Rambus Inc (NASDAQ:RMBS) shares fell 3.6% despite the memory interface chip and silicon intellectual property company reporting third-quarter results above expectations and forecasting faster product revenue growth in the current quarter.
The company reported third-quarter revenue of $218.3 million, up 22% year over year and ahead of analyst expectations of $213.2 million. Adjusted earnings per share came in at $0.84, compared with the consensus estimate of $0.79 and $0.62 a year earlier.
Product revenue rose 22% to $114.3 million, increasing 15% sequentially, while royalty revenue reached $77 million and contract and other revenue totaled $27 million.
Non-GAAP operating income was $102.2 million, above expectations of $96.2 million, and operating margin improved to 47% from 44% a year earlier. Operating cash flow reached $102.5 million, while cash and marketable securities totaled $776.9 million at quarter-end.
For the fourth quarter, Rambus forecast revenue of $227 million to $233 million and adjusted earnings per share of $0.84 to $0.92. Product revenue is expected to reach $127 million to $133 million, implying year-over-year growth of about 34% at the midpoint.
Baird described the projected acceleration in product revenue as encouraging but maintained a Neutral rating, citing supply constraints, potential average selling price pressure from product mix and the growing share of SOCAMM2-based CPUs.
The broker expects product revenue growth of 30% in 2027, with sustained growth in the low-30% range and better visibility into the second half needed to support a higher valuation. It also expects product gross margins to remain under pressure from input costs.
Jefferies took a more positive view, reiterating its Buy rating and $145 price target. The broker highlighted broad-based demand across registered clock driver (RCD) generations and companion chips, along with improved visibility into 2027 as customers place orders earlier.
Jefferies identified memory interface technology MRDIMM as a key potential growth driver, although it expects a more gradual adoption curve as the technology gains traction.
Rambus also announced expanded product and intellectual property offerings for next-generation AI systems, including a power management integrated circuit for LPDDR6 SOCAMM2 modules.
