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Many Deals in the PipelinePerhaps the most significant thing discussed at the last earnings conference call was when the analyst challenged the CEO in regards to his prior comments about accelerating revenue expectations in 2016.
Q: “Do you still stand behind that qualitative commentary, and could you give us a sense of what you expect to contribute to the growth in 2016?”
A: “Sure, and the answer is of course…”
Here is my take from that discussion
Contribution Areas for 2016. - really excited about the new memory product - binary pixel (customers really excited and proactively working with Rambus) - lot of deals and a lot of partners - biggest chuck from CryptoManager - excited about adding new CM customers and downstream revenue opportunities - downstream revenue opportunity dwarfs Rambus’s current revenue - other people seeing the downstream opportunities and wanting to partner - more detail at the upcoming Analyst Day in September
Before the analyst challenged the CEO with the question above, in the prepared remarks the CEO highlighted the various parts of CryptoManager. In my opinion, that is very relevant to this question because it relates to revenue recognition timing.
Major parts of CryptoManager - Security Engine - Infrastructure - Infrastructure software - Downstream revenue opportunities
My understanding is Rambus gets a relatively small amount of revenue as the security engine is integrated into the SoC design (as an example, Rambus has been collecting revenues from Qualcomm for this first part). When the SoC goes into production and the first keys are injected, Rambus will collect some incremental revenue on a per device basis. In addition, Rambus will collect some additional revenue for the Infrastructure and software that is deployed for controlling key injection.
Finally, after the end product (i.e. phone, tablet, etc.) is deployed into the end market, additional revenue opportunities arise associated with various applications running on those devices. (i.e. DRM, EPN, payment, etc.).
This last revenue recognition area (downstream revenue), is the part Rambus appears extremely excited about because it has huge incremental revenue potential. That revenue is not collected from the chip maker but App maker. In my opinion, I think it is very important to note that the CEO said “and we're not the only ones to see that. Other people are seeing it and wanting to partner with us.”
Imagine that, customers knocking on the door and wanting to partner with Rambus. Now that’s a significant behavior change in my opinion.
In short, I am looking forward to the Analyst day presentation. Hopefully, some new CryptoManager SoC customers and downsteam revenue partners will get disclosed. |
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Msg # | Subject | Author | Recs | Date Posted |
751178 | Re: Many Deals in the Pipeline | stkhawk | 22 | 8/3/2015 10:24:34 AM |