Rambus Inc. (NASDAQ:RMBS) Q4 2019 Earnings Conference Call - Final Transcript
Jan 27, 2020 • 05:00 pm ET
$0.09 for the quarter.
Looking ahead to 2020, I expect Q2 down 2%, because of our typical seasonality and then modest growth in Q3. I expect Q4 to be roughly flat with Q3 due to the structure of our licensing agreements. As we've communicated previously, structural step downs in several of our long-term licensing agreements impacted our 2019 revenue.
Last year our excellent product growth and operational efficiencies offset the structural step downs. In 2020, we had the last of structural step downs under our current license agreements, after which patent licensing billings will level off. As we look to the future, I expect subsequent revenue growth in our product businesses to provide growth on both the top line and bottom line.
We expect to deliver gross margins in the 55% to 60% range. From an expense perspective, we expect COGS to move in line with product shipments through the year. We anticipate operating expenses will come down gradually through the year due to the operational efficiencies we've already implemented. All told, these changes reflect $5 million of higher revenue and $0.02 of higher EPS than current analyst consensus estimates -- expectations for 2020.
Let me finish with a summary on Slide 11. We're proud of the solid performance by our team and the progress we continue to make against our strategic initiatives to drive long-term profitable growth. We've had a significant amount of M&A activity as we refocused our company and are very pleased with our execution on organic and inorganic growth. While we understand that ASC 606 added a level of complexity to our financial reporting, it's important to reiterate that the underlying financial strength of our business remains strong, reflected in our demonstrated ability to generate cash.
We have refocused our product portfolio around Rambus' core strengths in the semiconductor industry, improved our operational efficiency and profitability, generated solid cash from operations and leveraged our strong balance sheet to support our strategic initiatives. We continue to focus on our core markets and are well positioned for 2020 and beyond.
With that, I'll turn the call back over to Christine to begin the Q&A. Could we please have our first question?