What changed in this filing

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Item 9A. Controls and Procedures

2024-02-23 compared with 2023-02-24 · 465 added, 421 removed, 1238 unchanged (42% of the section changed)

19 unchanged sentences

Other Information

Securities Trading Plans of Directors and Executive Officers

During our last fiscal quarter, the below directors and/or officers, as defined in Rule 16a-1(f), adopted and/or terminated a “Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K.

The Rule 10b5-1 trading arrangements are each intended to satisfy the affirmative defense in Rule 10b5-1(c)(1).

Name Title Adopted or Terminated Adoption Date Termination Date Total Number of Shares of Common Stock Sold or to be Sold

Lynch Senior Vice President, Finance and Chief Financial Officer

Terminated (1)

September 7, 2023 December 8, 2023 8,365

Luc Seraphin President and Chief Executive Officer

Adopted November 13, 2023 November 13, 2024 Up to 356,654

John Shinn Senior Vice President and General Counsel Adopted December 7, 2023 December 7, 2024 Up to 42,444

Lynch Senior Vice President, Finance and Chief Financial Officer

Adopted December 11, 2023 December 11, 2024 7,837

______________________________________

(1) On December 8, 2023, all 8,365 shares to be sold under the plan had been sold.

Therefore the plan originally scheduled to terminate on September 7, 2024, was deemed terminated as of December 8, 2023 .

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

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

1 unchanged sentence

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – License and Customization Services Revenue

As described in Note 2 to the consolidated financial statements, the Company recognizes license and customization services revenue based on an over time model, measured using the input method.

License and customization services revenue is reported as part of contract and other revenue, and was $5 million for the year ended December 31, 2022.

Due to the nature of the work performed in these arrangements, the estimation of the over time model is complex and involves significant judgment.

The key factor reviewed by management to estimate costs to complete each contract is the estimated man-months necessary to complete the project.

The principal considerations for our determination that performing procedures relating to revenue recognition for license and customization services revenue is a critical audit matter are (i) the significant judgment by management in determining the estimated man-months necessary for contract completion for each contract, and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s estimate of man-months necessary to complete each project.

Revenue Recognition

As described in Note 2 to the consolidated financial statements, the Company’s total revenue was $461.1 million for the year ended December 31, 2023.

The Company recognizes revenue upon transfer of control of promised goods and services in an amount that reflects the consideration it expects to receive in exchange for those goods and services.

Goods and services that are distinct are accounted for as separate performance obligations.

Where an arrangement includes multiple performance obligations, the transaction price is allocated to these on a relative standalone selling price basis.

The Company’s revenue consists of product, royalty and contract and other revenue.

The principal consideration for our determination that performing procedures relating to revenue recognition is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the Company’s license and customization services revenue recognition process, including controls over management’s determination of the estimate of man-months necessary to complete each contract.

These procedures also included, among others, for a sample of contracts, testing management’s process for determining the estimate of man-months.

Evaluating the reasonableness of management’s assumption related to the estimate of man-months involved (i) performing a comparison of the estimated man-months to completed projects of similar size and (ii) evaluating the timely identification of circumstances which may warrant a modification to a previous cost estimate, including an assessment of total man-months.

These procedures included testing the effectiveness of controls relating to the revenue recognition process.

These procedures also included, among others (i) testing the revenue recognized for a sample of product, royalty, and contract and other revenue transactions by obtaining and inspecting source documents, such as purchase orders, license agreements or support and maintenance agreements, invoices, proof of shipment/delivery or licensee revenue reports, and cash receipts;

(ii) testing the timing of revenue recognition for a sample of product and contract and other revenue transactions before and after December 31, 2023, as applicable, by obtaining and inspecting source documents, such as purchase orders, license agreements, invoices, and proof of shipment/delivery;

and (iii) confirming a sample of outstanding customer invoice balances as of December 31, 2023 and, for confirmations not returned, obtaining and inspecting source documents, such as purchase orders, license agreements or support and maintenance agreements, invoices, proof of shipment/delivery, and subsequent cash receipts.

/s/ PricewaterhouseCoopers LLP

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Operating lease right-of-use assets 21,497 24,143

Deferred tax assets 3,031 4,047

Unbilled receivables 4,423 25,222

Deferred tax assets 127,892 3,031

Income tax receivable 88,768 1,064

Other assets 1,613 2,745

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Additional paid in capital 1,324,796 1,297,408

1,297,408 1,298,966

Accumulated deficit

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Restructuring and other charges 9,368 — 368

Gain on divestiture ( 90,784 ) — —

Impairment of assets 10,045 — —

Change in fair value of earn-out liability 9,234 3,111 5,300

Total operating expenses 204,056 270,272 233,629

Operating income (loss) 76,942 24,281 ( 44,054 )

Operating income 153,639 76,942 24,281

Interest income and other income (expense), net 11,327 7,771 9,711

2 unchanged sentences

Loss on fair value adjustment of derivatives, net ( 240 ) ( 10,585 ) —

Gain on sale of non-marketable equity security 23,924 — —

Interest expense ( 1,490 ) ( 1,874 ) ( 10,706 )

1 unchanged sentence

Income (loss) before income taxes 187,160 ( 7,825 ) 23,286

Provision for income taxes 6,485 4,952 3,932

Provision for (benefit from) income taxes ( 146,744 ) 6,485 4,952

Net income (loss) $ 333,904 $ ( 14,310 ) $ 18,334

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Foreign currency translation adjustment 282 ( 958 ) ( 366 )

Unrealized loss on marketable securities, net of tax ( 2,553 ) ( 1,005 ) ( 13 )

Unrealized gain (loss) on marketable securities, net of tax 3,412 ( 2,553 ) ( 1,005 )

Total comprehensive income (loss) $ 337,598 $ ( 17,821 ) $ 16,963

4 unchanged sentences

Balances at December 31, 2020 111,698 $ 112 $ 1,270,426 $ ( 357,751 ) $ ( 81 ) $ 912,706

Net loss — — — ( 40,471 ) — ( 40,471 )

Foreign currency translation adjustment — — — — 24 24

Unrealized loss on marketable securities, net of tax — — — — ( 13 ) ( 13 )

Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan 2,183 3 2,081 — — 2,084

Repurchase and retirement of common stock under repurchase program ( 2,616 ) ( 3 ) ( 18,575 ) ( 31,491 ) — ( 50,069 )

Stock-based compensation — — 25,778 — — 25,778

Balances at December 31, 2020 111,698 112 1,270,426 ( 357,751 ) ( 81 ) 912,706

Net income — — — 18,334 — 18,334

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Balances at December 31, 2022 107,610 108 1,297,408 ( 513,256 ) ( 4,963 ) 779,297

Net income — — — 333,904 — 333,904

Foreign currency translation adjustment — — — — 282 282

Unrealized gain on marketable securities, net of tax — — — — 3,412 3,412

Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan 1,698 1 ( 29,379 ) — — ( 29,378 )

Repurchase and retirement of common stock under repurchase program ( 1,859 ) ( 1 ) ( 5,783 ) ( 94,742 ) — ( 100,526 )

Stock-based compensation — — 45,011 — — 45,011

Issuance of common stock in connection with the payments of year 1 and year 2 earn-out related to the PLDA Group acquisition 405 — 16,556 — — 16,556

Issuance of common stock in connection with the maturity of the convertible senior notes related to the settlement of the in-the-money conversion feature of the convertible senior notes 284 — — — — —

Exercise of the convertible senior note hedges in connection with the conversion of convertible senior notes and retirement of the corresponding shares ( 284 ) — 11,440 ( 11,440 ) — —

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

Balances at December 31, 2023 107,854 $ 108 $ 1,324,796 $ ( 285,534 ) $ ( 1,269 ) $ 1,038,101

Refer to Notes to Consolidated Financial Statements

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Deferred income taxes ( 145,350 ) 689 1,522

Gain on divestiture ( 90,784 ) — —

Gain on sale of non-marketable equity security ( 23,924 ) — —

Impairment of assets 10,045 — —

Gain on sale of equity security — ( 3,547 ) —

Loss on equity investment 1,276 1,071 747

Realized loss from sale of marketable securities 1,138 — —

Change in fair value of earn-out liability 9,234 3,111 5,300

Gain on disposal of property, plant and equipment ( 1 ) ( 82 ) ( 77 )

Change in operating assets and liabilities, net of effects of acquisition:

Other 645 2,413 989

Change in operating assets and liabilities, net of effects of acquisition/disposition:

Accounts receivable ( 28,931 ) ( 9,274 ) ( 13,521 )

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Inventories ( 15,254 ) ( 12,702 ) 6,109

Income taxes receivable ( 87,704 ) ( 618 ) ( 240 )

Accounts payable ( 5,768 ) 11,975 2,195

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Proceeds from sale of marketable securities 117,798 276,687 227,045

Settlement of working capital adjustment from disposal of business — — ( 1,131 )

Proceeds from divestiture 106,347 — —

Proceeds from sale of equity security — 3,009 —

5 unchanged sentences

Payments under installment payment arrangements ( 16,192 ) ( 14,378 ) ( 12,472 )

Repurchase of convertible senior notes ( 258,060 ) — —

Payments for settlement and repurchase of convertible senior notes ( 10,381 ) ( 258,060 ) —

Proceeds from retirement of convertible senior note hedges — 91,729 —

Payments for retirement of warrants ( 69,528 ) — —

Payments for settlement of warrants ( 10,697 ) ( 69,528 ) —

Payment of deferred purchase consideration from acquisition ( 2,450 ) — —

Repurchase and retirement of common stock, including prepayment under accelerated share repurchase program ( 100,525 ) ( 100,421 ) ( 100,081 )

12 unchanged sentences

Property, plant and equipment received and accrued in accounts payable and other liabilities $ 21,768 $ 39,035 $ 12,935

Issuance of common stock in connection with the payments of year 1 and year 2 earn-out related to the PLDA Group acquisition $ 16,556 $ — $ —

Operating lease right-of-use assets obtained in exchange for operating lease obligations $ 1,690 $ 5,931 $ —

2 unchanged sentences

(In thousands) 2023 2022 2021

Reconciliation of the cash, cash equivalents and restricted cash balances as shown on the consolidated statement of cash flows:

Reconciliation of the cash, cash equivalents and restricted cash balances as shown in the consolidated statement of cash flows:

Cash and cash equivalents $ 94,767 $ 125,334 $ 107,891

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(“Rambus” or the “Company”) was incorporated in California in March 1990 and reincorporated in Delaware in March 1997.

In addition to licensing, the Company is creating new business opportunities through offering products and services where its goal is to perpetuate strong company operating performance and long-term stockholder value.

The Company generates revenue by licensing its inventions and solutions, selling its semiconductor products and providing services to market-leading companies.

Rambus produces products and innovations that address the fundamental challenges of accelerating data.

The Company makes industry-leading chips and intellectual property (“IP”) that enable critical performance improvements for data center and other growing markets.

The ongoing shift to the cloud, along with the widespread advancement of artificial intelligence (“AI”) across the data center, edge and Internet of Things (“IoT”) end points, has led to exponential growth in data usage and tremendous demands on data infrastructure.

Creating fast and safe connections, both in and across systems, remains one of the most mission-critical design challenges limiting performance in advanced hardware for these markets.

The Company offers a balanced and diverse portfolio of products and solutions across chips, silicon intellectual products (“IP”) and patent licensing with the goal of perpetuating strong company operating performance and delivering long-term stockholder value.

The Company generates revenue by selling its semiconductor chip and licensing its IP products and inventions to market-leading companies.

As an industry pioneer with over 30 years of advanced semiconductor design experience, Rambus is dedicated to addressing the challenges of accelerating and protecting data in hardware for the data center and other growing markets.

With the exponential increase in the complexity, size and number of advanced workloads, like generative artificial intelligence (“AI”), the demands on computing infrastructure continue to grow.

Rambus is a leader in high-performance memory subsystems, providing chips, silicon IP and innovations that maximize the performance and security in computationally-intensive systems.

Summary of Significant Accounting Policies

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Actual results could differ from those estimates.

Reclassifications

Certain prior-year balances were reclassified to conform to the current year’s presentation.

None of these reclassifications had an impact on reported net income (loss) or cash flows for any of the periods presented.

Revenue Recognition

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Where an arrangement includes multiple performance obligations, the transaction price is allocated to these on a relative standalone selling price basis.

The Company has established standalone selling prices for all of its distinct offerings - specifically, the same pricing methodology is consistently applied to all licensing arrangements;

The Company has established standalone selling prices for the majority of its distinct offerings - specifically, the same pricing methodology is consistently applied to all licensing arrangements;

all services offerings are priced within tightly controlled bands and all contracts that include support and maintenance state a renewal rate or price that is systematically enforced.

For certain contracts, the Company utilizes the residual approach to estimate standalone selling prices primarily for service offerings sold to customers at highly variable pricing.

The Company’s revenue consists of product, royalty and contract and other revenue.

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Contract and other revenue consists of software license fees, engineering fees associated with integration of the Company’s technology solutions into its customers’ products and support and maintenance fees.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Product Revenue

Product revenue is recognized upon shipment of product to customers, net of accruals for estimated sales returns and allowances, and to distributors, net of accruals for price protection and rights of return on products unsold by the distributors.

To date, none of these accruals have been material.

The Company transacts with direct customers primarily pursuant to standard purchase orders for delivery of products and generally allows customers to cancel or change purchase orders within limited notice periods prior to the scheduled shipment date.

The Company transacts with direct customers primarily pursuant to standard purchase orders for delivery of products and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

generally allows customers to cancel or change purchase orders within limited notice periods prior to the scheduled shipment date.

Royalty Revenue

Rambus’ patent and technology licensing arrangements generally range between one year and ten years in duration and generally grant the licensee the right to use the Company’s entire IP portfolio as it evolves over time.

Rambus’ patent and technology licensing arrangements generally range between one year and ten years in duration and generally grant the licensee the right to use applicable portions of the Company’s entire IP portfolio as it evolves over time.

These arrangements do not typically grant the licensee the right to terminate for convenience and where such rights exist, termination is prospective, with no refund of fees already paid or cancellation of fees already incurred by the licensee.

There is no interdependency or interrelation between the IP included in the portfolio licensed upon contract inception and any IP subsequently made available to the licensee, and the Company would be able to fulfill its promises by transferring the portfolio and the additional IP use rights independently.

However, the numbers of additions to, and removals from the portfolio (for example when a patent expires and renewal is not granted to the Company) in any given period have historically been relatively consistent;

as such, the Company does not allocate the transaction price between the rights granted at contract inception and those subsequently granted over time as a function of these additions.

Patent and technology licensing arrangements result in fixed payments received over time, with guaranteed minimum payments on occasion, variable payments calculated based on the licensee’s sale or use of the IP, or a mix of fixed and variable payments.

• For fixed-fee arrangements (including arrangements that include minimum guaranteed amounts), the Company recognizes revenue upon control over the underlying IP use right transferring to the licensee, net of the effect of significant financing components calculated using customer-specific, risk-adjusted lending rates ranging between 5 % and 10 %, with the related interest income recognized over time on an effective rate basis.

Where a licensee has the contractual right to terminate a fixed-fee arrangement for convenience without any substantive penalty payable upon such termination, the Company applies the guidance in Accounting Standards Update (“ASU”) No.

2014-09, Revenue from Contracts with Customers in Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”) to the duration of the contract in which the parties have present enforceable rights and obligations and only recognizes revenue for amounts that are due and payable.

• For variable arrangements, the Company recognizes revenue based on an estimate of the licensee’s sale or usage of the IP during the period of reference, typically quarterly, with a true-up recorded, if required, when the Company receives the actual royalty report from the licensee.

• The Company recognizes license renewal revenue at the beginning of the renewal period.

• For fixed-fee arrangements (including arrangements that include minimum guaranteed amounts), the Company recognizes revenue upon control over the underlying IP use right transferring to the licensee, net of the effect of significant financing components calculated using customer-specific, risk-adjusted lending rates typically ranging between 5 % and 10 %, with the related interest income recognized over time on an effective rate basis.

Where a licensee has the contractual right to terminate a fixed-fee arrangement for convenience without any substantive penalty payable upon such termination, the Company recognizes revenue for the duration of the contract in which the parties have present enforceable rights and obligations.

• For variable arrangements, the Company recognizes revenue based on an estimate of the licensee’s sale or usage of the IP during the period the licensee’s sale or usage occur, typically quarterly, with a true-up recorded, if required, when the Company receives the actual royalty report from the licensee.

• The Company recognizes license renewal revenue commencing with the start of the renewal period.

Contract and Other Revenue

Contract and other revenue consists of software license fees and engineering fees associated with integration of the Company’s technology solutions into its customers’ products, and support and maintenance.

An initial software arrangement generally consists of a term-based or perpetual license, significant software customization services and support and maintenance services that include post-implementation customer support and the right to unspecified software updates and enhancements on a when and if available basis.

An initial software arrangement may consist of a term-based or perpetual license, significant software customization services and support and maintenance services that include post-implementation customer support and the right to unspecified software updates and enhancements on a when and if available basis.

The Company recognizes license and customization services revenue at a point in time when final delivery is made or based on an over time model, depending on the nature and amount of customization.

2 unchanged sentences

License and customization services revenue recognized over time, which is reported as part of contract and other revenue, was approximately $ 6.1 million for the year ended December 31, 2023.

Due to the nature of the work performed in these arrangements, the estimation of the over time model is complex and involves significant judgment.

Due to the nature of the work performed in these arrangements, the estimation of the over time model may involve judgment.

The key factor reviewed by management to estimate costs to complete each contract is the estimated man-months necessary to complete the project.

The Company recognizes support and maintenance revenue over time.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Significant Judgments

Historically, no significant judgment has generally been required in determining the amount and timing of revenue from the Company’s contracts with customers, except for the following:

• There is significant judgment by management in determining the estimated man-months necessary for completing development and customization services.

The only significant judgment required in determining the amount and timing of revenue from the Company’s contracts with customers is determining the estimated man-months necessary for completing development and customization services.

The Company has adequate tools and controls in place, and substantial experience and expertise in timely and accurately tracking man-months incurred in completing customization and other professional services, and quantifying significant changes in estimates.

1 unchanged sentence

• For contract revenue where the Company recognizes revenue over time, the key factor reviewed by management to estimate costs to complete each contract is the estimated man-months necessary to complete the project.

• For fixed-fee arrangements in which cash is being received over a period exceeding a year, the Company calculates a customer-specific lending rate using a Daily Treasury Yield Curve Rate that changes depending on the date on which the licensing arrangement was entered into and the term (in years) of the arrangement, and takes into consideration a licensee-specific risk profile determined based on a review of the licensee’s “Full Company View” Dun & Bradstreet report obtained on the date the licensing arrangement was signed by the parties, with a risk premium being added to the Daily Treasury Yield Curve Rate considering the overall business risk, financing strength and risk indicators, as listed.

• For fixed-fee arrangements in which cash is being received over a period exceeding one year, the Company calculates a customer-specific lending rate using a Daily Treasury Yield Curve Rate that changes depending on the date on which

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the licensing arrangement was entered into and the term (in years) of the arrangement, and takes into consideration a licensee-specific risk profile determined based on a review of the licensee’s “Full Company View” Dun & Bradstreet report obtained on the date the licensing arrangement was signed by the parties, with a risk premium being added to the Daily Treasury Yield Curve Rate considering the overall business risk, financing strength and risk indicators, as listed.

• The Company recognizes revenue on variable fee licensing arrangements on the basis of sales and usage which the Company is required to estimate prior to receiving the final related reports from its customers.

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The Company leases office space, domestically and internationally, under operating leases.

The Company’s leases have remaining lease terms generally between one year and eight years .

Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, and long-term operating lease liabilities on the Company’s consolidated balance sheets.

The Company’s leases have remaining lease terms generally between one year and seven years .

Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities and long-term operating lease liabilities in the Company’s Consolidated Balance Sheets.

The Company does not have any finance leases.

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Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the Company does not separate non-lease components from lease components.

Operating lease costs are included in research and development and selling, general and administrative costs on the statement of operations.

Operating lease costs are included in research and development and selling, general and administrative costs in the Company’s Consolidated Statements of Operations.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination.

1 unchanged sentence

The Company performs its impairment analysis of goodwill on an annual basis during the fourth quarter of the year unless conditions arise that warrant a more frequent evaluation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

When goodwill is assessed for impairment, the Company has the option to perform an assessment of qualitative factors of impairment (optional assessment) prior to necessitating a quantitative impairment test.

12 unchanged sentences

Under the income approach, the Company measures fair value of the reporting unit based on a projected cash flow method using a discount rate determined by its management which is commensurate with the risk inherent in its current business model.

The Company’s discounted cash flow projections are based on its annual financial forecasts developed internally by management for use in managing its business.

The Company’s discounted cash flow projections are based on annual financial forecasts developed internally by management for use in managing its business.

If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required.

If the fair value of the reporting unit is less than the carrying value, then the amount of goodwill impairment will be the amount by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

If the fair value of the reporting unit is less than the carrying value, then the amount of goodwill

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

impairment will be the amount by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

The Company performed its annual goodwill impairment analysis as of December 31, 2023 and determined that there was no impairment of its goodwill.

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Inventory write-downs are also established when conditions indicate that the net realizable value is less than cost due to physical deterioration, obsolescence, changes in price level or other causes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Property, Plant and Equipment

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The Company’s estimates of future cash flows attributable to its asset groups require significant judgment based on its historical and anticipated results and are subject to many factors.

Factors that the Company considers important which could trigger an impairment review include significant negative industry or economic trends, significant loss of clients, and significant changes in the manner of its use of the acquired assets or the strategy for its overall business.

Factors that the Company considers important

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

which could trigger an impairment review include significant negative industry or economic trends, significant loss of clients and significant changes in the manner of its use of the acquired assets or the strategy for its overall business.

When the Company determines that the carrying value of the asset groups may not be recoverable based upon the existence of one or more of the above indicators of impairment, the Company measures the potential impairment based on a projected discounted cash flow method using a discount rate determined by the Company to be commensurate with the risk inherent in the Company’s current business model.

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During 2023, 2022 and 2021, the Company did not recognize any impairment of its definite-lived and indefinite-lived assets.

Income taxes are accounted for using an asset and liability approach, which requires the recognition of deferred tax assets and liabilities for expected future tax events that have been recognized differently on the Company’s consolidated financial statements and tax returns.

Income taxes are accounted for using an asset and liability approach, which requires the recognition of deferred tax assets and liabilities for expected future tax events that have been recognized differently in the Company’s consolidated financial statements and tax returns.

The measurement of current and deferred tax assets and liabilities is based on provisions of the enacted tax law and the effects of future changes in tax laws or rates are not anticipated.

11 unchanged sentences

When estimating forfeitures, the Company considers voluntary termination behaviors, as well as trends of actual option forfeitures.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash and Cash Equivalents

Cash equivalents are highly liquid investments with original maturity of three months or less at the date of purchase.

Cash equivalents are investments with original maturity of three months or less at the date of purchase.

The Company maintains its cash balances with high-quality financial institutions.

Cash equivalents are invested in highly-rated and highly-liquid money market securities and certain U.S.

Cash equivalents are invested in highly rated, liquid money market securities, time deposits and certain U.S.

government sponsored obligations.

1 unchanged sentence

Rambus invests its excess cash and cash equivalents primarily in U.S.

government-sponsored obligations, commercial paper, corporate notes and bonds, and money market funds that mature within three years .

government-sponsored obligations, corporate bonds, commercial paper and notes, time deposits and money market funds that mature within three years .

Available-for-sale securities are carried at fair value, based on quoted market prices, with the unrealized gains or losses reported, net of tax, in stockholders’ equity as part of accumulated other comprehensive income (loss).

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1) the Company’s intent to sell the security, 2) if the Company intends to hold the security, whether or not it is more likely than not that the Company will be required to sell the security before recovery of the security’s amortized cost basis and 3) even if the Company intends to hold the security, whether or not the Company expects the security to recover the entire amortized cost basis.

Due to the high credit quality and short-term nature of the Company’s investments, there have been no material credit losses recorded to date.

Due to the high credit

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

quality and short-term nature of the Company’s investments, there have been no material credit losses recorded to date.

The classification of funds between short-term and long-term is based on whether the securities are available for use in operations or other purposes.

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The financial assets in Level 2 include U.S.

government bonds and notes, corporate notes, and commercial paper.

government bonds and notes, and corporate bonds, commercial paper and notes.

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

When determining fair value, the Company considers the principal or most advantageous market in which the Company would transact, and the Company considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of non-performance.

The Company does not have any financial assets or liabilities in Level 3 as of December 31, 2022 and 2021, except for the Company’s liability for the earn-out consideration related to the PLDA acquisition.

The Company does not have any financial assets or liabilities in Level 3 as of December 31, 2023 and 2022, except for the Company’s liability for the earn-out consideration related to the PLDA acquisition, which is recorded within other long-term liabilities.

The Company has classified this liability within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs.

Refer to Note 20, “Acquisitions , ” for additional information.

Refer to Note 9, “Fair Value of Financial Instruments and Note 21, “Acquisitions,” for additional information.

The carrying value of cash equivalents, accounts receivable and accounts payable approximate their fair values due to their relatively short maturities as of December 31, 2023 and 2022.

2 unchanged sentences

Fair value of the marketable securities is determined based on quoted market prices.

The fair value of the Company’s convertible notes fluctuates with interest rates and with the market price of the common stock, but does not affect the carrying value of the debt on the balance sheet.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair value of the Company’s convertible notes fluctuated with interest rates and with the market price of the common stock, but did not affect the carrying value of the debt on the balance sheet.

The Company’s non-financial assets, such as goodwill, intangible assets and property, plant and equipment, are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized.

The Company’s equity method investments are initially recognized at cost, and the carrying amount is increased or decreased to recognize the Company’s share of the profit or loss of the investee after the date of acquisition.

The Company’s share of the investee’s profit or loss is recognized on the Company’s consolidated statements of operations.

Distributions received from an investee reduce the carrying amount of the investment.

The Company’s equity method investments were initially recognized at cost, and the carrying amount was increased or decreased to recognize the Company’s share of the profit or loss of the investee after the date of acquisition.

The Company’s share of the investee’s profit or loss was recognized in the Company’s Consolidated Statements of Operations.

Distributions received from an investee reduced the carrying amount of the investment.

Research and Development

1 unchanged sentence

Software development costs are capitalized beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers.

The Company has not capitalized any software development costs since the period between establishing technological feasibility and general customer release is relatively short and as such, these costs have not been material.

The Company has not capitalized any software development costs in the period between establishing technological feasibility and general customer release since the period is relatively short and as such, these costs have not been material.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Computation of Earnings (Loss) Per Share

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Diluted earnings (loss) per share is calculated by dividing the earnings (loss) by the weighted-average number of common shares and potentially dilutive securities outstanding during the period.

Potentially dilutive common shares consist of incremental common shares issuable upon exercise of stock options, employee stock purchases, restricted stock and restricted stock units, and shares issuable upon the conversion of convertible notes.

Potentially dilutive common shares consist of incremental common shares issuable upon exercise of stock options, employee stock purchases, and restricted stock and restricted stock units, and shares issuable upon the conversion of convertible notes.

The dilutive effect of outstanding shares is reflected in diluted earnings per share by application of the treasury stock method, or the if-converted method for the in-the-money conversion benefit feature of the 2023 Notes.

3 unchanged sentences

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, including foreign currency translation adjustments and unrealized gains and losses on marketable securities.

Other comprehensive income (loss), net of tax, is presented on the consolidated statements of comprehensive income (loss).

Other comprehensive income (loss), net of tax, is presented in the Consolidated Statements of Comprehensive Income (Loss).

Credit Concentration

As of December 31, 2022 and 2021, the Company’s cash, cash equivalents and marketable securities were invested with various financial institutions in the form of corporate notes, bonds and commercial paper, money market funds, U.S.

As of December 31, 2023 and 2022, the Company’s cash, cash equivalents and marketable securities were invested with various financial institutions in the form of corporate bonds, commercial paper and notes, money market funds, U.S.

Treasuries and U.S.

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The portfolio includes only marketable securities with active secondary or resale markets to enable portfolio liquidity.

The Company’s note hedge transactions, entered into in connection with the 1.375% convertible senior notes due 2023 (the “2023 Notes”), expose the Company to credit risk to the extent that its counterparties may be unable to meet the terms of the transactions.

The Company mitigates this risk by limiting its counterparties to major financial institutions.

Refer to Note 12, “Convertible Notes,” for additional information.

The Company’s accounts receivable are derived from revenue earned from customers located in the U.S.

1 unchanged sentence

Refer to Note 7, “Segments and Major Customers,” for additional information.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s unbilled receivables are collected from customers located in the U.S.

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Refer to Note 4, “Revenue Recognition,” for additional information.

Derivative Instruments and Hedging Activities

The Company has on occasion, entered into foreign currency forward contracts (the “Contracts”) to manage the Company’s exposure related to certain foreign currency denominated monetary assets (the “Hedging Program”) and to minimize the related impact of foreign currency fluctuations on the Company’s earnings.

The hedged monetary assets primarily consisted of certain euro-denominated cash and accounts receivable balances.

The Contracts mitigate the Company’s foreign currency exposure when the Contracts are settled at their maturity by generally offsetting the gains and losses generated by the re-measurement of the underlying monetary assets.

The Contracts are typically entered into at the end of a month, with an approximately one month duration at inception.

Due to the short duration of these Contracts, their fair value has been deemed immaterial.

As the Contracts were considered derivative instruments that were not designated and did not qualify as hedging instruments, any gains and losses resulting from changes in their fair value were recorded to interest income and other income (expense), net in the Company’s Consolidated Statements of Operations.

The Company does not use its Hedging Program for speculative or trading purposes.

As of December 31, 2023, no Contracts were outstanding.

For the year ended December 31, 2023, any gains and losses resulting from changes in fair value of the Company’s Contracts were deemed immaterial.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Foreign Currency Translation and Re-Measurement

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Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period.

Gains and losses from these translations are recognized in foreign currency translation included in accumulated other comprehensive gain (loss) on the consolidated statements of stockholders’ equity.

Gains and losses from these translations are recognized in foreign currency translation included in accumulated other comprehensive gain (loss) in the Company’s Consolidated Statements of Stockholders’ Equity.

The Company’s subsidiaries that use the U.S.

dollar as their functional currency re-measure monetary assets and liabilities at exchange rates in effect at the end of each period, and inventories, property and non-monetary assets and liabilities at historical rates.

Additionally, foreign currency transaction gains and losses are included in interest income and other (income) expense, net, on the consolidated statements of operations and were not material in the periods presented.

Additionally, foreign currency transaction gains and losses are included in interest income and other (income) expense, net, in the Company’s Consolidated Statements of Operations and were not material in the periods presented.

Business Combinations

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While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, as well as contingent consideration, where applicable, the estimates are inherently uncertain and subject to refinement.

Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded on the consolidated statements of operations.

Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date including the Company’s estimates for intangible assets, contractual obligations assumed and pre-acquisition contingencies where applicable.

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The Company may be involved in certain legal proceedings.

Based upon consultation with outside counsel handling its defense in these matters and an analysis of potential results, if the Company believes that a loss arising from such matters is probable and can be reasonably estimated, the Company records the estimated liability on its consolidated financial statements.

If only a range of estimated losses can be determined, the Company records an amount within the range that, in its judgment, reflects the most likely outcome;

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The Company adopted this guidance on January 1, 2022 on a modified retrospective basis.

Upon adoption, the Company reversed approximately $ 35.2 million of debt discount related to the

Upon adoption, the Company reversed approximately $ 35.2 million of debt discount related to the Company’s 1.375 % Convertible Senior Notes due 2023 (the “2023 Notes”) from additional paid-in capital, reversed approximately $ 8.3 million representing the unamortized debt discount from liabilities, and recorded the net impact of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Company’s 1.375% Convertible Senior Notes due 2023 (the “2023 Notes”) from additional paid-in capital, reversed approximately $ 8.3 million representing the unamortized debt discount from liabilities, and recorded the net impact of $ 26.9 million to accumulated deficit.

$ 26.9 million to accumulated deficit.

The Company also removed approximately $ 0.7 million of debt issuance costs related to the 2023 Notes from additional paid-in capital and recorded approximately $ 0.5 million to accumulated deficit related to the amortization of debt issuance costs that were historically allocated to equity.

The Company expects reported interest expense for its convertible notes to decrease this year and in the future.

In October 2021, the FASB issued ASU No.

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The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” This guidance requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker.

In addition, this ASU requires that all existing annual disclosures about segment profit or loss must be provided on an interim basis and clarifies that single reportable segment entities are subject to the disclosure requirement under Topic 280 in its entirety.

This ASU is effective for annual reporting periods beginning after December 15, 2023, and interim reporting periods within annual reporting periods beginning after December 15, 2024.

Early adoption is permitted.

The amendments in this ASU should be applied on a retrospective basis.

The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” This guidance requires additional disclosures related to rate reconciliation, income taxes paid and other disclosures.

For each annual period presented, public business entities are required to 1) disclose specific categories in the rate reconciliation and 2) provide additional information for reconciling items that meet a quantitative threshold.

In addition, this ASU requires all reporting entities to disclose on an annual basis the amount of income taxes paid disaggregated by federal, state and foreign taxes, as well as the amount of income taxes paid disaggregated by individual jurisdictions which meet a quantitative threshold.

This ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance.

The amendments in this ASU should be applied on a prospective basis, with retrospective application permitted.

The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

Revenue Recognition

6 unchanged sentences

Deferred revenue 18,085 25,421

During the years ended December 31, 2022 and December 31, 2021, the Company recognized $ 23.6 million and $ 10.2 million, respectively, of revenue that was included in the contract balances as of December 31, 2021 and December 31, 2020, respectively.

During the years ended December 31, 2023 and December 31, 2022, the Company recognized $ 20.8 million and $ 23.6 million, respectively, of revenue that was included in deferred revenue as of December 31, 2022 and December 31, 2021, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Remaining Performance Obligations

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Contracted but unsatisfied performance obligations were approximately $ 19.3 million as of December 31, 2023, which the Company primarily expects to recognize over the next 2 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Earnings (Loss) Per Share

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

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

For the Years Ended December 31,

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Effect of potential dilutive common shares

2,706 — 4,327

Weighted-average common shares outstanding - diluted

2 unchanged sentences

Diluted net income (loss) per share $ 3.01 $ ( 0.13 ) $ 0.16

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share attributable to the Company’s common stockholders for the periods presented because the impact of including them would have been anti-dilutive (in thousands):

For the Years Ended December 31,

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share attributable to the Company’s common stockholders for the year ended December 31, 2022 because the impact of including them would have been anti-dilutive (in thousands):

For the Year Ended December 31,

(In thousands) 2022

2 unchanged sentences

Potentially issuable shares related to the in-the-money conversion benefit feature of convertible notes 175

Contingently issuable ESPP shares — 12

Total 2,818 2,306

The potentially dilutive securities during the year ended December 31, 2021 were immaterial.

The shares in the table above do not include the par amount of the Company’s 2023 Notes.

The par amount of convertible notes is payable in cash equal to the principal amount of the notes plus any accrued and unpaid interest and then the “in-the-money” conversion benefit feature at the conversion price above $ 18.93 per share is payable in cash, shares of the Company’s common stock or a combination of both.

The Company has the option to pay cash, issue shares of common stock or any combination thereof for the aggregate amount due upon conversion of the notes.

The Company’s intent is to settle the principal amount of the notes in cash upon conversion.

As a result, upon conversion of the notes, only the amounts payable in excess of the principal amounts of the notes are considered in diluted earnings per share under the treasury stock method.

During the year ended December 31, 2021, the Company’s stock price exceeded the 2023 Notes’ conversion price of $ 18.93 per share, therefore approximately 1.4 million shares were included in the weighted-average dilutive shares.

The shares in the tables above did not include the principal amount of the Company’s 2023 Notes (“the 2023 Notes”) as the principal amount of the 2023 Notes must be paid in cash.

The Company settled the conversion of the remaining $ 10.4 million aggregate principal amount of the 2023 Notes in the first quarter of 2023.

Accordingly, the Company delivered approximately 0.3 million shares of the Company's common stock as settlement related to the in-the-money conversion feature of the 2023 Notes and received an equal amount of shares due to the settlement of the convertible senior note hedges.

The Company included dilutive instruments exercised during the period in the denominator of diluted earnings (loss) per share for the period prior to exercise, and thereafter, the Company included the actual shares issued in the denominator for both basic and diluted earnings (loss) per share .

Refer to Note 12, “Convertible Notes,” for additional information.

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2020-06, there is no impact to its earnings per share calculation.

Under the if-converted method, the cumulative dilutive effect of the 2023 Notes would be approximately 0.5 million shares, if the shares had been dilutive.

Refer to Note 12, “Convertible Notes,” for additional information.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2 unchanged sentences

(In thousands) December 31,

2021 Addition to Goodwill (1)

Adjustments to Goodwill (2)

Effect of Exchange Rates (3)

2022 Divestiture of Goodwill (1)

Total goodwill $ 292,040 $ ( 5,228 ) $ 286,812

______________________________________

(1) In May 2022, the Company acquired Hardent, Inc.

(“Hardent”), which resulted in the Company recognizing additional goodwill.

Refer to Note 20, “Acquisitions,” for additional information.

(2) The adjustments to goodwill primarily include a correction of an immaterial error related to an understatement in other current liabilities that originated from the acquisition of AnalogX Inc.

(“AnalogX”) in 2021 and working capital adjustments from the acquisition of Hardent.

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

As of December 31, 2022

(In thousands) Gross Carrying Amount Accumulated Impairment Losses Net Carrying Amount

Total goodwill $ 313,810 $ ( 21,770 ) $ 292,040

(1) In September 2023, the Company divested its PHY IP group, which resulted in the Company recognizing a decrease in goodwill based on the relative fair value of the Company’s single reporting unit in proportion to the fair value of the divested PHY IP group.

Refer to Note 20, “Divestiture,” for additional information.

(In thousands) December 31,

2021 Additions to Goodwill (1)

Adjustment to Goodwill (2)

Effect of Exchange Rates (3)

Total goodwill $ 278,810 $ 12,069 $ 1,013 $ 148 $ 292,040

______________________________________

(1) In July 2021, the Company acquired AnalogX and in August 2021, the Company acquired PLDA, which resulted in the Company recognizing additional goodwill.

(1) In May 2022, the Company acquired Hardent, Inc.

(“Hardent”), which resulted in the Company recognizing additional goodwill.

Refer to Note 21, “Acquisitions,” for additional information.

As of December 31, 2021

(In thousands) Gross Carrying Amount Accumulated Impairment Losses Net Carrying Amount

Total goodwill $ 300,580 $ ( 21,770 ) $ 278,810

(2) The adjustment to goodwill primarily includes a correction of an immaterial error related to an understatement in other current liabilities that originated from the acquisition of AnalogX Inc.

(“AnalogX”) in 2021 and working capital adjustments from the acquisition of Hardent within the measurement period of one year.

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

Intangible Assets, Net

12 unchanged sentences

______________________________________

(1) During the year ended December 31, 2022, the Company acquired certain intangible assets for $ 3.0 million in cash.

The assets were classified as existing technology and are being amortized over their expected useful life of five years .

During the year ended December 31, 2022, the amortization for the acquired assets was not material.

(2) In May 2022, the Company acquired Hardent, which resulted in the Company recognizing additional intangible assets.

Refer to Note 20, “Acquisitions,” for additional information.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) In September 2023, the Company disposed of approximately $ 7.4 million of net intangible assets (including $ 3.8 million of IPR&D) in connection with the divestiture of the Company’s PHY IP group.

Refer to Note 20, “Divestiture,” for additional information.

As of December 31, 2022

10 unchanged sentences

______________________________________

(1) In July 2021, the Company acquired AnalogX and in August 2021, the Company acquired PLDA, which resulted in the Company recognizing additional intangible assets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) During the year ended December 31, 2022, the Company acquired certain intangible assets for $ 3.0 million in cash.

The assets were classified as existing technology and are being amortized over their expected useful life of five years .

During the year ended December 31, 2022, the amortization for the acquired assets was not material.

(2) In May 2022, the Company acquired Hardent, which resulted in the Company recognizing additional intangible assets.

Refer to Note 21, “Acquisitions,” for additional information.

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Customer 3 12 % *

Customer 4 * 23 %

Customer 5 * 16 %

_________________________________________

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Customer C * 17 % 13 %

Customer D * 14 % 11 %

_________________________________________

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(In thousands) 2023 2022 2021

USA $ 277,776 $ 211,419 $ 137,614

Singapore 57,309 39,798 28,034

Asia-Other 54,421 28,949 26,249

Taiwan 35,116 23,953 21,803

Japan 16,516 14,894 20,437

United States $ 176,821 $ 277,776 $ 211,419

South Korea 152,328 7,222 6,007

Europe 6,213 3,165 7,359

Canada 220 119 1,162

Singapore 53,327 57,309 39,798

Other 78,641 112,486 71,080

Total $ 461,117 $ 454,793 $ 328,304

5 unchanged sentences

As of December 31, 2023

(In thousands, except percentages) Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Weighted Rate of Return

(In thousands) Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses

Cash $ 88,486 $ 88,486 $ — $ —

Cash equivalents:

Money market funds 3,790 3,790 — —

Government bonds and notes 2,491 2,491 — —

Corporate notes, bonds and commercial paper 106,355 108,092 7 ( 1,744 ) 2.59 %

Total cash equivalents and marketable securities

218,489 222,105 8 ( 3,624 )

Cash 94,737 94,737 — —

Total cash equivalents 6,281 6,281 — —

Total cash and cash equivalents 94,767 94,767 — —

Marketable securities:

Government bonds and notes 194,428 194,389 251 ( 212 )

Corporate bonds, commercial paper and notes 136,649 136,892 162 ( 405 )

Total marketable securities 331,077 331,281 413 ( 617 )

Total cash, cash equivalents and marketable securities $ 425,844 $ 426,048 $ 413 $ ( 617 )

$ 313,226 $ 316,842 $ 8 $ ( 3,624 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2022

(In thousands, except percentages) Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Weighted Rate of Return

(In thousands) Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses

Cash $ 94,737 $ 94,737 $ — $ —

Cash equivalents:

Money market funds 15,763 15,763 — —

Corporate bonds, commercial paper and notes 14,834 14,838 — ( 4 )

Total cash equivalents 30,597 30,601 — ( 4 )

Total cash and cash equivalents 125,334 125,338 — ( 4 )

Marketable securities:

Government bonds and notes 96,371 98,250 1 ( 1,880 )

Corporate notes, bonds and commercial paper 287,905 288,667 8 ( 770 ) 0.22 %

Total cash equivalents and marketable securities

398,119 399,182 8 ( 1,071 )

Cash 87,490 87,490 — —

Corporate bonds, commercial paper and notes 91,521 93,254 7 ( 1,740 )

Total marketable securities 187,892 191,504 8 ( 3,620 )

Total cash, cash equivalents and marketable securities

$ 313,226 $ 316,842 $ 8 $ ( 3,624 )

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

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

As of December 31,

(In thousands) 2023 2022

Cash equivalents $ 30,597 $ 20,401

Short-term marketable securities 187,892 377,718

Total cash equivalents and marketable securities

218,489 398,119

Cash $ 88,486 $ 94,737

Cash equivalents 6,281 30,597

Total cash and cash equivalents 94,767 125,334

Marketable securities 331,077 187,892

Total cash, cash equivalents and marketable securities

$ 425,844 $ 313,226

The Company continues to invest in highly rated and highly liquid debt securities.

The Company holds all of its marketable securities as available-for-sale, marks them to market, and regularly reviews its portfolio to ensure adherence to its investment policy and to monitor individual investments for risk analysis, proper valuation, and unrealized losses that may be other than temporary.

The Company continues to invest in highly rated, liquid debt securities.

The Company holds all of its marketable securities as available-for-sale, marks them to market and regularly reviews its portfolio to ensure adherence to its investment policy and to monitor individual investments for risk analysis, proper valuation and impairment.

The estimated fair value and gross unrealized losses of cash equivalents and marketable securities classified by the length of time that the securities have been in a continuous unrealized loss position at December 31, 2023 and 2022 are as follows:

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Government bonds and notes $ 32,454 $ 28,893 $ ( 53 ) $ ( 23 )

Corporate notes, bonds and commercial paper 45,538 255,783 ( 35 ) ( 770 )

Corporate bonds, commercial paper and notes 46,407 45,538 ( 40 ) ( 35 )

Total cash equivalents and marketable securities in a continuous unrealized loss position for less than 12 months 78,861 74,431 ( 93 ) ( 58 )

1 unchanged sentence

Government bonds and notes 6,841 62,588 ( 159 ) ( 1,857 )

Corporate notes, bonds and commercial paper 49,559 — ( 1,709 ) —

Corporate bonds, commercial paper and notes 16,619 49,559 ( 365 ) ( 1,709 )

Total cash equivalents and marketable securities in a continuous unrealized loss position for 12 months or greater 23,460 112,147 ( 524 ) ( 3,566 )

2 unchanged sentences

The gross unrealized losses can be primarily attributed to a combination of market conditions as well as the demand for and duration of the U.S.

government-sponsored obligations and corporate notes, bonds and commercial paper.

The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before the recovery of its related amortized cost.

government-sponsored obligations and corporate bonds, commercial paper and notes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Company reasonably believes that there is no need to sell these investments and that it can recover the amortized cost of these investments.

The Company has found no evidence of impairment due to credit losses in its portfolio.

Therefore, these unrealized losses were recorded in other comprehensive income (loss).

However, the Company cannot provide any assurance that its portfolio of cash, cash equivalents and marketable securities will not be

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

impacted by adverse conditions in the financial markets, which may require the Company in the future to record an impairment charge for credit losses which could adversely impact its financial results.

The Company cannot provide any assurance that its portfolio of cash, cash equivalents and marketable securities will not be impacted by adverse conditions in the financial markets, which may require the Company in the future to record an impairment charge for credit losses which could adversely impact its financial results.

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

13 unchanged sentences

Government bonds and notes 196,919 — 196,919 —

Corporate notes, bonds and commercial paper 106,355 — 106,355 —

Corporate bonds, commercial paper and notes 136,649 — 136,649 —

Total assets carried at fair value $ 337,358 $ 3,790 $ 333,568 $ —

9 unchanged sentences

Government bonds and notes 96,371 — 96,371 —

Corporate notes, bonds and commercial paper 287,905 — 287,905 —

Corporate bonds, commercial paper and notes 106,355 — 106,355 —

Total assets carried at fair value $ 218,489 $ 15,763 $ 202,726 $ —

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(In thousands) 2023 2022 2021

Balance as of January 1 $ 16,900 $ — $ 1,800

Balance as of beginning of period $ 14,800 $ 16,900 $ —

Addition of earn-out liability due to acquisition — — 11,600

1 unchanged sentence

Change in fair value of earn-out liability due to achievement of revenue target ( 11,534 ) ( 5,211 ) —

Balance as of December 31 $ 14,800 $ 16,900 $ —

For the years ended December 31, 2022 and 2021, the change in the fair value of the earn-out liability related to the 2021 acquisition of PLDA, which is subject to certain revenue targets of the acquired business for a period of three years from the date of acquisition.

During the year ended December 31, 2022, the first-year earn-out target was achieved, and the fair value relating to the remaining two years of the earn-out period were remeasured.

As a result of these adjustments, the Company recorded a net loss of $ 2.1 million on the Company’s consolidated statements of operations.

During the year ended December 31, 2021, the Company remeasured the fair value of the earn-out liability, which resulted in an additional expense of $ 5.3 million on the Company’s consolidated statements of operations.

During the year ended December 31, 2020, the Company recorded a full reduction in the fair value of the earn-out liability related to the 2019 asset purchase agreement to acquire the Secure Silicon IP and Protocols business from Verimatrix, formerly Inside Secure, since the specified performance milestones were not met for the year ended December 31, 2020, which resulted in a gain on the Company’s consolidated statements of operations.

The Company monitors its investments for other-than-temporary impairment and records appropriate reductions in carrying value when necessary.

The Company monitors its investments for other-than-temporary losses by considering current factors, including the economic environment, market conditions, operational performance and other specific factors relating to the business underlying the investment, reductions in carrying values when necessary and the Company’s ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery in the market.

Any other-than-temporary loss is reported under “Interest and other income (expense), net” on the consolidated statement of operations.

Balance as of end of period $ 12,500 $ 14,800 $ 16,900

For the years ended December 31, 2023, 2022 and 2021, the changes in the fair value of the earn-out liability related to the 2021 acquisition of PLDA, which is subject to certain revenue targets of the acquired business for a period of three years from the date of acquisition, and which is settled annually in shares of the Company’s common stock based on the fair value of that common stock fixed at the time the Company acquired PLDA.

The fair value of the earn-out liability is remeasured each quarter, depending on the acquired business’s revenue performance relative to target over the applicable period, and adjusted to reflect changes in the per share value of the Company’s common stock.

The Company has classified its liability for the contingent earn-out consideration related to the PLDA acquisition within Level 3 of the fair value hierarchy because the fair value calculation includes significant unobservable inputs, such as revenue forecast, revenue volatility, equity volatility and weighted average cost of capital.

During the years ended December 31, 2023, 2022 and 2021, the Company remeasured the fair value of the earn-out liability, which resulted in additional expense of $ 9.2 million, $ 3.1 million and $ 5.3 million, respectively, in the Company’s Consolidated Statements of Operations.

The Company monitors its investments for impairment and records appropriate reductions in carrying value when necessary.

The Company monitors its investments for impairment by considering current factors, including the economic environment, market conditions, operational performance and other specific factors relating to the business underlying the investment, reductions in carrying values when necessary and the Company’s ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery in the market.

Any impairment is reported under “Interest and other income (expense), net” in the Consolidated Statements of Operations.

During the years ended December 31, 2023 and 2022, the Company recorded no other-than-temporary impairment charges on its investments.

During the second half of 2018, the Company made an investment in a non-marketable equity security of a private company.

This equity investment is accounted for under the equity method of accounting, and the Company accounts for its equity method share of the income (loss) on a quarterly basis.

As of December 31, 2022 and December 31, 2021, the carrying value of the Company’s 25.0 % ownership percentage was $ 0.5 million and $ 1.8 million, respectively, which were included in other assets on the accompanying consolidated balance sheets.

The Company recorded immaterial amounts on its consolidated statements of operations representing its share of the investee’s loss for the years ended December 31, 2022, 2021 and 2020.

During the year ended December 31, 2022, the Company recorded a gain on fair value of approximately $ 3.5 million related to the sale of an equity security with an immaterial carrying value on its consolidated statement of operations.

In 2018, the Company made an investment in a non-marketable equity security of a private company.

This investment was accounted for under the equity method of accounting, and the Company accounted for its equity method share of the income (loss).

During the second quarter of 2023, the carrying value of the Company’s 25.0 % ownership percentage was reduced to zero as the carrying value had been adjusted by an equal and offsetting amount of the Company’s share of the investee’s cumulative losses.

During the fourth quarter of 2023, the Company sold its 25.0 % ownership share in the equity investment for approximately $ 25.0 million, which was included, net of withholding taxes paid, in prepaid and other current assets in the Company’s Consolidated Balance Sheet as of December 31, 2023.

The Company recognized a gain of $ 25.0 million related to the sale of the Company’s 25.0 % ownership share in the non-marketable equity security.

The gain was offset by transaction costs of approximately $ 1.1 million, resulting in a net gain of approximately $ 23.9 million, which was included in the Company’s Consolidated Statement of Operations for the year ended December 31, 2023.

The Company has non-cash investing cash flow activity of approximately $ 23.0 million from the sale of the non-marketable equity security, which were offset by withholding taxes paid and changes in the foreign currency exchange rates, which was subsequently received in January 2024.

The carrying value of the Company’s 25.0 % ownership percentage was deemed immaterial as of December 31, 2022.

The Company recorded immaterial amounts in its Consolidated Statements of Operations representing its share of the investee’s loss for the years ended December 31, 2023 and 2022, respectively.

During the years ended December 31, 2023 and 2022, there were no transfers of financial instruments between different categories of fair value.

The following table presents the financial instruments that are not carried at fair value but which require fair value disclosure as of December 31, 2022 and 2021:

As of December 31, 2022 As of December 31, 2021

(In thousands) Face

Value Carrying Value Fair

1.375% Convertible Senior Notes due 2023 (the “2023 Notes”) $ 10,381 $ 10,378 $ 19,625 $ 172,500 $ 163,687 $ 254,103

The fair value of the convertible notes at each balance sheet date is determined based on recent quoted market prices for these notes which is a level 2 measurement.

As discussed in Note 12, “Convertible Notes,” as of December 31, 2022, the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

convertible notes were carried at their face value of $ 10.4 million, less any unamortized debt discount and unamortized debt issuance costs.

The following table presents the financial instruments that are not carried at fair value but require fair value disclosure as of 2022:

As of December 31, 2022

(In thousands) Face Value Carrying Value Fair Value

1.375% Convertible Senior Notes due 2023 (the “2023 Notes”) $ 10,381 $ 10,378 $ 19,625

The fair value of the convertible notes at December 31, 2022 was determined based on recent quoted market prices for these notes, which is a Level 2 measurement.

As discussed in Note 12, “Convertible Notes,” the Company settled the remaining $ 10.4 million aggregate principal amount of the 2023 Notes during the first quarter of 2023.

As of December 31, 2022, the 2023 Notes were carried at their face value of $ 10.4 million, less any unamortized debt issuance costs.

The carrying value of other financial instruments, including accounts receivable, accounts payable and other liabilities, approximated fair value due to their short maturities.

Information regarding the Company’s goodwill and long-lived assets balances are disclosed in Note 6, “Intangible Assets and Goodwill.”

On July 8, 2019, the Company entered into a lease agreement with 237 North First Street Holdings, LLC (the “Landlord”), whereby the Company leases office space located at 4453 North First Street in San Jose, California, (the “Lease”).

In April 2020, the lease was amended for certain terms (the “Amended Lease”).

The Amended Lease includes approximately 90,000 square feet of office space, which serves as the Company’s corporate headquarters and includes engineering, sales, marketing and administrative functions.

The Amended Lease has a term of 128 months from the amended commencement date in April 2020.

The starting rent of the Amended Lease was approximately $ 3.26 per square foot on a triple net basis.

The annual base rent increases each year to certain fixed amounts over the course of the term as set forth in the Amended Lease and will be $ 4.38 per square foot in the final year of the Amended Lease term.

In addition to the base rent, the Company will also pay operating expenses, insurance expenses, real estate taxes, and a management fee under the Amended Lease.

The Amended Lease also allows for an option to expand, wherein the Company has the right of first refusal to rent additional space in the building.

The Company has a one-time option to extend the Amended Lease for a period of 60 months and may elect to terminate the Amended Lease, via written notice to the Landlord, in the event the office space is damaged or destroyed.

Total required payments under the Amended Lease are approximately $ 41 million.

Pursuant to the terms of the Amended Lease, the landlord agreed to reimburse the Company up to $ 9.0 million related to a tenant improvement allowance.

During the year ended December 31, 2021, the Company received approximately $ 9.0 million from the landlord in total reimbursements related to the tenant improvement allowance.

The table below reconciles the undiscounted cash flows for the first five years and total of the remaining years to the operating lease liabilities recorded on the consolidated balance sheet as of December 31, 2022 (in thousands):

The Company has a lease agreement with 237 North First Street Holdings, LLC for an office space located at 4453 North First Street in San Jose, California (the “Lease”).

The Lease has a term of 128 months from the amended commencement date in April 2020.

The annual base rent increases each year to certain fixed amounts over the course of the term.

In addition to the base rent, the Company will also pay operating expenses, insurance expenses, real estate taxes and a management fee.

The Lease allows for an option to expand, wherein the Company has the right of first refusal to rent additional space in the building.

The Company has a one-time option to extend the Lease for a period of 60 months and may elect to terminate the Lease, via written notice to the Landlord, in the event the office space is damaged or destroyed.

These options were not recognized as part of operating lease right-of-use assets and operating lease liabilities.

The table below reconciles the undiscounted cash flows for the first five years and total of the remaining years to the operating lease liabilities recorded in the Consolidated Balance Sheet as of December 31, 2023 (in thousands):

Years ending December 31, Amount

6 unchanged sentences

As of December 31, 2023, the weighted-average remaining lease term for the Company’s operating leases was 6.2 years, and the weighted-average discount rate used to determine the present value of the Company’s operating leases was 6.3 %.

Operating lease costs included in research and development and selling, general and administrative costs on the statements of operations were $ 7.5 million, $ 7.4 million and $ 9.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Operating lease costs included in research and development and selling, general and administrative costs in the Company’s Consolidated Statements of Operations were $ 6.0 million, $ 7.5 million and $ 7.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities were $ 6.7 million, $ 8.6 million and $ 7.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.

1 unchanged sentence

Balance Sheet Details

Inventories (1)

Inventories consisted of the following:

5 unchanged sentences

$ 36,154 $ 20,900

(1) As of December 31, 2023 and 2022, the Company had inventory reserve balances of approximately $ 6.0 million and $ 1.3 million included in the Consolidated Balance Sheets, respectively.

Property, Plant and Equipment, net

14 unchanged sentences

Depreciation expense for the years ended December 31, 2023, 2022 and 2021 was $ 37.7 million, $ 26.0 million and $ 21.0 million, respectively.

Accumulated Other Comprehensive Gain (Loss)

Accumulated other comprehensive gain (loss) is comprised of the following:

Other Current Liabilities

Other current liabilities are comprised of the following:

As of December 31,

(In thousands) 2023 2022

EDA tools software licenses liability $ 14,566 $ 15,563

Price protection liability 6,563 —

Other current liabilities 5,469 8,429

Total $ 26,598 $ 23,992

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is comprised of the following:

As of December 31,

(In thousands) 2023 2022

Foreign currency translation adjustments $ ( 913 ) $ ( 1,195 )

1 unchanged sentence

$ ( 1,269 ) $ ( 4,963 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Convertible Notes

3 unchanged sentences

2023 Notes (1)

Unamortized discount — 2023 Notes (1)

Unamortized debt issuance costs — 2023 Notes ( 3 )

2 unchanged sentences

Total long-term convertible notes $ —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

_________________________________________

(1) On January 1, 2022, the Company adopted ASU No.

Refer to Note 3, “Recent Accounting Pronouncements,” for additional information.

(1) As of December 31, 2023, none of the 2023 Notes remained outstanding.

1.375 % Convertible Senior Notes due 2023.

8 unchanged sentences

2020-06 on January 1, 2022, the Company reversed approximately $ 35.2 million of debt discount related to the 2023 Notes from additional paid-in capital, reversed approximately $ 8.3 million representing the unamortized debt discount from liabilities and recorded the net impact of $ 26.9 million to accumulated deficit.

Refer to Note 3, “Recent Accounting Pronouncements,” for additional information.

The 2023 Notes bear interest at a rate of 1.375 % per year, payable semi-annually on February 1 and August 1 of each year, beginning on August 1, 2018.

The 2023 Notes will mature on February 1, 2023, unless earlier repurchased by the Company or converted pursuant to their terms.

The 2023 Notes bore interest at a rate of 1.375 % per year, payable semi-annually on February 1 and August 1 of each year, beginning on August 1, 2018.

Contractually, the 2023 Notes would mature on February 1, 2023, unless earlier repurchased by the Company or converted pursuant to their terms.

The Company incurred transaction costs of approximately $ 3.3 million related to the issuance of the 2023 Notes.

1 unchanged sentence

2020-06, the Company had allocated the costs to the liability and equity components in proportion to the allocation of proceeds from the issuance of the 2023 Notes to such components.

Transaction costs allocated to the liability component of $ 2.6 million were netted against the carrying amount of the liability in the consolidated balance sheet and are amortized to interest expense using the effective interest method over the term of the 2023 Notes.

Transaction costs allocated to the liability component of $ 2.6 million were netted against the carrying amount of the liability in the Consolidated Balance Sheets and were amortized to interest expense using the effective interest method over the term of the 2023 Notes.

The transaction costs allocated to the equity component of $ 0.7 million were recorded as additional paid-in capital.

1 unchanged sentence

2020-06 on January 1, 2022, the Company removed approximately $ 0.7 million of debt issuance costs related to the 2023 Notes from additional paid-in capital and recorded approximately $ 0.5 million to accumulated deficit related to the amortization of debt issuance costs that were historically allocated to equity.

Refer to Note 3, “Recent Accounting Pronouncements,” for additional information.

The initial conversion rate of the 2023 Notes is 52.8318 shares of the Company’s common stock per $ 1,000 principal amount of 2023 Notes (which is equivalent to an initial conversion price of approximately $ 18.93 per share).

The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest.

In addition, upon the occurrence of a make-whole fundamental change (as defined in the 2023 Indenture), the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2023 Notes in connection with such make-whole fundamental change.

Prior to the close of business on the business day immediately preceding November 1, 2022, the 2023 Notes will be convertible only under the following circumstances:

The initial conversion rate of the 2023 Notes was 52.8318 shares of the Company’s common stock per $ 1,000 principal amount of 2023 Notes (which was equivalent to an initial conversion price of approximately $ 18.93 per share).

The conversion rate was subject to adjustment upon the occurrence of certain specified events but would not be adjusted for accrued and unpaid interest.

In addition, upon the occurrence of a make-whole fundamental change (as defined in the 2023 Indenture), the Company would have, in certain circumstances, increased the conversion rate by a number of additional shares for a holder that could have elected to convert its 2023 Notes in connection with such make-whole fundamental change.

Prior to the close of business on the business day immediately preceding November 1, 2022, the 2023 Notes would have been convertible only under the following circumstances:

(1) during any calendar quarter commencing after March 31, 2018, and only during such calendar quarter, if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 130 % of the conversion price on each applicable trading day;

(2) during the five business day period after any five consecutive trading day period in which, for each trading day of that period, the trading price per $ 1,000 principal amount of 2023 Notes for such trading day was less than 98 % of the product of the last reported sale price of the common stock and the conversion rate on each such trading day;

(3) upon the occurrence of specified distributions to holders of our common stock;

or (4) upon the occurrence of specified corporate transactions.

On or after November 1, 2022, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2023 Notes may convert all or a portion of their 2023 Notes regardless of the foregoing conditions.

Upon conversion, the Company will pay cash up to the aggregate principal amount of the 2023 Notes to be converted and pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the 2023 Notes being converted.

The Company may not redeem the 2023 Notes prior to the maturity date and no sinking fund is provided for the 2023 Notes.

Upon the occurrence of a fundamental change (as defined in the 2023 Indenture) prior to the maturity date, holders may require

(3) upon the occurrence of specified distributions to holders of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the Company to repurchase all or a portion of the 2023 Notes for cash at a price equal to 100 % of the principal amount of the 2023 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2023 Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the notes;

equal in right of payment with the Company’s existing and future liabilities that are not so subordinated;

our common stock;

or (4) upon the occurrence of specified corporate transactions.

On or after November 1, 2022, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2023 Notes would have been able to convert all or a portion of their 2023 Notes regardless of the foregoing conditions.

Upon conversion, the Company would have paid cash up to the aggregate principal amount of the 2023 Notes to be converted and pay or deliver, as the case may have been, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the 2023 Notes being converted.

The Company could not have redeemed the 2023 Notes prior to the maturity date and no sinking fund was provided for the 2023 Notes.

Upon the occurrence of a fundamental change (as defined in the 2023 Indenture) prior to the maturity date, holders may have required the Company to repurchase all or a portion of the 2023 Notes for cash at a price equal to 100 % of the principal amount of the 2023 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2023 Notes were the Company’s senior unsecured obligations and ranked senior in right of payment to any of the Company’s indebtedness that was expressly subordinated in right of payment to the notes;

equal in right of payment with the Company’s existing and future liabilities that were not so subordinated;

effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness;

and structurally junior to any existing and future indebtedness and other liabilities (including trade payables, but excluding intercompany obligations and liabilities) and any preferred stock of subsidiaries of the Company.

The following events are considered “events of default” with respect to the 2023 Notes, which may result in the acceleration of the maturity of the 2023 Notes:

(1) the Company defaults on the payment when due of any principal of any of the 2023 Notes at maturity or upon exercise of a repurchase right or otherwise;

(2) the Company defaults on the payment of any interest, including additional interest, if any, on any of the 2023 Notes, when the interest becomes due and payable, and continuance of such default for a period of 30 days;

The following events were considered “events of default” with respect to the 2023 Notes, which may have resulted in the acceleration of the maturity of the 2023 Notes:

( 1) the Company defaulted on the payment when due of any principal of any of the 2023 Notes at maturity or upon exercise of a repurchase right or otherwise;

(2) the Company defaulted on the payment of any interest, including additional interest, if any, on any of the 2023 Notes, when the interest became due and payable, and continuance of such default for a period of 30 days;

(3) failure by the Company to comply with its obligation to convert the 2023 Notes in accordance with the 2023 Indenture upon exercise of a holder’s conversion right;

(4) failure by the Company to give a fundamental change notice or notice of a specified corporate transaction when due with respect to the Notes;

(5) failure by the Company to comply with any of its other agreements contained in the 2023 Notes or the 2023 Indenture for a period of 60 days after written notice from the Trustee or the holders of at least 25 % in aggregate principal amount of the Notes then outstanding has been received;

(6) failure by the Company to pay when due the principal of, or acceleration of, any indebtedness for money borrowed by the Company or any of its Material Subsidiaries (as defined in the 2023 Indenture) in excess of $ 40.0 million principal amount, if such indebtedness is not discharged, or such acceleration is not annulled, for a period of 30 days after written notice to the Company by the Trustee or to the Company and the Trustee by holders of 25 % or more in aggregate principal amount of the 2023 Notes then outstanding in accordance with the 2023 Indenture;

(6) failure by the Company to have paid when due the principal of, or acceleration of, any indebtedness for money borrowed by the Company or any of its Material Subsidiaries (as defined in the 2023 Indenture) in excess of $ 40.0 million principal amount, if such indebtedness was not discharged, or such acceleration was not annulled, for a period of 30 days after written notice to the Company by the Trustee or to the Company and the Trustee by holders of 25 % or more in aggregate principal amount of the 2023 Notes then outstanding in accordance with the 2023 Indenture;

(7) certain events of bankruptcy, insolvency or reorganization of the Company or any of its Material Subsidiaries (as defined in the Indenture).

If such an event of default, other than an event of default described in clause (7) above with respect to the Company, occurs and is continuing, the Trustee by written notice to the Company, or the holders of at least 25 % in aggregate principal amount of the outstanding Notes by notice to the Company and the Trustee, may, and the Trustee at the request of such holders shall, declare 100 % of the principal of and accrued and unpaid interest, if any, on all the Notes then outstanding to be due and payable.

If an event of default described in clause (7) above occurs, 100% of the principal of and accrued and unpaid interest on the Notes then outstanding will automatically become due and payable.

If such an event of default, other than an event of default described in clause (7) above with respect to the Company, had occurred, the Trustee by written notice to the Company, or the holders of at least 25 % in aggregate principal amount of the outstanding Notes by notice to the Company and the Trustee, may have, and the Trustee at the request of such holders should have, declared 100 % of the principal of and accrued and unpaid interest, if any, on all the Notes then outstanding to be due and payable.

If an event of default described in clause (7) above occurred, 100% of the principal of and accrued and unpaid interest on the Notes then outstanding would have automatically become due and payable.

On March 2, 2022, the Company entered into individual, privately negotiated transactions with certain holders of its outstanding 2023 Notes, pursuant to which the Company paid an aggregate of approximately $ 199.1 million in cash for the repurchase of approximately $ 123.1 million aggregate principal amount of its 2023 Notes (“Q1 2022 Partial Notes Repurchase”).

The cash consideration was based on a volume-weighted average price of $ 29.6789 for the 19-trading day measurement period ending March 29, 2022.

The cash consideration was based on a volume-weighted average price of $ 29.6789 for the 19-trading day

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

measurement period ending March 29, 2022.

Of the $ 123.1 million aggregate principal amount, approximately $ 107.9 million was settled on March 31, 2022 for $ 174.5 million in cash.

4 unchanged sentences

In addition, this transaction resulted in a loss on extinguishment of debt of $ 17.1 million and a loss on fair value adjustment of derivatives, net of $ 2.3 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Upon entering into the Q1 2022 and Q3 2022 Partial Notes Repurchase agreements, the conversion feature related to the 2023 Notes repurchased, as well as the settlements of the convertible senior note hedges and warrants, were subject to derivative accounting.

As described in the preceding paragraphs above, the combination of these two transactions resulted in $ 10.6 million in losses on fair value adjustment of derivatives, net, for the year ended December 31, 2022.

During the year ended December 31, 2022, no holders elected to convert their 2023 Notes which had met the trigger for early conversion as of December 31, 2021, March 31, 2022 and September 30, 2022, respectively.

The early conversion had been met as of December 31, 2021, March 31, 2022 and September 30, 2022, as the last reported sale price of the Company’s common stock exceeded 130 % of the conversion price of the 2023 Notes for more than 20 trading days during the 30 consecutive trading days ended December 31, 2021, March 31, 2022 and September 30, 2022, respectively.

Since November 1, 2022, the remaining outstanding 2023 Notes were convertible at the option of the holders and continue to be convertible until the close of business on the second scheduled trading day immediately preceding the maturity date, and holders of the 2023 Notes may convert all or a portion of their 2023 Notes regardless of the foregoing conditions.

During the first quarter of 2023, the holders of the remaining $ 10.4 million aggregate principal amount of the 2023 Notes elected to convert the notes pursuant to the original terms of the conversion feature.

Accordingly, upon maturity, the Company paid $ 10.4 million in cash to settle the aggregate principal amount of the 2023 Notes and delivered approximately 0.3 million shares of the Company's common stock to settle the conversion spread.

Note Hedges and Warrants.

1 unchanged sentence

The Company paid an aggregate amount of approximately $ 33.5 million to the Counterparties for the Convertible Note Hedge Transactions.

The Convertible Note Hedge Transactions cover, subject to anti-dilution adjustments substantially similar to those in the 2023 Notes, approximately 9.1 million shares of Common Stock, the same number of shares underlying the 2023 Notes, at a strike price that corresponds to the initial conversion price of the 2023 Notes, and are exercisable upon conversion of the 2023 Notes.

The Convertible Note Hedge Transactions will expire upon the maturity of the 2023 Notes.

The Convertible Note Hedge Transactions are intended to reduce the potential economic dilution upon conversion of the 2023 Notes.

The Convertible Note Hedge Transactions are separate transactions and are not part of the terms of the 2023 Notes.

Holders of the 2023 Notes will not have any rights with respect to the Convertible Note Hedge Transactions.

In addition, concurrently with entering into the Convertible Note Hedge Transactions, the Company separately entered into privately negotiated warrant transactions, whereby the Company sold to the Counterparties warrants (the “Warrants”) to acquire, collectively, subject to anti-dilution adjustments, approximately 9.1 million shares of the Common Stock at an initial strike price of approximately $ 23.30 per share, which represents a premium of 60 % over the last reported sale price of the Common Stock of $ 14.56 on November 14, 2017.

The Convertible Note Hedge Transactions covered, subject to anti-dilution adjustments substantially similar to those in the 2023 Notes, approximately 9.1 million shares of Common Stock, the same number of shares underlying the 2023 Notes, at a strike price that corresponded to the initial conversion price of the 2023 Notes, and were exercisable upon conversion of the 2023 Notes.

Contractually, the Convertible Note Hedge Transactions would have expired upon the maturity of the 2023 Notes.

The Convertible Note Hedge Transactions were intended to reduce the potential economic dilution upon conversion of the 2023 Notes.

The Convertible Note Hedge Transactions were separate transactions and were not part of the terms of the 2023 Notes.

Holders of the 2023 Notes did not have any rights with respect to the Convertible Note Hedge Transactions.

In addition, concurrently with entering into the Convertible Note Hedge Transactions, the Company separately entered into privately negotiated warrant transactions, whereby the Company sold to the Counterparties warrants (the “Warrants”) to acquire, collectively, subject to anti-dilution adjustments, approximately 9.1 million shares of the Common Stock at an initial strike price of approximately $ 23.30 per share, which represented a premium of 60 % over the last reported sale price of the Common Stock of $ 14.56 on November 14, 2017.

The Company received aggregate proceeds of approximately $ 23.2 million from the sale of the Warrants to the Counterparties.

The Warrants are separate transactions and are not part of the 2023 Notes or Convertible Note Hedge Transactions.

Holders of the 2023 Notes and Convertible Note Hedge Transactions will not have any rights with respect to the Warrants.

The amounts paid and received for the Convertible Note Hedge Transactions and Warrants have been recorded in additional paid-in capital on the consolidated balance sheets.

The fair value of the Convertible Note Hedge Transactions and Warrants are not re-measured through earnings each reporting period.

The amounts paid for the Convertible Note Hedge Transactions are tax deductible expenses, while the proceeds received from the Warrants are not taxable.

The Warrants were separate transactions and were not part of the 2023 Notes or Convertible Note Hedge Transactions.

Holders of the 2023 Notes and Convertible Note Hedge Transactions did not have any rights with respect to the Warrants.

The amounts paid and received for the Convertible Note Hedge Transactions and Warrants were recorded in additional paid-in capital in the Consolidated Balance Sheets.

The fair value of the Convertible Note Hedge Transactions and Warrants were not re-measured through earnings each reporting period.

The amounts paid for the Convertible Note Hedge Transactions were tax deductible expenses, while the proceeds received from the Warrants were not taxable.

In connection with the Q1 2022 Partial Notes Repurchase, the Company entered into agreements with certain financial institutions to retire the corresponding portions of convertible senior note hedges and warrants the Company had previously entered into with the counterparties in connection with the issuance of the 2023 Notes.

Upon settlement, the Company received $ 72.4 million in cash for the retirement of the proportionate amount of convertible senior note hedges and paid $ 55.1 million in cash for the retirement of the proportionate amount of warrants during the three months ended March 31, 2022.

In connection with the Q3 2022 Partial Notes Repurchase, the Company entered into agreements with certain financial institutions to retire the corresponding portions of convertible senior note hedges and warrants the Company had previously entered into with the counterparties in connection with the issuance of the 2023 Notes.

Upon settlement, the Company received $ 19.3 million in cash for the retirement of the proportionate amount of convertible senior note hedges and paid $ 14.4 million in cash for the retirement of the proportionate amount of warrants during the three months ended September 30, 2022.

Impact to Earnings per Share.

As a result of the Company’s adoption of ASU No.

2020-06, the dilutive impact of the 2023 Notes on the calculation of diluted net income (loss) per share is considered using the if-converted method.

Furthermore, because the principal amount of the 2023 Notes must be settled in cash, the dilutive impact of applying the if-converted method is limited to the in-the-money portion, if any, of the 2023 Notes.

For periods prior to the Company’s January 1, 2022 adoption of ASU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2020-06, the Company applied the treasury stock method to account for the dilutive impact of the 2023 Notes for diluted net income (loss) per share purposes.

As noted in ASU .

2020-06, for convertible instruments where the principal is required to be paid in cash, the results of applying the if-converted method are consistent with the results of applying the historical treasury stock method.

Therefore, even though the Company is required to apply the if-converted method upon adoption of ASU No.

2020-06, there is no impact to its earnings per share calculation.

Under the if-converted method, the cumulative dilutive effect of the 2023 Notes would be approximately 0.5 million shares if the average price of the Company’s Common Stock is $ 18.93 .

However, upon conversion, there will be no economic dilution from the 2023 Notes, as exercise of the Convertible Note Hedge Transactions eliminates any dilution from the 2023 Notes that would have otherwise occurred when the price of the Company’s Common Stock exceeds the conversion price.

The Convertible Note Hedge Transactions are required to be excluded from the calculation of diluted earnings per share, as they would be anti-dilutive under the treasury stock method.

The warrants will have a dilutive effect when the average share price exceeds the warrant’s strike price of $ 23.30 per share.

However, upon conversion, the Convertible Note Hedge Transactions would neutralize the dilution from the 2023 Notes so that there would only be dilution from the warrants.

In connection with the settlement of the conversion of the remaining 2023 Notes, the Company received 0.3 million shares of the Company’s common stock for the retirement of the remaining convertible senior note hedges and paid $ 10.7 million in cash for the retirement of the remaining warrants during the first quarter of 2023.

Additionally, the retirement of the remaining warrants was subject to derivative accounting, resulting in a loss on fair value adjustment of derivatives of $ 0.2 million for the year ended December 31, 2023.

As of December 31, 2023, none of the note hedges and warrants remained outstanding.

Interest expense related to the convertible notes for the years ended December 31, 2022 and 2021 was as follows:

6 unchanged sentences

$ 804 $ 10,028

For the year ended December 31, 2023, interest expense related to the convertible notes was deemed immaterial.

Commitments and Contingencies

2 unchanged sentences

Contractual obligations (1) (2)

Other contractual obligations $ 3,800 $ 3,200 $ 600 $ — $ — $ —

Software licenses (3)

$ 24,635 $ 16,552 $ 8,083 $ — $ — $ —

Other contractual obligations 1,594 1,326 131 137 — —

Acquisition retention bonuses (4) (5)

894 558 336 — — —

Convertible notes (5)

10,381 10,381 — — — —

Interest payments related to convertible notes 71 71 — — — —

Total $ 27,123 $ 18,436 $ 8,550 $ 137 $ — $ —

1 unchanged sentence

(1) The above table does not reflect possible payments in connection with unrecognized tax benefits of approximately $ 110.7 million, including $ 31.7 million recorded as a reduction of long-term deferred tax assets and $ 78.9 million in long-term income taxes payable, as of December 31, 2023.

As noted below in Note 18, “Income Taxes,” although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, the Company cannot reasonably estimate the outcome at this time.

(2) For the Company’s lease commitments as of December 31, 2023, refer to Note 10, “Leases.”

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

During the second and fourth quarters of 2022, the Company renewed certain software license agreements for engineering development tools, which are included in the table above.

As of December 31, 2023, approximately $ 14.6 million of the fair value of the liability was included in other current liabilities and $ 8.0 million was included in other long-term liabilities, in the accompanying Consolidated Balance Sheet.

(4) In connection with the acquisition of Northwest Logic, Inc.

(“Northwest Logic”) in the third quarter of 2019, the Secure Silicon IP and Protocols business from Verimatrix, formerly Inside Secure, in the fourth quarter of 2019, the acquisitions of AnalogX and PLDA in the third quarter of 2021, and the acquisition of Hardent in the second quarter of 2022, the Company is obligated to pay retention bonuses to certain employees subject to certain eligibility and acceleration provisions including the condition of employment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(5) On November 17, 2017, the Company entered into an Indenture with U.S.

Bank National Association, as trustee, relating to the issuance by the Company of $ 172.5 million aggregate principal amount of the 2023 Notes.

During the year ended December 31, 2022, the Company repurchased $ 162.1 million aggregate principal amount of its 2023 Notes.

Refer to Note 12, “Convertible Notes,” for additional information.

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

(5) In connection with the acquisition of AnalogX in the third quarter of 2021, the Company was obligated to pay retention bonuses to certain employees subject to certain eligibility and acceleration provisions, including the condition of employment.

In September 2023, the Company divested its PHY IP group, which included AnalogX and resulted in the Company recognizing an immaterial decrease related to the remaining AnalogX acquisition retention bonus liability.

Refer to Note 20, “Divestiture,” for additional information.

Indemnifications

From time to time, the Company indemnifies certain customers as a necessary means of doing business.

Indemnification covers customers for losses suffered or incurred by them as a result of any patent, copyright, or other IP infringement or any other claim by any third party arising as result of the applicable agreement with the Company.

The Company generally attempts to limit the maximum amount of indemnification that the Company could be required to make under these agreements to the amount of fees received by the Company, however, this may not always be possible.

Indemnification covers customers for losses suffered or incurred by them as a result of any patent, copyright, or other IP infringement or any other claim by any third party arising as a result of the applicable agreement with the Company.

The Company generally attempts to limit the maximum amount of indemnification that the Company could be required to make under these agreements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

to the amount of fees received by the Company, however, this may not always be possible.

The fair value of the liability as of December 31, 2023 and 2022, respectively, was not material.

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Equity Incentive Plans

The Company has three equity incentive plans under which grants are currently outstanding:

the 2006 Equity Incentive Plan (the “2006 Plan”), the 2015 Equity Incentive Plan (the “2015 Plan”) and the 2019 Inducement Equity Incentive Plan (the “2019 Inducement Plan”).

On April 23, 2015, the Company’s stockholders approved the 2015 Plan, which replaced the 2006 Plan.

Additionally, in the third quarter of 2019, the Company adopted the 2019 Inducement Plan and, subject to the adjustment provisions of the 2019 Inducement Plan, reserved 400,000 shares of the Company’s common stock for issuance pursuant to equity awards granted under the 2019 Inducement Plan.

The Company has two equity incentive plans under which grants are currently outstanding:

the 2015 Equity Incentive Plan (the “2015 Plan”) and the 2019 Inducement Equity Incentive Plan (the “2019 Inducement Plan”).

The 2015 Plan and 2019 Inducement Plan were the Company’s only plans for providing stock-based incentive awards to eligible employees, executive officers, non-employee directors and consultants as of December 31, 2023.

Grants under all plans typically have a requisite service period of 60 months or 48 months, have straight-line vesting schedules and expire not more than 10 years from date of grant.

No further awards will be made under the 2006 Plan, but the 2006 Plan will continue to govern awards previously granted under it.

In addition, any shares subject to stock options or other awards granted under the 2006 Plan that on or after the effective date of the 2015 Plan are forfeited, cancelled, exchanged or surrendered or terminate under the 2006 Plan will become available for grant under the 2015 Plan.

The Board will periodically review actual share consumption under the 2015 Plan and may make a request for additional shares as needed.

The 2019 Inducement Plan provides for the grant of equity-based awards, including nonstatutory stock options, restricted stock units, restricted stock, stock appreciation rights, performance shares and performance units, and its terms are substantially similar to the Company’s 2015 Plan.

However, awards under the 2019 Inducement Plan may only be granted to individuals who previously have not been employees or non-employee directors of the Company (or who will become employed following a bona fide period of non-employment or service with the Company), as an inducement material to the individuals’ entry into employment with the Company, or, to the extent permitted by Rule 5635(c)(3) of the Nasdaq Listing Rules, in connection with a merger or acquisition.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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Total shares available for grant as of December 31, 2020 12,412,320

Increase in shares approved for issuance (1)

Stock options granted

Stock options forfeited

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Total shares available for grant as of December 31, 2021 10,492,178

Stock options forfeited

Nonvested equity stock and stock units granted (1) (3)

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Total shares available for grant as of December 31, 2022 7,655,769

Increase in shares approved for issuance (4)

Nonvested equity stock and stock units granted (1) (5)

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______________________________________

(1) On April 30, 2020, the Company’s stockholders approved an additional 7,800,000 shares for issuance under the 2015 Plan.

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

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

Each restricted stock unit granted on or after April 27, 2023 reduces the number of shares available for grant by 1.0 shares and each restricted stock unit forfeited increases shares available for grant by 1.0 shares.

(2) Amount includes approximately 0.4 million shares that have been reserved for potential future issuance related to certain performance unit awards granted in 2021 and discussed under the section titled “Nonvested Equity Stock and Stock Units” below.

(3) Amount includes approximately 0.6 million shares that have been reserved for potential future issuance related to certain performance unit awards granted in 2022 and discussed under the section titled “Nonvested Equity Stock and Stock Units” below.

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

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

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Outstanding as of December 31, 2020 964,211 $ 11.08

Options granted

40,000 $ 15.59

Options exercised

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( 117,138 ) $ 7.43

Options forfeited

( 54,327 ) $ 14.98

Outstanding as of December 31, 2022 432,443 $ 11.60

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The 2015 ESPP provides for six -month offering periods, with a new offering period commencing on the first trading day on or after May 1 and November 1 of each year.

Under the plans, employees may purchase stock at the lower of 85 % of the beginning of the offering period (the enrollment date), or the end of each offering period (the purchase date).

Under the plan, employees may purchase stock at the lower of 85 % of the fair market value of the Company’s common stock at the beginning of the offering period (the enrollment date) or the end of each offering period (the purchase date).

Employees generally may not purchase more than the number of shares having a value greater than $ 25,000 in any calendar year, as measured at the purchase date.

The Company issued 255,614 shares at a price of $ 20.60 p er share during the year ended December 31, 2022.

The Company issued 384,087 shares at a price of $ 12.95 per share during the year ended December 31, 2021.

The Company issued 467,065 shares at a price of $ 10.51 per share during the year ended December 31, 2020.

On April 30, 2020, the Company's stockholders approved an additional 2,000,000 shares to be reserved for issuance under the 2015 ESPP.

The Company issued 172,711 shares at an average price of $ 31.10 p er share during the year ended December 31, 2023.

The Company issued 255,614 shares at an average price of $ 20.60 per share during the year ended December 31, 2022.

The Company issued 384,087 shares at an average price of $ 12.95 per share during the year ended December 31, 2021.

As of December 31, 2023, 2.4 million shares under the ESPP remained available for issuance.

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There were no stock options granted during the years ended December 31, 2023, 2022 and 2021, respectively.

During the year ended December 31, 2020, the number of stock options granted were not material.

During the years ended December 31, 2022, 2021 and 2020, the Company recorded stock-based compensation related to stock options of $ 0.1 million, $ 0.4 million and $ 0.6 million, respectively.

As of December 31, 2022, there was $ 0.1 million of total unrecognized compensation cost, net of expected forfeitures, related to unvested stock-based compensation arrangements granted under the stock option plans.

This cost is expected to be recognized over a weighted-average period of 0.8 years .

Stock-based compensation expense related to stock options was immaterial for the years ended December 31, 2023, 2022 and 2021.

As of December 31, 2023, all compensation cost net of expected forfeitures, related to unvested stock-based compensation arrangements granted under the stock option plans has been fully recognized.

The total fair value of options vested f or the years ended December 31, 2023, 2022 and 2021 was $ 0.5 million, $ 1.7 million and $ 2.0 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Employee Stock Purchase Plan

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That cost is expected to be recognized over four months .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Valuation Assumptions

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

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

Stock Option Plan for Year Ended December 31,

Stock Option Plan

Expected stock price volatility 38 %

Risk free interest rate 0.2 %

Expected term (in years) 5.5

Weighted-average fair value of stock options granted $ 5.46

There were no stock options granted during the years ended December 31, 2022 and 2021, respectively.

Employee Stock Purchase Plan for Years Ended December 31,

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1.49 %- 4.58 %

0.04 %- 0.05 %

Expected term (in years)

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The expected term of options granted represents the period of time that options granted are expected to be outstanding.

The expected term was determined based on historical experience of similar awards, giving consideration to the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior.

The expected term was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior.

The expected term of ESPP grants is based upon the length of each respective purchase period.

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This amount is expected to be recognized over a weighted-average period of 1.9 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table reflects the activity related to nonvested equity stock and stock units for the years ended December 31, 2023, 2022 and 2021:

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Share Repurchase Programs

On October 29, 2020, the Board approved a new share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million shares (the “2020 Repurchase Program”).

On October 29, 2020, the Board approved a share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million shares (the “2020 Repurchase Program”).

Share repurchases under the 2020 Repurchase Program may be made through the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules and regulations.

There is no expiration date applicable to the 2020 Repurchase Program.

The 2020 Repurchase Program replaced the previous program approved by the Board in January 2015 and canceled the remaining shares outstanding as part of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the previous authorization.

The 2020 Repurchase Program replaced the previous program approved by the Board in January 2015 and canceled the remaining shares outstanding as part of the previous authorization.

During the years ended December 31, 2023, 2022 and 2021, the Company repurchased shares of its common stock under the 2020 Repurchase Program as discussed below.

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(“Deutsche Bank”) (the “2020 ASR Program”).

The 2020 ASR Program was part of the share repurchase program previously authorized by the Company’s Board on October 29, 2020.

The 2020 ASR Program was part of the 2020 Repurchase Program.

Under the 2020 ASR Program, the Company pre-paid to Deutsche Bank the $ 50.0 million purchase price for its common stock and, in turn, the Company received an initial delivery of approximately 2.6 million shares of its common stock from Deutsche Bank in the fourth quarter of 2020, which were retired and recorded as a $ 40.0 million reduction to stockholders’ equity.

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On June 15, 2021, the Company entered into an accelerated share repurchase program with Deutsche Bank (the “2021 ASR Program”).

The 2021 ASR Program was part of the share repurchase program previously authorized by the Board on October 29, 2020.

Under the 2021 ASR Program, the Company pre-paid to Deutsche Bank the $ 100.0 million purchase price for its common stock and, in turn, the Company received an initial delivery of approximately 3.9 million shares of its common stock from Deutsche Bank in the second quarter of 2021, which were retired and recorded as a $ 80.0 million reduction to stockholders’ equity.

The 2021 ASR Program was part of the 2020 Repurchase Program.

Under the 2021 ASR Program, the Company pre-paid to Deutsche Bank the $ 100.0 million purchase price for its common stock and, in turn, the Company received an initial delivery of approximately 3.9 million shares of its common stock from Deutsche Bank in the second quarter of 2021, which were retired and recorded as an $ 80.0 million reduction to stockholders’ equity.

The remaining $ 20.0 million of the initial payment was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to the Company’s stock.

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On September 9, 2022, the Company entered into an accelerated share repurchase program with Wells Fargo Bank, National Association (“Wells Fargo”) (the “2022 ASR Program”).

The 2022 ASR Program was part of the share repurchase program previously authorized by the Board on October 29, 2020.

Under the 2022 ASR Program, the Company pre-paid to Wells Fargo the $ 100.0 million purchase price for its common stock and, in turn, the Company received an initial delivery of approximately 3.1 million shares of its common stock from Wells Fargo in the third quarter of 2022, which were retired and recorded as a $ 80.0 million reduction to stockholders’ equity.

The 2022 ASR Program was part of the 2020 Repurchase Program.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under the 2022 ASR Program, the Company pre-paid to Wells Fargo the $ 100.0 million purchase price for its common stock and, in turn, the Company received an initial delivery of approximately 3.1 million shares of its common stock from Wells Fargo in the third quarter of 2022, which were retired and recorded as an $ 80.0 million reduction to stockholders’ equity.

The remaining $ 20.0 million of the initial payment was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to the Company’s stock.

During the fourth quarter of 2022, the accelerated share repurchase program was completed and the Company received an additional 0.1 million shares of its common stock, which were retired, as the final settlement of the accelerated share repurchase program.

On August 10, 2023, the Company entered into an accelerated share repurchase program with Royal Bank of Canada (“RBC”) (the “2023 ASR Program”).

The 2023 ASR Program was part of the 2020 Repurchase Program.

Under the 2023 ASR Program, the Company pre-paid to RBC the $ 100.0 million purchase price for its common stock and, in turn, the Company received an initial delivery of approximately 1.6 million shares of its common stock from RBC on August 11, 2023, which were retired and recorded as an $ 80.0 million reduction to stockholders’ equity.

The remaining $ 20.0 million of the initial payment was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to the Company’s stock.

On September 22, 2023, the accelerated share repurchase program was completed and the Company received an additional 0.2 million shares of its common stock, which were retired, as the final settlement of the 2023 ASR Program.

On November 2, 2023, the Company entered into a share repurchase plan (the “Buying Plan”) with RBC Capital Markets, LLC (“RBCCM”).

The Buying Plan was part of the 2020 Repurchase Program.

Under the Buying Plan, RBCCM shall commence purchases for a 12-month period starting on November 2, 2023 and ending on November 1, 2024, unless terminated sooner pursuant to the Buying Plan (the “Repurchase Period”).

During the Repurchase Period, RBCCM may purchase an aggregate amount of $ 50.0 million of the Company’s common stock, and its execution is dependent on the Company’s stock price reaching certain levels.

Share repurchases shall not exceed $ 25.0 million in a quarter.

During the fourth quarter of 2023, an immaterial amount of shares were repurchased, retired and recorded as a reduction to stockholders’ equity.

Effective January 1, 2023, the Company’s share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022.

As of December 31, 2023, there was no exercise tax liability as the fair market value of the Company’s common stock issuances in 2023 exceeded the fair market value of the total repurchases during the same period.

During the year ended December 31, 2023, there were no other repurchases of the Company’s common stock under the 2020 Repurchase Program.

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2023 Restructuring Plan

In November 2020, the Company initiated a restructuring program to reduce overall expenses to improve future profitability by reducing spending on research and development efforts and sales, general and administrative programs (the “2020 Restructuring Plan”).

In connection with this restructuring program, the Company initiated a plan of termination resulting in a reduction of approximately 70 employees.

During the years ended December 31, 2021 and 2020, the Company recorded charges of approximately $ 0.4 million and $ 3.3 million, respectively, related primarily to the reduction in workforce.

The 2020 Restructuring Plan was completed in the second quarter of 2021.

In June 2023, the Company initiated a restructuring program to reduce overall expenses to improve future profitability by reducing the Company’s overall spending (the “2023 Restructuring Plan”).

In connection with this restructuring program, the Company initiated a plan resulting in a reduction of 42 employees.

During the year ended December 31, 2023, the Company recorded charges of approximately $ 9.4 million to “Restructuring and other charges” in its Consolidated Statement of Operations, related to the reduction in workforce, as well as write-downs of obligations related to certain IP development costs and software licenses for engineering development tools.

The 2023 Restructuring Plan was materially completed in the fourth quarter of 2023.

The following table summarizes the 2023 Plan restructuring activities during the year ended December 31, 2023:

(In thousands) Employee

Severance and

Related Benefits Other Costs Total

Liability at December 31, 2022

Charges 4,620 4,748 9,368

Non-cash items* — ( 948 ) ( 948 )

Payments ( 4,152 ) ( 2,600 ) ( 6,752 )

Liability at December 31, 2023

$ 468 $ 1,200 $ 1,668

_________________________________________

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

During the years ended December 31, 2022 and 2021, the Company did not initiate any restructuring programs.

Income (loss) before taxes consisted of the following:

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$ 187,160 $ ( 7,825 ) $ 23,286

The provision for income taxes was comprised of:

The provision for (benefit from) income taxes was comprised of:

Years Ended December 31,

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Foreign-derived intangible income deduction ( 1.9 ) 70.5 ( 55.8 )

Divestiture — — ( 20.4 )

Acquisition 1.6 ( 25.1 ) 8.8

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Deferred revenue — ( 76 )

Depreciation and amortization ( 5,078 ) —

Total gross deferred tax liabilities ( 9,667 ) ( 5,577 )

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Valuation allowance ( 25,056 ) ( 201,883 )

Net deferred tax liabilities $ ( 21,933 ) $ ( 19,938 )

Net deferred tax assets (liabilities) $ 123,430 $ ( 21,933 )

As of December 31,

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( 4,462 ) ( 24,964 )

Net deferred tax liabilities

$ ( 21,933 ) $ ( 19,938 )

Net deferred tax assets (liabilities) $ 123,430 $ ( 21,933 )

The Company periodically evaluates the realizability of its net deferred tax assets based on all available evidence, both positive and negative.

During the third quarter of 2018, the Company assessed the changes in its underlying facts and circumstances and evaluated the realizability of its existing deferred tax assets based on all available evidence, both positive and negative, and the weight accorded to each, and concluded a full valuation allowance associated with U.S.

federal and California deferred tax assets was appropriate.

The Company continues to maintain a full valuation allowance on its California and U.S.

federal deferred tax assets as it does not expect to be able to fully utilize them.

The realizability of the Company’s net deferred tax assets is dependent on its ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets.

During the second quarter of 2023, based on all available positive and negative evidence, the Company determined that it was appropriate to release the valuation allowance on the majority of the Company’s U.S.

federal and other state deferred tax assets.

During the third quarter of 2023, the Company further adjusted its valuation allowance release as a result of a change in forecasted income and tax expense, primarily due to the sale of intangible assets as part of the PHY IP group divestiture.

The Company recognized a $ 177.9 million tax benefit during the year ended December 31, 2023 as a result of the valuation allowance release.

During the second quarter of 2023, the Company reached a cumulative income position over the previous three years.

The cumulative three-year income is considered positive evidence, which is considered objective and verifiable, and thus received significant weighting.

Additional positive evidence considered by the Company in its assessment included recent utilization of tax attribute carryforwards and future forecasts of continued profitability in the United States.

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

Upon considering the relative impact of all evidence during the second quarter of 2023, both negative and positive, and the weight accorded to each, the Company concluded that it was more likely than not that the majority of its deferred tax assets would be realizable, with the exception of primarily its California research and development credits that have not met the “more likely than not” realization threshold criteria.

As a result, the Company released the related valuation allowance against the majority of its federal and state deferred tax assets.

The effect of the valuation allowance release is included as a component of the benefit from income taxes in the accompanying Consolidated Statements of Operations.

The Company has U.S.

federal deferred tax assets related to research and development credits, foreign tax credits and other tax attributes that can be used to offset U.S.

federal taxable income in future periods.

These credit carryforwards will expire if they are not used within certain time periods.

It is possible that some or all of these attributes could ultimately expire unused.

The following table presents the tax valuation allowance information for the years ended December 31, 2023, 2022 and 2021:

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The annual limitations could result in the expiration of the net operating loss and tax credit carryforwards prior to utilization.

As of December 31, 2022, the Company had $ 164.5 million of unrecognized tax benefits including $ 19.6 million recorded as a reduction of long-term deferred tax assets, $ 143.6 million recorded as a reduction of other assets associated with refundable withholding taxes previously withheld from licensees in South Korea, and $ 1.3 million recorded to long-term income taxes payable.

As of December 31, 2023, the Company had $ 185.7 million of unrecognized tax benefits including $ 31.7 million recorded as a reduction of long-term deferred tax assets, $ 75.0 million recorded as a reduction of other assets associated with refundable withholding taxes previously withheld from licensees in South Korea and $ 78.9 million recorded to long-term income taxes payable, which are primarily comprised of $ 77.1 million in income taxes payable related to withholding taxes previously withheld from licensees in South Korea.

As a result of recent court rulings in South Korea, the Company has determined that they may be entitled to refund claims for foreign taxes previously withheld from licensees in South Korea.

The Company recognizes that there are numerous risks and uncertainties associated with the ultimate collection of this refund and has therefore established an offsetting reserve for the entire amount of potentially refundable withholding taxes previously withheld in South Korea.

If recognized, $ 144.9 million would be recorded as an income tax benefit on the consolidated statement of operations.

If the Company is

successful in recovering the $ 162.2 million of refundable withholding taxes from South Korea, the refund would result in an offsetting reduction in U.S.

foreign tax credits.

The Company recognizes that there are numerous risks and uncertainties associated with the ultimate collection of this refund.

The Company previously maintained an offsetting reserve for the entire amount of refundable withholding taxes previously withheld in South Korea.

During the year ended December 31, 2023, the Company concluded it is more likely than not it will recover withholding taxes withheld during the past five years and accordingly filed a claim in October 2023 for refund of certain refundable withholding taxes and recorded an income taxes receivable of $ 82.7 million, with an offsetting long-term payable of $ 72.6 million and a reduction in long-term deferred tax assets of $ 10.1 million for the reduction in U.S.

foreign tax credits.

The Company has recorded a receivable for the portion of withholding taxes paid subsequent to the third quarter of 2023 for which it intends to file a future refund claim.

The Company has not recorded a receivable for the portion of potentially available refunds for which a claim for refund has not been submitted or for which the Company does not intend to pursue at this time, as the Company does not believe recovery of those taxes would be more likely than not if a refund claim were submitted.

The Company continues to evaluate the potential for recovery of these taxes and has therefore established an offsetting reserve for the entire amount of potentially refundable withholding taxes previously withheld in South Korea, for which a claim for refund has not been submitted.

As of December 31, 2022, the Company had $ 164.5 million of unrecognized tax benefits, including $ 19.6 million recorded as a reduction of long-term deferred tax assets, $ 143.6 million recorded as a reduction of other assets associated with refundable withholding taxes previously withheld from licensees in South Korea and $ 1.3 million recorded to long-term income taxes payable.

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The Company recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision (benefit).

At December 31, 2022 and 2021, an immaterial amount of interest and penalties is included in long-term income taxes payable.

At December 31, 2023 and 2022, an immaterial amount of interest and penalties was included in long-term income taxes payable.

Rambus files income tax returns for the U.S., California, India and various other state and foreign jurisdictions.

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In addition, any research and development credit carryforward or net operating loss carryforward generated in prior years and utilized in these or future years may also be subject to examination.

The Company settled its 2010, 2016 and 2018 audits with the California Franchise Tax Board in 2021, agreeing to the immaterial adjustments proposed.

The India returns are under examination by the Indian tax administration for tax years beginning with 2011, except for 2012 through 2015, which were assessed in the Company’s favor, and are subject to examination from 2016 and forward.

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Management regularly assesses the likelihood of outcomes resulting from income tax examinations to determine the adequacy of their provision for income taxes and believes their provision for unrecognized tax benefits is adequate.

At December 31, 2022, no other income taxes (state or foreign) have been provided on undistributed earnings of approximately $ 32.3 million from the Company’s international subsidiaries since these earnings have been, and under current plans will continue to be, indefinitely reinvested outside the United States.

However, if such earnings were distributed, the Company would incur approximately $ 2.4 million of foreign withholding taxes and an immaterial amount of U.S.

The estimated potential reduction in the Company’s unrecognized tax benefits in the next 12 months would not be material.

At December 31, 2023, no other income taxes (state or foreign) have been provided on undistributed earnings of approximately $ 50.3 million from the Company’s international subsidiaries since these earnings have been, and under current plans will continue to be, indefinitely reinvested outside the United States, with the exception of France.

If the non-France earnings were distributed, the Company would incur approximately $ 3.1 million of foreign withholding taxes and an immaterial amount of U.S.

Litigation and Asserted Claims

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however, from time to time, Rambus may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business.

Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on our business, operating results, financial position or cash flows.

Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business, operating results, financial position or cash flows.

Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management attention and resources and other factors.

The Company records a contingent liability when it is probable that a loss has been incurred and the amount is reasonably estimable in accordance with accounting for contingencies.

In July 2023, the Company entered into an asset purchase agreement (the “Purchase Agreement”) with Cadence Design Systems, Inc.

(the “Purchaser”), pursuant to which the Company agreed to sell certain assets and the Purchaser agreed to assume certain liabilities from the Company, in each case with respect to the Company’s PHY IP group, for $ 110.0 million in cash, subject to certain adjustments and certain closing conditions (the “Transaction”).

The decision to sell this business reflects the evolution of the Company’s core semiconductor business to focus on the development of digital IP and chips, including novel memory solutions for high-performance computing, to support the continued advancement of the data center and artificial intelligence.

The Transaction was completed on September 6, 2023 and resulted in net proceeds of approximately $ 106.3 million, which consisted of the initial selling price of $ 110.0 million offset by approximately $ 3.7 million related to certain purchase price adjustments.

The Company recognized a net gain on divestiture of the PHY IP group in its Consolidated Statements of Operations of approximately $ 90.8 million during the year ended December 31, 2023.

Transaction costs of approximately $ 1.4 million were included in the net gain of $ 90.8 million.

The divestiture of the PHY IP group did not represent a strategic shift that would have a major effect on the Company’s consolidated results of operations, and therefore its results of operations were not reported as discontinued operations.

Concurrent with the Transaction, the Company also recorded a charge of approximately $ 10.0 million in the Company’s Consolidated Statements of Operations during the year ended December 31, 2023.

The charge was primarily related to the accelerated amortization of software licenses that were not directly part of the PHY IP disposal group.

There were no acquisitions during the year ended December 31, 2023.

2022 Acquisition

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On May 20, 2022, (the “Closing Date”), the Company completed its acquisition of Hardent, a leading electronic design company, by acquiring all of its outstanding shares.

The Company acquired Hardent for a total consideration of approximately $ 16.1 million, which consisted of $ 14.7 million in initial cash consideration paid at the Closing Date, $ 1.2 million was deposited into an escrow account to fund indemnification obligations to be released within 18 months after the Closing Date, and $ 0.2 million was deposited into an escrow account to fund other contractual provisions related to certain working capital

The Company acquired Hardent for a total consideration of approximately $ 16.1 million, which consisted of $ 14.7 million in initial cash consideration paid at the Closing Date, $ 1.2 million deposited into an escrow account to fund indemnification obligations to be released within 18 months after the Closing Date and $ 0.2 million deposited into an escrow account to fund other contractual provisions related to certain working capital adjustments.

The addition of the technology and expertise from Hardent augments the Company’s CXL memory interconnect initiative.

As part of the acquisition, the Company agreed to pay certain Hardent employees approximately $ 1.2 million in cash over three years following the Closing Date (the “Retention Bonus”), to be paid in three equal installments on each of the dates that are 12 months, 24 months and 36 months following the Closing Date.

The Retention Bonus payouts are subject to the condition of continued employment.

Therefore, the Retention Bonus payouts will be treated as compensation and will be expensed ratably over the retention period.

As part of the acquisition, the Company agreed to pay certain Hardent employees approximately $ 1.2 million in cash over three years following the Closing Date (the “Retention Bonus”), to be paid in three equal installments on each of the dates that were 12 months, 24 months and 36 months following the Closing Date.

The Retention Bonus payouts are subject to the condition of continued employment, therefore the Retention Bonus payouts will be treated as compensation and will be expensed ratably over the retention period.

As of December 31, 2022, the Company had incurred approximately $ 1.2 million in external acquisition costs in connection with the transaction, which were expensed as incurred.

The purchase price allocation and related accounting for this acquisition is preliminary.

The preliminary fair value estimates for the assets acquired and liabilities assumed were based upon preliminary calculations and valuations and the Company’s estimates and assumptions for the acquisition are subject to change if the Company obtains additional information during the measurement period.

The fair value of the intangible assets acquired was determined by management primarily by using the multi-period excess earnings method under the income approach.

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The Company performed a valuation of the net assets acquired as of the Closing Date.

The total consideration from the acquisition was allocated as of the Closing Date, and reflects adjustments made during the measurement period, as described in Note 6, “Intangible Assets and Goodwill,” to finalize the purchase price accounting, as follows:

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

(In thousands) Total

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Total $ 16,141

The goodwill arising from the acquisition is primarily attributed to synergies related to the combination of new and complementary technologies of the Company and the assembled workforce of the acquired business.

This goodwill is not expected to be deductible for tax purposes.

The goodwill arising from the acquisition was primarily attributed to synergies related to the combination of new and complementary technologies of the Company and the assembled workforce of the acquired business.

This goodwill was not deductible for tax purposes.

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

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The following pro forma financial information presents the combined results of operations for the Company and Hardent as if the acquisition had occurred on January 1, 2021.

The pro forma financial information has been prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the acquisition actually taken place on January 1, 2021, and should not be taken as indicative of future consolidated operating results.

The pro forma financial information was prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the acquisition actually taken place on January 1, 2021, and should not be taken as indicative of future consolidated operating results.

Additionally, the pro forma financial results do not include any anticipated synergies or other expected benefits from the acquisition:

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The fair value of the intangible assets acquired was determined by management primarily by using the estimated current replacement cost under the cost approach.

The fair values of the remaining assets acquired and liabilities assumed approximated

their carrying values at the AnalogX Closing Date.

The fair values of the remaining assets acquired and liabilities assumed approximated their carrying values at the AnalogX Closing Date.

The Company performed a valuation of the net assets acquired as of the AnalogX Closing Date.

The total consideration from the business combination was allocated as of the Closing Date, and reflects adjustments made through the measurement period, as described in Note 6, “Intangible Assets and Goodwill,” to finalize the purchase price accounting, as follows:

The total consideration from the business combination was allocated as of the Closing Date and reflects adjustments made through the measurement period to finalize the purchase price accounting, as follows:

(In thousands) Total

11 unchanged sentences

Total $ 47,513

Approximately $ 26.9 million of the goodwill is expected to be deductible for tax purposes.

Approximately $ 26.9 million of the goodwill was deductible for tax purposes.

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

5 unchanged sentences

Total $ 10,600

IPR&D consists of multiple projects relating to the development of various high-speed SerDes technologies.

The projects are expected to be completed within the next three years.

The acquired IPR&D will not be amortized until completion of the related products, which is determined by when the underlying project reaches technological feasibility and commences commercial production.

Upon completion, the IPR&D projects will be amortized over their useful lives, which are expected to range between three years and five years .

IPR&D consisted of multiple projects relating to the development of various high-speed SerDes technologies.

The projects were expected to be completed within the subsequent three years .

In the third quarter of 2023, the Company disposed the $ 3.8 million related to the AnalogX IPR&D in connection with the divestiture of the Company’s PHY IP group.

Refer to Note 20, “Divestiture,” for additional information.

On June 16, 2021, the Company announced that it had entered into an agreement to acquire PLDA, a provider of high-speed interconnect solutions.

On August 18, 2021 (the “PLDA Closing Date”), the Company completed its acquisition of PLDA by acquiring all of its outstanding shares.

Under the terms of the Share Purchase Agreement, the total consideration of approximately $ 85.6 million is comprised of $ 67.1 million in closing cash consideration, 0.3 million shares of the Company’s common stock (valued based on the Company’s closing stock price at the PLDA Closing Date, which amounted to approximately $ 6.9 million) and up to an additional $ 21.0 million to be paid in shares of common stock, currently valued at $ 16.9 million (the “fair value of the earn-out liability”), subject to certain revenue targets of the acquired business for the next three years.

Under the terms of the Share Purchase Agreement, the total consideration of approximately $ 85.6 million was comprised of $ 67.1 million in closing cash consideration, 0.3 million shares of the Company’s common stock (valued based on the Company’s closing stock price at the PLDA Closing Date, which amounted to approximately $ 6.9 million) and up to an additional $ 21.0 million to be paid in shares of common stock, valued at $ 16.9 million as of the acquisition date (the “fair value of the earn-out liability”), subject to certain revenue targets of the acquired business for the subsequent three years.

The fair value of the earn-out liability will be remeasured each quarter, depending on the acquired business’s revenue performance relative to target over the applicable period.

The Company has classified its liability for the contingent earn-out consideration related to the PLDA acquisition within Level 3 of the fair value hierarchy because the fair value is

determined using significant unobservable inputs.

The Company classified its liability for the contingent earn-out consideration related to the PLDA acquisition within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs.

A portion of the purchase price, $ 10.0 million of the consideration, was deposited into an escrow account to fund indemnification obligations and other contractual provisions, to be released 24 months after the PLDA Closing Date.

The addition of the technology and expertise from PLDA augments the Company’s digital controller IP and CXL memory interconnect initiative.

As part of the acquisition, the Company agreed to pay certain PLDA employees $ 3.0 million in cash over three years following the PLDA Closing Date (the “PLDA Retention Bonus”), to be paid in three equal installments on each of the dates that are 12 months, 24 months and 36 months following the PLDA Closing Date.

As part of the acquisition, the Company agreed to pay certain PLDA employees $ 3.0 million in cash over three years following the PLDA Closing Date (the “PLDA Retention Bonus”), to be paid in three equal installments on each of the dates that were 12 months, 24 months and 36 months following the PLDA Closing Date.

The PLDA Retention Bonus payouts are subject to the condition of continued employment.

Therefore, the PLDA Retention Bonus payouts will be treated as compensation and will be expensed ratably over the retention period.

Therefore, the PLDA Retention Bonus payouts will be treated as compensation and expensed ratably over the retention period.

As of December 31, 2021, the Company had incurred approximately $ 1.4 million in external acquisition costs in connection with the transaction, which were expensed as incurred.

The fair value of the intangible assets acquired was determined by management primarily by using the multi-period excess earnings method under the income approach.

This method reflects the present value of the projected cash flows that are expected to be generated by the existing technologies less charges representing the contribution of other assets to those cash flows.

The fair values of the remaining assets acquired and liabilities assumed approximated their carrying values at the PLDA Closing Date.

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Total $ 85,641

This goodwill is not expected to be deductible for tax purposes.

This goodwill was not deductible for tax purposes.

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

5 unchanged sentences

Total $ 28,800

IPR&D consists of multiple projects relating to the development of PLDA’s PCIe Gen 6 and CXL 3.0 technologies.

The projects are expected to be completed within the next 24 months.

IPR&D consisted of multiple projects relating to the development of PLDA’s PCIe Gen 6 and CXL 3.0 technologies.

The projects are expected to be completed within 36 months from the date of acquisition.

The acquired IPR&D will not be amortized until completion of the related products which are determined by when the underlying project reaches technological feasibility and commences commercial production.

Upon completion, the IPR&D projects will be amortized over their respective useful life, which are expected to range between three years and five years .

Upon completion, the IPR&D projects will be amortized over their respective useful lives, which are expected to range between three years and five years .

Unaudited Pro Forma Combined Consolidated Financial Information

The following pro forma financial information presents the combined results of operations for the Company and AnalogX and PLDA as if the acquisitions had occurred on January 1, 2020.

The pro forma financial information has been prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the acquisitions actually taken place on January 1, 2020, and should not be taken as indicative of future consolidated operating results.

The pro forma financial information was prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the acquisitions actually taken place on January 1, 2020, and should not be taken as indicative of future consolidated

operating results.

Additionally, the pro forma financial results do not include any anticipated synergies or other expected benefits from the acquisitions:

For the Years Ended December 31,

(In thousands) 2021 2020

(In thousands) For the Year Ended December 31, 2021

Total revenue $ 338,961

Net income (loss) $ 16,533 $ ( 33,871 )

Net income $ 16,533

The pro forma net income for 2021 was adjusted to exclude $ 2.2 million of acquisition-related costs incurred in 2021.

Consequently, the pro forma net loss for 2020 was adjusted to include these costs.

Subsequent Event

During the first quarter of 2023, the Company paid upon maturity the remaining $ 10.4 million in aggregate principal amount of the 2023 Notes.

Additionally, the Company delivered approximately 0.3 million shares of the Company's common stock as settlement related to the in-the-money conversion feature of the 2023 Notes at maturity, and received an equal amount of shares due to the exercise of the related Convertible Note Hedge Transactions.

INDEX TO EXHIBITS

Exhibit Number Description of Document

3.1(1) Amended and Restated Certificate of Incorporation of Registrant filed May 29, 1997.

3.2(1) Certificate of Amendment of Amended and Restated Certificate of Incorporation of Registrant filed June 14, 2000.

3.1(1) Amended and Restated Certificate of Incorporation of Registrant dated April 27, 2023.

3.2(1) Amended and Restated Bylaws of Registrant dated April 27, 2023.

4.1(2) Form of Registrant’s Common Stock Certificate.

4.2(4) Indenture, dated November 17, 2017, between Rambus Inc and U.S.

Bank National Association (including form of 1.375% Convertible Senior Note due 2023).

4.3 Description of Securities.

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10.10(8)+ Semiconductor Patent License Agreement, dated January 19, 2010, between Registrant and Samsung Electronics Co., Ltd.

10.11(11) First Amendment of Lease, dated November 4, 2011, by and between Registrant and MT SPE, LLC.

10.11(9) Employment Agreement between the Company and Luc Seraphin, dated as of October 25, 2018.

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and SK hynix Inc.

10.20(4) Form of Convertible Note Hedge Confirmation.

10.21(4) Form of Warrant Confirmation.

10.19(14) Lease agreement between Rambus Inc.

and 237 North First Street Holdings, LLC dated July 8, 2019.

10.23(18) Director Transition and Consulting Agreement dated March 11, 2022, by and between Rambus Inc.

and James Mitarotonda.

10.20(15) Offer Letter, dated August 9, 2019, by and between Rambus Inc.

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and Micron Technology, Inc.

Exhibit Number Description of Document

10.27(19)+ Amendment No.

2 dated October 27, 2022, to the Semiconductor Patent License Agreement, dated January 19, 2010, between Registrant and Samsung Electronics Co., Ltd.

10.28(20)+ Amendment 2 to Semiconductor Patent License Agreement, dated March 31, 2023, between Registrant and SK hynix.

10.29(21) Asset Purchase Agreement by and between Rambus Inc.

and Cadence Design Systems, Inc., dated as of July 19, 2023.

10.30(22) Form of Accelerated Share Repurchase Program Agreement.

1 unchanged sentence

23.1 Consent of Independent Registered Public Accounting Firm.

Exhibit Number Description of Document

Power of Attorney.

5 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

97* Compensation Recovery Policy, as adopted on July 27, 2023.

101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

(1) Incorporated by reference to the Form 10-K filed on February 28, 2022.

(2) Incorporated by reference to the Form 8-K filed on April 30, 2013.

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

(2) Incorporated by reference to the Form S-1/A (file no.

333-22885) filed on April 24, 1997.

(4) Incorporated by reference to the Form 8-K filed on November 17, 2017.

(3) Incorporated by reference to the Form 10-Q filed on May 7, 2021.

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(5) Incorporated by reference to the Form 8-K filed on April 30, 2014.

(8) Incorporated by reference to the Form 8-K filed on May 6, 2020.

(6) Incorporated by reference to the Form 10-Q filed on July 23, 2015.

(7) Incorporated by reference to the Form 8-K filed on May 6, 2020.

(8) Incorporated by reference to the Form 10-Q filed on May 3, 2010.

(11) Incorporated by reference to the Form 10-K filed on February 24, 2012.

(9) Incorporated by reference to the Form 8-K filed on October 29, 2018.

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(14) Incorporated by reference to the Form 10-Q filed on August 2, 2019.

(18) Incorporated by reference to the Form 8-K filed on March 11, 2022.

(15) Incorporated by reference to the Form 8-K filed on August 28, 2019.

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(18) Incorporated by reference to the Form 10-K filed on February 26, 2021.

(23) Incorporated by reference to the Form 8-K filed on September 12, 2022.

(19) Incorporated by reference to the Form 10-K filed on February 24, 2023.

(20) Incorporated by reference to the Form 10-Q filed on May 5, 2023.

(21) Incorporated by reference to the Form 8-K filed on July 20, 2023.

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

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

/s/ Luc Seraphin

Chief Executive Officer and President

(Principal Executive Officer)

/s/ Desmond Lynch

Desmond Lynch

Senior Vice President, Finance and Chief Financial Officer

(Principal Financial Officer)

February 23, 2024

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Signature Title Date

/s/ LUC SERAPHIN Chief Executive Officer, President and Director (Principal Executive Officer) February 24, 2023

/s/ LUC SERAPHIN Chief Executive Officer, President and Director

(Principal Executive Officer) February 23, 2024

/s/ DESMOND LYNCH Senior Vice President, Finance and Chief Financial Officer

(Principal Financial and Accounting Officer) February 24, 2023

(Principal Financial Officer) February 23, 2024

Desmond Lynch

/s/ JOHN ALLEN Vice President, Accounting and Chief Accounting Officer

(Principal Accounting Officer) February 23, 2024

/s/ CHARLES KISSNER Chairman of the Board of Directors February 23, 2024

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/s/ MEERA RAO Director February 23, 2024

/s/ KAREN ROGGE Director February 24, 2023

/s/ SANJAY SARAF Director February 24, 2023

/s/ NECIP SAYINER Director February 23, 2024

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures