the Memory Interconnect Business in the third quarter of 2016.

Cost of product revenue increased approximately $5.3 million to $17.9 million for the nine months ended September 30, 2017 from $12.6 million for the same period in 2016 primarily due to increased cost of sales associated with higher sales of memory products related to the Memory Interconnect Business acquisition in 2016.

In the near term, we expect costs of product revenue to ~~be higher as we expect higher sales~~fluctuate due to changes in product mix and the timing of ~~our various products in 2017 as compared to 2016.~~orders.

~~Engineering costs:~~Cost of Contract and Other Revenue


	Three Months Ended						Nine Months Ended
	September 30,				Change in		September 30,				Change in
(Dollars in millions)	2023		2022		Percentage		2023		2022		Percentage
Cost of contract and other revenue	$	1.3	$	1.5	(11.0)	%	$	4.3	$	3.1	40.2	%

Three Months Ended Nine Months Ended
September 30, Change in September 30, Change in
(Dollars in millions) 2017 2016 Percentage 2017 2016 Percentage
Engineering costs

Cost of contract and other revenue $ 5.7
$ 4.3
31.4 % $ 17.0
$ 12.3
38.0 %
Amortization of intangible assets 8.8
8.1
8.7 % 26.3
20.8
26.2 %
Stock-based compensation 0.0
0.0
— % 0.0
0.0
— %
Total cost of contract and other revenue 14.5
12.4
16.6 % 43.3
33.1
30.6 %
Research and development 33.2
31.5
5.5 % 100.7
84.6
19.0 %
Stock-based compensation 3.0
2.3
27.0 % 9.0
6.5
38.6 %
Total research and development 36.2
33.8
7.0 % 109.7
91.1
20.4 %
Total engineering costs $ 50.7
$ 46.2
9.6 % $ 153.0
$ 124.2
23.1 %

~~Total~~Cost of contract and other revenue reflects the portion of the total engineering costs ~~increased $4.5~~which are specifically devoted to individual customer development and support services. Cost of contract and other revenue decreased approximately $0.2 million for the three months ended September 30, ~~2017~~2023 as compared to the same period in ~~2016 primarily due to~~2022. Cost of contract and other revenue increased prototyping costs of $1.9 million, increased expenses related to software design tools of $1.5 million, increased amortization costs of $0.7 million, increased stock-based compensation expense of $0.6 million and increased headcount related expenses of $0.5 million, offset by decreased bonus accrual expense of $0.7 million, decreased consulting expenses of $0.5 million and decreased depreciation expense of $0.5 million.

~~Total engineering costs increased $28.8~~approximately $1.2 million for the nine months ended September 30, ~~2017~~2023 as compared to the same period in ~~2016~~2022. The decrease for the three months ended September 30, 2023 was primarily due to increased headcount related expenses of $8.9 million, increased amortization costs of $5.5 million, increased expenses related to software design tools of $5.1 million, increased stock-based compensation expense of $2.5 million, increased prototyping costs of $2.4 million, increased consulting costs of $0.9 million, increased travel costs of $0.6 million and increased bonus accrual expense of $0.5 million. Most oflower engineering services associated with the ~~increases were~~contracts. The increase for the nine months ended September 30, 2023 was primarily due to higher engineering services associated with the ~~business acquisitions during 2016.~~contracts.

In the near term, we expect costs of contract and other revenue to vary from period to period based on varying revenue recognized from contract and other revenue.

Research and Development Expenses


	Three Months Ended						Nine Months Ended
	September 30,				Change in		September 30,				Change in
(Dollars in millions)	2023		2022		Percentage		2023		2022		Percentage
Research and development expenses:




Research and development expenses, excluding stock-based compensation	$	34.5	$	36.1	(4.4)	%	$	109.6	$	108.9	0.6	%
Stock-based compensation	2.9		3.2		(10.7)	%	11.2		9.7		16.2	%
Total research and development expenses	$	37.4	$	39.3	(4.9)	%	$	120.8	$	118.6	1.8	%

Research and development expenses are those expenses incurred for the development of applicable technologies.

Total research and development expenses for the three months ended September 30, 2023 decreased approximately $1.9 million as compared to the same period in 2022, primarily due to decreased prototyping costs of $1.2 million, consulting expenses of $0.5 million, bonus expenses of $0.5 million and software EDA tool subscriptions of $0.5 million, offset by an increase in headcount-related expenses of $0.5 million.

Total research and development expenses for the nine months ended September 30, 2023 increased approximately $2.2 million as compared to the same period in 2022, primarily due to increased headcount-related expenses of $2.2 million, stock-based compensation expenses of $1.6 million, depreciation expenses of $1.2 million, software EDA tool subscriptions of $1.0 million, facility expenses of $0.6 million, and allocated information technology costs of $0.5 million, offset by a decrease in consulting expenses of $1.4 million, retention bonus expenses related to acquisitions of $1.3 million, an increase in engineering costs allocated to ~~be higher as we~~cost of revenue of $1.3 million, prototyping costs of $0.9 million and bonus expenses of $0.4 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


	Three Months Ended						Nine Months Ended
	September 30,				Change in		September 30,				Change in
(Dollars in millions)	2023		2022		Percentage		2023		2022		Percentage
Sales, general and administrative expenses:
Sales, general and administrative expenses, excluding stock-based compensation	$	18.3	$	20.7	(11.5)	%	$	59.7	$	64.2	(7.0)	%

Stock-based compensation	7.0		5.5		27.5	%	22.8		15.2		49.8	%
Total sales, general and administrative expenses	$	25.3	$	26.2	(3.3)	%	$	82.5	$	79.4	3.9	%

Sales, general and administrative ~~costs:~~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.

Three Months Ended Nine Months Ended
September 30, Change in September 30, Change in
(Dollars in millions) 2017 2016 Percentage 2017 2016 Percentage
Sales, general and administrative costs

Sales, general and administrative costs $ 22.8
$ 21.7
5.2 % $ 71.0
$ 60.9
16.7 %
Stock-based compensation 4.0
3.1
28.6 % 11.1
8.8
25.9 %
Total sales, general and administrative costs $ 26.8
$ 24.8
8.1 % $ 82.1
$ 69.7
17.9 %

Total sales, general and administrative ~~costs increased $2.0 million~~expenses for the three months ended September 30, ~~2017~~2023 decreased approximately $0.9 million as compared to the same period in ~~2016~~2022, primarily due to ~~increased headcount related~~decreases in acquisition-related costs of $1.3 million, bonus expenses of ~~$1.0 million, increased stock-based compensation expense of $0.9 million, increased bonus accrual expense of $0.8 million, increased depreciation expense of $0.3~~$1.2 million and ~~increased sales~~rent and ~~marketing~~facility expenses of ~~$0.2~~$0.5 million, offset by ~~decreased~~increases in stock-based compensation expenses of $1.5 million and accounting and audit ~~costs~~fees of ~~$0.4 million, decreased acquisition related costs of $0.4 million and decreased consulting costs of $0.3~~$0.5 million.

Total sales, general and administrative ~~costs increased $12.4 million~~expenses for the nine months ended September 30, ~~2017~~2023 increased approximately $3.1 million as compared to the same period in ~~2016~~2022, primarily due to ~~increased headcount related~~increases in stock-based compensation expenses of ~~$3.9~~$7.6 million, ~~increased bonus accrual expense~~headcount-related expenses of ~~$3.1~~$1.3 million ~~increased consulting~~and accounting and audit fees of $0.5 million, offset by decreases in acquisition-related costs of ~~$2.9~~$4.7 million, ~~increased stock-based compensation expense of $2.3 million, increased sales and marketing~~bonus expenses ~~of $2.0 million and increased travel costs~~related to acquisitions of $1.0 million, ~~offset by decreased acquisition related costs~~consulting expenses of ~~$3.0~~$0.5 million, recruiting expenses of $0.5 million and rent and facility expenses of $0.5 million. ~~Most of the increases were primarily due to the business acquisitions during 2016.~~

In the future, sales, general and administrative ~~costs~~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


	Three Months Ended						Nine Months Ended
	September 30,				Change in		September 30,				Change in
(Dollars in millions)	2023		2022		Percentage		2023		2022		Percentage
Amortization of acquired intangible assets:
Amortization of acquired intangible assets included in total cost of revenue	$	3.3	$	3.6	(6.3)	%	$	10.5	$	10.4	0.9	%
Amortization of acquired intangible assets included in total operating expenses (benefits)	0.3		0.4		(40.4)	%	1.0		1.3		(18.8)	%
Total amortization of acquired intangible assets	$	3.6	$	4.0	(10.0)	%	$	11.5	$	11.7	(1.2)	%

Amortization expense is related to various acquired IP.

Amortization of acquired intangible assets recognized in cost of revenue and operating expenses (benefits) for the three and nine months ended months ended September 30, 2023 remained relatively flat as compared to the same periods in 2022. In the ~~near term,~~third quarter of 2023, we ~~expect~~divested our ~~sales, general~~PHY IP group and ~~administrative costs~~as a result, we disposed of approximately $7.4 million of net intangible assets, which are expected to ~~remain relatively flat.~~reduce our amortization expense in future periods. Refer to Note 4, “Intangible Assets and Goodwill,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

Restructuring and Other Charges (Benefit)


	Three Months Ended						Nine Months Ended
	September 30,				Change in		September 30,				Change in
(Dollars in millions)	2023		2022		Percentage		2023		2022		Percentage
Restructuring and other charges (benefit)	$	(0.1)	$	—	(100.0)	%	$	9.4	$	—	100.0	%

~~Gain from sale~~In June 2023, we initiated a restructuring program to reduce overall expenses which is expected 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 ~~intellectual property:~~

Three Months Ended Nine Months Ended
September 30, Change in September 30, Change in
(Dollars in millions) 2017 2016 Percentage 2017 2016 Percentage
Gain from sale of intellectual property $ 0.5
$ —
100.0 % $ 0.5
$ —
100.0 %

During 2013, we sold portfolios of our patent assets covering display technologies. As part of these transactions, we received an initial upfront payment and expect to receive subsequent payments if and when the purchaser of the patents is successful in licensing that portfolio.42 employees. During the nine months ended September 30, ~~2017,~~2023, we ~~received a payment~~recorded charges of ~~$0.5~~approximately $9.4 million, ~~from the purchaser of the patents related to this transaction.~~

~~Gain from settlement:~~

Three Months Ended Nine Months Ended
September 30, Change in September 30, Change in
(Dollars in millions) 2017 2016 Percentage 2017 2016 Percentage
Gain from settlement $ —
$ —
— % $ —
$ 0.6
(100.0 )%

The settlements with SK hynix and Micron are multiple element arrangements for accounting purposes. For a multiple element arrangement, we are required to determine the fair value of the elements. We considered several factors in determining the accounting fair value of the elements of the settlement with SK hynix and the settlement with Micron which included ~~a third party valuation using~~ an ~~income approach (the “SK hynix Fair Value”~~immaterial benefit during the three months ended September 30, 2023, to “Restructuring and ~~"Micron Fair Value", respectively). The total gain from settlement~~other charges (benefit)” in our Unaudited Condensed Consolidated Statement of Operations, related to the ~~settlements with SK hynix~~reduction in workforce, as well as write-downs of obligations related to certain IP development costs and ~~Micron was $1.9 million and $3.3 million, respectively. As of~~software licenses for engineering development tools. The 2023 Restructuring Plan is expected to be substantially completed in the ~~end of the second~~fourth quarter of ~~2016, the total gain from settlement related~~2023. Refer to ~~the settlements with SK hynix~~Note 16, “Restructuring and ~~Micron has been~~Other Charges,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

~~fully recognized.~~ During the nine months ended September 30, ~~2016,~~2022, we did not initiate any restructuring programs.

Gain on Divestiture


	Three Months Ended						Nine Months Ended
	September 30,				Change in		September 30,				Change in
(Dollars in millions)	2023		2022		Percentage		2023		2022		Percentage
Change in fair value of earn-out liability	$	(90.8)	$	—	(100.0)	%	$	(90.8)	$	—	(100.0)	%

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 business reflects 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 artificial intelligence.

Consequently, we recognized ~~$0.6~~a gain of approximately $90.8 million ~~as gain from settlement, which represents~~during the ~~portion~~three and nine months ended September 30, 2023. Refer to Note 17, “Divestiture,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

Impairment of Assets


	Three Months Ended						Nine Months Ended
	September 30,				Change in		September 30,				Change in
(Dollars in millions)	2023		2022		Percentage		2023		2022		Percentage
Impairment of assets	$	10.0	$	—	100.0	%	$	10.0	$	—	100.0	%

Concurrent with the sale of our PHY IP group to Cadence, we recorded a charge of approximately $10.0 million in our Unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2023. The charge was primarily related to the accelerated amortization of software licenses that were not part of the ~~SK hynix Fair Value~~PHY IP disposal group, but where acceleration is warranted due to the lower headcount and ~~Micron~~corresponding excess capacity for such licenses. Refer to Note 17, “Divestiture,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

Change in Fair Value of Earn-Out Liability


	Three Months Ended					Nine Months Ended
	September 30,				Change in	September 30,				Change in
(Dollars in millions)	2023		2022		Percentage	2023		2022		Percentage
Change in fair value of earn-out liability	$	(5.7)	$	2.4	NM*	$	8.1	$	(1.9)	NM*

_________________________________________

NM* — percentage is not meaningful

The changes in the ~~cash consideration allocated~~fair value of the earn-out liability related to the ~~resolution~~PLDA acquisition, which is subject to certain revenue targets of the ~~antitrust litigation settlements.~~acquired business for a period of three years from the date of acquisition, and which is 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 is 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 three and nine months ended September 30, 2023, we remeasured the fair value of the earn-out liability, which resulted in a gain of $5.7 million and additional expense of $8.1 million, respectively, in our Unaudited Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2022, we remeasured the fair value of the earn-out liability, which resulted in additional expense of $2.4 million and a gain of $1.9 million, respectively, in our Unaudited Condensed Consolidated Statements of Operations.

Interest and ~~other income (expense)~~Other Income (Expense), ~~net:~~Net


	Three Months Ended						Nine Months Ended
	September 30,				Change in		September 30,				Change in
(Dollars in millions)	2023		2022		Percentage		2023		2022		Percentage
Interest income and other income (expense), net	$	2.7	$	2.8	(4.3)	%	$	7.1	$	6.9	2.5	%
Gain on fair value of equity security	—		3.5		(100.0)	%	—		3.5		(100.0)	%
Loss on extinguishment of debt	—		(17.1)		(100.0)	%	—		(83.6)		(100.0)	%
Loss on fair value adjustment of derivatives, net	—		(2.3)		(100.0)	%	(0.2)		(10.6)		(97.7)	%
Interest expense	(0.3)		(0.4)		(18.5)	%	(1.1)		(1.3)		(19.9)	%
Interest and other income (expense), net	$	2.4	$	(13.5)	(117.5)	%	$	5.8	$	(85.1)	(106.8)	%

Three Months Nine Months
Ended September 30, Change in Ended September 30, Change in
(Dollars in millions) 2017 2016 Percentage 2017 2016 Percentage
Interest income and other income (expense), net $ 0.2
$ 0.1
46.5 % $ 0.5
$ 1.5
(67.7 )%
Interest expense (3.3 ) (3.2 ) 2.9 % (9.8 ) (9.5 ) 2.7 %
Interest and other income (expense), net $ (3.1 ) $ (3.1 ) 0.9 % $ (9.3 ) $ (8.0 ) 16.2 %

Interest income and other income (expense), net, ~~consists primarily of~~includes interest income ~~generated~~ from ~~investments in high quality fixed income securities~~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 three and nine months ended September 30, 2023, interest income and other income (expense), net, consisted primarily of interest income from our investment portfolio of $2.5 million and $6.4 million, respectively. For the three and nine months ended September 30, 2022, interest income and other income (expense), net, consisted primarily of interest income from the significant financing component of licensing agreements of $1.2 million and $4.5 million, respectively.

The gain on fair value of equity security of $3.5 million related to the sale of an equity security during the third quarter of 2022.

The losses on extinguishment of debt of $17.1 million and $83.6 million, as well as the $2.3 million and $10.6 million losses on fair value adjustment of derivatives, net, for the three and nine months ended September 30, 2022, respectively, related to the repurchases of $162.1 million aggregate principal amount of our 2023 Notes and the settlement of the related convertible senior note hedges and warrants.

The $0.2 million loss on fair value adjustment of derivatives, net, for the nine months ended September 30, 2023, related to the settlement of the remaining outstanding warrants in the first quarter of 2023.

Interest expense consists primarily ~~consists~~ of interest expense associated with ~~our imputed facility lease obligations~~long term software licenses for the three and nine months ended September 30, 2023. Prior to the second quarter of 2023, interest expense consisted primarily onof interest expense associated with long term software licenses, the ~~Sunnyvale and Ohio facilities and~~ non-cash interest expense related to the amortization of the debt ~~discount and~~ issuance costs on the ~~1.125% convertible senior notes due 2018 (the “2018 Notes”)~~2023 Notes, as well as the coupon interest related to these notes. The remaining outstanding 2023 Notes were paid in full upon maturity in the ~~2018 Notes. We expect our non-cash interest expense~~first quarter of 2023. Refer to ~~increase steadily as the 2018~~Note 9, “Convertible Notes, ~~reach maturity.~~” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

Provision for ~~income taxes:~~(Benefit from) Income Taxes


	Three Months Ended							Nine Months Ended
	September 30,						Change in	September 30,						Change in
(Dollars in millions)	2023			2022			Percentage	2023			2022			Percentage
Provision for (benefit from) income taxes	$	4.0		$	2.5		61.2%	$	(151.1)		$	5.9		NM*
Effective tax rate	3.8		%	72.7		%		(121.6)		%	(24.5)		%

NM* — percentage is not meaningful

Three Months Ended Nine Months Ended
September 30, Change in September 30, Change in
(Dollars in millions) 2017 2016 Percentage 2017 2016 Percentage
Provision for income taxes $ 6.2
$ 4.3
46.6 % $ 16.1
$ 14.9
8.3 %
Effective tax rate 44.8 % 48.5 %
54.8 % 59.2 %

The provision for income taxes for the three months ended September 30, 2023 was primarily driven by foreign withholding taxes and adjustments to the valuation allowance release on our U.S. deferred tax assets due to a change in our forecasted taxable income and expense, offset by tax benefits from excess stock-based compensation deductions. The benefit from income taxes for the nine months ended September 30, 2023 was primarily driven by the valuation allowance release on our U.S. deferred tax assets, as well as tax benefits from excess stock-based compensation deductions, offset by foreign withholding taxes. Our income tax provision for the three months ended September 30, 2023 and income tax benefit for the nine months ended September 30, 2023 reflected an effective tax rate of 3.8% and (121.6)%, respectively. Our income tax provision for the three and nine months ended September 30, 2022 reflected an effective tax rate of 72.7% and (24.5)%, respectively. Our effective tax rate for the three and nine months ended September 30, ~~2017 was different~~2023 differed from the U.S. statutory ~~tax~~ rate primarily due to ~~income~~the valuation allowance release on our U.S. deferred tax expense recognized from exercises and expiration of out-of-the-money fully vested shares from our equity incentive plans. Similarly, the effective tax rate was lower for the three and nine months ended September 30, 2017 as compared to the same period in 2016, due to higher income tax expense recognized from exercises and expiration of vested shares from our equity incentive plans in 2016.

We recorded a provision for income taxes of $6.2 million and $4.3 million for the three months ended September 30, 2017 and 2016, respectively. We recorded a provision for income taxes of $16.1 million and $14.9 million for the nine months ended September 30, 2017 and 2016, respectively. During the three months ended September 30, 2017 and 2016, we paid withholding taxes of $4.7 million and $5.5 million, respectively. During the nine months ended September 30, 2017 and 2016, we paid withholding taxes of $15.6 million and $16.5 million, respectively.

assets. Our effective tax rate for the three and nine months ended September 30, ~~2016 was different~~2022, differed from the ~~U.S.~~ statutory ~~tax~~ rate primarily due to ~~income tax expense recognized from exercises and expiration of out-of-the-money fully vested shares from our equity incentive plans.~~

~~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 federal taxable income in future periods. These credit carryforwards will expire if they are not used within certain time periods. As of September 30, 2017, we determined that there is sufficient positive evidence to conclude that it is more likely than not sufficient taxable income will exist in the future allowing us to recognize these deferred tax assets. It is possible that some or all these attributes could ultimately expire unused. If facts and circumstances change in the future, we may determine at that time a valuation allowance is necessary. A valuation allowance would materially increase our tax expense in the period applied and would adversely affect our results of operations and statement of financial condition. Changes in our underlying facts or circumstances, such as the impact of the acquisitions, will be continually assessed and we will re-evaluate our position accordingly.

~~As of September 30, 2017, we continue to maintain a~~full valuation allowance against ~~the majority of our state~~U.S. deferred tax assets.

During the three months ended September 30, 2023 and 2022, we paid withholding taxes of $5.4 million and $5.5 million, respectively. During both the nine months ended September 30, 2023 and 2022, we paid withholding taxes of $15.8 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 the second quarter of 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 $149.4 million discrete tax benefit during the three and six months ended June 30, 2023 as a result of the valuation allowance release.

During the second quarter of 2023, we reached a cumulative income position over the previous three years. The cumulative three-year income is considered positive evidence, which is considered objective and verifiable, and thus received significant weighting. Additional positive evidence considered by us in our assessment included recent utilization of tax attribute carryforwards and future forecasts of continued profitability in the United States. Negative evidence we considered included economic uncertainties, including volatility of the industry, and the possibility of a recession or a decline in the market.

Upon considering the relative impact of all evidence during the second quarter of 2023, 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 and certain expiring federal tax credits that have not met the “more likely than not” realization threshold criteria. As a result, we released the related valuation allowance against the majority of our federal and state deferred tax assets. The effect of the valuation allowance release is included as a component of the benefit from income taxes in the accompanying Unaudited Condensed Consolidated Statements of Operations of this Form 10-Q.

When a change in valuation allowance is recognized during an interim period, the change in valuation allowance resulting from current year income is included in the annual effective tax rate and the release of valuation allowance supported by projections of future taxable income is recorded as a discrete provision for (benefit from) income taxes in the interim period. During the three months ended September 30, 2023, we further adjusted our valuation allowance release as a result of a change in our forecasted income and tax expense, primarily due to the sale of intangible assets as part of our PHY IP group divestiture. We recognized discrete tax expense of $4.4 million during the three months ended September 30, 2023, and we recognized a $145.1 million discrete tax benefit during the nine months ended September 30, 2023, as a result of our valuation allowance release.

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.

Liquidity and Capital Resources


	As of
(In millions)	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	131.9	$	125.3
Marketable securities	243.6		187.9
Total cash, cash equivalents and marketable securities	$	375.5	$	313.2

As of
September 30,
2017 December 31,
2016
(In millions)
Cash and cash equivalents $ 182.3
$ 135.3
Marketable securities 1.3
36.9
Total cash, cash equivalents, and marketable securities $ 183.6
$ 172.2


	Nine Months Ended
	September 30,
(In millions)	2023		2022
Net cash provided by operating activities	$	140.9	$	179.1
Net cash provided by investing activities	$	30.9	$	217.5
Net cash used in financing activities	$	(165.4)	$	(360.4)

Nine Months Ended
September 30,
2017 2016
(In millions)
Net cash provided by operating activities $ 57.8
$ 61.5
Net cash provided by (used in) investing activities $ 31.0
$ (125.9 )
Net cash provided by (used in) financing activities $ (43.4 ) $ 10.8

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~~the majority of our cash and cash equivalents is in the United States. Our cash needs for the nine months ended September 30, ~~2017~~2023, 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 or the repayment of the 2018 Notes in August 2018.~~fluctuations. Additionally, we have the intent and 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. ~~Additionally, we have no significant exposure to European sovereign debt.~~ We continually monitor the credit risk in our portfolio and mitigate our credit risk exposures in accordance with our policies.

growth.

To provide us with more flexibility in returning capital ~~back~~ to our ~~shareholders,~~stockholders, on ~~January 21, 2015,~~October 29, 2020, our Board ~~authorized~~approved a share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million ~~shares. During~~shares (the “2020 Repurchase Program”). Share repurchases under the ~~second quarter~~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 2020 Repurchase Program replaced the previous program approved by our Board in January 2015 and canceled the remaining shares outstanding as part of ~~2017,~~the previous authorization.

On August 10, 2023, we entered into an accelerated share repurchase program with ~~Barclays~~Royal Bank ~~PLC~~of Canada (“RBC”) (the “2023 ASR Program”). The 2023 ASR Program was part of the share repurchase program previously authorized by our Board on October 29, 2020. Under the 2023 ASR Program, we pre-paid to ~~repurchase an aggregate of $50.0~~RBC the $100.0 million ofpurchase price for our common stock and, in turn, we received an initial delivery of ~~3.2~~approximately 1.6 million shares of our common stock from RBC on August 11, 2023, which were retired and recorded as ~~a $40.0~~an $80.0 million reduction to ~~stockholders'~~stockholders’ equity. The remaining ~~$10.0~~$20.0 million of the initial payment was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to our stock. ~~The number~~On September 22, 2023, the accelerated share repurchase program was completed and we received an additional 0.2 million shares of ~~shares to be ultimately purchased by us will be determined based on~~our common stock, which were retired, as the ~~volume weighted average price~~final settlement of the ~~common stock during~~2023 ASR Program.

On September 9, 2022, we entered into the ~~terms~~2022 ASR Program with Wells Fargo. The 2022 ASR Program was part of ~~the transaction, minus an agreed upon discount between the parties. The program is expected to be completed by November 2017. We may continue to tactically execute~~ the share repurchase program previously authorized by our Board on October 29, 2020. Under the 2022 ASR Program, we pre-paid to Wells Fargo the $100.0 million purchase price for our common stock and, in turn, we received an initial delivery of approximately 3.1 million shares of our common stock from ~~time~~Wells Fargo in the third quarter of 2022, which were retired and recorded as an $80.0 million reduction to ~~time.~~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. During the fourth quarter of 2022, the 2022 ASR 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 2022 ASR Program.

As of September 30, ~~2017,~~2023, there remained an outstanding authorization to repurchase approximately ~~8.3~~7.9 million shares of our outstanding common stock under the ~~current share repurchase program. See~~2020 Repurchase Program. Refer to “Share Repurchase Program” below.

Operating Activities

Cash provided by operating activities of ~~$57.8~~$140.9 million for the nine months ended September 30, ~~2017~~2023, was primarily

attributable to the cash generated from customer licensing, ~~software license and related implementation, support and maintenance fees,~~ product sales and engineering services fees. Changes in operating assets and liabilities for the nine months ended September 30, ~~2017~~2023 primarily included a decrease in unbilled receivables and increase in income taxes payable, offset by increases in income taxes receivable, inventories and accounts receivable, ~~and deferred revenue, offset by~~as well as decreases in ~~prepaids and other current assets,~~ accounts payable, ~~and~~ accrued salaries and benefits and ~~other liabilities mainly due to the payout of the Corporate Incentive Plan.~~deferred revenue.

Cash provided by ~~operating~~operating activities of ~~$61.5~~$179.1 million for the nine months ended September 30, ~~2016~~2022, was primarily ~~attributable~~attributable to the cash generated from customer licensing, ~~software license and related implementation, support and maintenance fees,~~product sales and engineering services fees. ~~Changes~~Changes in operating

assets and liabilities for the nine months ended September 30, ~~2016~~2022, primarily included ~~a decrease~~decreases in unbilled receivable and accounts receivable and an increase in accounts payable, offset by decreases in income taxes payable, accrued salaries and benefits and other liabilities ~~mainly due to the payout of the Corporate Incentive Plan~~ and deferred revenue, as well as an increase in ~~deferred revenue.~~inventory.

Investing Activities

Cash provided by investing activities of ~~$31.0~~$30.9 million for the nine months ended September 30, ~~2017 primarily~~2023, consisted of proceeds from the maturities and sales of available-for-sale marketable securities of ~~$32.0~~$127.5 million and ~~$4.5~~$117.8 million, respectively, and net proceeds from sale of our PHY IP group of $106.3 million, offset by ~~$5.4~~purchases of available-for-sale marketable securities of $298.3 million and $22.5 million paid to acquire property, plant and equipment.

Cash ~~used in~~ provided by investing activities of ~~$125.9~~$217.5 million for the nine months ended September 30, ~~2016 primarily~~ 2022, consisted of ~~cash paid for~~proceeds from the sale and maturities of available-for-sale marketable securities of $276.7 million and $53.4 million, respectively, offset by purchases of available-for-sale marketable securities of $81.0 million, the acquisition of ~~SCS of $92.6~~Hardent for $16.1 million, net of cash acquired of ~~$12.1~~$0.2 million, cash paid for the acquisition of the Memory Interconnect Business of $90.0 million, cash paid for the acquisition of Snowbush IP assets of $32.0 million, cash paid for purchases of available-for-sale marketable securities of $54.9 million, $4.8$12.7 million paid to acquire property, plant and equipment ~~offset by proceeds from~~and the ~~maturities and sales~~acquisition of ~~available-for-sale marketable securities of $85.7 million and $50.5 million, respectively.~~intangible assets for $3.0 million.

Financing Activities

Cash used in financing activities of ~~$43.4~~$165.4 million for the nine months ended September 30, ~~2017~~2023, was primarily due to an aggregate payment of ~~$50.0~~$100.3 million ~~to Barclays Bank PLC,~~ as part of our ~~accelerated share repurchase~~2023 ASR program ~~and $3.5~~(includes $0.3 million in fees related to the ASR program), $36.7 million in payments of taxes on restricted stock units, $11.3 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 ~~$10.8~~$6.5 million in proceeds from the issuance of common stock under equity incentive plans.

Cash ~~provided by~~ used in financing activities ~~was $10.8~~of $360.4 million for the nine months ended September 30, ~~2016. We received~~2022, was primarily due to $258.1 million paid in connection with the partial repurchases of our 2023 Notes in the first and third quarters of 2022, an aggregate payment of $100.4 million as part of our 2022 ASR program (includes $0.4 million in fees related to the ASR program), $69.5 million paid in connection with the settlement of warrants associated with the partial repurchases of our 2023 Notes, $17.5 million in payments of taxes on restricted stock units and $10.5 million paid under installment payment arrangements to acquire fixed assets, offset by proceeds of ~~$12.3~~$91.7 million from the settlement of senior convertible note hedges associated with the partial repurchases of our 2023 Notes and $3.8 million in proceeds from the issuance of common stock under equity incentive ~~plans, offset by $0.5~~plans.

Contractual Obligations

As of September 30, 2023, our material contractual obligations were as follows:


(In thousands)	Total		Remainder of 2023		2024		2025		2026		2027
Contractual obligations (1) (2)
Software licenses (3)	$	29,847	$	5,262	$	16,502	$	8,083	$	—	$	—
Other contractual obligations	1,800		600		1,200		—		—		—
Acquisition retention bonuses (4) (5)	879		—		550		329		—		—


Total	$	32,526	$	5,862	$	18,252	$	8,412	$	—	$	—

(1) The above table does not reflect possible payments in connection with unrecognized tax benefits of approximately $104.4 million, including $27.4 million recorded as a reduction of long-term deferred tax assets and $77.0 million in ~~principal payments made against the lease financing obligation and $1.9 million in payments of~~long-term income taxes on restricted stock units, which were reclassified from operating activities to conform with the current interim period presentation due to the adoption of Accounting Standards Update (“ASU”) No. 2016-09, “Improvements to Employee Share-Based Payment Accounting”payable as of ~~January 1, 2017. Refer to~~September 30, 2023. As noted in Note ~~2, “Recent Accounting Pronouncements,~~13, “Income Taxes,” of Notes to Unaudited Condensed ~~Consolidated Financial Statements of this Form 10-Q for further details regarding the adoption of this ASU.~~

~~Contractual Obligations~~

~~As of~~ ~~September 30, 2017, our material contractual obligations were (in thousands):~~


~~(1)~~	The above table does not reflect possible payments in connection with uncertain tax benefits of approximately $22.9 million including $20.7 million recorded as a reduction of long-term deferred tax assets and $2.2 million in long-term income taxes payable as of ~~September 30, 2017. As noted in Note 12, “Income Taxes,” of Notes to Unaudited Condensed~~

Consolidated Financial Statements of this Form 10-Q, although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, we cannot reasonably estimate the outcome at this time.

~~(2)~~

~~(3)~~

(2) For our lease commitments as of September 30, 2023, refer to Note 8, “Leases,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q.

(3) We have commitments with various software vendors for agreements generally having terms longer than one year. As of September 30, 2023, approximately $16.0 million of the fair value of the software licenses was included in other current liabilities and $11.1 million was included in other long-term liabilities, in the accompanying Unaudited Condensed Consolidated Balance Sheet of this Form 10-Q.

(4) In connection with the acquisition of Hardent in the second quarter of 2022 and the acquisition of PLDA in the third quarter of 2021, we are obligated to pay retention bonuses to certain employees subject to certain eligibility and acceleration provisions, including the condition of employment.

(5) In connection with the acquisition of AnalogX in the third quarter of 2021, we were obligated to pay retention bonuses to certain employees subject to certain eligibility and acceleration provisions, including the condition of employment. In September 2023, we divested our PHY IP group, which includes AnalogX and resulted in us recognizing an immaterial decrease related to the remaining AnalogX acquisition retention bonus liability. Refer to Note 17, “Divestiture,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

~~We have commitments with various software vendors for non-cancellable agreements generally having terms longer than~~ ~~one~~ ~~year.~~

Share Repurchase Program

~~During the nine months ended September 30, 2017, we repurchased shares of our common stock under our share repurchase program as discussed below.~~

On ~~January 21, 2015,~~October 29, 2020, our Board approved ~~a share repurchase program~~the 2020 Repurchase Program authorizing the repurchase of up to an aggregate of 20.0 million shares. Share repurchases under the ~~plan~~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 ~~plan.~~ 2020 Repurchase Program. The 2020 Repurchase Program replaced the previous program approved by the Board in January 2015 and canceled the remaining shares outstanding as part of the previous authorization. During the nine months ended September 30, 2023, we repurchased shares of our common stock under the 2020 Repurchase Program as discussed below.

On ~~May 1, 2017,~~August 10, 2023, we ~~initiated~~entered into an accelerated share repurchase program with ~~Barclays~~Royal Bank ~~PLC.~~of Canada (“RBC”) (the “2023 ASR Program”). The ~~accelerated share repurchase program is~~2023 ASR Program was part of the ~~broader~~ share repurchase program previously authorized by our Board on ~~January 21, 2015.~~October 29, 2020. Under the ~~accelerated share repurchase program,~~2023 ASR Program, we pre-paid to ~~Barclays Bank PLC,~~RBC the ~~$50.0~~$100.0 million purchase price for our common stock and, in turn, we received an initial delivery of approximately ~~3.2~~1.6 million shares of our common stock from ~~Barclays Bank PLC, in the second quarter of 2017,~~RBC on August 11, 2023, which were retired and recorded as ~~a $40.0~~an $80.0 million reduction to ~~stockholders'~~stockholders’ equity. The remaining ~~$10.0~~$20.0 million of the initial payment was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to our stock. ~~The number~~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.

Effective January 1, 2023, our share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. Excise tax incurred is included in the cost of shares ~~to be ultimately purchased by us will be determined based on~~repurchased in the ~~volume weighted average price~~Unaudited Condensed Consolidated Statement of Stockholders’ Equity of this Form 10-Q.

On September 9, 2022, we entered into the 2022 ASR Program with Wells Fargo. The 2022 ASR Program was part of the share repurchase program previously authorized by our Board on October 29, 2020. Under the 2022 ASR Program, we pre-paid to Wells Fargo the $100.0 million purchase price for our common stock ~~during~~and, in turn, we received an initial delivery of approximately 3.1 million shares of our common stock from Wells Fargo in the ~~terms~~third quarter of 2022, which were retired and recorded as an $80.0 million reduction to stockholders’ equity. The remaining $20.0 million of the ~~transaction, minus~~initial payment was recorded as a reduction to stockholders’ equity as an ~~agreed upon discount between~~unsettled forward contract indexed to our stock. During the ~~parties. The program is expected to be~~fourth quarter of 2022, the 2022 ASR Program was completed ~~by November 2017.~~

and we received an additional 0.1 million shares of our common stock, which were retired, as the final settlement of the 2022 ASR Program.

2020 Repurchase Program.

We record ~~stock~~share repurchases as a reduction to stockholders’ equity. We record a portion of the purchase price of the repurchased shares as an increase to accumulated deficit when the price of the shares repurchased exceeds the average original proceeds per share received from the issuance of common ~~stock.~~stock in accordance with our accounting policy.

Warrants

In the first quarter of 2023, subsequent to the settlement of the remaining 2023 Notes upon their maturity, we entered into agreements with the bank counterparties (the “Counterparties”) to retire the remaining outstanding warrants that we had previously entered into with the Counterparties in connection with the issuance of the 2023 Notes. Upon settlement, we paid $10.7 million in cash for the retirement of the remaining warrants.

Refer to Note 9, “Convertible Notes,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our ~~condensed consolidated financial statements,~~Unaudited Condensed 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. Our critical accounting estimates include those regarding (1) revenue recognition, (2) goodwill, (3) intangible assets, (4) income taxes, ~~and~~ (5) stock-based ~~compensation.~~compensation and (6) business combinations. For a discussion of our critical accounting estimates, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

~~Recent Accounting Pronouncements~~

See Note 2, “Recent Accounting Pronouncements,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for discussion of recent accounting pronouncements including the respective expected dates of adoption.

Item 3. Quantitative and Qualitative Disclosures ~~about~~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 high quality, highly 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. ~~Treasuries, U.S. Agencies,~~government-sponsored obligations, and corporate notes, bonds and ~~municipal bonds and notes~~commercial paper with maturities up to 36 months. However, ~~the~~we bias of our investment portfolio isto shorter maturities. ~~All~~The majority of our investments ~~must be~~are U.S. dollar denominated. ~~Additionally, we have no significant exposure to European sovereign debt.~~

~~We invest our cash equivalents and marketable securities in a variety of U.S. dollar financial instruments such as U.S. Treasuries, U.S. Government Agencies, commercial paper and corporate notes.~~ Our policy specifically prohibits trading securities for the sole ~~purposes~~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 September 30, ~~2017,~~2023, we had an investment portfolio of fixed income marketable securities of ~~$142.3~~$287.8 million, including cash ~~equivalents.~~equivalents and time deposits. If market interest rates were to increase ~~immediately~~immediately and uniformly by 1.0% from the levels as of September 30, ~~2017~~,2023, the fair value of the portfolio would decline by approximately ~~$0.1~~ m~~illion.~~ $1.0 million. Actual results may differ materially from this sensitivity analysis.

The fair value of our convertible notes is subject to interest rate risk, market risk and other factors due to the convertible feature. The fair value of the convertible notes will generally increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of the convertible notes will generally increase as our common stock price increases and will generally decrease as our common stock price declines in value. The interest and market value changes affect the fair value of our convertible notes but do not impact our financial position, cash flows or results of operations due to the fixed nature of the debt obligation.

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.~~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 Canada, India, Bulgaria and Finland and small business development offices in Australia, China, Japan, South Korea ~~Singapore~~ and Taiwan. We monitor our foreign currency ~~exposure; however,~~exposure and, as disclosed below, we have entered into foreign currency forward contracts to partially mitigate the exposure in currencies where we believe this is appropriate.

Since the first quarter of 2023, we enter into foreign currency forward contracts (the “Contracts”) to manage our exposure related to certain foreign currency denominated monetary assets (the “Hedging Program”) and to minimize the related impact of foreign currency fluctuations on our earnings. The hedged monetary assets primarily consist of certain euro-denominated cash and accounts receivable balances. We enter into Contracts at the end of each month, and they have a duration of approximately one month at inception. As of September 30, 2023, the total local currency amount of the outstanding Contract was €3.2 million, and its total notional value was $3.4 million. Given the short duration such contracts are outstanding in relation to changes in potential market rates, the change in their fair value was deemed immaterial and was not reflected either as an asset or a liability in the accompanying Unaudited Condensed Consolidated Balance Sheet of this Form 10-Q. Additionally, the effect of a hypothetical 1% change in the euro as compared to the U.S. dollar as of September 30, ~~2017, we believe~~2023 would not have a material impact on our financial statements as the effect of foreign currency ~~exposure~~rate changes on our Contracts is ~~not material enough~~expected to ~~warrant~~offset the effect of foreign currency ~~hedging.~~rate changes on the hedged items. Actual results may differ materially from this sensitivity analysis. Refer to Note 7, “Fair Value of Financial Instruments,” and Note 15, “Derivative Instruments and Hedging Activities,” of Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for additional information.

Item 4. 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 September 30, ~~2017,~~2023, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting ~~(as defined~~identified in management’s evaluation pursuant to Rules ~~13a-15(f) and 15d-15(f)~~13a-15(d) or 15d-15(d) of the Exchange ~~Act)~~Act during the quarter ended September 30, ~~2017,~~2023, that ~~have~~ materially affected, or that we believe are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. 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 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

~~Risks Associated With~~ Our ~~Business, Industry~~business is subject to numerous risks and ~~Market Conditions~~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:

~~The success~~•We have traditionally operated in, and may enter other, industries that are highly cyclical and competitive.

•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.

•Products that fail to meet their specifications or are defective could impose significant costs on us or loss of business.

•If we do not keep pace with technological innovations or customers’ increasing technological requirements, we may not be able to enhance our existing products and our products may not be competitive, and our revenue and operating results may suffer.

•If our customers do not incorporate our technologies into their products, or if our customers’ products are not commercially successful, our business would suffer.

•Our products may not be successful in new markets.

•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.

•Our future revenue depends in meaningful part 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.

•Our ~~revenue consists mainly of patent~~licensing cycle is lengthy and ~~technology license fees paid for access to~~costly, and our ~~patents, developed technology~~marketing and development and support services provided to our customers. Our ability to secure and renew the licenses from which our revenues are derived depends on our customers adopting our technology and using it in the products they sell. Once secured, license revenuelicensing efforts may be ~~negatively affected by factors within~~unsuccessful.

•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 ~~outside our control, including reductions in our customers’ sales prices, sales volumes,~~we may not receive royalties after that time.

•Future revenue is difficult to predict for several reasons, and our failure to ~~timely complete engineering deliverables,~~predict revenue or revenue trends accurately may result in our stock price declining.

•We may fail to meet our publicly announced guidance or other expectations about our business, which would likely cause our stock price to decline.

•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.

•Weak global economic conditions may adversely affect demand for the ~~terms~~products and services of ~~such licenses.~~ our customers and could otherwise harm our business.

•Our operations are subject to the effects of a rising rate of inflation.

•We rely on third parties for a variety of services, including manufacturing, and these third parties’ failure to perform these services adequately or change the allocation of their services/capacity due to industry or other pressures could materially and adversely affect our business.

•Our business and operations could suffer in the event of physical and cybersecurity breaches and incidents.

•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.

•If we are unable to attract and retain qualified personnel globally, our business and operations could suffer.

•Our operations are subject to risks of natural disasters, acts of war, terrorism, widespread illness or 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.

•In ~~addition,~~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 ~~licensing cycle for new licensees~~consolidated financial statements or cause us to fail to meet our periodic reporting obligations.

•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 various government restrictions and regulations, including on the sale of products and services that use encryption and other technology and those related to privacy and other consumer protection matters.

•Litigation and government proceedings could affect our business in materially negative ways.

•If we are unable to protect our inventions successfully through the issuance and enforcement of patents, our operating results could be adversely affected.

•Third parties may claim that our products or services infringe on their intellectual property (“IP”) rights, exposing us to litigation that, regardless of merit, may be costly to defend.

•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 ~~renewals for existing licensees is lengthy, costly~~our reputation and ~~unpredictable without any degree~~relationships with customers.

•Compliance with changing regulation of ~~certainty. We cannot provide any assurance that we will be successful~~corporate governance and public disclosure may result 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.~~additional expenses.

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, tablets, handheld devices, mobile applications, gaming and graphics, high-definition televisions, ~~general lighting,~~ 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'~~customers’ products and the financial resources of such customers. In particular, DRAM manufacturers, which such customers 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 ~~revenues~~revenue under our existing license agreements or loss of target customers. 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'~~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 ~~technology~~products and technologies and may cause us to experience substantial fluctuations in our operating ~~results.~~results and financial condition.

We face competition from semiconductor and digital electronics products and systems companies, and other semiconductor ~~intellectual property~~IP companies that provide security ~~cores~~ and ~~non-edge lit LED lighting options~~interface IP that are available to the market. We believe some of the ~~principal~~ competition for our technologies may come from our prospective customers, some of which are internally evaluating and developing products based on technologies that they contend or may contend will not require a license from us. ~~Some of our competitors use a system-level design approach similar to ours, including activities such as board and package design, power and signal integrity analysis, and thermal management.~~ Many of these companies are larger and may have better access to financial, technical and other resources than we ~~possess.~~possess and may be able to develop and advance competitive products more effectively.

To the extent that ~~alternatives~~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 ~~expansion~~efforts to expand into new markets ~~subjects~~subject us to additional risks. We may have limited or no experience in new products and markets, including our CryptoManager platform and new offerings that have resulted from our acquisition of SCS in the mobile payment and smart ticketing solution spaces, and our acquisitions of the assets of the Snowbush IP group and the Memory Interconnect Business, and our customers may not adopt our new offerings. These and other new offerings may present new and difficult challenges, which could negatively affect our operating results.

~~We may have to invest more resources in research and development than anticipated, which could increase~~Much of our ~~operating expenses and negatively impact our operating results.~~

If new competitors, technological advances by existing competitors, and/or development of new technologies or other competitive factors require us to invest significantly greater resources than anticipated in our research and development efforts, our operating expenses could increase. If we are required to invest significantly greater resources than anticipated in research and development efforts without an increase in revenue, our operating results would decline. We expect these expenses to increase in the foreseeable future as our technology development efforts continue.

~~Our~~ revenue is concentrated in a few customers, and if we lose any of these customers through contract terminations or acquisitions, our revenue may decrease substantially.

We have a high degree of revenue concentration. Our top five customers ~~for each reporting period~~ represented approximately ~~56%~~59% and ~~65%~~57% of our revenue for the nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, respectively. ~~For both of the nine months ended September 30, 2017 and 2016, revenue from Micron, Samsung and SK hynix each accounted for 10% or more of our total revenue.~~ Additionally, our top five customers represented approximately ~~63%~~58% and ~~65%~~56% of our ~~revenues~~revenue for the years ended December 31, ~~2016~~2022 and ~~2015,~~2021, respectively. For both of the years ended December 31, 2016 and 2015, revenues from Micron, Samsung and SK hynix each accounted for 10% or more of our total revenue in each year. We extended our license agreement with Samsung in December 2013, and we expect Samsung to continue to account for a significant portion of our licensing revenue. We also entered into settlement agreements with each of SK hynix and Micron (which included Elpida, which Micron had acquired in July 2013) in June 2013 and December 2013, respectively. In June 2015, we also extended our license agreement with SK hynix. As a result of the renewal and such settlements, we expect each of Samsung, SK hynix and Micron to account for a significant portion of our licensing revenue in the future. 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'~~customers’ reported shipment volumes, sales price and mix, offset in part by the proportion of customer payments that are fixed. In particular, under our license agreement with Samsung, the license fees payable by Samsung are subject to certain adjustments and conditions, and we therefore cannot provide assurances that the revenues generated by this license will not decline in the future. In addition, some of our material 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 they are terminated, our results of operations may decline significantly.

~~Our business and operations could suffer in the event of security breaches.~~

Attempts by others to gain unauthorized access to our information technology systems are becoming more sophisticated. These attempts, which might be related to industrial or other espionage, include covertly introducing malware to our computers and networks and impersonating authorized users, among others. We seek to detect and investigate all security incidents and to prevent their recurrence, but in some cases, we might be unaware of an incident or its magnitude and effects. While we have not identified any material incidents of unauthorized access to date, the theft, unauthorized use or publication of our intellectual

property 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. To the extent that any future security breach results in inappropriate disclosure of our customers' confidential information, we may incur liability.

~~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, payment 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 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. 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:

expenditure of significant financial and research and development resources in efforts to analyze, correct, eliminate or work around breaches, errors, bugs or defects or to address and eliminate vulnerabilities;

~~financial liability to customers for breach of certain contract provisions, including indemnification obligations;~~

~~loss of existing or potential customers;~~

~~delayed or lost revenue;~~

~~delay or failure to attain market acceptance;~~

~~negative publicity, which would harm our reputation; and~~

~~litigation, regulatory inquiries or investigations that would be costly and harm our reputation.~~

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'~~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 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 may require a new qualification process with our customers, which may result in delays and in our holding excess or obsolete inventory. 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 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:

•we may be required or agree to compensate customers for costs incurred or damages caused by defective or incompatible products and to replace products;

•we could incur a decrease in revenue or adjustment to pricing commensurate with the reimbursement of such costs or alleged damages;

•we may encounter adverse publicity, which could cause a decrease in sales of our products or harm our reputation or relationships with existing or potential customers; and

•our customers may reduce or cancel their orders with us or exclude us from further consideration as a supplier.

Any of the foregoing items could have a material adverse effect on our operating results and financial condition.

If we do not keep pace with technological innovations or customers’ increasing technological requirements, we may not be able to enhance our existing products and 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 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. Therefore, we may 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 have recently experienced both growth and decline in sales of our memory interface chips quarter over quarter. We could experience a slowdown in our customers’ demand for our products in the near term, 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 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 customer’s products will be commercially successful 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 for particular products. 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 customer 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 cancel orders for many reasons, including but not limited to the impacts of the global economic downturn, business challenges, supply chain constraints, 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’ 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 our customer demands 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.

Our products may not be successful in 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 wireless and 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 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.

Our future revenue depends in meaningful part 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 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 our 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 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, ~~lighting,~~ 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 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 these license agreements converting to fully paid-up licenses, our results of operations following such conversion could be adversely affected.

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, quarterly royalty payments, many of our license agreements provide for volume-based royalties and may also be subject to caps on royalties in a given period. The sales volume and prices of our ~~customers'~~customers’ products in any given period can be difficult to predict. ~~Furthermore, when we apply the Standard for~~Under revenue recognition standard (“ASC 606”) adopted during the first quarter of 2018, ~~we anticipate that~~ our revenue ~~will vary a great deal~~varies greatly from quarter to ~~quarter as discussed further below.~~quarter. As a result of the foregoing items, our actual results may differ substantially from analyst estimates or our forecasts in any given quarter.

Also, a portion of our revenue comes from development and support services provided to our customers. Depending upon the nature of the services, a portion of the related revenue may be recognized ratably over the support period, or may be recognized according to contract revenue accounting. Contract revenue accounting may result in deferral of the service fees tountil the completion of the contract, or may result in the recognition of service fees over the period in which services are performed on a percentage-of-completion basis.

We may not be successful in entering into new markets, and our new product offerings, such as our acquisitions of SCS, the assets of the Snowbush IP group and the Memory Interconnect Business, our CryptoManager platform and new offerings in the mobile credential and smart card solution spaces, may not be adopted by our customers or potential customers. In addition, once we commercially launch our products, the sales volume of and resulting revenue from such products in any given period will be difficult to predict.

~~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 ~~revenues,~~revenue, operating expenses and other financial and operation metrics. We are evaluating the form and content of any guidance that we may provide following implementation of the Standard, a new revenue recognition standard that will be effective for the first quarter of 2018, and expect our guidance metrics to change.

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.

~~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 and various bodies. 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. For example, in May 2014, the FASB issued the Standard. The Standard, as amended, is effective for us on January 1, 2018. We have yet to make a final decision regarding the adoption method we will use, but we believe we will adopt the Standard on a full retrospective basis, with a cumulative-effect adjustment to the opening balance of retained earnings on January 1, 2016 determined on the basis of the impact of the Standard on the accounting for contracts that are not completed as of that date. Although we have yet to finalize our evaluation and quantification of the effects that the Standard will have on our consolidated financial statements, and to finalize the design and implementation of related changes to our policies, procedures and controls, we expect the Standard to materially impact the timing of revenue recognition for our fixed-fee intellectual property (IP) licensing arrangements (including certain fixed-fee agreements that license our existing IP portfolio as well as IP added to our portfolio during the license term) as a majority of such revenue would be recognized at inception of the license term, as opposed to over time as is the case under current U.S. GAAP, and we will be required to compute and recognize interest income over time as control over the IP generally transfers significantly in advance of cash being received from customers. We are also evaluating the form and content of any guidance that we may provide following implementation of the Standard and expect our guidance metrics to change. We expect that any change to current revenue recognition practices may significantly increase volatility in our quarterly revenue trends.

We have in the past made and may in the future make acquisitions or enter into mergers, strategic investments, sales of assets or other arrangements that may not produce expected operating and financial results.

From time to time, we engage in acquisitions, strategic transactions and strategic investments, such as our 2016 acquisitions of SCS, the assets of the Snowbush IP group and the Memory Interconnect Business. 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 liquid 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 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. The integration of companies that have previously operated

independently may result in significant challenges, including, among others: retaining key employees; successfully integrating new employees, business systems and technology; retaining customers 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; and consolidating corporate and administrative infrastructures.

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 acquisition, which debt could involve restrictive covenants or which equity security issuance could be dilutive to our existing stockholders.

From time to time, we may also divest certain assets, where we may be required to provide certain representations, warranties and covenants to their buyers. While we would seek to ensure the accuracy of such 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.

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 nine months ended September 30, ~~2017~~2023 and ~~2016, revenues~~2022, revenue received from our international customers constituted ~~approximately 58%~~approximately 61% and ~~65%~~42%, respectively, of ~~our~~our total revenue. Additionally, for the years ended December 31, ~~2016~~2022 and ~~2015, revenues~~2021, revenue received from our international customers constituted approximately ~~64%~~39% and ~~60%~~36%, respectively, of our total 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 which are based on a percentage of the ~~customers'~~customers’ sales that 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. We ~~do not~~ use limited financial instruments to hedge foreign exchange rate risk, however such instruments may not be sufficient to cover such risk.

Trade-related government actions, whether implemented by the United States, China, European Union or other countries, that impose barriers or restrictions that would impact 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 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 announced 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. While the Company currently has not been materially adversely impacted by these new restrictions, we may be impacted in the future if such controls are expanded to cover our key products/markets.

We currently have international business, ~~operations in the United Kingdom~~business development, and ~~the Netherlands, international~~ design operations in Canada, China, India, Finland, France, Japan, the Netherlands, South Korea, Taiwan, and ~~France, and business development operations in Australia, China, Japan, Korea, Singapore and Taiwan.~~Bulgaria. Our international operations and revenue are subject to a variety of risks which are beyond our control, including:

•hiring, maintaining and managing a workforce and facilities remotely and under various legal systems, including compliance with local labor and employment laws;

•non-compliance with our code of conduct or other corporate policies;

•compliance with and international laws involving international operations, including the Foreign Corrupt Practices Act of 1977, as amended, sanctions and anti-corruption laws, export and import laws, and similar rules and regulations;

•natural disasters, acts of war, terrorism, widespread global pandemics or illness, such as COVID-19 and its variants, or security ~~breaches;~~breaches or incidents;

•export controls, tariffs, import and licensing restrictions, climate-change regulations and other trade barriers;

•profits, if any, earned abroad being subject to local tax laws and not being repatriated to the United States or, if repatriation is possible, limited in amount;

•adverse tax treatment of revenue from international sources and changes to tax ~~codes,~~laws and regulations, including being subject to foreign tax laws and being liable for paying withholding, income or other taxes in foreign jurisdictions;

•longer payment cycles and greater difficulty in collecting accounts receivable;

•unanticipated changes in foreign government laws and ~~regulations;~~regulations including imposition of bans on sales of goods or services to one or more of our significant foreign customers;

•increased financial accounting and reporting burdens and complexities;

•lack of protection of our ~~intellectual property~~IP and other contract rights by jurisdictions in which we may do business to the same extent as the laws of the United States;

•potential vulnerability to computer system, internet or other systemic attacks, such as denial of service, viruses or other malware which may be caused by criminals, terrorists or other groups or sophisticated organizations;

•social, political and economic instability;

•geopolitical ~~issues,~~instability, including changes in diplomatic and trade ~~relationships;~~relationships, in particular with China and Taiwan; and

•cultural differences in the conduct of business both with customers and in conducting business in our international facilities and international sales offices.

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.

Weak global economic conditions may adversely affect demand for the products and services of our ~~customers.~~customers and could otherwise harm our business.

Our operations and performance depend significantly on worldwide economic conditions. ~~Uncertainty about~~Current and future uncertainty in the worldwide economy, due to inflation, geopolitics, major central bank policies including interest rate increases, public health crises, or other global ~~or regional~~factors could adversely affect our business. Adverse economic ~~and political~~ conditions ~~poses a risk as consumers and businesses may postpone spending in response to tighter credit, negative financial news and declines in income or asset values, which~~ could ~~have a material negative effect on the~~also affect demand for ~~the~~our products ofand our ~~customers in the foreseeable future.~~customers’ products. If our customers experience reduced demand ~~for their products~~or excess inventory as a result of global or regional economic conditions or otherwise, this could result in reduced royalty revenue and/or product sales and our business and results of operations could be harmed.

~~If our counterparties are unable~~ Inflationary pressures and shortages have increased, and may continue to ~~fulfill their financial~~increase, costs for materials, supplies, 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 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, 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 or business relationshipslabor and could cause our expenses to increase at a rate faster than our product pricing to recover such increases which may 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 ~~operations~~capital expenditures. In addition, we may experience losses on our holdings of cash and investments due to ~~suffer.~~

~~We are subject to various government restrictions and regulations, including on the sale~~failures of ~~products and services that use encryption technology and those related to privacy~~financial institutions and other ~~consumer protection matters.~~

~~Various countries have adopted controls, license requirements and restrictions~~parties. Difficult economic conditions may also result in a higher rate of losses 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 the ability of RSDour accounts receivable due to license its data security technologies to the manufacturers and providers of such products and services in certain markets or may require RSD or its 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 RSD's 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 technology to certain countries, entities and individuals. Our failure to comply with export and use regulations concerning encryption technology of RSD could subject us to sanctions and penalties, including fines, and suspension or revocation of export or import privileges.

~~We are subject to~~credit defaults. As a ~~variety of laws and regulations~~result, downturns in the ~~United States, the European Union and other countries that involve, for example, user privacy, data protection and security, content and consumer protection. A number~~worldwide economy could have a material adverse effect on our business, results of ~~proposals are pending before federal, state, and foreign legislative and regulatory bodies that could significantly~~operations, or financial condition.

Any failure in our delivery of high-quality technical support services may adversely affect our business. Existing and proposed laws and regulations can be costly 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.

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC established new disclosure and reporting requirements for those companies that use "conflict" minerals mined from the Democratic Republic of Congo and adjoining countries in their products, whether or not these products are manufactured by third parties. These requirements could affect the sourcing and availability of minerals that are used in the manufacture of our products. We have to date incurred costs and expect to incur significant additional costs associated with complying with the disclosure requirements, including for example, due diligence in regard to the sources of any conflict minerals used in our products, in addition to the cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities. Additionally, we may face reputational challengesrelationships with our customers and ~~other stakeholders if we are~~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 ~~sufficiently verify the origins of all minerals used~~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 ~~products through the due diligence procedures~~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 ~~implement. We may also face challenges with government regulators~~do not maintain high-quality support, could adversely affect our reputation, our ability to sell our solutions to existing and prospective customers, and our ~~customers~~business, operating results and ~~suppliers if we are unable to sufficiently verify that the metals used in our products are conflict free.~~

financial position.

Our operations are subject to ~~risks~~the effects of a rising rate of inflation.

The United States has recently experienced historically high levels of inflation. If the inflation rate increases or remains high, such 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 is experiencing an acute workforce shortage, which in turn, has created a competitive wage environment that may increase the Company’s operating costs. To the extent inflation results in rising interest rates and 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 the 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 production materials and may be located in regions subject to geopolitical uncertainty (e.g., tensions between China and Taiwan). 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. In particular, 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 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, ~~acts~~or other events, our business, results of ~~war, terrorism, widespread illness~~operations, or ~~security breach~~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 ~~domestic~~network of manufacturing and ~~international locations, any~~packaging facilities, an operational disruption at one of ~~which~~our or a subcontractor’s facilities may have a disproportionate impact on our ability to produce many of our products.

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 like COVID-19 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 ~~business stoppage and negatively affect our operating results.~~

~~Our business operations depend on our ability~~significant increase in manufacturing costs, loss of revenue, or damage to ~~maintain and protect our facilities, computer systems and personnel,~~customer relationships, any of which are primarily located in the San Francisco Bay Area in the United States, the United Kingdom, the Netherlands, India and Australia. The San Francisco Bay Area is in close proximity to known earthquake fault zones. Our facilities and transportation for our employees are susceptible to damage from earthquakes and other natural disasters such as fires, floods 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 work stoppage could have a ~~negative~~material adverse 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. Acts of terrorism, widespread illness, war and any event that causes failures or interruption in our network infrastructure and technology systems could have a negative effect at our international and domestic facilities and could harm our business, financial condition, and operating results.

~~We do not have extensive experience in manufacturing and marketing products and, as a result, may be unable to sustain and grow a profitable commercial market for new and existing products.~~

We do not have extensive experience in creating, manufacturing and marketing products, including our CryptoManager platform, our RLD product offerings and new offerings that have resulted from our acquisition of SCS in the mobile credential and smart card solution spaces, and our acquisitions of the assets of the Snowbush IP group and the Memory Interconnect Business. These and other new offerings may present new and difficult challenges, and we may be subject to claims if customers of these offerings experience delays, failures, non-performance or other quality issues. In particular, we may experience difficulties with product design, qualification, manufacturing, marketing or certification that could delay or prevent our development, introduction or marketing of new 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.

If we fail to introduce products that meet the demand of our customers or penetrate new markets in which we expend significant resources, our revenues will decrease over time and our financial condition could suffer. Additionally, if we concentrate resources on a new market that does not prove profitable or sustainable, it could damage our reputation and limit our growth, and our financial condition could decline.

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, ~~including in our offerings of our advanced mobile payment platform and smart ticketing platform,~~ and have entered into various agreements for such services. The continuous availability of our ~~service~~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.

~~We rely on third parties for a variety of services, including manufacturing, and these third parties’ failure to perform these services adequately 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. Certain of these third parties are, and may be, our sole manufacturer or sole source of production materials. If we fail to manage our relationship with these manufacturers and suppliers effectively, or if they experience delays, disruptions, capacity constraints 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, 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 or events beyond their control, or refuse to provide these services on terms acceptable to us or at all, 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.

Warranty 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 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 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.

~~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 revenues, 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.

Certain software and/or IP blocks that we use in ~~certain~~or with some of our products is licensed from third parties and, for that reason, may not be available to us in the future, which 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

~~Certain software~~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 are becoming more sophisticated. These attempts, which might be related to industrial or other espionage, may include covertly introducing malware to our computers and networks (or those of our customers) and impersonating authorized users, phishing attempts and other forms of social engineering, employee or contractor malfeasance, 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. We, our customers, and/or our third-party service providers have faced and may continue to face security threats and attacks from a variety of sources. Our data, corporate systems, third-party systems and security measures and those of our customers 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, and, as a result, an unauthorized party may obtain access to our systems, networks, or data, including IP and confidential business information of ourselves and our customers. 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. 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 isor publication 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 personally-identifiable 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 ~~open source code sources, which,~~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

generally are not recognized until launched against a target, we may ~~lead~~be unable to ~~unintended consequences~~anticipate, detect or prevent these techniques and ~~therefore,~~may not address them in our data security technologies. Any errors, bugs, defects or security vulnerabilities discovered in our solutions after commercial release could ~~materially~~ adversely affect our ~~business,~~revenue, our customer relationships and the market’s perception of our products and services. 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:

•expenditure of significant financial ~~condition, operating~~and research and development resources in efforts to analyze, correct, eliminate or work around breaches, errors, bugs or defects or to address and eliminate vulnerabilities;

•financial liability to customers for breach of certain contract provisions, including indemnification obligations;

•loss of existing or potential customers;

•product shipment restrictions or prohibitions to certain customers;

•delayed or lost revenue;

•delay or failure to attain market acceptance;

•negative publicity, which would harm our reputation; and

•litigation, regulatory inquiries or investigations that would be costly and harm our reputation.

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. For instance, we adopted ASC 606, the Revenue Standard, effective for us on January 1, 2018, on a modified retrospective basis, with a cumulative-effect adjustment to the opening balance of accumulated deficit on January 1, 2018. The Revenue Standard materially impacted the timing of revenue recognition for our fixed-fee IP licensing arrangements (including certain fixed-fee agreements that license our existing IP portfolio, as well as IP added to our portfolio during the license term) as a majority of such revenue would be recognized at inception of the license term (as opposed to over time as was the case under prior U.S. GAAP). We have enhanced the form and content of some of our guidance metrics that we provide following implementation of the Revenue Standard. We expect that any change to current revenue recognition practices may significantly increase volatility in our quarterly revenue, financial results and ~~cash flow.~~

trends, and may impact our stock price.

We ~~use open source software in our services, including our advanced mobile payment platform and smart ticketing platform, and we intend to continue to use open source software~~have in the ~~future.~~ 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, ~~there have been claims challenging~~we engage in acquisitions, strategic transactions, strategic investments, divestitures and potential discussions with respect thereto. For example, in 2019, we acquired Northwest Logic, Inc. (“Northwest Logic”) and the ~~ownership~~Secure Silicon IP and Protocols business from Verimatrix, formerly Inside Secure. Further, we acquired AnalogX Inc. (“AnalogX”) in July 2021, PLDA Group (“PLDA”) in August 2021, and Hardent, Inc. (“Hardent”) in May 2022. In July 2023, we entered into an asset purchase agreement with Cadence Design Systems to sell our PHY IP group, and the sale was completed in September 2023. Many of ~~open source software against companies~~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 ~~incorporate open source software into their products~~we anticipated or ~~alleging that these companies have violated~~generate the ~~terms of an open source license. As a result,~~financial returns we ~~could~~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 ~~lawsuits~~regulatory approvals or liabilities that are not covered by ~~parties claiming ownership~~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.

Additional risks related to our acquisitions or strategic investments include, but are not limited to:

•difficulty in combining the technology, products, or operations of the acquired business with our business;

•difficulty in integrating and retaining the acquired workforce, including key employees;

•diversion of capital and other resources, including management’s attention;

•assumption of liabilities and incurring amortization expenses, impairment charges to goodwill or write-downs of acquired assets;

•integrating financial forecasting and controls, procedures and reporting cycles;

•coordinating and integrating operations in countries in which we have not previously operated;

•acquiring business challenges and risks, including, but not limited to, disputes with management and integrating international operations and joint ventures;

•difficulty in realizing a satisfactory return, if any return at all;

•difficulty in obtaining or inability to obtain governmental and regulatory consents and approvals, other approvals or financing;

•the potential impact of complying with governmental or other regulatory restrictions placed on an acquisition;

•the potential impact on our stock price and financial results if we are unable to obtain regulatory approval for an acquisition, are required to pay reverse breakup fees or are otherwise unable to close an acquisition;

•failure and costs associated with the failure to consummate a proposed acquisition or other strategic investment;

•legal proceedings initiated as a result of an acquisition or investment;

•the potential for our acquisitions to result in dilutive issuances of our equity securities;

•the potential variability of the amount and form of any performance-based consideration;

•uncertainties and time needed to realize the benefits of an acquisition or strategic investment, if at all;

•negative changes in general economic conditions in the regions or the industries in which we or our acquired business operate;

•the need to determine an alternative strategy if an acquisition does not meet our expectations;

•potential failure of our due diligence processes to identify significant issues with the acquired assets or company; and

•impairment of relationships with, or loss of our acquired business’ employees, vendors and customers, as a result of our acquisition or investment.

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 ~~believe~~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 representations and warranties and fulfillment of any ongoing obligations, we may not be ~~open source software~~completely successful and consequently may be subject to claims by a purchaser of such assets or ~~alleging~~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.

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 ~~have violated~~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 ~~terms~~services of ~~an open source license. Litigation~~any key employees could be ~~costly~~disruptive to our development efforts, business relationships and strategy, and could cause our business and operations to suffer.

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 further 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 ~~defend,~~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 or 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, Canada, the Netherlands, France, Bulgaria, Taiwan and India. 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 work stoppage could have a negative effect on our operating ~~results~~results. We also rely on our network infrastructure and ~~financial~~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.

~~condition~~New epidemics, pandemics or ~~require us~~outbreaks of novel diseases may arise at any time. The COVID-19 pandemic or other disease outbreak, may continue to ~~devote additional research~~adversely affect the economies and ~~development resources to change~~financial markets of many countries, resulting in an economic downturn that may impact overall technology spending, adversely affecting demand for our ~~solutions. In addition, if we were to combine~~products and impacting our ~~proprietary software solutions with open source software~~operating results. Furthermore, such disruption 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~~global financial markets 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 onreduce our ability to ~~commercialize~~access capital or our ~~solutions,~~customers’ ability to pay us for past or future purchases, which could ~~adversely~~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, war and any event that causes failures or interruption in our network infrastructure and technology systems could have a negative effect at our international and domestic facilities 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 royalty 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.

We are subject to increased inventory risks and costs because we build our products based on forecasts provided by customers before receiving purchase orders for the product.

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, ~~such as the restructuring~~including discontinuing certain products, services and ~~plan of termination that we undertook~~technologies and planned reductions in ~~the fourth quarter of 2015.~~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. For example, in the third quarter of 2023, we commenced operating a new ERP system. Any failures of this system to operate as intended could impact our ability to timely and accurately manage our business and publicly report our financial results. Additionally, our information systems may not support new business models and initiatives and significant investments could be required in order to upgrade them. ~~For example, in connection with our adoption of the Standard, we plan to augment our systems with new revenue accounting software, utilizing internal and third party resources.~~ 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.

~~Risks Related~~Certain software we use is from open source code sources, which, under certain circumstances, may lead to ~~Capitalization Matters~~unintended consequences and, ~~Corporate Governance~~therefore, could materially adversely affect our business, financial condition, operating results and cash flow.

~~The price of~~We use open source software in our ~~common stock may~~services and we intend to 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:

~~any progress, or lack of progress, real or perceived,~~use open source software in the ~~development~~future. From time to time, there have been claims challenging the ownership of ~~products~~open source software against companies that incorporate ~~our innovations and technology companies' acceptance~~open source software into their products or alleging that these companies have violated the terms of ~~our products, including the results of our efforts to expand into new target markets;~~

~~our signing or not signing new licenses and the loss of strategic relationships with any customer;~~

~~announcements of technological innovations or new products by us, our customers or our competitors;~~

~~changes in our strategies, including changes in our licensing focus and/or acquisitions of companies with business models or target markets different from our own;~~

~~positive or negative reports by securities analysts as to our expected financial results and business developments;~~

~~developments with respect to patents or proprietary rights and other events or factors;~~

~~new litigation and the unpredictability of litigation results or settlements; and~~

~~issuance of additional securities by us, including in acquisitions.~~

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. These broad market and industry fluctuations may adversely affect the price of our common stock, regardless of our operating performance.

~~We have outstanding senior convertible notes in~~ an ~~aggregate principal amount totaling $138.0 million. Because these notes are convertible into shares of our common stock, volatility or depressed prices of our common stock~~open source license. As a result, we could have a similar effect on the trading price of such notes. In addition, the existence of these notes may encourage short selling in our common stock by market participants because the conversion of the notes could depress the price of our common stock.

~~We have been party to, and may in the future~~ be subject to lawsuits ~~relating~~by parties claiming ownership of what we believe to ~~securities law matters which may result in unfavorable outcomes~~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 ~~significant judgments, settlements and legal expenses which could cause our business,~~ financial condition or require us to devote additional research and ~~results of operations~~development resources to ~~suffer.~~

~~We and~~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 ~~current and former officers and directors, as well as~~proprietary software solutions. If we inappropriately use open source software, we may be required to re-engineer our ~~current auditors, were subject from 2006 to 2011 to several stockholder derivative actions, securities fraud class actions and/or individual lawsuits filed in federal court against us and certain~~solutions, discontinue the sale of our ~~current and former officers and directors. The complaints generally alleged~~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 ~~the defendants violated the federal and state securities laws and stated state law claims for fraud and breach of fiduciary duty. Although to date these complaints have either been settled~~open source licenses could be construed in a way that could impose unanticipated conditions or dismissed, the amount of time to resolve any future lawsuits is uncertain, and these matters could require significant management and financial resources. Unfavorable outcomes and significant judgments, settlements and legal expenses in litigation related to any future securities law claims could have material adverse impactsrestrictions on our ~~business, financial condition, results of operations, cash flows and the trading price of~~ability to commercialize our ~~common stock.~~

~~We are leveraged financially,~~solutions, which could adversely affect our ~~ability~~business, operating results and financial condition.

In the future, we may fail to ~~adjust~~maintain an effective system of internal control over financial reporting or adequate disclosure controls and procedures, which may result in material misstatements of our ~~business~~consolidated financial statements or cause us to ~~respond to competitive pressures and to obtain sufficient funds to satisfy our future research and development needs, to protect and enforce our intellectual property, and~~fail to meet ~~other needs.~~our periodic reporting obligations.

~~We have material indebtedness. In August 2013, we issued $138.0 million aggregate principal amount of our 2018 Notes which remain outstanding. The degree to which~~If we are ~~leveraged could have negative consequences, including, but~~ not ~~limited to, the following:~~

~~we may be more vulnerable to economic downturns, less~~ able ~~to withstand competitive pressures and less flexible in responding to changing business and economic conditions;~~

~~our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, litigation, general corporate or other purposes may be limited;~~

a substantial portion of our cash flows from operations in the future may be required for the payment of the principal amount of our existing indebtedness when it becomes due at maturity in August 2018; and

~~we may be required to make cash payments upon any conversion of the 2018 Notes, which would reduce our cash on hand.~~

~~A failure~~ to comply with the ~~covenants~~requirements of the Sarbanes-Oxley Act or if we are unable to maintain effective internal control over financial reporting and ~~other provisions~~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. In connection with the audit of our ~~debt instruments~~consolidated financial statements as of and for the year ended December 31, 2020, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting that impacted our consolidated financial statements and related disclosures as of and for the years ended December 31, 2020 and 2019, and revised our consolidated financial statements for the year ended December 31, 2018. While we believe this material weakness has been remediated, we cannot assure you that we have identified all of our existing material weaknesses, or that we will not in the future have additional material weaknesses. Any failure of our internal control over financial reporting or disclosure controls and procedures could result in ~~events~~material misstatements of ~~default under such instruments,~~our consolidated financial statements, which could ~~permit acceleration of all of~~cause our outstanding 2018 Notes. Any required repurchase of the 2018 Notes as a result of a fundamental change or acceleration of the 2018 Notes would reduce our cash on hand such that we would not have those funds available for useinvestors to lose confidence in our ~~business.~~

If we are at any time unable to generate sufficient cash flows from operations to service our indebtedness when payment is due, we may be required to attempt to renegotiate the terms of the instruments relating to the indebtedness, seek to refinance all or a portion of the indebtedness or obtain additional financing. There can be no assurance that we will be able to successfully renegotiate such terms, that any such refinancing would be possible or that any additional financing could be obtained on terms that are favorable or acceptable to us.

~~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 certificate of incorporation and bylaws, Delaware law, our outstanding convertible notes and certain other agreements contain provisions that could discourage transactions resulting in a change in control, which may negatively affectpublicly reported information, cause the market price of our ~~common stock.~~

~~Our certificate of incorporation, our bylaws and Delaware law contain provisions that might enable our management~~stock 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:

our board of directors is authorized, without prior stockholder approval, to create and issue preferred stock, commonly referred to as “blank check” preferred stock, with rights senior to those of common stock, which means that a stockholder rights plan could be implemented by our board;

~~our board of directors is staggered into two classes, only one of which is elected at each annual meeting;~~

~~stockholder action by written consent is prohibited;~~

~~nominations for election to our board of directors and the submission of matters to be acted upon by stockholders at a meeting are subject to advance notice requirements;~~

certain provisions in our bylaws and certificate of incorporation such as notice to stockholders, the ability to call a stockholder meeting, advance notice requirements and action of stockholders by written consent may only be amended with the approval of stockholders holding 66 2/3% of our outstanding voting stock;

~~our stockholders have no authority to call special meetings of stockholders; and~~

~~our board of directors is expressly authorized to make, alter or repeal our bylaws.~~

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.

Certain provisions of our outstanding 2018 Notes could make it more difficult or more expensive for a third party to acquire us. Upon the occurrence of certain transactions constituting a fundamental change, holders of such 2018 Notes will have the right, at their option, to requiredecline, expose us to ~~repurchase, at a cash repurchase price equal to 100%~~sanctions or investigations by the SEC or other regulatory authorities, or impact our results of the principal amount plus accrued and unpaid interest on such 2018 Notes, all or a portion of their 2018 Notes. We may also be required to increase the conversion rate of such 2018 Notes in the event of certain fundamental changes.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 ~~as well as other factors.~~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. 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 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 has proposed imposing a 15% global minimum tax, and the Council of the European Union adopted this proposal for implementation by member states by December 31, 2023. Further, the United States has recently enacted the Inflation Reduction Act, which includes, among other changes, a 1% excise tax on certain stock repurchases and a 15% alternative minimum tax on adjusted financial statement income. If we are subject to additional tax liabilities, our financial performance may be adversely affected. In addition, many jurisdictions are actively considering changes to existing tax laws or have proposed or enacted new laws that 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 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 ~~Business Risks Related~~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 and those related to privacy and other consumer protection 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 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 countries that involve, for example, user privacy, data protection and security, content and consumer protection. For example, in 2016, a new EU data protection regime, the General Data Protection Regulation (“GDPR”) was adopted, with it fully effective on May 25, 2018. The GDPR includes significant penalties for noncompliance, which may result in monetary penalties of up to the higher of €20 million or 4% of a group’s worldwide turnover for the preceding financial year for the most serious violations. The United Kingdom’s version of the GDPR, which it maintains along with its Data Protection Act, also provides for substantial penalties that, for the most serious violations, can go up to the greater of £17.5 million or 4% of a group’s worldwide turnover for the preceding financial year. In the United States, California enacted the California Consumer Privacy Act (“CCPA”), which became effective on January 1, 2020. The CCPA includes a framework with potentially severe statutory damages and private rights of action. Moreover, a new privacy law, the California Privacy Rights Act (“CPRA”), was approved by California voters in November 2020. The CPRA significantly modifies the CCPA, effective as of January 1, 2023. Numerous other states have passed laws that share similarities with the CCPA and CPRA, and other states are considering such legislation. The U.S. federal government also is contemplating federal privacy legislation. The GDPR and CCPA, and new and evolving laws such as the CPRA, and other future changes in laws or regulations relating to cross-border data transfer, data localization, and other aspects of privacy, data protection and information security may require us to modify our existing practices with respect to the collection, use, disclosure and other processing of data. The GDPR, CCPA, and other existing and proposed laws and regulations 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.

We are subject to disclosure and reporting requirements for companies that use “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries in their products, whether or not these products are manufactured by third parties. These requirements could affect the sourcing and availability of minerals that are used in the manufacture of our products. We have to date incurred costs and expect to incur significant additional costs associated with complying with the disclosure requirements, including for example, due diligence in regard to the sources of any conflict minerals used in our products, in addition to the cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities. Additionally, we may face reputational challenges with our customers and other stakeholders if we are unable to sufficiently verify the origins of all minerals used in our products through the due diligence procedures that we implement. We may also face challenges with government regulators and our customers and suppliers if we are unable to sufficiently verify that the metals used in our products are conflict free.

Litigation and government proceedings could affect our business in materially negative ways.

We may be subject to legal claims or regulatory matters involving consumer, stockholder, employment, competition, IP and other issues on a global basis. Litigation can be lengthy, expensive and disruptive to our ~~Intellectual Property~~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 ~~intellectual property~~IP and make other claims, which could adversely affect our ~~intellectual property~~IP rights, distract our management and cause substantial expenses and declines in our revenue and stock price.

We seek to diligently protect our ~~intellectual property~~IP rights and will continue to do so. While we are not currently involved in ~~intellectual property~~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 tend~~ 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 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 ~~intellectual property~~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 ~~intellectual property,~~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 ~~litigations,~~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 ~~reviewed~~initiated by the ~~USPTO's~~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 ~~Rambus'~~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 ~~intellectual property~~IP litigation. If a ~~sufficient~~significant number of such patents are impaired, our ability to enforce or license our ~~intellectual property~~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.

Litigation or other third-party claims of ~~intellectual property~~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 ~~have~~and/or our customers, also ~~been named in the past, and~~ may ~~in the future~~ be named as a defendant in lawsuits claiming that our technology infringes upon the ~~intellectual property~~IP rights of third parties. As we develop additional products and technology, we may face claims of infringement of various patents and other ~~intellectual property~~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 ~~intellectual property~~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:

•any current or future U.S. or foreign patent applications will be approved and not be challenged by third parties;

•our issued patents will protect our ~~intellectual property~~IP and not be challenged by third parties;

•the validity of our patents will be upheld;

•our patents will not be declared unenforceable;

•the patents of others will not have an adverse effect on our ability to do business;

•Congress or the U.S. courts or foreign countries will not change the nature or scope of rights afforded patents or patent owners or alter in an adverse way the process for seeking or enforcing patents;

•changes in law will not be implemented, or changes in interpretation of such laws will occur, that will affect our ability to protect and enforce our patents and other ~~intellectual property;~~IP;

•new legal theories and strategies utilized by our competitors will not be successful;

•others will not independently develop similar or competing chip interfaces or design around any patents that may be issued to us; or

•factors such as difficulty in obtaining cooperation from inventors, pre-existing challenges or litigation, or license or other contract issues will not present additional challenges in securing protection with respect to patents and other ~~intellectual property~~IP that we acquire.

If any of the above were to occur, our operating results could be adversely affected.

Furthermore, ~~recent~~ 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 recently 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.

In addition, our patents will continue to expire according to their terms, with expected expiration dates ranging from ~~2017~~2023 to ~~2038.~~2042. 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 ~~the intellectual property we create~~ 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-patentable ~~intellectual property~~IP rights. If we fail to protect these ~~intellectual property~~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 ~~intellectual property~~IP in the products of ~~third party~~third-party manufacturers, and our ability to enforce ~~intellectual property~~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 to do so, our business will suffer.

Effective protection of trademarks, copyrights, domain names, patent rights, and other ~~intellectual property~~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 ~~intellectual property~~IP rights may not be sufficient or effective. Our ~~intellectual property~~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 ~~intellectual property~~IP rights, and limitations on our ability to assert our ~~intellectual property~~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 ~~intellectual property~~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 ~~intellectual property~~IP rights of others. Third parties may claim that our current or future products or services infringe upon their ~~intellectual property~~IP rights. 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 license the products that incorporate the challenged ~~intellectual property.~~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. 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.

~~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 royalty 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.

Any dispute regarding our ~~intellectual property~~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 ~~patents or other intellectual property,~~products, our customers could also become the target of litigation. ~~While we generally do not indemnify our customers, some~~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 ~~of acquisitions, including with respect to~~that we acquired assets or businesses for our ~~acquisitions of SCS, the assets of the Snowbush IP group and the Memory Interconnect Business, and we may agree to indemnify others in the future.~~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~~customer’s development, marketing and sales of licensed semiconductors, ~~lighting,~~ 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.

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 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.

We have been party to, and may in the future be subject to, lawsuits relating to securities law matters which may result in unfavorable outcomes and significant judgments, settlements and legal expenses which could cause our business, financial condition and results of operations to suffer.

We and certain of our current and former officers and directors, as well as our current independent auditors, have been subject to several stockholder derivative actions, securities fraud class actions and/or individual lawsuits filed in federal court. The complaints generally alleged that the defendants violated the federal and state securities laws and stated state law claims for fraud and breach of fiduciary duty. Although to date these complaints have either been settled or dismissed, the amount of time to resolve any future lawsuits is uncertain, and these matters could require significant management and financial resources. Unfavorable outcomes and significant judgments, settlements and legal expenses in litigation related to any future securities law claims could have material adverse impacts on our business, financial condition, results of operations, cash flows and the trading price of our common stock.

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. 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:

•any progress, or lack of progress, real or perceived, in the development of products that incorporate our innovations and technology companies’ acceptance of our products, including the results of our efforts to expand into new target markets;

•our signing or not signing new licenses or renewing existing licenses, and the loss of strategic relationships with any customer;

•announcements of technological innovations or new products by us, our customers or our competitors;

•changes in our strategies, including changes in our licensing focus and/or acquisitions or dispositions of companies or businesses with business models or target markets different from our core;

•changes in macroeconomic conditions, increased risk of recession, and geopolitical issues, including the effects of tensions between China and Taiwan;

•positive or negative reports by securities analysts as to our expected financial results and business developments;

•developments with respect to patents or proprietary rights and other events or factors;

•new litigation and the unpredictability of litigation results or settlements;

•repurchases of our common stock on the open market;

•issuance of additional securities by us, including in acquisitions, or large cash payments, including in acquisitions; and

•changes in accounting pronouncements.

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 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. While the trading price of our common stock has been trending upward, there is no guarantee that the trading price will continue to increase.

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.

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:

•our board of directors is authorized, without prior stockholder approval, to create and issue preferred stock, commonly referred to as “blank check” preferred stock, with rights senior to those of common stock, which means that a stockholder rights plan could be implemented by our board;

•our board of directors is staggered into two classes, only one of which is elected at each annual meeting;

•stockholder action by written consent is prohibited;

•nominations for election to our board of directors and the submission of matters to be acted upon by stockholders at a meeting are subject to advance notice requirements, including compliance with the “universal proxy rules” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings;

•certain provisions in our amended and restated certificate of incorporation and amended and restated bylaws, such as notice to stockholders, the ability to call a stockholder meeting, advance notice requirements and action of stockholders by written consent may only be amended with the approval of stockholders holding 66 2/3% of our outstanding voting stock;

•our stockholders have no authority to call special meetings of stockholders; and

•our board of directors is expressly authorized to make, alter or repeal our bylaws.

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):

•any derivative action or proceeding brought on behalf of us;

•any action asserting a claim of breach of a fiduciary duty;

•any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended from time to time); and

•any action asserting a claim against us that is governed by the internal affairs doctrine.

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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchase Program

On ~~January 21, 2015,~~October 29, 2020, our Board approved a new share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million ~~shares.~~shares (the “2020 Repurchase Program”). Share repurchases under the ~~plan~~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 ~~plan. On May 1, 2017, as~~2020 Repurchase Program.

As part of the broader share repurchase program ~~previously~~ authorized by our Board on ~~January 21, 2015,~~October 29, 2020, we ~~initiated~~entered into an accelerated share repurchase program with ~~Barclays~~Deutsche Bank ~~PLC.~~ AG, London Branch as counterparty, through its agent Deutsche Bank Securities Inc. (“Deutsche Bank”) on November 11, 2020 (the “2020 ASR Program”), which was completed in the second quarter of 2021. Also in the second quarter of 2021, we entered into another accelerated share repurchase program with Deutsche Bank on June 15, 2021 (the “2021 ASR Program”), which was completed in the fourth quarter of 2021. In the third quarter of 2022, we entered into an accelerated share repurchase program with Wells Fargo on September 9, 2022 (the “2022 ASR Program”), which was completed in the fourth quarter of 2022. In the third quarter of 2023, we entered into an accelerated share repurchase program with Royal Bank of Canada (“RBC”) on August 10, 2023, (the “2023 ASR Program”), which was also completed in the third quarter of 2023.

After giving effect to ~~such accelerated share repurchase program,~~the 2020, 2021, 2022 and 2023 ASR programs, detailed in the table below, ~~we had remaining~~there remained an outstanding authorization to repurchase approximately ~~8.3~~7.9 million ~~shares.~~shares of our outstanding common stock under the 2020 Repurchase Program.

We record stock repurchases as a reduction to stockholders’ equity. We record a portion of the purchase price of the repurchased shares as an increase to accumulated deficit when the price of the shares repurchased exceeds the average original proceeds per share received from the issuance of common stock.


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Number of Shares that May Yet be Purchased Under the Program
Cumulative shares repurchased as of December 31, 2022 (1) (2) (3)	10,261,922	$	24.36	10,261,922	9,738,078
August 1, 2023 - September 30, 2023(4)	1,854,832	$	53.91	1,854,832	7,883,246

Cumulative shares repurchased as of September 30, 2023	12,116,754			12,116,754

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs

Cumulative shares repurchased as of December 31, 2016 8,548,361
$11.70 8,548,361
11,451,639
May 1, 2017 - May 31, 2017 (1) 3,187,251
To be determined at the end of the current accelerated share repurchase program 3,187,251
8,264,388
Cumulative shares repurchased as of September 30, 2017 11,735,612
11,735,612

(1) In ~~the second quarter of 2017,~~November 2020, we entered into ~~an accelerated share repurchase program~~the 2020 ASR Program with ~~Barclays~~Deutsche Bank ~~PLC~~ to repurchase an aggregate of $50.0 million of our common stock. We made an upfront payment of $50.0 million pursuant to the accelerated share repurchase program and received an initial delivery of ~~3.2~~2.6 million shares 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. ~~The number~~During the second quarter of 2021, the accelerated share repurchase program was completed and we received an additional 0.1 million shares ~~to be ultimately purchased by us will be determined based on~~of our common stock, which were retired, as the ~~volume weighted average price~~final settlement of the accelerated share repurchase program. The total shares of our common stock ~~during~~received and retired under the terms of the ~~transaction, minus~~accelerated share repurchase program were 2.7 million, with an ~~agreed upon discount between~~average price paid per share of $18.63.

(2) In June 2021, we entered into the ~~parties.~~2021 ASR Program with Deutsche Bank to repurchase an aggregate of $100.0 million of our common stock. We made an upfront payment of $100.0 million pursuant to the accelerated share repurchase program and received an initial delivery of 3.9 million shares, which were retired and recorded as an $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. In October 2021, the accelerated share repurchase program ~~is expected~~was completed and we received an additional 0.4 million shares of our common stock, which were retired, as the final settlement of the accelerated share repurchase program. The total shares of our common stock received and retired under the terms of the accelerated share repurchase program were 4.4 million, with an average price paid per share of $22.82.

(3) In September 2022, we entered into the 2022 ASR Program with Wells Fargo to berepurchase an aggregate of $100.0 million of our common stock. We made an upfront payment of $100.0 million pursuant to the accelerated share repurchase program and received an initial delivery of approximately 3.1 million shares, which were retired and recorded as an $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. During the fourth quarter of 2022, the accelerated share repurchase program was completed ~~by November 2017. See Note 11, “Stockholders' Equity,”~~and we received an additional 0.1 million shares of ~~Notes~~our common stock, which were retired, as the final settlement of the accelerated share repurchase program. The total shares of our common stock received and retired under the terms of the accelerated share repurchase program were 3.2 million, with an average price paid per share of $31.30.

(4) In August 2023, we entered into the 2023 ASR Program with RBC to ~~Unaudited Condensed Consolidated Financial Statements~~repurchase an aggregate of ~~this Form 10-Q for further discussion.~~$100.0 million of our common stock. We made an upfront payment of $100.0 million pursuant to the accelerated share repurchase program and received an initial delivery of approximately 1.6 million shares, which were retired and recorded as an $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 accelerated share repurchase program. The total shares of our common stock received and retired under the terms of the accelerated share repurchase program were 1.8 million, with an average price paid per share of $53.91.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not ~~Applicable.~~applicable.

Item 5. Other Information

~~None.~~Securities Trading Plans of Directors and Executive Officers

During the third quarter of 2023, the below directors and/or officers, as defined in Rule 16a-1(f), adopted and/or terminated a “Rule 10b5-1 trading arrangement” and/or a “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of Regulation S-K. The Rule 10b5-1 trading arrangements are each intended to satisfy the affirmative defense in Rule 10b5-1(c)(1).

Name

Title

Adopted or
Terminated

Adoption
Date

Termination
Date

Total Number of Shares of Common Stock to be Sold

Desmond M. Lynch

Senior Vice President, Finance and Chief Financial Officer

Adopted

September 7, 2023

September 7, 2024

8,365

Sean Fan

Senior Vice President, Chief Operating Officer

Adopted

September 11, 2023

September 11, 2024

Up to 135,752

No other directors or officers, as defined in Rule 16a-1(f), adopted, modified, and/or terminated a “Rule 10b5-1 trading arrangement,” and no directors or officers, as defined in Rule 16a-1(f), adopted, modified, and/or terminated a “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of Regulation S-K.

Item 6. Exhibits

~~A list of exhibits to this Quarterly Report on Form 10-Q is set forth on the Exhibit Index immediately preceding such exhibits and is incorporated herein by reference.~~

~~SIGNATURE~~

~~Pursuant to the requirements 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.~~

INDEX TO EXHIBITS



Exhibit Number			~~RAMBUS INC.~~

~~Date: October 27, 2017~~	~~By:~~	~~/s/ Rahul Mathur~~
		~~Rahul Mathur~~
		~~Senior Vice President, Finance and Chief Financial Officer~~
		~~(Principal Financial Officer and Duly Authorized Officer)~~

~~INDEX TO EXHIBITS~~

Description of Document

~~Exhibit~~ ~~Number~~2.1(1)		~~Description of Document~~

~~10.1 (1)~~	~~Employment~~Asset Purchase Agreement by and between ~~the Company~~Rambus Inc. and ~~Ronald Black,~~Cadence Design Systems, Inc., dated as of July ~~17, 2017.~~ 19, 2023.*

10.1(2)		Form of ASR Agreement.

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*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*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.

101.INS		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		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)



*						Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. Rambus will furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request. Rambus may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules or exhibits so furnished.

†						The certifications furnished in Exhibit 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as ~~amended.~~amended, or otherwise subject to the liability of that section. 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 July ~~18, 2017.~~20, 2023.

(2)						Incorporated by reference to the Form 8-K filed on August 11, 2023.

SIGNATURE

Pursuant to the requirements 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.

Date:	November 3, 2023	By:	/s/ Desmond Lynch
			Desmond Lynch
			Senior Vice President, Finance and Chief Financial Officer
			(Principal Financial Officer and Duly Authorized Officer)



	September 30, 2017			December 31, 2016
	(In thousands, except shares and par value)
ASSETS
Current assets:
Cash and cash equivalents	$	182,345		$	135,294
Marketable securities	1,287			36,888
Accounts receivable	49,799			21,099
Inventories	5,015			5,633
Prepaids and other current assets	10,998			17,867
Total current assets	249,444			216,781
Intangible assets, net	102,545			132,388
Goodwill	209,318			204,794
Property, plant and equipment, net	54,035			58,442
Deferred tax assets	206,503			168,342
Other assets	2,283			2,749
Total assets	$	824,128		$	783,496
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	7,016		$	9,793
Accrued salaries and benefits	12,278			14,177
Convertible notes, short-term	131,490			—
Deferred revenue	21,224			16,932
Other current liabilities	10,731			10,399
Total current liabilities	182,739			51,301
Convertible notes, long-term	—			126,167
Long-term imputed financing obligation	37,471			38,029
Other long-term liabilities	14,381			15,217
Total liabilities	234,591			230,714
Commitments and contingencies (Notes 9 and 13)
Stockholders’ equity:
Convertible preferred stock, $.001 par value:
Authorized: 5,000,000 shares
Issued and outstanding: no shares at September 30, 2017 and December 31, 2016	—			—
Common stock, $.001 par value:
Authorized: 500,000,000 shares
Issued and outstanding: 109,778,058 shares at September 30, 2017 and 111,053,734 shares at December 31, 2016	110			111
Additional paid-in capital	1,187,987			1,181,230
Accumulated deficit	(592,863		)	(615,051		)
Accumulated other comprehensive loss	(5,697		)	(13,508		)
Total stockholders’ equity	589,537			552,782
Total liabilities and stockholders’ equity	$	824,128		$	783,496



Cost of product revenue	$	20	$	14	$	53	$	42
Research and development	$	2,969	$	2,337	$	9,048	$	6,526
Sales, general and administrative	$	3,975	$	3,092	$	11,068	$	8,788



	Nine Months Ended
	September 30,
	2017			2016
	(In thousands)
Cash flows from operating activities:
Net income	$	13,306		$	10,265
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	20,169			15,356
Depreciation	9,971			9,388
Amortization of intangible assets	31,436			26,045
Non-cash interest expense and amortization of convertible debt issuance costs	5,324			5,025
Deferred income taxes	(4,108		)	(4,157		)
Excess tax benefits from stock-based compensation	—			(927		)
(Gain) loss from disposal of property, plant and equipment	169			(29		)
Effect of exchange rate on assumed cash liability from acquisition	—			(985		)
Change in operating assets and liabilities, net of impact of acquisitions:
Accounts receivable	(23,656		)	333
Prepaid expenses and other assets	6,824			(3,143		)
Inventories	617			(744		)
Accounts payable	(2,795		)	2,302
Accrued salaries and benefits and other liabilities	(2,658		)	(4,772		)
Deferred revenue	3,248			7,532
Net cash provided by operating activities	57,847			61,489
Cash flows from investing activities:
Purchases of property, plant and equipment	(5,444		)	(4,750		)
Acquisition of intangible assets	(120		)	—
Purchases of marketable securities	—			(54,869		)
Maturities of marketable securities	32,048			85,746
Proceeds from sale of marketable securities	4,450			50,546
Proceeds from sale of property, plant and equipment	28			—
Acquisitions of businesses, net of cash acquired	—			(202,523		)
Net cash provided by (used in) investing activities	30,962			(125,850		)
Cash flows from financing activities:
Proceeds received from issuance of common stock under employee stock plans	10,792			12,277
Principal payments against lease financing obligation	(625		)	(476		)
Payments of taxes on restricted stock units	(3,525		)	(1,861		)
Repurchase and retirement of common stock, including prepayment under accelerated share repurchase program	(50,036		)	—
Excess tax benefits from stock-based compensation	—			927
Net cash provided by (used in) financing activities	(43,394		)	10,867
Effect of exchange rate changes on cash and cash equivalents	1,636			(791		)
Net increase (decrease) in cash and cash equivalents	47,051			(54,285		)
Cash and cash equivalents at beginning of period	135,294			143,764
Cash and cash equivalents at end of period	$	182,345		$	89,479

Non-cash investing activities during the period:
Property, plant and equipment received and accrued in accounts payable and other liabilities	$	1,294		$	1,344
Non-cash financing activities during the period:
Additional purchase consideration from acquisition	$	—		$	10,779



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Net income per share:	(In thousands, except per share amounts)
Numerator:
Net income	$	7,695	$	4,511	$	13,306	$	10,265
Denominator:
Weighted-average shares outstanding - basic	109,555		110,214		110,353		109,951
Effect of potential dilutive common shares	3,564		3,509		3,508		2,854
Weighted-average shares outstanding - diluted	113,119		113,723		113,861		112,805
Basic net income per share	$	0.07	$	0.04	$	0.12	$	0.09
Diluted net income per share	$	0.07	$	0.04	$	0.12	$	0.09



Reportable Segment:	As of December 31, 2016		Additions to Goodwill (1)		Impairment of Goodwill		Effect of Exchange Rates (2)		As of September 30, 2017
	(In thousands)
MID	$	66,643	$	—	$	—	$	—	$	66,643
RSD	138,151		803		—		3,721		142,675
Total	$	204,794	$	803	$	—	$	3,721	$	209,318



	As of
	September 30, 2017
Reportable Segment:	Gross Carrying Amount		Accumulated Impairment Losses			Net Carrying Amount
	(In thousands)
MID	$	66,643	$	—		$	66,643
RSD	142,675		—			142,675
Other	21,770		(21,770		)	—
Total	$	231,088	$	(21,770	)	$	209,318



Years Ending December 31:	Amount
2017 (remaining 3 months)	$	11,775
2018	29,624
2019	19,877
2020	19,133
2021	12,653
Thereafter	9,483
	$	102,545



	Fair Value				Gross Unrealized Loss
	September 30, 2017		December 31, 2016		September 30, 2017			December 31, 2016
	(In thousands)
Less than one year
U.S. Government bonds and notes	$	27,489	$	18,395	$	(2	)	$	—
Corporate notes, bonds and commercial paper	97,600		54,377		(13		)	(21		)
Total Corporate notes, bonds, and commercial paper and U.S. Government bonds and notes	$	125,089	$	72,772	$	(15	)	$	(21	)



	As of September 30, 2017
	Total		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Money market funds	$	12,882	$	12,882	$	—	$	—
U.S. Government bonds and notes	30,489		—		30,489		—
Corporate notes, bonds, commercial paper and other	98,887		1,287		97,600		—
Total available-for-sale securities	$	142,258	$	14,169	$	128,089	$	—



	Total		Remainder of 2017		2018		2019		2020		2021		Thereafter
Contractual obligations (1)
Imputed financing obligation (2)	$	17,511	$	1,593	$	6,447	$	6,602	$	2,869	$	—	$	—
Leases and other contractual obligations	28,336		3,020		6,000		5,631		4,662		4,793		4,230
Software licenses (3)	16,317		2,609		10,176		3,532		—		—		—
Convertible notes	138,000		—		138,000		—		—		—		—
Interest payments related to convertible notes	1,552		—		1,552		—		—		—		—
Total	$	201,716	$	7,222	$	162,175	$	15,765	$	7,531	$	4,793	$	4,230



	Options Outstanding
	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
	(In thousands, except per share amounts)
Outstanding as of December 31, 2016	7,008,833		$	9.34
Options granted	498,426		$	12.74
Options exercised	(989,613	)	$	7.12
Options forfeited	(1,858,653	)	$	10.54
Outstanding as of September 30, 2017	4,658,993		$	9.69	5.64	$	19,594
Vested or expected to vest at September 30, 2017	4,592,934		$	9.66	5.46	$	19,533
Options exercisable at September 30, 2017	3,621,650		$	9.13	4.87	$	17,843



	Stock Option Plan
	Nine Months Ended
	September 30,
	2017			2016
Stock Option Plan
Expected stock price volatility	32		%	36		%
Risk free interest rate	1.8% - 1.9%			1.7		%
Expected term (in years)	5.3 - 5.4			6.1
Weighted-average fair value of stock options granted to employees	$	4.12		$	4.66



	Three Months						Nine Months
	Ended September 30,				Change in		Ended September 30,				Change in
(Dollars in millions)	2017		2016		Percentage		2017		2016		Percentage
Total Revenue
Royalties	$	72.8	$	68.3	6.6	%	$	211.7	$	194.0	9.1	%
Product revenue	8.6		7.1		22.1	%	28.0		14.3		95.5	%
Contract and other revenue	17.7		14.5		22.3	%	51.5		30.7		67.7	%
Total revenue	$	99.1	$	89.9	10.3	%	$	291.2	$	239.0	21.8	%