Why Rambus Stock Dropped This Week

Rambus (RMBS -6.19%) had a week to forget, at least as far as its stock is concerned. The chip interface technology company saw its stock price plummet following its latest earnings release. In total, it lost nearly 29% over the five trading days, according to data compiled by S&P Global Market Intelligence.

Sharp drop in net profit

After trading Monday, Rambus took its time and released its second-quarter numbers. Of those, total revenue of more than $132 million was up 10% from a year earlier. However, GAAP net income moved sharply in the opposite direction. It fell to just over $36 million ($0.33 per share) from nearly $169 million in the second quarter of 2023.

Analysts had expected higher numbers than that. Collectively, they estimated Rambus would post revenue of $139 million and a higher profit of $0.45 per share.

Of its three revenue sources, the largest, products, was up only slightly from the previous quarter. It took in $56.7 million in the second quarter, up from $55 million in the same period a year earlier. Royalties, however, jumped much more sharply, climbing 39% to $56.4 million. However, contract and other revenue fell year-over-year, from just over $24 million to $19 million.

Selected and detailed advice included

In the earnings press release, Rambus provided guidance for its current third quarter. Product revenue is expected to be in the range of $62 million to $68 million, license billings are expected to be in the range of $60 million to $66 million, and contract and other revenue is expected to be in the range of $17 million to $23 million. Operating costs/expenses, on the other hand, are expected to be in the range of $93 million to $97 million.

Rambus did not provide revenue or profitability guidance in the filing.