Q2 2026 Rambus Inc Earnings Call

July 27, 2026

Speaker #1: To the rhombus 2nd quarter fiscal 2026 earnings conference call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question-and-answer session.

Operator: Welcome to the Rambus Q2 fiscal 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question and answer session. If you would like to ask a question, you may press star 1 on your touch phone at any time. If anyone should require assistance during the conference, please press star 0 at any time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Sumeet Gagneja, Chief Financial Officer. You may begin your conference.

Operator: Welcome to the Rambus Q2 Fiscal 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question and answer session. If you would like to ask a question, you may press star 1 on your touch phone at any time. If anyone should require assistance during the conference, please press star 0 at any time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Sumeet Gagneja, Chief Financial Officer. You may begin your conference.

Speaker #1: If you would like to ask a question, you may press start 1 on your touch phone at any time. If anyone should require assistance during the conference, please press star 0 at any time.

Speaker #1: As a reminder, this conference call is being recorded. I would now like to turn the conference over to Sumeet Ghargneja, Chief Financial Officer. You may begin your conference.

Speaker #2: Thank you, operator. And welcome to the Rambus 2nd quarter 2026 results conference call. I am Sumeet Ghargneja, Chief Financial Officer at Rambus. And on the call today, with me is Luke Serafin, our CEO.

Sumeet Gagneja: Thank you, operator. Welcome to the Rambus Q2 2026 results conference call. I am Sumeet Gagneja, Chief Financial Officer at Rambus, and on the call today with me is Luc Seraphin, our CEO. The press release for the results that we will be discussing today has been filed with SEC on Form 8-K. We are webcasting this call along with the slides that we will reference during portions of today's call. A replay of this call will be available on our website beginning today at 5:00 PM Pacific Time. Our discussion today will contain forward-looking statements, including our expectations regarding projected financial results, financial prospects, market growth, demand for our solutions, other market factors, including reflections of the geopolitical, and macroeconomic environment, amongst other items.

Speaker #1: Welcome to the Rambus Q2 fiscal 2026 earnings conference call. At this time, all participants are in listen-only mode. At the conclusion of our prepared remarks, we will conduct a question-and-answer session.

Speaker #2: The press release for the results that we will be discussing today has been filed with SSE on Form 86. We are webcasting this call along with the slides that we will reference during portions of today's call.

Speaker #1: If you would like to ask a question, you may press star one on your touch-tone phone at any time. If anyone should require assistance during the conference, please press star zero at any time.

Speaker #1: As a reminder, this conference call is being recorded. I would now like to turn the conference over to Sumeet Ghargneja, Chief Financial Officer. You may begin your conference.

Speaker #2: A replay of this call will be available on our website beginning today at 5:00 PM Pacific Time. Our discussion today will contain forward-looking statements, including our expectations regarding projected financial results, financial prospects, market growth, demand for our solutions, other market factors, including reflections of the geopolitical and macroeconomic environment, amongst other items.

Speaker #2: Thank you, operator, and welcome to the Rambus Q2 2026 results conference call. I am Sumeet Ghargneja, Chief Financial Officer at Rambus. On the call today with me is Luc Seraphin, our CEO.

Speaker #2: These statements are subject to risk and uncertainties. That may be discussed during the call, and more fully described in the documents we file with SSE, including our edge case 10Qs and 10Ks.

Sumeet Gagneja: These statements are subject to risk and uncertainties that may be discussed during the call and more fully described in the documents we filed with SEC, including our 8-Ks, 10-Qs, and 10-Ks. These forward-looking statements may differ materially from our actual results, we are under no obligation to update these statements. In an effort to provide greater clarity on the financials, we are using both GAAP and non-GAAP financial presentations in both our press release and on this call. A reconciliation of these non-GAAP financials to the most directly comparable GAAP measures has been included in our press release, in our slide presentation, and on our website at rambus.com on the investor relations page under financial releases. I would like to note a change in how we present our results going forward.

Speaker #2: The press release for the results that we will be discussing today has been filed with the SEC on Form 8-K. We are webcasting this call, along with the slides that we will reference during portions of today's call.

Speaker #2: These forward-looking statements may differ materially from our actual results, and we are under no obligation to update these statements. In an effort to provide greater clarity on the financials, we are using both GAAP and non-GAAP financial presentations.

Speaker #2: A replay of this call will be available on our website beginning today at 5:00 p.m. Pacific Time. Our discussion today will contain forward-looking statements, including our expectations regarding projected financial results, financial prospects, market growth, demand for our solutions, and other market factors, including reflections of the geopolitical and macroeconomic environment, among other items.

Speaker #2: In both our press release and on this call. A reconciliation of these non-GAAP financials to the most directly comparable GAAP measures has been included in our press release, in our slide presentation, and on our website at rambus.com on the investor relations page under Financial Releases.

Speaker #2: These statements are subject to risks and uncertainties, but may be discussed during the call and are more fully described in the documents we file with the SEC, including our 8-Ks, 10-Qs, and 10-Ks.

Speaker #2: I would like to note a change in how we present our results going forward. Since the adoption of ASC 606, we have disclosed licensing billings and operational metrics that bridges the difference between GAAP revenue and actual billings to our licenses.

Sumeet Gagneja: Since the adoption of ASC 606, we have disclosed licensing billings, an operational metric that bridges the difference between GAAP revenue and actual billings to our licenses. This was an important metric in the initial years after ASC 606 adoption, when the delta between royalties revenue and licensing billings was material. As the difference is now minimal, we expect to remain so, we will focus our financial results and guidance on an ASC 606 revenue basis going forward. The order of the call today will be as follows. Luc will start with an overview of the business. I will discuss our financial results, we end with Q&A. I will now turn the call over to Luc to provide an overview of the quarter. Luc?

Speaker #2: This was an important metric in the initial years after ASC 606 adoption, when the delta between royalties revenue and licensing billings was material. As the difference is now minimal and we expect to remain so, we will focus our financial results and guidance on an ASC 606 revenue basis going forward.

Speaker #2: A reconciliation of these non-GAAP financials to the most directly comparable GAAP measures has been included in our press release, in our slide presentation, and on our website at rambus.com on the Investor Relations page under Financial Releases.

Speaker #2: The order of the call today will be as follows: Luke will start with an overview of the business, I will discuss our financial results, and then we end with Q&As.

Speaker #2: I would like to note a change in how we present our results going forward. Since the adoption of ASC 606, we have disclosed licensing billings and operational metrics that bridge the difference between GAAP revenue and actual billings to our licensees.

Speaker #2: I will now turn the call over to Luke to provide an overview of the quarter. Luke?

Speaker #2: This was an important metric in the initial years after ASC 606 adoption, when the delta between royalties revenue and licensing billings was material. As the difference is now minimal—and we expect it to remain so—we will focus our financial results and guidance on an ASC 606 revenue basis going forward.

Speaker #3: Thank you, Sumeet. Good afternoon, everyone, and thank you for joining us. Before we begin, I'd like to take a moment to welcome Sumeet Ghargneja, to his first earnings call as Rambus Chief Financial Officer.

Luc Seraphin: Thank you, Sumeet. Good afternoon, everyone, and thank you for joining us. Before we begin, I'd like to take a moment to welcome Sumeet Gagneja to his first earnings call as Rambus Chief Financial Officer. Sumeet brings more than 2 decades of leadership experience in the semiconductor industry and a wealth of knowledge in the data center ecosystem. Since joining Rambus, he has quickly become a valued member of the leadership team, and we are very pleased to have him on board. Welcome, Sumeet. With that, let's turn to our results. Rambus had an excellent Q2, delivering a new all-time high in revenue and non-GAAP earnings and beating the high end of our guidance ranges. Fueled by record product revenue and strong contributions from our diversified revenue streams, this quarter marks the first time we have exceeded $200 million in revenue.

Speaker #3: Sumeet brings more than 2 decades of leadership experience in the semiconductor industry, and a wealth of knowledge in the data center ecosystem. Since joining Rambus, he has quickly become a valued member of the leadership team, and we are very pleased to have him on board.

Speaker #2: The order of the call today will be as follows: Luc will start with an overview of the business, I will discuss our financial results, and then we will end with Q&As.

Speaker #3: Welcome, Sumeet. With that, let's turn to our results. Rambus had an excellent 2nd quarter, delivering a new all-time high in revenue and non-GAAP earnings, and beating the high end of our guidance ranges.

Speaker #2: I will now turn the call over to Luc to provide an overview of the quarter. Luc?

Speaker #3: Thank you, Sumeet. Good afternoon, everyone, and thank you for joining us. Before we begin, I'd like to take a moment to welcome Sumeet Ghargneja to his first earnings call as Rambus Chief Financial Officer.

Speaker #3: Fueled by record product revenue, and strong contributions from our diversified revenue streams, this quarter marks the first time we have exceeded $200 million in revenue.

Speaker #3: Sumeet brings more than two decades of leadership experience in the semiconductor industry and a wealth of knowledge in the data center ecosystem. Since joining Rambus, he has quickly become a valued member of the leadership team, and we are very pleased to have him on board.

Speaker #3: These results reflect our sustained execution and leadership across our expanding portfolio of chips and IP. We also generated solid cash from operations, underscoring the strength of our business model and enabling us to continue investing in our product roadmap to drive long-term growth.

Luc Seraphin: These results reflect our sustained execution and leadership across our expanding portfolio of chips and IP. We also generated solid cash from operations, underscoring the strength of our business model and enabling us to continue investing in our product roadmap to drive long-term growth. This combination of record performance, disciplined execution, and sustained investment positions Rambus to capitalize on the exciting market trends in data center and AI. AI continues to drive a fundamental evolution in computing. As inference and agentic use cases scale, workloads are becoming more diverse, more persistent, and more memory intensive. To support these workloads, AI infrastructure deployments are becoming more complex and heterogeneous, combining a mix of traditional and AI server platforms. This is accelerating demand for CPU-based servers to support orchestration, data management, and real-time execution at scale, while increasing requirements for memory capacity, bandwidth, and power efficiency.

Speaker #3: Welcome, Sumeet. With that, let's turn to our results. Rambus had an excellent second quarter, delivering a new all-time high in revenue and non-GAAP earnings, and beating the high end of our guidance ranges.

Speaker #3: This combination of record performance, disciplined execution, and sustained investment positions Rambus to capitalize on the exciting market trends in data center and AI. AI continues to drive a fundamental evolution in computing.

Speaker #3: Fueled by record product revenue and strong contributions from our diversified revenue streams, this quarter marks the first time we have exceeded $200 million in revenue.

Speaker #3: As inference and agentic use cases scale, workloads are becoming more diverse, more persistent, and more memory-intensive. To support these workloads, AI infrastructure deployments are becoming more complex and heterogeneous, combining a mix of traditional and AI server platforms.

Speaker #3: This is accelerating demand for CPU-based servers to support orchestration, data management, and real-time execution at scale, while increasing requirements for memory, capacity, bandwidth, and power efficiency.

Luc Seraphin: This is accelerating demand for CPU-based servers to support orchestration, data management, and real-time execution at scale, while increasing requirements for memory capacity, bandwidth, and power efficiency.

Speaker #3: These trends align directly with our strengths, and are driving new opportunities for richer chip content and broader adoption of our industry-leading IP. Now, let me turn to our quarterly business results.

Luc Seraphin: These trends align directly with our strengths and are driving new opportunities for richer chip content and broader adoption of our industry-leading IP. Now let me turn to our quarterly business results. Starting with chips, product revenue reached a new record of $99 million, up 22% year over year, and we expect another quarter of double-digit growth in Q3. This reflects our continued leadership in DDR5 RCDs, strong execution, and growing traction in new products. Looking ahead, we see increasing customer adoption and remain well-positioned to support the ramp of next-generation platforms as they enter the market. We continue to execute well across our DDR5 roadmap. We expanded our portfolio with complete chipsets for DDR5 9600 clients and server memory modules, further expanding our leadership in high-speed memory interface solutions.

Speaker #3: Starting with chips, product revenue reached a new record of $99 million, up 22% year over year, and we expect another quarter of double-digit growth in Q3.

Speaker #3: This reflects our continued leadership in DDR5 RCDs, strong execution, and growing traction in new products. And looking ahead, we see increasing customer adoption and remain well-positioned to support the ramp of next-generation platforms as they enter the market.

Speaker #3: These trends align directly with our strengths and are driving new opportunities for richer chip content and broader adoption of our industry-leading IP. Now, let me turn to our quarterly business results.

Speaker #3: We continue to execute well across our DDR5 roadmap. We expanded our portfolio with complete chipsets for DDR5-9600 clients and server memory modules, further expanding our leadership in high-speed memory interface solutions.

Speaker #3: Starting with chips, product revenue reached a new record of $99 million, up 22% year over year, and we expect another quarter of double-digit growth in Q3.

Speaker #3: Our new DDR5-9600 client chipset enables top-of-the-line performance for emerging AI PCs, and leverages the same high-speed memory interface expertise we have developed across multiple generations of server platforms, as technology requirements increasingly waterfall from the data center into high-performance client systems.

Luc Seraphin: Our new DDR5 9600 client chipset enables top-of-the-line performance for emerging AI PCs and leverages the same high-speed memory interface expertise we have developed across multiple generations of server platforms as technology requirements increasingly waterfall from the data center into high-performance client systems. For servers, our new DDR5 9600 RDIMM chipset, built around our sixth generation RCD and PMIC5030, supports the next level of memory performance required by advanced CPU-based server platforms. As core counts, memory channels, and bandwidth requirements increase, solutions like these are essential to enabling higher system throughput and power-efficient performance. Importantly, our server chip solutions support the expanding range of new and existing process and system architectures, positioning us to benefit from increasing memory requirements across the industry.

Speaker #3: This reflects our continued leadership in DDR5 RCDs, strong execution, and growing traction with new products. Looking ahead, we see increasing customer adoption and remain well-positioned to support the ramp of next-generation platforms as they enter the market.

Speaker #3: For servers, our new DDR5-9600 Ardian chipset built around our 6th-generation RCD and PMIC 5030 supports the next level of memory performance, required by advanced CPU-based server platforms.

Speaker #3: We continue to execute well across our DDR5 roadmap. We expanded our portfolio with complete chipsets for DDR5-9600 client and server memory modules, further expanding our leadership in high-speed memory interface solutions.

Speaker #3: As core accounts, memory channels, and bandwidth requirements increase, solutions like these are essential to enabling higher system throughput and power-efficient performance. Importantly, our server-chip solutions support the expanding range of new and existing process and system architectures, positioning us to benefit from increasing memory requirements across the industry.

Speaker #3: For servers, our new DDR5-9600 RDM chipset, built around our sixth-generation RCD and PMIC 5030, supports the next level of memory performance required by advanced CPU-based server platforms.

Speaker #3: Together, these additions expand the breadth of our DDR5 roadmap and demonstrate our continued enablement of higher performance improved signal integrity and advanced power management across both data center and client applications.

Luc Seraphin: Together, these additions expand the breadth of our DDR5 roadmap and demonstrate our continued enablement of higher performance, improved signal integrity, and advanced power management across both data center and client applications. As AI workloads continue to diversify, there is increasing demand for novel memory architectures with application-specific performance, capacity, and power requirements. We are addressing these needs through products like our complete chipsets for MRDIMM and LPDDR5 SOCAMM2 and remain on track to intercept the market as these architectures gain adoption. Supported by active engagements across customers and ecosystem partners, we are expanding our roadmap of differentiated memory subsystem solutions to help shape the next generation of server modules. This reinforces our opportunity for increased chip content and sustained growth in 2027 and beyond.

Speaker #3: As core counts, memory channels, and bandwidth requirements increase, solutions like these are essential to enabling higher system throughput and power-efficient performance. Importantly, our server-chip solutions support the expanding range of new and existing process and system architectures, positioning us to benefit from increasing memory requirements across the industry.

Speaker #3: As AI workloads continue to diversify, this increasing demand for novel memory architectures with application-specific performance capacity and power requirements. We are addressing these needs through products like our complete chipset for MRDIM and LPDDR5 EXO CAM2, and remain on track to intercept the market as these architectures gain adoption.

Speaker #3: Together, these additions expand the breadth of our DDR5 roadmap and demonstrate our continued enablement of higher performance, improved signal integrity, and advanced power management across both data center and client applications.

Speaker #3: Supported by active engagement across customers and ecosystem partners, we are expanding our roadmap of differentiated memory subsystem solutions to help shape the next generation of server modules.

Speaker #3: These reinforces our opportunity for increased chip content and sustained growth in 2027 and beyond. Turning now to silicon IP, we delivered another strong quarter with increasing customer traction and key design wins across hyperscalers, custom silicon companies, and emerging AI semiconductor developers.

Speaker #3: As AI workloads continue to diversify, there's increasing demand for novel memory architectures with application-specific performance, capacity, and power requirements. We are addressing these needs through products like our complete chipset for MRDM and LPDDR5X SOCM2, and remain on track to intercept the market as these architectures gain adoption.

Luc Seraphin: Turning now to Silicon IP, we delivered another strong quarter with increasing customer traction and key design wins across hyperscalers, custom silicon companies, and emerging AI semiconductor developers. As AI infrastructure scales, chip development cycles are accelerating and performance requirements are pushing beyond industry-standard specifications. Customers are building advanced SoCs for high-performance AI systems, driving robust demand for our differentiated IP solutions, spanning advanced memory, connectivity, and security IP. We also have a growing number of deep architectural engagements ahead of standards being finalized to help our customers be first to market with state-of-the-art performance. This includes an exciting design win with a tier 1 US hyperscaler for next generation HBM in future AI chips. These engagements are a great testament to the strategic importance of our premium IP portfolio.

Speaker #3: As AI infrastructure scales, chip development cycles are accelerating, and performance requirements are pushing beyond industry standard specifications. Customers are building advanced SOCs for high-performance AI systems, driving robust demand for our differentiated IP solutions, spanning advanced memory, connectivity, and security IP.

Speaker #3: These reinforce our opportunity for increased chip content and sustained growth in 2027 and beyond. Turning now to silicon IP, we delivered another strong quarter with increasing customer traction and key design wins across hyperscalers, custom silicon companies, and emerging AI semiconductor developers.

Speaker #3: We also have a growing number of deep architecture engagements, ahead of standards customers be first to market with state-of-the-art performance. This includes an exciting design win with a Tier 1 US hyperscaler, for next-generation HBM in future AI chips.

Speaker #3: As AI infrastructure scales, chip development cycles are accelerating, and performance requirements are pushing beyond industry-standard specifications. Customers are building advanced SoCs for high-performance AI systems, driving robust demand for our differentiated IP solutions spanning advanced memory, connectivity, and security IP.

Speaker #3: These engagements are a great testament to the strategic importance of our premium IP portfolio. The growth of custom silicon for acceleration and connectivity remains an important long-term trend, particularly among hyperscalers and leading AI infrastructure companies.

Luc Seraphin: The growth of custom silicon for acceleration and connectivity remains an important long-term trend, particularly among hyperscalers and leading AI infrastructure companies. As customers optimize hardware for their own workloads, software stacks, and deployment requirements, they need Rambus advanced IP to help them deliver performance, power efficiency, and reliability at scale. Secure connectivity is also an increasingly important part of the overall architecture, and Rambus proven security IP is foundational to enabling trusted, high-performance data movements across distributed AI infrastructure. During the quarter, we also expanded our AI IP solutions with PCIe 7 switch IP supporting 128 GT per second. This solution is designed to support the next generation of AI scale-up and scale-out architectures, where high bandwidth, low latency connectivity is critical to overall system performance. As AI infrastructure scales, Rambus IP is in great demand, enabling faster, more efficient, and more secure data movement.

Speaker #3: As customers optimize hardware for their own workloads, software stacks, and deployment requirements, they need Rambus advanced IP to help them deliver performance, power efficiency, and reliability at scale.

Speaker #3: We also have a growing number of deep architectural engagements ahead of standards being finalized to help our customers be first to market with state-of-the-art performance.

Speaker #3: This includes an exciting design win with a Tier 1 U.S. hyperscaler, for next-generation HBM in future AI chips. These engagements are a great testament to the strategic importance of our premium IP portfolio.

Speaker #3: Secure connectivity is also an increasingly important part of the overall architecture, and Rambus' proven security IP is foundational to enabling trusted, high-performance data movements across distributed AI infrastructure.

Speaker #3: During the quarter, we also expanded our AI IP solutions with PCIe 7-switch IP supporting 128 gigatons per second, this solution is designed to support the next generation of AI scale-up and scale-out architectures, where high-bandwidth, low-latency connectivity is critical to overall system performance.

Speaker #3: The growth of custom silicon for acceleration and connectivity remains an important long-term trend, particularly among hyperscalers and leading AI infrastructure companies. As customers optimize hardware for their own workloads, software stacks, and deployment requirements, they need Rambus advanced IP to help them deliver performance, power efficiency, and reliability at scale.

Luc Seraphin: This solution is designed to support the next generation of AI scale-up and scale-out architectures, where high bandwidth, low latency connectivity is critical to overall system performance. As AI infrastructure scales, Rambus IP is in great demand, enabling faster, more efficient, and more secure data movement.

Speaker #3: As AI infrastructure scales, Rambus IP is in great demand enabling faster, more efficient, and more secure data movements. With our strong customer partnerships and deep architectural engagements, we are enabling the future of advanced AI hardware.

Luc Seraphin: With our strong customer partnerships and deep architectural engagements, we are enabling the future of advanced AI hardware. In summary, Rambus delivered an excellent Q2 with record revenue and earnings. Our results reflect the strength of our product leadership, the depth of our customer relationships, and our ability to execute in markets that continue to present significant opportunities for growth. Looking ahead, we are well-positioned for the major trends reshaping data center and AI infrastructure. As AI scales and agentic workloads drive greater demand for CPU-based servers and memory, Rambus chips and IP are enabling the performance, connectivity, and security customers need to build the next generations of advanced computing systems. We remain confident in our strategy, our roadmap, and our ability to drive strong growth in 2026 and beyond. As always, I want to thank our customers, partners, and employees for their continued trust and support.

Speaker #3: In summary, Rambus delivered an excellent second quarter with record revenue and earnings. Our results reflect the strength of our product leadership, the depth of our customer relationships, and our ability to execute in markets that continue to present significant opportunities for growth.

Speaker #3: During the quarter, we also expanded our AI IP solutions with PCIe 7 switch IP supporting 128 gigatransfers per second. This solution is designed to support the next generation of AI scale-up and scale-out architectures, where high-bandwidth, low-latency connectivity is critical to overall system performance.

Speaker #3: Looking ahead, we are well-positioned for the major trends reshaping data center and AI infrastructure. As AI scales, an agentic workloads drive greater demand for CPU-based servers and memory.

Speaker #3: As AI infrastructure scales, Rambus IP is in great demand, enabling faster, more efficient, and more secure data movement. With our strong customer partnerships and deep architectural engagements, we are enabling the future of advanced AI hardware.

Speaker #3: Rambus chips and IP are enabling the performance, connectivity, and security customers need to build the next generations of advanced computing systems. We remain confident in our strategy, our roadmap, and our ability to drive strong growth in 2026 and beyond.

Luc Seraphin: We remain confident in our strategy, our roadmap, and our ability to drive strong growth in 2026 and beyond. As always, I want to thank our customers, partners, and employees for their continued trust and support.

Speaker #3: As always, I want to thank our customers, partners, and employees for their continued trust and support. Now, I'll turn the call over to Sameet to walk us through the financials.

Luc Seraphin: I turn the call over to Sumeet to walk us through the financials. Sumeet?

Speaker #3: Looking ahead, we are well-positioned for the major trends reshaping data center and AI infrastructure. As AI scales and agentic workloads drive greater demand for CPU-based servers and memory, Rambus chips and IP are enabling the performance, connectivity, and security customers need to build the next generations of advanced computing systems.

Speaker #3: Sameet?

Speaker #2: Thank you, Luke, and good afternoon, everyone. Before I turn to the caller, I want to say how excited I am to be here and how much I've appreciated the warm welcome from the team.

Sumeet Gagneja: Thank you, Luc, good afternoon, everyone. Before I turn to the quarter, I want to say how excited I am to be here and how much I have appreciated the warm welcome from the team. Having spent the past several weeks meeting with our employees and investors, I have come away with a clear conviction. We have differentiated technology, deep customer relationships, and meaningful long-term growth opportunities ahead. As CFO, my focus is straightforward. Drive profitable growth through disciplined financial execution, allocate capital thoughtfully, and provide shareholders with transparent and consistent communication. Let me turn to our Q2 financial results. As I noted earlier, because the difference between royalties revenue and licensing billing is now minimal, we will focus our financial results and guidance solely on an ASC 606 revenue basis.

Speaker #2: Having spent the past several weeks meeting with our employees and investors, I have come away with a clear conviction. We have differentiated technology, deep customer relationships, and meaningful long-term growth opportunities ahead.

Speaker #3: We remain confident in our strategy, our roadmap, and our ability to drive strong growth in 2026 and beyond. As always, I want to thank our customers, partners, and employees for their continued trust and support.

Speaker #2: As CFO, my focus is straightforward. Drive profitable growth through disciplined financial execution, allocate capital thoughtfully, and provide shareholders with transparent and consistent communication. Now, let me turn to our second quarter financial results.

Speaker #3: Now, I'll turn the call over to Sameet to walk us through the financials. Sameet?

Speaker #2: Thank you, Luke, and good afternoon, everyone. Before I turn to the quarter, I want to say how excited I am to be here and how much I've appreciated the warm welcome from the team.

Speaker #2: As I noted earlier, because the difference between royalties revenue and licensing billing is now minimal, we will focus our financial results and guidance solely on an ASC 606 revenue basis.

Speaker #2: Having spent the past several weeks meeting with our employees and investors, I have come away with a clear conviction: we have differentiated technology, deep customer relationships, and meaningful long-term growth opportunities ahead.

Speaker #2: We delivered Q2 revenue and on gap. Earnings per share exceeding our Q2 guidance driven by strong contributions across our diversified revenue streams. Revenue for the second quarter was $207.4 million, which is up 20% year over year and up 15% sequentially, led by strong performances from our product and royalties revenue.

Sumeet Gagneja: We delivered Q2 revenue and non-GAAP earnings per share exceeding our Q2 guidance, driven by strong contributions across our diversified revenue streams. Revenue for the Q2 was $207.4 million, which is up 20% year over year and up 15% sequentially, led by strong performances from our product and royalties revenue. Product revenue was $99.2 million, which is up 22% year over year and up 13% sequentially. Royalties revenue was $84.2 million. Contract and other revenue was $24 million, consisting primarily of silicon IP. As a reminder, only a portion of our silicon IP revenue is reflected in contract and other revenue, and the remaining portion is reported in royalties revenue. Total non-GAAP operating costs, including cost of goods sold for the quarter, were $113.7 million. Operating expenses of $73.5 million were up sequentially due to higher SG&A expenses. Interest and other income for the quarter was $6.8 million.

Speaker #2: As CFO, my focus is straightforward: drive profitable growth through disciplined financial execution, allocate capital thoughtfully, and provide shareholders with transparent and consistent communication. Now, let me turn to our second quarter financial results.

Speaker #2: Product revenue was $99.2 million, which is up 22% year over year and up 13% sequentially. Royalties revenue was $84.2 million, contract and other revenue was $24 million, consisting primarily of silicon IP.

Speaker #2: As I noted earlier, because the difference between royalties revenue and licensing billings is now minimal, we will focus our financial results and guidance solely on an ASC 606 revenue basis.

Speaker #2: We delivered Q2 revenue and non-GAAP earnings per share exceeding our Q2 guidance, driven by strong contributions across our diversified revenue streams. Revenue for the second quarter was $207.4 million, which is up 20% year over year and up 15% sequentially, led by strong performances from our product and royalties revenue.

Speaker #2: As a reminder, only a portion of our silicon IP revenue is reflected in contract and other revenue, and the remaining portion is reported in royalties revenue.

Speaker #2: Total non-gap operating costs including cost of goods sold for the quarter were $113.7 million. Operating expenses of $73.5 million were up sequentially due to higher SG&A expenses.

Sumeet Gagneja: Total non-GAAP operating costs, including cost of goods sold for the quarter, were $113.7 million. Operating expenses of $73.5 million were up sequentially due to higher SG&A expenses. Interest and other income for the quarter was $6.8 million.

Speaker #2: Product revenue was $99.2 million, up 22% year-over-year and up 13% sequentially. Royalties revenue was $84.2 million. Contract and other revenue was $24 million, consisting primarily of silicon IP.

Speaker #2: Enforced and other income for the quarter was $6.8 million. Using an assumed non-gap tax rate of 16%, non-gap net income for the quarter was $84.4 million.

Sumeet Gagneja: Using an assumed non-GAAP tax rate of 16%, non-GAAP net income for the quarter was $84.4 million, resulting in Q2 non-GAAP earnings per share of $0.77, which is up 24% year over year and up 21% sequentially. Let me turn to the balance sheet details. We ended the quarter with cash equivalents, and marketable securities totaling $825 million, up $39 million from Q1, with solid operating cash flow of $61 million, partially offset by $12 million in capital expenditures and $9 million of net equity outflows. Inventory increased by $16 million during the quarter as we leveraged the strength of our balance sheet to support future product ramps and provide customers with greater supply assurance in the coming quarters. Free cash flow in the quarter was $49 million. Let me turn to our non-GAAP outlook for the Q3.

Speaker #2: As a reminder, only a portion of our silicon IP revenue is reflected in contract and other revenue, while the remaining portion is reported as royalties revenue.

Speaker #2: Resulting in Q2 non-gap earnings per share of $77 cents, which is up 24% year over year and up 21% sequentially. Now, let me turn to the balance sheet details.

Speaker #2: Total non-GAAP operating costs, including cost of goods sold for the quarter, were $113.7 million. Operating expenses of $73.5 million were up sequentially due to higher SG&A expenses.

Speaker #2: We ended the quarter with cash, cash equivalents, and marketable securities totaling $825 million, up 39 million from Q1, with solid operating cash flow of $61 million, partially offset by $12 million in capital expenditures and $9 million of net equity outflows.

Speaker #2: Interest and other income for the quarter was $6.8 million. Using an assumed non-GAAP tax rate of 16%, non-GAAP net income for the quarter was $84.4 million.

Speaker #2: Inventory increased by $16 million during the quarter, as we leveraged the strength of our balance sheet to support future product ramps and provide customers with greater supply assurance in the coming quarters.

Speaker #2: Resulting in Q2 non-GAAP earnings per share of $0.77, which is up 24% year over year and up 21% sequentially. Now, let me turn to the balance sheet details.

Speaker #2: Free cash flow in the quarter was $49 million. Let me now turn to our non-gap outlook for the third quarter. As a reminder, the forward-looking guidance reflects our best estimates at this time and our actual results could differ materially from what I'm about to review.

Speaker #2: We ended the quarter with cash, cash equivalents, and marketable securities totaling $825 million, up $39 million from Q1, with solid operating cash flow of $61 million, partially offset by $12 million in capital expenditures and $9 million of net equity outflows.

Sumeet Gagneja: As a reminder, the forward-looking guidance reflects our best estimates at this time, our actual results could differ materially from what I'm about to review. We expect revenue in Q3 to be between $210 to $216 million. We expect product revenue to be between $110 to $116 million, a sequential increase of 14% at the midpoint of guidance. We expect royalties revenue to be between $69 to 75 million, we expect contract and other revenues to be between $25 to 31 million. We expect Q3 non-GAAP total operating costs, which include cost of sales, to be between $119 to 115 million. We expect Q3 capital expenditures to be approximately $13 million. Non-GAAP operating results for Q3 are expected to be between a profit of $91 to 101 million. For non-GAAP interest and other income, we expect $7 million of interest income.

Speaker #2: We expect revenue in the third quarter to be between $210 and $216 million. We expect product revenue to be between $110 and $116 million.

Speaker #2: A sequential increase of 14% at the midpoint of guidance. We expect royalties revenue to be between $69 and $75 million, and we expect contract and other revenues to be between $25 and $31 million.

Speaker #2: Free cash flow in the quarter was $49 million. Let me now turn to our non-GAAP outlook for the third quarter. As a reminder, the forward-looking guidance reflects our best estimates at this time, and our actual results could differ materially from what I'm about to review.

Speaker #2: We expect Q3 non-gap total operating costs which include cost of sales to be between $119 and $115 million. We expect Q3 capital expenditures to be approximately $13 million.

Speaker #2: We expect revenue in the third quarter to be between $210 million and $216 million. Product revenue is expected to be between $110 million and $116 million, representing a sequential increase of 14% at the midpoint of guidance.

Speaker #2: Non-gap operating results for the third quarter are expected to be a between a profit of $91 and $101 million. For non-gap interest and other income, we expect $7 million of interest income.

Speaker #2: Assuming non-gap tax rate of 16% and Q3 share count of $110 million, diluted shares outstanding, we expect Q3 non-gap earnings per share range between $75 cents and $82 cents.

Sumeet Gagneja: Assuming non-GAAP tax rate of 16% and Q3 share count of 110 million diluted shares outstanding, we expect Q3 non-GAAP earning per share range between $0.75 to $0.82. In closing, we delivered a strong quarter reflecting the diversification of our business and contributions across our revenue streams. Our Q3 outlook reflects continued sequential growth in both revenue and earnings per share, supported by sustained momentum across the business. We remain firmly focused on driving long-term shareholder value through disciplined execution, thoughtful capital allocation, and consistent operational performance. Before we open the call to questions, I want to thank our employees for their continued dedication and execution, our customers for their trusted partnership, and our investors for their ongoing support and confidence in Rambus. With that, I'll turn the call back to our operator to begin Q&A. Could we have our first question, please?

Speaker #2: We expect royalties revenue to be between $69 million and $75 million, and we expect contract and other revenues to be between $25 million and $31 million.

Speaker #2: We expect Q3 non-GAAP total operating costs, which include cost of sales, to be between $119 million and $115 million. We expect Q3 capital expenditures to be approximately $13 million.

Speaker #2: In closing, we delivered a strong quarter reflecting the diversification of our business and contributions across our revenue streams. Our third quarter outlook reflects continued sequential growth in both revenue and earnings per share, supported by sustained momentum across the business.

Speaker #2: Non-GAAP operating results for the third quarter are expected to be between a profit of $91 million and $101 million. For non-GAAP interest and other income, we expect $7 million of interest income.

Speaker #2: We remain firmly focused on driving long-term shareholder value through disciplined execution, thoughtful capital allocation, and consistent operational performance. Before we open the call to questions, I want to thank our employees for their continued dedication and execution, our customers for their trusted partnership, and our investors for their ongoing support and confidence in Rambus.

Speaker #2: Assuming a non-GAAP tax rate of 16% and a Q3 share count of 110 million diluted shares outstanding, we expect Q3 non-GAAP earnings per share to range between $0.75 and $0.82.

Sumeet Gagneja: Before we open the call to questions, I want to thank our employees for their continued dedication and execution, our customers for their trusted partnership, and our investors for their ongoing support and confidence in Rambus. With that, I'll turn the call back to our operator to begin Q&A. Could we have our first question, please?

Speaker #2: With that, I'll turn the call back to our operator to begin Q&A. Could we have our first question, please?

Speaker #2: In closing, we delivered a strong quarter, reflecting the diversification of our business and contributions across our revenue streams. Our third quarter outlook reflects continued sequential growth in both revenue and earnings per share, supported by sustained momentum across the business.

Speaker #3: Thank you. Ladies and gentlemen, if you have a question, please press star one on your cash fund re-request to limit yourself to one question and one follow-up.

Operator: Thank you. Ladies and gentlemen, if you have a question, please press star one on your touch phone. We request to limit yourselves to one question and one follow-up. Your first question comes from the line of Kevin Cassidy with Rosenblatt Securities. Your line is open.

Speaker #3: Your first question comes from the line of Kevin Cassidy with Rosenblatt Securities. Your line is open.

Speaker #4: Yes. Congratulations on the great results, and thanks for taking my question. Just to confirm, did you have any capacity issues during the quarter? Any orders you weren't able to meet?

Kevin Cassidy: Yes. Congratulations on the great results, thanks for taking my question. Just to confirm, did you have any capacity issues during the quarter? Any orders you weren't able to meet?

Speaker #5: Hi, Kevin. No, we didn't have any capacity issue in the second quarter. We continued to see tightness in the supply chain. We continued to see lead times increasing.

Luc Seraphin: Hi, Kevin. No, we didn't have any capacity issue in Q2. We continue to see tightness in the supply chain. We continue to see lead times increasing, but we didn't have any capacity issue in Q2. We have built strong relationships with our suppliers. At this point in time, we are able to serve the market demand.

Speaker #2: With that, I'll turn the call back to our operator to begin Q&A. Could we have our first question, please?

Speaker #5: But we didn't have any capacity issue in Q2. We have built strong relationships with our suppliers, and at this point in time, we are able to serve the market demand.

Speaker #1: Thank you. Ladies and gentlemen, if you have questions, please press star one on your keypad. We request that you limit yourself to one question and one follow-up.

Speaker #4: Okay, great. And just because it's topical today, China-based CXMT had a big splash today, and is Rambus involved with CXMT? They're on the IP side or product side?

Kevin Cassidy: Okay, great. Just because it's topical today, China-based CXMT had a big splash today. Is Rambus involved with CXMT, either on the IP side or product side?

Speaker #1: Your first question comes from the line of Kevin Cassidy with Rosenblatt Securities. Your line is open.

Speaker #3: Yes. Congratulations on the great results, and thanks for taking my question. Just to confirm, did you have any capacity issues during the quarter? Any orders you weren't able to meet?

Speaker #5: Yeah, it's great news for CXMT. I think they're going to be a strong player in the market. Every company that builds memory has to have a license agreement with us, and they're one of them.

Luc Seraphin: Yes, it's great news for CXMT. I think they're going to be a strong player in the market. Every company that builds memory has to have a license agreement with us, and they're one of them. We're very pleased with the success, and that's going to be a good thing for us in the long run as well.

Speaker #4: Hi, Kevin. No, we didn't have any capacity issues in the second quarter. We continued to see tightness in the supply chain, and lead times continued to increase, but we didn't have any capacity issues in Q2.

Speaker #5: So we're very pleased with the success, and that's going to be a good thing for us in the long run as well. Thank you, Kevin.

Kevin Cassidy: Okay, great. Thank you.

Speaker #4: We have built strong relationships with our suppliers, and at this point in time, we are able to serve the market demand.

Luc Seraphin: Thank you, Kevin.

Speaker #3: Your next question comes from the line of Sebastian Naji with William Blair. Your line is open.

Operator: Your next question comes from the line of Sebastien Naji with William Blair. Your line is open.

Speaker #6: Good afternoon. Thank you for taking my questions. Maybe just for the first one, could you update us on your expectation for MRDIM for the ramp of MRDIM?

Sebastien Naji: Good afternoon. Thank you for taking my questions. Maybe just for the first one, could you update us on your expectation for the ramp of MRDIMM? AMD is in production with the Venice CPU today. Sounds like servers will start shipping in Q4. Are you starting to get any better visibility into how much of the market will go down the MRDIMM route versus sticking with more traditional RDIMMs?

Speaker #3: Okay, great. And just because it's topical today, China-based CXMT had a big splash today. Is Rambus involved with CXMT, either on the IP side or the product side?

Speaker #6: AMD is in production with the Venice CPU today, sounds like servers will start shipping in Q4. Are you starting to get any better visibility into how much of the market will go down the MRDIM route versus sticking with more traditional RDIMs?

Speaker #4: Yeah, it's great news for CXMT. I think they're going to be a strong player in the market. Every company that builds memory has to have a license agreement with us, and they're one of them.

Speaker #5: Yeah, thank you. We do continue to see MRDIM as a material opportunity. But as you said, the timing is going to be dependent on the platform adoption.

Luc Seraphin: Yeah, thank you. As you said, the timing is going to be dependent on the platform adoption, when the servers go to market and whether those servers, what percentage of MRDIMM are they going to use as compared to a standard DIMM. We are excited by the opportunity, but at this point in time, we will not overcall the adoption curves before the platforms actually ramps and we get feedback from the market. The contribution for Q4 is going to be minimal. We continue to ship to our customers for these early system buildups and a more material contribution is going to happen in 2027, when both platforms from the CPU guys ramp in the market in earnest.

Speaker #4: So we're very pleased with the success, and that's going to be a good thing for us in the long run as well.

Speaker #5: When the servers go to market and whether those servers what percentage of MRDIM are they going to use as compared to standard DIM? So we are excited by the opportunity but at this point in time, we will not overcall the adoption curve before the platform is actually ramped and we get feedback from the market.

Speaker #3: Okay, great. Thank you.

Speaker #4: Thank you, Kevin.

Speaker #1: Your next question comes from the line of Sebastian Naji with William Blair. Your line is open.

Speaker #5: Good afternoon. Thank you for taking my questions. Maybe just for the first one, could you update us on your expectation for MRDIM and the ramp of MRDIM?

Speaker #5: The contribution for Q4 is going to be minimal. We continue to ship to our customers for these early system build-ups and more material contribution is going to happen in 2027 when both platforms from the CPU guys ramp in the market in earnest.

Speaker #5: AMD is in production with the Venice CPU today. Sounds like servers will start shipping in Q4. Are you starting to get any better visibility into how much of the market will go down the MRDIMM route versus sticking with more traditional RDIMMs?

Speaker #6: Got it. Okay, great. That's helpful. And then maybe for my follow-up, one of the concerns that we're hearing more about from investors is just the risk of potentially over-ordering in this very tight memory supply environment.

Sebastien Naji: Got it. Okay, great. That is helpful. Maybe for my follow-up, one of the concerns that we are hearing more about from investors is just the risk of potentially over-ordering in this very tight memory supply environment. Are you seeing any signs of inventory buildup with your customers, or what kind of signals are you looking at that gives you some confidence this is not happening right now?

Speaker #4: Yeah, thank you. We do continue to see MRDIM as a material opportunity. But as you said, the timing is going to be dependent on platform adoption.

Speaker #6: Are you seeing any signs of inventory build-up at your customers or what kind of signals are you looking at that gives you some confidence this is not happening right now?

Speaker #4: When the servers go to market, and whether those servers—what percentage of MRDIM are they going to use as compared to a standard DIMM?

Speaker #5: We don't see any signs of our customers building inventory. For the concerns that you expressed, this said, however, we are building some inventory on critical products that we believe are going to ramp in Q3, Q4, and early next year.

Luc Seraphin: We do not see any signs of our customers building inventory for the concerns that you expressed. This said, however, we are building some inventory on critical products that we believe are going to ramp in Q3, Q4, and early next year, as we do see our lead times lengthening given the tightness in the supply chain. No inventory buildup from our customers. We build strategic inventory for the products that we believe are going to contribute to our growth in the next few quarters.

Speaker #4: So we are excited by the opportunity, but at this point in time, we will not overcall the adoption curve before the platform actually ramps and we get feedback from the market.

Speaker #4: The contribution for Q4 is going to be minimal. We continue to ship to our customers for these early system build-ups, and more material contribution is going to happen in 2027, when both platforms from the CPU guys ramp in the market in earnest.

Speaker #5: As we do see our lead times lengthening, given the tightness in the supply chain. So no inventory build-up from our customers. We build strategic inventory for the products that we believe are going to contribute to our growth in the next few quarters.

Speaker #5: Got it. Okay, great, that's helpful. And then maybe for my follow-up—one of the concerns that we're hearing more about from investors is just the risk of potentially overordering in this very tight memory supply environment.

Speaker #6: Great. Thank you, Luke.

Sebastien Naji: Great. Thank you, Luc.

Speaker #5: Thank you.

Luc Seraphin: Thank you.

Speaker #3: Your next question comes from the line of Gary Mobley with PhoneX. Your line is open.

Operator: Your next question comes from the line of Gary Mobley with StoneX. Your line is open.

Speaker #5: Are you seeing any signs of inventory build-up at your customers, or what kind of signals are you looking at that give you some confidence this is not happening right now?

Speaker #6: Hi guys. Thanks so much for taking my question and let me extend my congratulations on the snapbacking your product revenue. Now, relating to that, I think you've always stated, at least so far this year, that typically you see seasonal strength in the second half of the year, and that's certainly reflected in your Q3 guidance.

Gary Mobley: Hi, guys. Thanks so much for taking my question, let me extend my congratulations on the snap back in your product revenue. Relating to that, I think you've always stated, at least so far this year, that typically you see seasonal strength in H2 of the year, that's certainly reflected in your Q3 guidance. You're obviously building inventory, I assume, in preparation to fill strong demand. We've also heard from the server processor supply chain that volumes continue to exceed expectations. I'm curious to know what kind of visibility you have currently versus, say, last quarter, what kind of visibility you have looking into Q4 in terms of the continued strength.

Speaker #4: We don't see any signs of our customers building inventory. For the concerns that you expressed, that said, however, we are building some inventory on critical products that we believe are going to ramp in Q3, Q4, and early next year, as we do see our lead times lengthening given the tightness in the supply chain.

Speaker #6: And you're obviously building inventory I assume in preparation to feel strong demand. And we've also heard from the server processor supply chain that volumes continue to exceed expectations.

Speaker #6: So I'm curious to know what kind of visibility you have currently versus, say, last quarter, and what kind of visibility you have looking into the fourth quarter in terms of the continued strength.

Speaker #4: So, no inventory build-up from our customers. We build strategic inventory for the products that we believe are going to contribute to our growth in the next few quarters.

Speaker #5: Great. Thank you, Luke.

Speaker #5: Thank you, Gary. I think our confidence is continuing to build. One of the reasons is the use of CPU in agentic AI is certainly a demand driver, and we sense this with our customers.

Luc Seraphin: Thank you, Gary. I think our confidence is continuing to build. One of the reasons is the use of CPU in agentic AI is certainly a demand driver, we sense this with our customers. Our guide through Q3 shows another 20% growth year-over-year, compared to last year. This is a good sign as well. We want to be reasonable, though, in terms of guiding beyond one quarter, for two reasons. The same reasons. One is the timing of ramp of the platforms. We hear good things, but they have to ramp. The second one is the supply tightness. We believe our H2 is going to be stronger than our H1. We're going to see the same dynamic as we saw in prior years. We will continue to guide quarter by quarter.

Speaker #4: Thank you.

Speaker #1: Your next question comes from the line of Gary Mobley with PhoneX. Your line is open.

Speaker #6: Hi, guys. Thanks so much for taking my question, and let me extend my congratulations on the snapback in your product revenue. Now, relating to that, I think you've always stated, at least so far this year, that typically you see seasonal strength in the second half of the year, and that's certainly reflected in your Q3 guidance.

Speaker #5: Our guide for Q3 shows another 20% growth year over year. Compared to last year, so this is a good sign as well. We want to be reasonable, though, in terms of guiding beyond one quarter.

Speaker #6: And you're obviously building inventory, I assume, in preparation to fill strong demand. We've also heard from the server processor supply chain that volumes continue to exceed expectations.

Speaker #5: For two reasons, the same reasons one is the timing of ramp of the platforms we hear good things, but they have to ramp. And the second one is the supply tightness.

Speaker #6: So, I'm curious to know what kind of visibility you have currently versus, say, last quarter, and what kind of visibility you have looking into the fourth quarter in terms of the continued strength.

Speaker #5: So we believe our second half is going to be stronger than our first half. We're going to see the same dynamic. As we saw in prior years, but we will continue to guide quarter by quarter.

Speaker #6: Thanks for that, Colin. The follow-up I wanted to ask about the Silicon IP business, if I'm not mistaken, you've been pretty steady in assuming that business is about 130 million.

Speaker #4: Thank you, Gary. I think our confidence is continuing to build. One of the reasons is that the use of CPUs in agentic AI is certainly a demand driver, and we sense this with our customers.

Gary Mobley: Thanks. As a follow-up, I wanted to ask about the Silicon IP business. If I'm not mistaken, you've been pretty steady and assuming that business is about $130 million, correct me if I'm wrong. You've consistently and seemingly delivered upside to that number, at least through H1 of the year. What's your most up-to-date view on the performance of the Silicon IP business, whether it be expressed in growth or dollar terms?

Speaker #6: Correct me if I'm wrong. But you've consistently and seemingly delivered upside to that number, at least through the first half of the year. So what's your most up-to-date view on the performance of the Silicon IP business, whether it be expressed in growth or dollar terms?

Speaker #4: Our guide for Q3 shows another 20% growth year over year compared to last year, so this is a good sign as well. We want to be reasonable, though, in terms of guiding beyond one quarter.

Speaker #5: So we continue to see that business growing 10 to 15 percent a year. I would say that this is another business where our confidence in that number is continuing to build.

Luc Seraphin: We continue to see that business growing 10% to 15% a year. I would say that this is another business where our confidence in that number is continuing to build. With the inference and agentic AI coming up into the market. We do see a lot of our customers building custom solutions that use our IP, whether it's on the interconnect side, on the security side, or on the memory side. Our confidence is building up, and we're confident in this 10% to 15% growth going forward. It gives us comfort as well, in terms of the strategy we're using. We're trying to stay at the bleeding edge of technology on these interconnect memory or security IPs, and that allows us to engage with customers very early and gives us a longer-term visibility into that growth.

Speaker #4: For two reasons—the same reasons. One is the timing of the ramp of the platforms. We hear good things, but they have to ramp. And the second one is the supply tightness.

Speaker #5: Again, with the inference and agentic AI coming up into the market, we do see a lot of our customers building custom solutions that use our IP.

Speaker #4: So, we believe our second half is going to be stronger than our first half. We're going to see the same dynamic as we saw in prior years, but we will continue to guide quarter by quarter.

Speaker #5: Whether it's on the interconnect side, on the security side, or on the memory side. So our confidence is building up, and we're confident in this 10 to 15 percent growth going forward.

Speaker #6: Yeah, thanks for the color. The follow-up I wanted to ask is about the Silicon IP business. If I'm not mistaken, you've been pretty steady in assuming that business is about $130 million—correct me if I'm wrong—but you've consistently and seemingly delivered upside to that number, at least through the first half of the year.

Speaker #5: We also it gives us comfort as well in terms of the strategy we're using. We're trying to stay as a bleeding edge of technology on these interconnect, memory, or security IPs.

Speaker #6: So, what's your most up-to-date view on the performance of the Silicon IP business, whether it be expressed in growth or dollar terms?

Speaker #5: And that allows us to engage with customers very, very early and gives us a longer-term visibility into that growth. So again, I would say we still see that business growing 10 to 15 percent a year, but our confidence in that growth continues to grow.

Speaker #4: So, we continue to see that business growing 10% to 15% a year. I would say that this is another business where our confidence in that number is continuing to build.

Luc Seraphin: Again, I would say we still see that business growing 10% to 15% a year, but our confidence in that growth continues to grow. We had a great quarter in Q2, in particular, as you could see.

Speaker #5: We had a great quarter in Q2 in particular, as you could see.

Speaker #4: Again, with inference and agentic AI coming up in the market, we do see a lot of our customers building custom solutions that use our IP.

Speaker #6: Thanks. Appreciate it.

Gary Mobley: Excellent. Appreciate it.

Speaker #5: Thank you, Gary.

Luc Seraphin: Thank you, Gary.

Speaker #3: Your next question comes from the line of Aaron Rakers with Wells Fargo. Your line is open.

Operator: Your next question comes from the line of Aaron Rakers with Wells Fargo. Your line is open.

Speaker #4: Yeah. Thanks for taking the questions. I guess my first question is earlier was asked about MRDIMS. There's just a lot of architecture stuff going on in memory or the memory subsystems in general.

Aaron Rakers: Yeah. Thanks for taking the questions. I guess my first question is, earlier it was asked about MR-DIMMs, there's just a lot of architecture stuff going on in memory or the memory subsystems in general. I'm curious, Luc, as you think about MR-DIMMs and you maybe juxtapose that relative to, let's say, CXL. What is the company's views on CXL now that we've seen Meta endorse the technology? There's other inklings that other hyperscalers are working on their own solutions for CXL. I'm just curious to how you see that playing out and maybe touch on Rambus' position for CXL, if it starts to materialize.

Speaker #4: Whether it's on the interconnect side, on the security side, or on the memory side, our confidence is building up, and we're confident in this 10 to 15% growth going forward.

Speaker #4: It also gives us comfort as well, in terms of the strategy we're using. We're trying to stay at the bleeding edge of technology on these interconnect, memory, or security IPs.

Speaker #4: I'm curious, Luke, as you think about MRDIMS and you maybe juxtapose that relative to, let's say, CXL, what is the company's views on CXL now that we've seen Meta endorse the technology?

Speaker #4: There's kind of other inklings that other hyperscalers are working on their own solutions for CXL. I'm just curious how you see that playing out and maybe touch on Rambus's position for CXL if it starts to materialize.

Speaker #4: And that allows us to engage with customers very, very early and gives us longer-term visibility into that growth. So again, I would say we still see that business growing 10% to 15% a year, but our confidence in that growth continues to grow.

Speaker #5: Yeah. Thank you, Aaron. I'll start with MRDIM because we mentioned MRDIM. One of the excitements we show around MRDIM is that it's a standard product defined by Jedec.

Luc Seraphin: Yeah. Thank you, Aaron. I'll start with MR-DIMM because we mentioned MR-DIMM. One of the excitements we show around MR-DIMM is that it's a standard product defined by JEDEC, and it goes into an existing infrastructure. That's the excitement around MR-DIMM. Now, when it comes to CXL, we are very supportive of CXL as a very important internet protocol. It's not a shape, it's an interconnect protocol, excuse me. I think it's going to play a role in the AI evolution. In particular, in agentic AI, it's going to play a role on managing the memory stack or the memory pyramid and moving from cold memory to hot memory. That's still, I would say, a interconnect protocol and not a product. It remains very relevant to our silicon IP business.

Speaker #4: We had a great quarter in Q2 in particular, as you could see.

Speaker #6: Excellent. Appreciate it.

Speaker #4: Thank you, Gary.

Speaker #1: Your next question comes from the line of Aaron Rakers with Wells Fargo. Your line is open.

Speaker #5: And it goes into an existing infrastructure. So that's the excitement around MRDIM. Now, when it comes to CXL, we are very supportive of CXL as a very important internet protocol.

Speaker #2: Yeah, thanks for taking the questions. I guess my first question is, earlier someone asked about MRDIMMs, but there's just a lot of architecture stuff going on in memory, or the memory subsystems in general.

Speaker #5: It's not a chip. It's an interconnect protocol, excuse me. And I think it's going to play a role in the AI evolution. In particular, in agentic AI, it's going to play a role on managing the memory stack or the memory pyramid and moving from cold memory to hot memory.

Speaker #2: I'm curious, Luke, as you think about MRDIMMs and you maybe juxtapose that relative to, let's say, CXL, what is the company's view on CXL now that we've seen Meta endorse the technology?

Speaker #2: There's kind of other inklings that others...

Speaker #5: But that's still a I would say a interconnect protocol, not a product. So it remains very, very relevant to our Silicon IP business. Now, at the product chip level, because we actually talk to the people who build those products, we continue to see a fragmented market from a product standpoint with many deployments looking like ASIC-like or customer-specific products.

Luc Seraphin: Now at the product chip level, because we actually talk with people who build those products, we continue to see a fragmented market from a product standpoint with many deployments looking like ASIC-like or customer-specific products. Our positions with respect to CXL remains the same. We will continue to enable the ecosystem with our IP engagement, and that's why we're building confidence on our IP business, and we'll continue to monitor the traction there. We will continue also to focus our product investment where we see, I would say, the strongest market opportunity for scaling, and in particular on standard products. Again, we play a critical role in the deployment in the ecosystem through our IP business, and we're monitoring the product business. At this point in time, we see this as a custom ASIC business that is fragmented for us.

Speaker #5: That's the excitement around MRDIMMs. Now, when it comes to CXL, we are very supportive of CXL as a very important interconnect protocol—it's not a chip, it's an interconnect protocol, excuse me.

Speaker #5: So our position with respect to CXL remains the same. We will continue to enable the ecosystem with our IP engagement. And that's why we're building confidence on our IP business.

Speaker #5: And we'll continue to monitor the traction there. But we will continue also to focus our product investment where we see I would say the strongest market opportunity for scaling and in particular on standard products.

Speaker #5: And I think it's going to play a role in the AI evolution. In particular, in agentic AI, it's going to play a role in managing the memory stack or the memory pyramid and moving from cold memory to hot memory.

Speaker #5: So again, we play a critical role in the deployment, in the ecosystem through our IP business. And we're monitoring the product business. At this point in time, we see this as a custom ASIC business that is fragmented for us and for the product standpoint rather than investing into standard products at this point in time.

Speaker #5: But that's still, I would say, an interconnect protocol and not a product. So it remains very, very relevant to our silicon IP business.

Speaker #5: Now, at the product chip level, because we actually talk to the people who build those products, we continue to see a fragmented market from a product standpoint, with many deployments looking like ASIC-like or customer-specific products.

Luc Seraphin: From the product standpoint, we'd rather invest into standard products at this point in time.

Speaker #4: Yep. That makes a lot of sense. Appreciate that. And then as a quick follow-up, I know you referenced it in your prepared remarks that you were engaged with a hyperscaler on some of the IP and some future generation I'm guessing XPUs or programs that they have in place.

Aaron Rakers: Yep, that makes a lot of sense. Appreciate that. Then as a quick follow-up, I know you referenced it in your prepared remarks that you were engaged with a hyperscaler on some of the IP and some future generation, I'm guessing SPUs or programs that they have in place. I'm curious, is that changing? Like that opportunity set of your business, is that necessarily a new dynamic or any thoughts on hyperscalers being direct, like real customers and driving some incremental growth for Rambus?

Speaker #5: So, our position with respect to CXL remains the same. We will continue to enable the ecosystem with our IP engagement, and that's why we're building confidence in our IP business.

Speaker #4: I'm curious is that changing? That opportunity set of your business, is that necessarily a new dynamic or any thoughts on hyperscalers being direct real customers and driving some incremental growth for Rambus?

Speaker #5: And we'll continue to monitor the traction there, but we will also continue to focus our product investment where we see, I would say, the strongest market opportunity for scaling, and in particular, on standard products.

Speaker #5: Yes, Aaron. That's a very good question. I think the trend we see is that hyperscalers are playing a growing role in defining their own architectures, whether they build the products themselves or whether they have ASIC companies or product companies building the products for themselves.

Luc Seraphin: Yes, Aaron, that's a very good question. I think the trend we see is that hyperscalers are playing a growing role in defining their own architectures, whether they build the products themselves or whether they have ASIC companies or product companies building the products for themselves because they want to stay competitive and move fast. Their role in defining the architectures on complex subsystems, like the memory subsystem, is becoming more and more important. They work very early with us, for example, before even the specifications are complete to make sure that we can meet their system requirements. Once this is done, they can use that to either build their own products or actually have semiconductor building their own products against those high-end specifications. The trend that I see here is that these technologies actually proliferate.

Speaker #5: So again, we play a critical role in the deployment, in the ecosystem through our IP business, and we're monitoring the product business. At this point in time, we see this as a custom ASIC business that is fragmented for us, and from the product standpoint, we'd rather invest into standard products at this point in time.

Speaker #5: Because they want to stay competitive and move fast. So their role in defining the complex subsystems like the memory subsystems is becoming more and more important.

Speaker #2: Yep, that makes a lot of sense. Appreciate that. And then as a quick follow-up, I know you referenced it in your prepared remarks that you were engaged with a hyperscaler on some of the IP and some future generation—I'm guessing XPUs or programs—that they have in place.

Speaker #5: So they work very early with us, for example, before even the specifications are complete. To make sure that we can meet their system requirements and once this is done, they can use that to either build their own products or actually have semiconductor building their own products.

Speaker #2: I'm curious, is that changing? That opportunity set of your business—is that necessarily a new dynamic, or any thoughts on hyperscalers being direct, real customers and driving some incremental growth for Rambus?

Speaker #5: Against those high-end specifications. And the trend that I see here is that these technologies actually proliferate. Once a hyperscaler has decided upon a particular implementation of a memory controller, for example, then that proliferates into their own ecosystem.

Speaker #4: Yes, Aaron, that's a very good question. I think the trend we see is that hyperscalers are playing a growing role in defining their own architectures, whether they build the products themselves or whether they have ASIC companies or product companies building the products for them.

Luc Seraphin: Once a hyperscaler has decided upon a particular implementation of a memory controller, for example, then that proliferates into their own ecosystem. That again, is one of the reasons we feel confident in the growth rate of our IP business.

Speaker #5: And that, again, is one of the reasons we feel confident in the growth rate of our IP business.

Speaker #4: Because they want to stay competitive and move fast, their role in defining the architectures on complex subsystems like the memory subsystems is becoming more and more important.

Speaker #4: Yeah. Thank you.

Aaron Rakers: Yeah. Thank you.

Speaker #5: Thank you, Aaron.

Luc Seraphin: Thank you, Aaron.

Speaker #3: Your next question comes from the line of Kevin Garrigan with Jefferies. Your line is open.

Operator: Your next question comes from the line of Kevin Garrigan with Jefferies. Your line is open.

Speaker #4: So they work very early with us, for example, before even the specifications are complete, to make sure that we can meet their system requirements. And once this is done, they can use that to either build their own products or actually have semiconductor companies build their own products.

Speaker #2: Yeah. Hey, team. Thanks for taking my questions and congrats on the results. Hey, I may have missed it, but can you just talk about how much of your revenue was from companionships or new product revenue this quarter?

Kevin Garrigan: Yeah. Hey, team. Thanks for taking my questions and congrats on the results. Hey, I may have missed it, but can you just talk about how much of your revenue was from companion chips or new product revenue this quarter?

Speaker #5: We continue being the first quarter we indicated that our product I would say these new products were in a low double-digit percentage of the product revenue.

Luc Seraphin: We continue, like in Q1, we indicated that our products, I would say these new products were in a low double-digit percentage of the product revenue. We continue to be at that type of rate, and we continue to ramp those products into the market. It's going to be in the mid double-digit by the end of Q4. We are on that trajectory. Remember, this is on a growing revenue base for the product side. It's actually growing quite nicely, but it has to go through the qualification process with our customers, with our customers' customers and ecosystem. It's never going to be a step function, but we do have momentum there, across the board, and we're happy with the performance of those products.

Speaker #4: Against those high-end specifications, the trend that I see here is that these technologies actually proliferate. Once a hyperscaler has decided upon a particular implementation of a memory controller, for example, then that proliferates into their own ecosystem.

Speaker #5: We continue to be at that type of rate. And we continue to ramp those products into the market. And it's going to be in a double-digit by the end of Q4.

Speaker #5: So we are on that trajectory. I remember this is on a growing revenue base for the product side. Actually, it's growing quite nicely. But it has to go through the qualification process with our customers, with our customers' customers, and ecosystem.

Speaker #4: And that, again, is one of the reasons we feel confident in the growth rate of our IP business.

Speaker #2: Yeah. Thank you.

Speaker #4: Thank you, Aaron.

Speaker #1: Your next question comes from the line of Kevin Garrigan with Jefferies. Your line is open.

Speaker #5: So it's never going to be a step function. But we do have a momentum there. Across the board, and we're happy with the performance of those products.

Speaker #3: Yeah, hey team, thanks for taking my questions and congrats on the results. I may have missed it, but can you just talk about how much of your revenue was from partnerships or new product revenue this quarter?

Speaker #2: Yep. Okay. Great. That makes a ton of sense. And then so I get a lot of questions about just LPTDR-based servers and you guys now have your SoCAM2 chipset and I believe just SoCAM in general has lower content overall versus Ardem and mArdem.

Kevin Garrigan: Yep. Okay. Great. That makes a ton of sense. Then, I get a lot of questions about just LPDDR-based servers and you guys now have your SOCAMM2 chipset, and I believe just SOCAMM in general has lower content overall versus RDIMM and MRDIMM. As the industry kind of shifts or potentially shifts towards more LPDDR-based server modules, I mean, does that kind of cannibalize your RDIMM or MRDIMM opportunity at all?

Speaker #4: We continue in the first quarter; we indicated that our product—I would say these new products—were in a low double-digit percentage of the product revenue.

Speaker #2: But as the industry kind of shifts or potentially shifts towards more LPTDR-based server modules, I mean, does that kind of cannibalize your Ardem or mArdem opportunity at all?

Speaker #4: We continue to be at that type of rate, and we continue to run those products into the market. And this is going to—it's going to be in the mid double-digits by the end of Q4.

Speaker #5: That's a great question. I wouldn't say that the industry is shifting to LPTDR. I think LPTDR is actually an incremental opportunity. For servers, we believe that DDR will remain dominant.

Luc Seraphin: That's a great question. I wouldn't say that the industry is shifting to LPDDR. I think LPDDR is actually an incremental opportunity for servers. We believe that DDR will remain dominant, where server grade scale, capacity, reliability, serviceability are required. That's going to be continuing to be dominant in the server space. LPDDR and SOCAMM have a role to play where power efficiency is really important. We see this as complementary. We talk a lot about the AI market becoming heterogeneous. This is one aspect of that. Our SOCAMM2 gives us a seat at the table. We have a chipset for the current generation. To the extent that LPDDR is adopted more in the future with future generations, we will continue to develop chipsets there. I think the content is going to continue to increase, as the complexity increase.

Speaker #4: So we are on that trajectory. I remember, this is on a growing revenue base for the product side. Actually, it's growing quite nicely. But it has to go through the qualification process with our customers, with our customers' customers, and the ecosystem.

Speaker #5: Where server grade scale, capacity, reliability, serviceability are required. So that's going to be continuing to be dominant in the server space. But LPTDR and SoCAM have a role to play where power efficiency is really, really important.

Speaker #4: So it's never going to be a step function, but we do have momentum there across the board, and we're happy with the performance of those products.

Speaker #3: Yep. Okay, great. That makes a ton of sense. And then, so, I get a lot of questions about just LPDDR-based servers, and you guys now have your SoCAM2 chipset, and I believe just SoCAM in general has lower content overall versus RDIMM and MRDIMM.

Speaker #5: So we see this as complementary. We talk a lot about the AI market becoming heterogeneous. This is one aspect of that. So our SoCAM2 gives us a seat at the table.

Speaker #3: But as the industry kind of shifts, or potentially shifts, towards more LPDDR-based server modules, I mean, does that kind of cannibalize your RDIMM or MRDIMM opportunity at all?

Speaker #5: We have a chipset for the current generation. To the extent that LPTDR is adopted more in the future with future generations, we will continue to develop chipsets there and I think the content is going to continue to increase.

Speaker #4: That's a great question. I wouldn't say that the industry is shifting to LPDDR. I think LPDDR is actually an incremental opportunity. For servers, we believe that DDR will remain dominant.

Speaker #5: As the complexity increased. So we do see this as an opportunity we said in the last call, the revenue outlook in the short run is modest, but the strategic importance is really high for us.

Luc Seraphin: We do see this as an opportunity. We said in the last call, the revenue outlook in the short run is modest, but the strategic importance is really high for us.

Speaker #4: Where server-grade scale, capacity, reliability, and serviceability are required, that's going to continue to be dominant in the server space. But LPDDR and SoC DRAM have a role to play where power efficiency is really, really important.

Speaker #2: Yep. Okay. Perfect. Thanks, Luke.

Kevin Garrigan: Yep. Okay, perfect. Thanks, Luc.

Speaker #5: Thank you.

Luc Seraphin: Thank you.

Speaker #3: Your next question comes from the line of Tristan Gare with Baird. Your line is open.

Operator: Your next question comes from the line of Tristan Gerra with Baird. Your line is open.

Speaker #6: Hi. Good afternoon. The 20% year-over-year increase in product revenue guidance that you provided, is that a good reflection of the unit demand that you see for X86 CPU in light of AMD-provided or raising their X86 CPU trigger to a 50% of the next several years?

Tristan Gerra: Hi, good afternoon. The 20% year-over-year increase in product revenue guidance that you provided, is that a good reflection of the unit demand that you see for x86 CPU, in light of AMD provided or raising their x86 CPU CAGR to a 50%, over the next several years, but I understand this includes pricing. Is 20% kind of a good proxy in terms of units that you expect for CPU, and then on top of that, you're layering additional channel count?

Speaker #4: So we see this as complementary. We talk a lot about the AI market becoming heterogeneous; this is one aspect of that. So our SoCAM2 gives us a seat at the table.

Speaker #4: We have a chipset for the current generation. To the extent that LPDDR is adopted more in the future with future generations, we will continue to develop chipsets there.

Speaker #6: But I understand this includes pricing. So is 20% kind of a good proxy in terms of units that you expect for CPU and then on top of that, you're layering additional channel count?

Speaker #4: And I think the content is going to continue to increase as the complexity increases. So, we do see this as an opportunity. We said in the last call, the revenue outlook in the short run is modest, but the strategic importance is really high for us.

Speaker #5: Thank you, Tristan. Yes. It's good that you remind that the way we look at our business is unit-based more than dollar-based. As we do not see the same pricing dynamics than the CPU or the memory guys have.

Luc Seraphin: Thank you, Tristan. Yes, it's good that you remind that the way we look at our business is unit-based more than dollar-based, as we do not see the same pricing dynamics than the CPU or the memory guys have. I guess that's the nature of a standard product business. If you look at our business, we grew 20% year over year. Next quarter, we're going to see the same type of growth year over year. The first quarter despite the manufacturing issue we had, it was 15% higher than the same quarter a year earlier. We are on that trend. The server market view in terms of units has changed positively. I would say last quarter we would say it was mid to high single-digit growth. Now it's double-digit growth. Gartner mentions 12% growth.

Speaker #3: Yep. Okay, perfect. Thanks, Luke.

Speaker #4: Thank you.

Speaker #1: Your next question comes from the line of Tristan Garrett with Baird. Your line is open.

Speaker #5: That's the nature of a standard product business. But if you look at our business, we grew 20% year over year next quarter. We're going to see the same growth type of growth year over year.

Speaker #5: Hi, good afternoon. The 20% year-over-year increase in product revenue guidance that you provided—is that a good reflection of the unit demand that you see for x86 CPU in light of AMD providing, or raising, their x86 CPU CAGR to 50% over the next several years?

Speaker #5: And in the first quarter, despite the manufacturing issue we had, it was 15% higher than the same quarter year earlier. So we are on that trend.

Speaker #5: The server market view in terms of units has changed positively. I would say last quarter, we would say it was mid to high single-digit growth.

Speaker #5: But I understand this includes pricing. So is 20% kind of a good proxy in terms of units that you expect for CPU? And then, on top of that, you're layering additional channel count.

Speaker #5: Now it's double-digit growth. Gartner mentioned 12% growth. So we believe that we're growing faster than that. And it's coming from a combination of the channel counts, but also the initial contribution of new products.

Luc Seraphin: We believe that we're growing faster than that, and it's coming from a combination of the channel accounts, but also the initial contribution of new products. Remember, on the channel accounts, we always make the same reflection. It's a great trend for us, but it's not a step function. We had AMD at 12 channels, then Intel moved from 8 to 12, then the whole market is going to move to 16. All of that are pointing in the right direction, and the secular trend is really, really good. That's not a step function. I would say that we're growing faster than market. We continue to believe we are growing faster than market. All of these factors come into play.

Speaker #4: Thank you, Tristan. Yes, it's good that you remind us that the way we look at our business is unit-based more than dollar-based, as we do not see the same pricing dynamics that the CPU or memory guys have.

Speaker #5: Remember, on the channel counts, we always make the same reflection. It's a great trend for us, but it's not a step AMD at 12 channels, then Intel moved from 8 to 12.

Speaker #4: That's the nature of a standard product business. But if you look at our business, we grew 20% year over year. Next quarter, we're going to see the same type of growth year over year.

Speaker #5: Then the whole market is going to move to 16. So all of that are pointing in the right direction. And the secular trend is really, really good.

Speaker #5: But that's not a step function. So I would say that we're growing faster than market. We continue to believe we're growing faster than market.

Speaker #4: And in the first quarter, despite the manufacturing issue we had, it was 15% higher than the same quarter a year earlier. So we are on that trend.

Speaker #5: And all of these factors come into play.

Speaker #6: Okay. Great. And as my follow-up for next year, do you think that we could see an acceleration from that 20% year-over-year growth given the dynamic that you've mentioned?

Speaker #4: The server market, viewed in terms of units, has changed positively. I would say last quarter, we saw mid to high single-digit growth.

Tristan Gerra: Okay, great. As my follow-up, for next year, do you think that we could see an acceleration from that 20% year-over-year growth, given the dynamic that you've mentioned? Is that something that you would be able to get sufficient supply? If you could also talk about any potential mix changes that you're seeing, and anything that could impact ASPs given the supply constraint in DRAM and the potential this has in terms of DRAM content and CPU usage.

Speaker #4: Now it's double-digit growth. Gartner mentioned 12% growth, so we believe that we're growing faster than that. And it's coming from a combination of the channel counts, but also the initial contribution of new products.

Speaker #6: Is that something that you would be able to get sufficient supply? And then if you could also talk about any potential mixed changes that you're seeing and anything that could impact ASPs given the supply constraint in DRAM and the potential this has in terms of DRAM content and CPU usage.

Speaker #4: Remember, on the channel counts, we always make the same reflection. It's a great trend for us, but it's not a step function. We had AMD at 12 channels, and Intel moved from 8 to 12.

Speaker #5: So as we said earlier, we don't guide beyond the current quarter. The data is so dynamic. But I would say there are a few things to take into consideration when we look into 2027.

Luc Seraphin: As we said earlier, we don't guide beyond the current quarter. The data is so dynamic. I would say there are a few things to take into consideration when we look into 2027. I think the Gen5 DDR5 is going to grow in earnest. That's the time where the market will have moved to 16 channel per CPU. That's a good thing. This is the trend we were talking about. This is also, as we said earlier, when MRDIMM is going to start to kick in in the market. That's another good thing. We continue to see growing contribution from our companion chips and the client space. From a demand standpoint, the environment is very positive when we look at 2027. This being said, the supply constraints will continue to be there in 2027. When we talk to our suppliers, we work with them.

Speaker #4: Then the whole market is going to move to 16. So, all of that is pointing in the right direction, and the secular trend is really, really good.

Speaker #4: But that's not a step function. So I would say that we're growing faster than the market. We continue to believe we're growing faster than the market.

Speaker #5: I think the Gen 5 DDR5 is going to grow in earnest. So that's the time where the market will have moved to 16-channel per CPU.

Speaker #4: And all of these factors come into play.

Speaker #5: Okay, great. And then as my follow-up for next year, do you think that we could see an acceleration from that 20% year-over-year growth, given the dynamic that you've mentioned?

Speaker #5: So that's a good thing. This is a trend we were talking about. This is also, as we said earlier, when MRDM is going to start to kick in in the market.

Speaker #5: So that's another good thing. And we'll continue to see growing contribution from our companionship and the client space. So from a demand standpoint, the environment is very positive when we look at 2027.

Speaker #5: Is that something where you'll be able to get sufficient supply? And then, if you could also talk about any potential mix changes that you're seeing, and anything that could impact ASPs given the supply constraint in DRAM, and the potential this has in terms of DRAM content and CPU usage.

Luc Seraphin: We continue to see growing contribution from our companion chips and the client space. From a demand standpoint, the environment is very positive when we look at 2027. This being said, the supply constraints will continue to be there in 2027. When we talk to our suppliers, we work with them.

Speaker #5: This being said, the supply constraints will continue. To be there in 2027, when we talk to our suppliers, we work with them that's the situation that is going to last with us for some time now.

Speaker #4: As we said earlier, we don't guide beyond the current quarter; the data is so dynamic. But I would say there are a few things to take into consideration when we look into 2027.

Luc Seraphin: That's the situation that is going to last with us for some time now. We have to take this into account when we look at the potential of our business and as well as the platform timing. By experience, we know that platform ramps typically take a little bit longer than what people anticipate. When we look and we guide, and again, we cannot guide beyond one quarter, but when we look at the business, we feel very comfortable with the underlying assumptions on the demand side. We are prudent with respect to platform timing and supply, in particular. At this point in time, because we have standard products, we don't see any opportunity, I would say, for price increases, because this is what you were talking about. We want to stay competitive and maintain or continue to increase our share in the DIMM markets.

Speaker #5: So we have to take this into account when we look at the potential of our business. And as well as the platform timing. By experience, we know that platform ramps typically take a little bit longer than what people anticipate.

Speaker #4: I think the Gen 5 DDR5 is going to grow in earnest, so that's the time when the market will have moved to 16 channels per CPU.

Speaker #5: So when we look and we guide and again, we cannot guide beyond one quarter, but when we look at the business, we feel very comfortable with the underlying assumptions on the demand side.

Speaker #4: So that's a good thing. This is the trend we were talking about. This is also, as we said earlier, when MRDIM is going to start to kick in in the market.

Speaker #5: But we are prudent with respect to platform timing. And supply in particular. At this point in time, because we have standard products, we don't see any opportunity I would say for price increases because this is what you were talking about.

Luc Seraphin: We are prudent with respect to platform timing and supply, in particular. At this point in time, because we have standard products, we don't see any opportunity, I would say, for price increases, because this is what you were talking about. We want to stay competitive and maintain or continue to increase our share in the DIMM markets.

Speaker #4: So that's another good thing. And we'll continue to see a growing contribution from our company in the client space. So from a demand standpoint, the environment is very positive when we look at 2027.

Speaker #5: But we want to stay competitive and maintain or continue to increase our share in the DIMM markets.

Speaker #4: That being said, the supply constraints will continue to be there in 2027. When we talk to our suppliers and work with them, that's the situation that's going to last with us for some time now.

Speaker #6: Great. Very useful. Thank you very much.

Tristan Gerra: Great. Very useful. Thank you very much.

Speaker #5: Thank you.

Luc Seraphin: Thank you.

Speaker #3: Your next question comes from the line of market passes with Evercore ISI. Your line is open.

Operator: Your next question comes from the line of Mark Lipacis with Evercore ISI. Your line is open.

Speaker #4: So we have to take this into account when we look at the potential of our business, as well as the platform timing. By experience, we know that platform ramps typically take a little bit longer than what people anticipate.

Speaker #7: Hi. Thanks for taking the questions. First question is, I think there is a framework to think about CPUs ramping in data centers along three dimensions.

Mark Lipacis: Hi. Thanks for taking the questions. First question is, I think there's a framework to think about CPUs ramping in data centers along three dimensions. One would be CPU head nodes next to the GPU or accelerators. One would be CPUs, kind of standalone agentic AI CPUs, the third one would be CPUs, in standard server configurations supporting legacy workloads like database. Should we think about a different framework for your silicon content opportunity in either of these three categories, or is the MRDIMM opportunity, does it ramp more obviously in one of these versus the other? That's the first question, I had a follow-up. Thanks.

Speaker #4: So, when we look and we guide—and again, we cannot guide beyond one quarter—but when we look at the business, we feel very comfortable with the underlying assumptions on the demand side.

Speaker #7: One would be CPU head nodes next to the GPU or accelerators. One would be CPUs kind of standalone, agentic. AI CPUs and then the third one would be CPUs in standard server configuration supporting legacy workloads like database.

Speaker #4: But we are prudent with respect to platform timing, and supply in particular. At this point in time, because we have standard products, we don't see any opportunity, I would say, for price increases—because this is what you were talking about.

Speaker #7: Is there a should we think about a different framework for your silicon content opportunity in either these three categories or is the MRDM opportunity does it ramp more obviously in one of these versus the other?

Speaker #4: But we want to stay competitive and maintain, or continue to increase, our share in the DIM market.

Speaker #5: Great, very useful. Thank you very much.

Speaker #7: That's the first question. Then I had a follow-up. Thanks.

Speaker #4: Thank you.

Speaker #5: Yeah. That's a good framework to look at this. I would say that every segment that you described has their own requirements. In head nodes, we see sometimes the emergence or where people are starting to look at very high bandwidth, low power, that was one of the drivers for the thoughts around silicon.

Luc Seraphin: Yeah, that's a good framework to look at this. I would say that every segment that you described have their own requirements. In head nodes, we see sometimes the emergence level or where people are starting to look at very high bandwidth, low power. That was one of the driver for the thoughts around silicon. In AI servers, we typically see them as a catalyst for the adoption of the fastest technology and the highest, I would say, configuration in terms of capacity. If we put the questions of platform ramps and DRAM pricing on the side for a moment, that could be a good candidate for MRDIMM types of solutions, close to the GPU, the HBM, where you need a lot of memory there. That could be an option.

Speaker #1: Your next question comes from the line of Mark Lipacis with Evercore ISI. Your line is open.

Speaker #6: Hi, thanks for taking the questions. My first question is—I think there's a framework to think about CPUs ramping in data centers along three dimensions.

Speaker #6: One would be CPU head nodes next to the GPU or accelerators. One would be CPUs, kind of standalone, agentic AI CPUs, and then the third one would be CPUs in standard server configuration supporting legacy workloads like databases.

Speaker #5: In AI servers, we typically see them as a catalyst for the adoption of the fastest technology and the highest I would say configuration in terms of capacity.

Speaker #5: So if we put the questions of platform ramps and DRAM pricing on the side for a moment, that could be a good candidate for MRDM types of solutions.

Speaker #6: Should we think about a different framework for your silicon content opportunity in either these three categories, or does the MRDIM opportunity ramp more obviously in one of these versus the others?

Speaker #5: Close to the GPUs, HBM, where you need a lot of memory there. That could be an option. And then standard servers, I would say whether they're used for a legacy or agentic AI, would have more standard solutions.

Luc Seraphin: Standard servers, I would say, whether they're used for a legacy or agentic AI, would have more standard solutions. In agentic AI, the latency is becoming very important. You have to build the key value cache. Once you have to pull from that key value cache, you need to be very fast. Latency becomes very important, and we see those servers actually using the maximum number of channels, not necessarily with the highest, I would say capacity, to maintain that latency smaller or shorter. One of the strengths we have is we have a good understanding of those trade-offs. Whether it's through our product business or our IP business. If you look at our roadmap, we're trying to have solutions for each one of those segments.

Speaker #6: That's the first question. Then I had a follow-up. Thanks.

Speaker #4: Yeah, that's a good framework to look at this. I would say that every segment that you described has their own requirements. In head nodes, we see sometimes the emergence, or where people are starting to look at very high bandwidth, low power. That was one of the drivers for the thoughts around SOCAM.

Speaker #5: In agentic AI, the latency is becoming very, very important. You have to build the. The key value cache but then once you have to pull from that key value cache, you need to be very, very fast.

Speaker #5: So latency becomes very, very important. And we see those servers actually using the maximum number of channels, not necessarily with a highest I would say capacity.

Speaker #4: In AI servers, we typically see them as a catalyst for the adoption of the fastest technology and the highest, I would say, configuration in terms of capacity.

Speaker #5: To maintain that latency smaller or shorter. So one of the strengths we have is we have a good understanding of those trade-offs whether it's through our product business or our IT business.

Speaker #4: So if we put the questions of platform ramps and DRAM pricing on the side for a moment, that could be a good candidate for MRDIMM types of solutions.

Speaker #5: And if you look at our roadmap, we're trying to have solutions for each one of those segments the question we have as usual is we have to understand the ramp profile of each one of them.

Speaker #4: Close to the GPUs, HBM—where you need a lot of memory there—that could be an option. And then standard servers, I would say, whether they are used for legacy or agentic AI, would have more standard solutions.

Luc Seraphin: The question we have, as usual, is we have to understand the ramp profile of each one of them, as well as, I keep saying, the supply constraints we're going to have in 2026 and 2027.

Speaker #5: As well as I keep saying the supply constraints we're going to have in 2026 and 2027.

Speaker #7: Okay. Gotcha. That's very helpful framework, Luke. And then the design wind with the hyper-scaler for next-gen chip, just to be clear, this is a is this a product design wind for you or is this IP?

Mark Lipacis: Okay. Got you. That's a very helpful framework, Luc. Then the design win with the hyperscaler for next gen chip, just to be clear, is this a product design win for you, or is this IP?

Speaker #4: In agentic AI, latency is becoming very, very important. You have to build the key-value cache, but then once you have to pull from that key-value cache, you need to be very, very fast.

Speaker #5: It's an IP design wind where it's a company that designs a product.

Speaker #4: So latency becomes very, very important. And we see those servers actually using the maximum number of channels, not necessarily with the highest, I would say, capacity.

Luc Seraphin: It's an IP design win where it's a company that designs a product.

Speaker #7: Gotcha.

Mark Lipacis: Got you.

Speaker #5: It's someone building a SOC, if you wish, or providing a spec for SOC for others to build. And we provide critical IP in that SOC.

Luc Seraphin: It's someone building a SoC, if you wish.

Luc Seraphin: It's someone building a SoC, if you wish. Providing a spec for SoC for others to build. We provide critical IP in that SoC. We see that trend, with the requirements of AI as it moves to agentic AI, the requirements for high speed or the best performance, I would say, are accelerating. This is a trend that we're seeing, that we're talking more and more directly to the hyperscalers and develop with them the architecture, then it proliferates into people building the silicon. This is an IP win.

Speaker #4: To maintain that latency smaller or shorter. So one of the strengths we have is we have a good understanding of those trade-offs, whether it's through our product business or our IP business.

Luc Seraphin: providing a spec for SoC for others to build. We provide critical IP in that SoC. We see that trend, with the requirements of AI as it moves to agentic AI, the requirements for high speed or the best performance, I would say, are accelerating. This is a trend that we're seeing, that we're talking more and more directly to the hyperscalers and develop with them the architecture, then it proliferates into people building the silicon. This is an IP win.

Speaker #5: But we see that trend. With the requirements of AI as it moves to agentic AI, the requirements for high speed or the best performance I would say, high accelerating and this is a trend that we're seeing that we're talking more and more directly to the hyperscalers and develop with them the architecture and then it proliferates into people building the silicon.

Speaker #4: And if you look at our roadmap, we're trying to have solutions for each one of those segments. The question we have, as usual, is we have to understand the ramp profile of each one of them.

Speaker #5: But this is an IP wind.

Speaker #7: Gotcha. And is that would that be a royalty-based opportunity for you or licensed by?

Mark Lipacis: Got you. Would that be a royalty-based opportunity for you or licensed by program?

Speaker #4: As well as, I keep saying, the supply constraints we're going to have in 2026 and 2027.

Speaker #5: Like most of our silicon IP business, it's a license or multi-license meaning that anyone who's going to use that architecture in any product we have an opportunity for a license.

Luc Seraphin: Like most of our silicon IP business, it's a license or a multi-license, meaning that anyone who's going to use that architecture in any product, we have an opportunity for a license. It's not volume-based. Typically, the volumes might not be necessarily high on big chips, but it's a license base, which is typical with our silicon IP business.

Speaker #6: Okay, gotcha. So that's a very helpful framework, Luke. And then the design win with the hyperscaler for the next-gen chip—just to be clear, is this a product design win for you, or is this IP?

Speaker #5: So it's not volume-based and typically the volumes might not be necessarily high. Big chips. But it's a license-based which is typical with our silicon IP business.

Speaker #4: It’s an IP design win with a company that designs a product. It’s someone building an SoC, if you wish, or providing a spec for an SoC for others to build.

Speaker #5: And the silicon IP business market.

Mark Lipacis: Got you.

Luc Seraphin: IP in the market.

Speaker #7: Okay. That's very helpful. Thank you. And then the last question, you mentioned the PCI Express Gen 7, I believe, IP. When what is the timeframe for seeing revenues from that product?

Mark Lipacis: Okay, that's very helpful. Thank you. The last question, you mentioned the PCI Express Gen 7, I believe, IP. What is the timeframe for seeing revenues from that product? Or IP.

Speaker #4: And we provide critical IP in that SoC. But we see that trend. With the requirements of AI as it moves to agentic AI, the requirements for high speed or the best performance, I would say, are accelerating, and this is a trend that we're seeing. We're talking more and more directly to the hyperscalers and developing with them the architecture, and then it proliferates into people building the silicon.

Speaker #5: So it's similar. Yeah. It's a similar business model as the one we talked about, about HDM controllers. This is again a similar trend where customers are working with us ahead of the specifications being finalized or as the specifications are being finalized.

Luc Seraphin: Yeah, it's a similar business model as the one we talked about HBM controllers. This is again a similar trend where customers are working with us ahead of the specifications being finalized or as the specifications are being finalized. It's a license opportunity for us, which we will see very quickly, I mean, in the coming quarters. Because it's a licensing business, right? It doesn't need to ramp in the market. It's very well ahead of the end product ramping in the market.

Speaker #4: But this is an IP win.

Speaker #6: Gotcha. And would that be a royalty-based opportunity for you, or would it be licensed?

Speaker #5: So it's a license opportunity for us which we will see very quickly. I mean, in the coming quarters. Because it's a licensing business, right?

Speaker #4: Like most of our silicon IP business, it's a license or multi-license, meaning that anyone who's going to use that architecture in any product, we have an opportunity for a license.

Speaker #5: It doesn't need to ramp in the market. It's very well ahead of the end products ramping in the market.

Speaker #4: So, it's not volume-based, and typically the volumes might not necessarily be high—big chips. But it's license-based, which is typical with our silicon IP business.

Speaker #7: So you could get license revenues well ahead of this product shipping from that. Gotcha. Okay.

Mark Lipacis: You could get license revenues well ahead.

Luc Seraphin: Yes

Mark Lipacis: of the end product shipping from that. Got you. Okay.

Speaker #4: And the silicon IP business market.

Speaker #5: Yes. And that's typical for our IP business. We engage very early. We get the license as we engage. And then our customers build their chips and it can take them 12, 18, 24 months before the product actually goes into the market.

Luc Seraphin: Yes. That's typical for our IP business. We engage very early. We get the license as we engage, and then our customers build their chips, and it can take them 12, 18, 24 months before the product actually goes into the market. We see the revenue much earlier than that. What we see as well is the trend, because we understand what people are building and why they're building it, and that gives us a very good insight as to where the market is going.

Speaker #6: Okay, that's very helpful. Thank you. And then, the last question—you mentioned the PCI Express Gen 7, I believe, IP. When is the timeframe for seeing revenues from that product?

Speaker #5: But we see the revenue much earlier than that. But what we see as well as the trend because we understand what people are building and why they're building it and that gives us a very good insight as to where the market is going.

Speaker #4: So, it's a similar—yeah, it's a similar business model as the one we talked about, about HDM controllers. This is, again, a similar trend where customers are working with us ahead of the specifications being finalized or as the specifications are being finalized.

Speaker #7: Gotcha. All right. A very helpful thank you for all the insight. We appreciate it.

Mark Lipacis: Got you. All right. Very helpful. Thank you for all the insight.

Speaker #5: Thank you. Thank you.

Luc Seraphin: Thank you.

Mark Lipacis: Appreciate it.

Luc Seraphin: Thank you.

Speaker #1: Your next question comes from the line of Mary Husaini with SIG. Your line is open.

Operator: Your next question comes from the line of Mehdi Hosseini with SIG. Your line is open.

Speaker #4: So it's a license opportunity for us, which we will see very quickly—I mean, in the coming quarters. Because it's a licensing business, right?

Speaker #2: Yes. Thanks for taking my question. All the good questions have already been asked. I just have a couple of follow-ups. Starting off with Luke, I look at the slide number 7 and it's very exciting that the chipset, especially for memory interface, is diversifying.

Mehdi Hosseini: Yes. Thanks for taking my question. All the good questions have already been asked. I just have a couple of follow-ups. Starting off with Luc. I look at the slide number seven, and it's very exciting that the chipset, especially for memory interface, is diversifying. What I wanted to ask you is how do you see or what gives the confidence that this combined with additional silicon IP is going to help you with the growth acceleration? We have gone through the DDR5, and you have done a great job of carving out market share in SPD companionship. As I look into next year and I think about agentic AI and Arm-based solution where number of channel per CPU is not really high priority. At the same time, you have all of these exotic chipset architectures coming to the market.

Speaker #4: It doesn't need to ramp in the market. It's very well ahead of the end products ramping in the market.

Speaker #6: So, you could get license revenues well ahead of this product shipping from that. Gotcha. Okay.

Speaker #2: But what I wanted to ask you is how do you see or what gives the confidence that this combined with additional silicon IP is going to help you with the growth acceleration?

Speaker #4: Yes, and that's typical for our IP business. We engage very early, we get the license as we engage, and then our customers build their chips.

Speaker #2: We have gone through the DDR5 and you have done a great job of carving out market share in SPD companionship. But as I look into next year, and I think about agentic AI and ARM-based solution, where channel number of channel per CPU is not really high priority at the same time you have all of these exotic chipset architecture coming to the market.

Speaker #4: And it can take them 12, 18, 24 months before the product actually goes into the market. But we see the revenue much earlier than that.

Speaker #4: But what we see as well is the trend, because we understand what people are building and why they're building it, and that gives us very good insight as to where the market is going.

Speaker #6: Gotcha. All right. Very helpful. Thank you for all the insight. I appreciate it.

Speaker #2: What is it that you see that will give you the confidence that you can actually grow revenue at a higher rate and have a follow-up?

Mehdi Hosseini: What is it that you see that will give you the confidence that you can actually grow revenue at a higher rate? I have a follow-up.

Speaker #4: Thank you.

Speaker #2: Your next question comes from the line of Mehdi Husaini with SIG. Your line is open.

Speaker #5: Yeah. Thank you, Mary. I think as we said earlier, we believe that we have a very strong secular setup for our business. If you look at it and you look into next year, the market will be entirely DDR5 as we move from that transition from DDR4 to acceleration of the DDR5 sub-generations which gives us additional opportunities to grow share on the core business in the prepared remarks we talked about introducing Gen 6.

Luc Seraphin: Yeah. Thank you, Mehdi. I think, as we said earlier, we believe that we have a very strong secular setup for our business. If you look at it and you look into next year, the market will be entirely DDR5 as we move from that transition from DDR4 to DDR5. We continue to see an acceleration of the DDR5 sub-generations, which gives us additional opportunities to grow share on the core business. In the prepared remarks, we talked about introducing Gen6. Gen5 is not in market yet, and we're introducing Gen6 for after that. Every generation gives us an opportunity to gain share. On the companion chips, we have a great growth opportunity there. We talked about increasing the percentage of revenue from our companion chips, but there's still a lot of room to increase that in 2027. That's another vector for us.

Speaker #1: Yes, thanks for taking my question. All the good questions have already been asked. I just have a couple of follow-ups. Starting off with Luke, I'm looking at slide number seven, and it's very exciting that the chipset, especially for memory interface, is diversified.

Speaker #1: But what I wanted to ask you is, how do you see, or what gives the confidence that this, combined with additional silicon IP, is going to help you with the growth acceleration?

Speaker #1: We have gone through the DDR5, and you have done a great job of carving out market share in SPD companionship. But as I look into next year, and I think about agentic AI and ARM-based solutions, where number of channels per CPU is not really a high priority, at the same time you have all of these exotic chipset architectures coming to the market.

Speaker #5: Gen 5 is not in market yet and we're introducing Gen 6 for after that. So every generation gives us an opportunity to gain share.

Speaker #5: On the companionships, we have a great growth opportunity there. We talked about increasing the percentage of revenue from our companionship, but there's still a lot of room to increase that in 2027.

Speaker #5: So that's another vector for us. And adding with a four times the content silicon content on the module is another vector. And we're starting to see more and more platforms in the client side.

Speaker #1: What is it that you see that will give you the confidence that you can actually grow revenue at a higher rate? And I have a follow-up.

Luc Seraphin: MR-DIMM, with 4x the silicon content on the module is another vector. We're starting to see more and more platforms on the client side. All the seeds that we have planted over the last two years are actually going to grow into something quite solid in 2027. I'm very confident in the setup from a demand standpoint. Now, if you look at the silicon IP business, although this is a license-based business, not a volume-based business, we do see this trend with hyperscalers defining their own products with advanced IP, which is also a source of growth for us. I am confident that we can grow. I know I said it, but I'll say it again.

Speaker #4: Yeah. Thank you, Mehdi. I think, as we said earlier, we believe that we have a very strong secular setup for our business. If you look at it and you look into next year, the market will be entirely DDR5 as we move through that transition from DDR4 to DDR5.

Speaker #5: So all the seeds that we have planted over the last two years are actually going to grow into something quite solid in 2027. So I'm very confident in the in the setup from a demand standpoint.

Speaker #5: Now, if you look at the silicon IP business, although this is a license-based business, not a volume-based business, we do see this trend with hyperscalers defining their own products with advanced IP.

Speaker #4: We'll continue to see an acceleration of the DDR5 sub-generations, which gives us additional opportunities to grow share in the core business, and in the prepared remarks we talked about introducing Gen 6.

Speaker #5: Which is also a source of growth for us. So I am confident that we can grow. I know I said it, but I'll say it again.

Speaker #4: Gen 5 is not in the market yet, and we're introducing Gen 6 for after that. So every generation gives us an opportunity to gain share.

Speaker #5: I think the challenge next year for the industry, not only for us, is going to be the tightness of the supply chain, but we're working with our suppliers to address that as early as we can.

Luc Seraphin: I think the challenge next year for the industry, not only for us, is going to be the tightness of the supply chain. We're working with our suppliers to address that as early as we can.

Speaker #4: On the companionships, we have a great growth opportunity there. We talked about increasing the percentage of revenue from our companionships, but there's still a lot of room to increase that in 2027.

Speaker #2: Sure. So if part of the strategy is to increase market share, does that mean that your product revenue growth margin is actually going to remain in the low 60%?

Mehdi Hosseini: Sure. If part of the strategy is to increase market share, does that mean that your product revenue gross margin is actually going to remain in the low 60%? Because that's what's been a trend despite double-digit product revenue. The gross margin is in the low 60%. Is there a trade-off here?

Speaker #4: So that's another vector for us. And Mardin, with four times the silicon content on the module, is another vector. And we're starting to see more and more platforms on the client side.

Speaker #2: Because that's what's been a trend despite double-digit product revenue, the growth margin is in the low 60. So is there a trade-off here?

Speaker #4: So all the seeds that we have planted over the last two years are actually going to grow into something quite solid in 2027. So I'm very confident in the setup from a demand standpoint.

Speaker #5: Our model remains 60 to 65 percent and we do see fluctuations from quarter to quarter. We like to see the product margin looked at on an annual basis at the end of the year.

Luc Seraphin: Our model remains 60% to 65%, we do see fluctuations from quarter to quarter. We like to see the product margin looked at on an annual basis at the end of the year, because with short-term supply constraints, mix, and all of that, it can fluctuate from quarter to quarter.

Speaker #4: Now, if you look at the silicon IP business, although this is a license-based business and not a volume-based business, we do see this trend with hyperscalers defining their own products with advanced IP.

Speaker #5: Because with short-term supply constraints, mix and all of that, it can fluctuate from quarter to quarter.

Speaker #2: Got it. Thank you.

Speaker #3: Yeah. And if I may add to that, Luke recovered it. Just to reinforce that on a quarterly basis, you may see that our growth margin may fluctuate based on product mix and other factors, but recently, as you know, we've been operating in the 60 to 63 percent growth margin, but our long-term model of 60 to 65 remains intact.

Mehdi Hosseini: Got it. Thank you.

Sumeet Gagneja: If I may add to that, Luc covered it. Just to reinforce that, on a quarterly basis, you may see that our gross margin may fluctuate based on product mix and other factors. Recently, as you know, we've been operating in the 60% to 63% gross margin, our long-term model of 60% to 65% remains intact.

Speaker #4: Which is also a source of growth for us. So, I am confident that we can grow. I know I said it, but I'll say it again.

Speaker #4: I think the challenge next year for the industry, not only for us, is going to be the tightness of the supply chain, but we're working with our suppliers to address that as early as we can.

Speaker #2: Got it. Thanks for the details.

Mehdi Hosseini: Got it. Thanks for the details.

Speaker #1: Sure. So if part of the strategy is to increase market share, does that mean that your product revenue gross margin is actually going to remain in the low 60% range?

Speaker #1: At this time, there are no further questions. This includes the question and answer session. I would now like to turn the conference back over to the company.

Operator: At this time, there are no further questions. This concludes the question and answer session. I would now like to turn the conference back over to the company.

Speaker #5: I'd like to thank everyone who has joined us today for your continued time and support. And we look forward to speaking with you again soon.

Speaker #1: Because that's what's been the trend. Despite double-digit product revenue, the gross margin is in the low 60s. So is there a trade-off here?

Luc Seraphin: I'd like to thank everyone who has joined us today for your continued time and support, and we look forward to speaking with you again soon. Thank you.

Speaker #5: Thank you.

Speaker #3: Yeah. Thanks, everyone.

Sumeet Gagneja: Yeah. Thanks, everyone.

Operator: Thank you. This now concludes today's conference.

Speaker #4: Our model remains 60 to 65 percent, and we do see fluctuations from quarter to quarter. We like to see the product margin looked at on an annual basis at the end of the year.

Speaker #4: Because with short-term supply constraints, mix, and all of that, it can fluctuate from quarter to quarter.

Speaker #1: Got it. Thank you.

Speaker #3: And if I may add to that, Luke covered it. Just to reinforce, on a quarterly basis, you may see that our gross margin may fluctuate based on product mix and other factors, but recently, as you know, we've been operating in the 60% to 63% gross margin range. However, our long-term model of 60% to 65% remains intact.

Speaker #1: Got it. Thanks for the details.

Speaker #2: At this time, there are no further questions. This concludes the question and answer session. I would now like to turn the conference back over to the company.

Speaker #4: I'd like to thank everyone who has joined us today for your continued time and support. We look forward to speaking with you again soon.

Speaker #4: Thank you.

Speaker #3: Thanks, everyone.

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