Ron Black - President and Chief Executive Officer Satish Rishi - Senior Vice President and Chief Financial Officer

Gary Mobley - Benchmark Suji De Silva - Topeka Sandeep Vajekar - Jefferies

Good day, ladies and gentlemen, and welcome to the First Quarter 2014 Rambus Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, today’s conference is being recorded. I would now like to turn the call over to Satish Rishi, Senior Vice President and Chief Financial Officer.

Thank you, Jamie, and welcome to the Rambus first quarter 2014 results conference call. I am Satish Rishi, CFO. And on the call with me today is Dr. Ron Black, our President and CEO. The press release for the results that will be discussed here today have been filed with the SEC on Form 8-K. A replay of this call will be available for the next week at 855-859-2056. You can hear the replay by dialing the toll-free number and then entering ID number 22388776 when you hear the prompt. In addition, we are simultaneously webcasting this call, and along with the audio, we are webcasting slides. So even if you are joining us via conference call, you may want to access the website for the slide presentation. A replay of this call can be accessed on our website beginning today at 5:00 PM Pacific Time. In an effort to help provide greater clarity in our financials, we are using both GAAP and non-GAAP pro forma form in our press release and on this call. We use non-GAAP or pro forma numbers to discuss our operating results as well as forward-looking projections, which we believe are indicative of complete performance as they include certain cash events and exclude our non-cash and discrete events, such as impairment and restructuring charges. We believe these elements do not provide a good indication of long-term performance. We provide reconciliation to the most comparable GAAP measures on our website. In the case of any forward-looking projections, our estimates containing non-GAAP information discussed on this call, the reconciliation will not be available due to unreasonable amount of effort needed to make such a determination, I will provide such information as more fully described on our website. You can find a copy of earnings release and the reconciliation on our website at rambus.com on the Investor Relations page under Press Releases and Events & Presentations. The discussion today will contain certain forward-looking statements regarding our financial prospects, litigation and demand for our technologies among other things. These statements are subject to risks and uncertainties that are discussed during the call and may be more fully described in the documents we file with the SEC, including our 8-Ks, 10-Qs and 10-Ks. These forward-looking statements may differ materially from our actual results and we are under no obligation to update these statements. Now, I will turn the call over to Ron.

Thank you, Satish and good afternoon everyone. We turned in another solid quarter, with revenue of $78 million above our guidance of $70 million to $75 million. Pro forma net income was $19.6 million also above our guidance of $12 million to $17 million. I am pleased to report that our GAAP net income was almost $8 million, which is the first time in nine quarters that we have been GAAP profitable. Of course, our intention is to continue. As Satish will explain in more detail in a few minutes, our year-over-year quarterly revenue growth was impressive with the total business growing 17% and the new business areas, excluding memory, growing 138%. In the first quarter, we were pleased that our strategic SoC customer took an option of extending their patent license to more advanced DDR technologies incrementally in increasing our revenue for the quarter, but more importantly also providing us an opportunity to engage in broader technology licensing activities. On the patent side, we also profitably resolved the situation with Nanya, a specialty memory company, which was our last open litigation proceeding and again providing a platform for broader technology collaboration. As many of you know, the first quarter is important from a trade show, conference and industry event standpoint, with the Consumer Electronics Show, CES; Mobile World Congress, MWC; RSA Security Conference; and DesignCon, all occurring within the quarter. At MWC, we highlighted our efforts in capturing and manipulating data with our binary pixel and smart-sensor technologies. Since last year, we have made improvements in our binary pixel technology providing enhanced stop motion capabilities that add to our existing single-shot, ultra-high dynamic range and improved low-light sensitivity features. We are in active discussions with potential customers for this technology and hope to share more in the coming months. Also at MWC, we unveiled our lens less smart-sensor technology that takes a novel approach to reduce the size, cost and power consumption for sensing and also for selective low resolution imaging. This smart-sensor technology eliminates the relatively large traditional lens, auto-focus motors and associated enclosure, and replaces the functionality with miniscule diffraction gratings that makes the overall sensor extremely small. This technology which is being developed under our labs group can also be used to easily detect motion which is why it is particularly interesting for sensing applications of all kinds. Since this technology takes advantage of Moore’s law by leveraging the computing power that exists even in mobile phones today, it is a natural technology for us to collaborate with others companies on. Indeed the technology is found to be so impressive at MWC that the well-regarded technology publication Tom’s Guide named it one of the top five best technologies at the show. At this year’s DesignCon, we highlighted our overall customer engagement model with our LabStation validation platform. This comprehensive test environment provides customers with a tool suite to validate advanced low power high performance memory systems plus helping customers enhance the quality and reduce the time to market of the chips and systems. This tool is proving valuable to a growing list of our customers and while it is not a large revenue generator for us, it is a valuable element of our complete memory product offering much as our DPA Workstation or DPAWS is for our security business. Looking at the broader industry, we see our role evolving in the $2.7 billion semiconductor IP space. According a 2013 IBS report, we were ranked number four behind ARM, Synopsys and Imagination MIPS as a semiconductor IP provider. As design tool and (indiscernible) costs increase more and more fab and fabless semiconductor companies are looking at ways to optimize costs and expense and finding that outsourcing their SIP requirements is a good way to do so. We believe that this trend will not only continue but accelerate over the next few years. This in turn bodes well for companies that produce high quality reliable semiconductor IP for licensing as we do. Indeed, I have recently heard more people talking about the evolution of the semiconductor industry from fab to fabless to chipless where chipless means semiconductor IP. Our core business segments are each also positioned well. As most of you know the memory industry and especially DRAM continues to do well. Higher performance server class DRAM and low power mobile DRAM can benefit from our enhanced R+ enhanced industry standard cores which are gaining traction with several customers as we ramp up engagement. With all of the global security breaches ranging from the target credit exposure to the Heartbleed virus enterprises and consumers are increasingly concerned about security, we see increased number of both semiconductor and system companies interested in our DPA countermeasure technology and our portfolio of cryptographic cores for content protection and anti-counterfeiting. Our LED lighting technology is also doing well as our main customer, Eaton’s Cooper Lighting continues to ramp its LED products. We also continue to work with customers in Japan and Europe and believe that over time we will add new mainstream lighting customers to these geographies. However, I need to caution investors that the lighting business moves rather slowly, so this growth will probably not be in the near-term. Finally, we are pleased to see our A19 lamp winning EE Times ACE Award for the best technology. As a reminder this lamp is built upon the same technology that is also used in LED solutions provided by Eaton’s Cooper. In summary, I am happy to say that it was again a good quarter for Rambus with strong financials and solid year-over-year growth. Our strategy of engaging the industry more collaboratively is working and we are increasingly optimistic that we will drive further growth in all segments. With that I will hand the call back over to Satish to provide an outlook and our financials and guidance. Satish?

Thanks, Ron. In the past, we have used the non-GAAP revenue measure, customer licensing income or CLI which included cash proceeds that were received under signed patent license agreements as well as cash proceeds from the sale of intellectual property of products. Given the convergence between CLI and revenue and the fact that pending litigation and settlement events are behind us, we are retiring the use of CLI and will try to simply our financials by focusing on revenue and other vitally used GAAP and non-GAAP measures. We will still use pro forma expenses but there will be one less reconciliation item to contend with. Now, I will review some of the financial highlights for the quarter before going into additional detail. Revenue for the first quarter was $78.3 million, above our guidance of $70 million to $75 million. Sequentially revenue increased by 6.6% and year-over-year revenue increased by 17.1%. Due to slow and expected headcount addition as well as lower litigation expenses pro forma operating expenses for the quarter came in at $43.9 million, slightly below our guidance of $48 million to $45 million. Pro forma net income for the quarter was $19.6 million as compared to our guidance of $12 million to $17 million. As Ron mentioned during the quarter, one of our customers exercised their option to take a license to a more advanced memory controller technology. We were pleased to see that the customer felt that our patents and more advanced memory technologies were relevant to their future business, and as such, they excised their option, the full impact of that option exercise, their one-time payment of $4 million, which has been recognized as revenue in the quarter. For the quarter, revenue for MID, CRI, and LDT business units was $61.2 million, $12.9 million and $4.2 million respectively. These numbers represent a 7.7%, 1.6% and a 7.9% sequential growth respectively. However, the better comparison is the growth year-over-year, as our investments in the new businesses start to payoff. Year-over-year, MID grew 2.5% and CRI and LED grew by 87.5% and over 1,000% respectively. For the quarter, revenue from DRAM customers was $38.9 million as compared to $39.4 million last quarter and $25.7 million in the quarter year ago. Pro forma operating expenses, which exclude retention bonuses, stock-based comp, and amortization of intangible assets, were $43.9 million for the first quarter, flat to the previous quarter and a 5.9% decline from a year ago. Not only our overall expense was down year-over-year due to lower litigation and consulting expenses, where and how we are allocating our resources has also changed as we continue to manage our expenses and invest in areas we believe have the greatest impact to investors. As we have shared with you in our investor presentations, pro forma EBITDA continues to grow at a significant expansion and was 48% for the quarter as compared to 46% in the last quarter and 36% for the quarter a year ago. Pro forma interest and other expenses for the first quarter were $3.7 million relatively flat to the prior quarter. Using a rate of 36% for pro forma pre-tax income, pro forma net income for the quarter was $19.6 million, a 19% increase quarter-over-quarter and an 81% increase year-over-year. We continue to generate free cash flow and cash balances increased by $16 million over the quarter ending the quarter at $403 million. Net cash defined as cash, cash equivalents and marketable securities less outstanding debt was $93 million as compared to $77 million last quarter and $42 million a year ago. Just a reminder that we do have the $172.5 million of our 5% notes maturing in June this year and we expect to repay the principal and cash. Now, I will provide guidance for the second quarter 2014 as well as for the full year. This guidance reflects a reasonable estimate and our actual results could materially differ from what I am about to review. Historically, we have had seasonality impact our second quarter due to lower royalty revenues from PSV shipments and also due to the fact that CRI has a couple of customers who make an annual payment in Q1 versus a typical quarterly payment. With that in mind, we are estimating our revenue for the second quarter to be between $69 million and $74 million. We expect pro forma expenses, which excludes restructuring charges, retention bonuses, stock-based comp and amortization of intangible assets to be between $44 million and $47 million. Pro forma net income is expected to be between $12 million and $17 million for the quarter. For the full year, it is too early to make any material changes to our previous guidance and we still expect revenue to be between $295 million and $305 million and operating expenses between $180 million and $185 million. We have been generating cash flow from operations for the past three consecutive quarters and expect to continue doing so. We expect our cash from operations for the full year to be between $75 million to $85 million. We are looking forward to providing more details on our business units and opportunities when we host and meet you at our Analyst Day on June 11 in New York. We are now ready to open the lines for Q&A. Operator?

(Operator Instructions) The first question comes from Gary Mobley from Benchmark. Gary Mobley - Benchmark: Hi, guys. Thanks for taking my question. Now, given that you are keeping your fiscal year ‘14 revenue outlook at around $300 million, if you are looking at the midpoint, that’s implying your second half revenue is equal to the first half and I am just curious to get your insight as to why you are not expecting sequential growth as the year progresses?

Hi, Gary, it’s Ron. So it’s just too early to update it. I think it’s appropriate to just to leave it where it is at this point. We can update it in the second quarter when we complete it. Satish kind of gave you an outline of where it’s at. I don’t think you should take or read anything more into this as good or bad just we are being our naturally conservative selves. Gary Mobley - Benchmark: Okay, alright. And could you elaborate a little bit more about the SoC licensee who grew – opted for a more advanced memory controller. And in your prepared remarks you mentioned or hinted to future license engagements with this SoC company might that bring additional revenue and I am just trying to get a sense of the materiality of it?

Yes, sure. So as we kind of evolved our strategy and we look to having reasonable settlements and move on and we kind of fixed our relationships with a variety of these different customers. It has opened up an incredible ground swell of collaboration. So the customers that wouldn’t talk to us from the beginning because of fear of our style of engagement are now heavily involved with us. And so we are just trying to be very specific about all of these engagements that it’s not just about the patent licensing that they happened to take, in this case it’s very positive because they chose to that’s what Satish described. But it’s also opened up the opportunity for us to look at other technology licensing opportunities and that’s what we pointed out in the prepared remarks. We are seeing more and more of the SoC customers that are looking at costs and expense. And as there is a number of license blocks that go into making up these SoCs, it’s just not economically viable for them to do all of their own work. So as they do this make buy analysis, Rambus today because we are back engaged in this in a very open and collaborative way are on the radar screens to add additional collaboration. So it’s really a multiple step process and we are executing to exactly what we said. Of course, it takes time because it’s really only a year since most people recognized we are back into the game doing this. So it’s coming off about as optimistically as we could possibly perceive at this point. Gary Mobley - Benchmark: Just to summarize that, this is an example of the patent licensee who is sort of morphing into a design intellectual property customer, is that a fair way to assess it?

Yes. And in fact one of the things we said a couple of times in the last calls is that as we move forward it’s going to be harder and harder to differentiate between a patent license and a technology license. In fact, the things that we are talking to many of the customers today it’s blended. So it’s completely blended. Gary Mobley - Benchmark: And the last question from me Satish could you go over the division numbers again?

MID was – for this quarter, MID was $61.2 million, CRI was $12.9 million and LDT was $4.2 million for a total $78.3 million in revenue. And a year ago it was $59.7 million, $6.9 million and $0.3 million respectively. Gary Mobley - Benchmark: Alright, very helpful. Thank you, guys.

Alright, thank you.

Your next question comes from Suji De Silva from Topeka. Suji De Silva - Topeka: Hi Ron and Satish, nice job on the quarter guys. In terms of the operating – the pro forma operating margin is in the mid-40s with planning, can we talk about – can you talk about target level that you think and you would want to run from the business that longer term investment versus the leverage there?

Yes we see – we can talk about targets for this year and I think I have sort of hardly given what the targets might be, but it’s for longer term where we will give you more detail as we go through our strategic plan and when we meet with you on June 11 at the Analyst Day, I will definitely provide longer term guidance on our operating margins. Suji De Silva - Topeka: Okay, I will wait for that event. Then in term of this customer that opted – on the SoC customer that opted to go to more leading edge DDR technology, what percent of customers in SoC have that option that have not exercised it yet versus – are most of the customers already at that advanced memory technology and this customer is catching up?

Yes, this was a unique deal with an option. We typically haven’t done deals with an option, so I would say that almost all the other customers do have access to the current technologies. Suji De Silva - Topeka: Understood. Okay. And last question perhaps to Ron, Ron you talked about maybe the smaller memory companies, there aren’t too many companies out there, but with small ones versus the larger ones perhaps being more aggressive leveraging you guys to “catch up” versus the larger guys, are you actually seeing that play out or are the larger guys being as aggressive in this environment to try to advance the technologies? Thanks.

I am just trying to understand it exactly. So, can you say it again, the larger companies? Suji De Silva - Topeka: Sure. Guys like Nanya were very kind of small in memory market versus the big guys. Are they more aggressive in trying to catch up by leveraging you guys or not or is that not playing out versus the larger guys?

No, I think Nanya is obviously a specialty manufacturer. So, they are very aggressively pursuing different options and we are looking at helping them. But our engagement is very broad across all of the customers. And I think especially in the memory industry today with the positive trends, I am cautiously optimistic, but there is a lot of design activity for us going forward with everybody. Suji De Silva - Topeka: Okay, great. Thanks guys.

(Operator Instructions) And there appear to be no further questions. I would now like to turn the call – so we did just get another question from Sandeep Vajekar [Jefferies]. Please go ahead. Sandeep Vajekar - Jefferies: Hi, guys. Thanks for taking the question and nice look in the quarter. First one on the CRI side, what types of applications or technologies do you think would be of highest commercial importance near-term? For example, what portion of the growth in CRI this year do you think would come from the mobile market, so that’s smartphone and tablet?

Well, thanks for the comment, Sandeep and I am thinking about when you say what percentage growth will come from the mobile market, we do have some customers who have signed up in the mobile market, but I think longer term, maybe not for this year, but longer term and maybe more – the overall growth for CRI will be coming from the mobile market. I mean, that’s where security is more important and that’s where we expected to get more traction with companies that are making handhelds and tablets and there are a couple of other areas we are working on which may also be related to mobile market, but not directly. I can’t give you precise number for this year, but I think just on an overall level longer term, we believe that mobile is definitely very favorable for our CRI business. Sandeep Vajekar - Jefferies: Okay, great. And then just to follow-up on CRI, can you share with us what portion of your current licensees are already licensed for CRI technology? So, for example, is MediaTek already licensed for CRI? I am just curious if there is potential for some of your existing licensing agreements to be updated to include CRI?

Give me one second. Well, MediaTek is not licensed to CRI. And it’s difficult to give you when you say percent, do you want like, percent of number of customers or license to MID and percent of customers are not or what percent of revenue is coming from customers or license to MID, but not to CRI? Sandeep Vajekar - Jefferies: I think either or both, whatever is easiest for you. I am just looking for some framework to see if there is opportunity in your existing – amongst your existing licensees for CRI?

Yes. I think the answer to that is definitely a yes. There is opportunity for CRI with our existing license base. And then there is a separate subset of companies that are not licensed to either MID or CRI. And then there might be a very small subset of companies that might be purely CRI and maybe would not require a MID license. Sandeep Vajekar - Jefferies: Okay, great. And then one more for me, on the technology side, what do you think are the primary focus areas for Rambus in terms of new technology development? If you could give us some framework in terms of the resources that you are spending in one area versus the other? That would be helpful.

Well, it’s really across the board, Sandeep. It’s – we are very passionate about the memory business. We are gaining a lot of traction on our DDR3 and more advanced DDR4 products that we are working on. Same thing with CRI, the CryptoFirewall core is for anti-counterfeiting and content production, are really doing rather well with customers. We have a whole set of other strategic products that we haven’t announced. So I can’t say what those are. And we have selected very small investments in our labs like with the lens less smart sensors as an example. So, we have the distribution of products. I think we have proven over the last year and a half that things that aren’t making it. We stopped the investment and we reinvest in the ones that are and we have really high confidence that are going to generate value for shareholders. Sandeep Vajekar - Jefferies: Okay, great. I appreciate it. Thank you so much.

Hey, I am showing no further questions. I would now like to turn the call back over to Ron Black.

Thank you all for your continued interest and support. We are very pleased with our Q1 results and our growth trajectory. I look forward to seeing you all at our Analyst Day on June 11. Have a nice day.

Ladies and gentlemen, that does conclude the conference for today. Again, thank you for your participation. You may all disconnect. Have a good day.