Participants

Desmond Lynch; Senior Vice President - Finance, Chief Financial Officer; Rambus Inc

Luc Seraphin; President, Chief Executive Officer, Director; Rambus Inc

Gary Mobley; Analyst; Loop Capital

Aaron Rakers; Analyst; Wells Fargo

Blayne Curtis; Analyst; Jefferies

Mehdi Hosseini; Analyst; Susquehanna International Group

Natalia Winkler; Analyst; Evercore ISI

Kevin Cassidy; Analyst; Rosenblatt Securities

Tristan Gerra; Analyst; Robert W. Baird

Presentation

Operator

Welcome to the around this first quarter fiscal year 2025 earnings conference call. (Operator Instructions)
And now like to turn the conference over to Dan Lynch, Chief Financial Officer.

Desmond Lynch

Thank you, operator, and welcome to the Rambus first quarter 2025 results conference call.
I'm Dan Lynch, Chief Financial Officer at Rambus and on the call with me today is Luc Seraphin, our CEO detached release for the results that we will be discussing today has been filed with the SEC on Form 8-K. We are webcasting this call along with this slide sites that we will reference during portions of today's call. A replay of this call can be accessed on our website beginning today at 5 P.M pacific time.
Our discussion today will contain forward-looking statements, including our expectations regarding projected financial results, financial prospects, market growth, demand for our solutions, other market factors, including the reflections of the geopolitical and macroeconomic environment and the effects of ASC 606 and reported revenue amongst other items.
This statements are subject to risks and uncertainties that may be discussed during this call and are more fully described in the documents we file with the SEC, including our 8-K's, 10-Q's and 10-K's. These forward looking statements may differ materially from our actual results, and we are under no obligation to update these statements.
In an effort to provide greater clarity in the financials, we are using both GAAP and non-GAAP financial presentations in both our press release and on this call. A reconciliation of these non-GAAP financials to the most directly comparable GAAP measures has been included in our press release and our slide presentation and on our website at rambus.com on the Investor Relations page under Financial Releases.
In addition, we will continue to provide operational metrics such as licensing billings to give investors better insight into our operations performance. The order of our call today will be as follows.
Luc will start an overview of the business. I will discuss our financial results and then we will end with Q&A. I'll now turn the call over to Luc to provide an overview of the quarter.

Story Continues

Luc Seraphin

Thank you, Dan, and good afternoon, everyone. Rambus had an excellent start to the year.
In Q1, we achieved great financial results and maintained our market leadership position in core DDR5 chips, delivering another quarter of record product revenue.
As a cornerstone of our growth strategy, we continue to aggressively drive our product development roadmap of signal and power integrity solutions for next-generation memory architectures that address the ever increasing needs of advance workloads in the data center as we navigate the dynamic environment in the near term, the Rambus business model is naturally resilience turbulence.
This resilience comes from the diversity of our business with revenue streams from chips, IP and patents or patent licensing business is highly predictable due to the long-term nature one of our agreements, which provides financial stability. Our Rambus balance sheet and consistent track record of generating strong cash from operations strengthens our ability to navigate macroeconomic uncertainty and the potential impact of tariffs.
As of today, there is no direct impact on our operations from Paris. This is a rapidly evolving situation that we are actively monitoring, and we are in continuous discussions with our customers and suppliers to understand the potential indirect impacts of tariffs. Given the current dynamics, we have limited visibility of the potential impacts beyond the current quarter, we remain very conscientious and focused on strategic execution.
Our Rambus business model and stable foundation allows us to sustain our strong investment in technology leadership. Our new product development, positioning us well for long-term growth while consistently delivering value to our stockholders.
Turning now to our Q1 results, we delivered revenue and earnings above our expectations and generated outstanding cash from operations of $77 million. Memory interface chips drove the top line growth, delivering another quarter of record revenue of $76 million, up 52% year-over-year, driven by our continued strong leadership position in core DDR5 RCD products.
We are delighted to see another quarter of increased sales from memory interface chips and expect further growth in Q2, putting us on track for a very strong first half of the year.
As I mentioned in my opening remarks, we are also making steady strides in advancing our product road map. The record number of products introduced last year are each moving through the varying stages of the product adoption cycle. Progress continues on the rollout of our expanding portfolio of new products, including our industry-leading service, Phoenix and a margin per [12800] chipset.
We have broad-based momentum and qualifications ongoing the module and system level. The industry standard MRDIMM. 12,800 chipsets will enable a new wave of high-performance DDR5 system as the need for capacity and bandwidth continues to grow.
These are intended to intercept future generation server platforms. We are providing qualification samples to customers and expect to see our chips ramp in line with compatible processes as a critical component to managing power in high-performance memory subsystems are familiar with Phoenix is also being very well received by customers.
Our industry-leading extreme currency and [Nick] will support high-capacity systems with [MRDIMM] is running at 6,400 and 7,200 megatransfers per second, and our second generation server clinic rounds out the offering for both the industry standard DDR5 adding $8,000 and a margin to 12,800.
We are very excited by the positive progress at customers for our broad set of new products with early shifts underway for both server and client applications. Turning to silicon IP, AI continues to drive design-win momentum.
And while quarter on quarter revenue may vary due to customer program timing, we are pleased with our ongoing traction key building blocks for accelerating computing ICs.
We continue to see strong demand for our industry leading memory and interconnect IP, including HBM4 [NTCA seven] controllers as well as our security IP. In March, we introduced our next-generation CryptoManager security IP solutions that address an expanded set of customers and offer a new levels of security, including quantum safe functionality.
As we look ahead, AI and the ongoing evolution of the data center will continue to drive demand across our chips and IP with advance applications requiring unprecedented levels of performance and security to enable the Rambus high performance and high capacity memory subsystems critical to meeting the needs of data intensive workloads.
A growing number of specialized silicon solutions are required with 35 years of memory subsystem expertise. Rambus has strategically expanded our product portfolio to offer complete chipset for all industry standard DDR5 server memory modules.
Over the past year, we continued our track record of industry leadership in core DDR5 products, introduced new server power management solutions, and we're first to market with a complete chipset for industry standard DDR5 [their] margins.
We are also excited about the future prospect of our Signal and Power Integrity technology water pulling into solutions for the clients market. The strength of our business model enables us to continue these investments in new products for growth, and we look forward to sharing more as we made further progress on our roadmap and expand our addressable market.
In closing, we had a very strong start to the year, exceeding guidance for revenue and earnings and continued product leadership, driving record the product results. Our dedicated project execution, continued conviction in our roadmap, investment and resilient business model position us well for future growth and success.
As always, I'd like to thank our customers, partners and employees for their ongoing support.
And with that, I'll turn the call over to Des to discuss the quarterly financial results test.

Desmond Lynch

Thank you, Luc.
Let's begin with a summary of financial results for the first quarter on slide 3. We delivered strong financial result was in the quarter as we continue to make progress on our long-term growth strategy. Our first quarter results exceeded our expectations for both revenue and earnings.
In addition to the solid results, a resilient business model with diversified revenue streams and a stable foundation of our patent licensing business consistently generate strong cash from operations. This enables us to invest in our long-term growth as we navigate the current dynamic environment.
Let me now provide you a summary of our non-GAAP income statement on Slide 5. Revenues for the first quarter was $166.7 million, which was above the high end of our expectations. Royalty revenue was $74 million for licensing billings were $73.3 million.
Difference between licensing billings and royalty revenue mainly relates to timing as we do not always record that revenue in the same quarter as we bill our customers. Product revenue was $76.3 million, up 4% sequentially and up 52% year-over-year as we delivered another quarter of record product revenue, driven by continued strength in DDR5 products.
Contract and other revenue was $16.4 million, consisting predominantly of Silicon IP. As a reminder, only a portion of our Silicon IP revenue as reflected in contract and other revenue and the remaining portion as reported in royalty revenue as well as in licensing billings.
Total operating costs, including costs of goods sold for the quarter were $90.4 million. Operating expenses of $59.4 million were in line with our expectations and relatively flat sequentially as we continued to be disciplined in that expense management.
Non-GAAP interest and other income for the first quarter was $4.5 million using assumed flat tax rate of 20% for non-GAAP pretax income and GAAP net income for the quarter was $64.6 million.
Now let me come to the balance sheet details on Slide 6. We ended the quarter with cash, cash equivalents and marketable securities totalling $514.4 million, up from Q4, primarily driven by strong cash from operations of $77.4 million. First-quarter capital expenditures were $11.7 million for depreciation expense was $7.1 million.
We delivered $65.7 million of free cash flow in the quarter. Let me now review our non-GAAP outlook for the second quarter on Slide 7. As a reminder, the forward-looking guidance reflects our current best estimates at this time, and our actual results could differ materially from what I'm about to review.
Well, the geopolitical and economic environment is uncertain. We remain in constant communication with our customers and suppliers to navigate the evolving landscape. In addition to the non-GAAP financial outlook under ASC 606, we also provide information on licensing billings, which is an operational metric that reflects amounts invoiced to our licensing customers during the period adjusted for certain differences.
We expect revenue in the second quarter to be between $167 million and $173 million. We expect royalty revenues to be between $67 million and $73 million and licensing billings between $64 million and $17 million.
We expect Q2 non-GAAP total operating costs, which includes COGS to be between $94 million and $90 million. We expect Q2 capital expenditures to be approximately $13 million. Non-GAAP operating results for the second quarter is expected to be between a profit of $73 million and $83 million. For non-GAAP interest and other income and expense, we expect $4 million of interest income.
We expect pro forma tax rate to be 20%, with non-GAAP tax expenses to be between $15.4 million and $17.4 million in Q2, we expect Q2 share count to be $109 million diluted shares outstanding. Overall, we anticipate the Q2 non-GAAP earnings per share range between $0.57 and $0.64.
Let me finish with a summary on Slide 8. In closing, I am pleased with our strong financial results and continued execution. Our diversified portfolio continued profitable growth with strong cash generation. Our Rambus balance sheet enables us to invest in market expansion opportunities and data center and AI for consistently delivering value to our stockholders.
Before I open up the call to Q&A, I would like to thank our employees for their continued teamwork and execution.
With that, I'll hand the call back to our operator to begin Q&A.

Question and Answer Session

Operator

(Operator Instructions)
Gary Mobley, Loop Capital.

Gary Mobley

Good afternoon, everybody.
Thanks for taking my question.
As we sit here today and think about the served available market for your product revenue, your memory interface, chip revenue, the baseline to considers the market for general servers.
But as far as socket integrations go core count and the number memory channels supported by these different server processor, what do you see it in terms of trends out there that's driving memory density in each visit server above and beyond? Just sort of the baseline general server market growth rate?

Desmond Lynch

Thank you, Gary, for your question.
There are actually a lot of factors coming into, you know, the view of the total available market for our products. Certainly, as you say, the number of sockets, the number of channels per processor, but also the mix between a I servers and standard servers.
You know, if we take all of this into account, we believe the market is going to grow mid to high single digit for our product this year. Taking into account all of the factors, including the memory density on each one of the divisions so it's a complex equation.
But with everything taken into account, we expect the market to continue to grow mid to high single digit this year for our products.

Gary Mobley

Which I think you just a quick follow up in the past, you've always had your ASC 606 compliant GAAP revenue lower than your adjusted revenue.
And now I would presume that most of your major patent licenses with your memory [IDMs] are on you have some of that no performance obligation, so I would expect them to converge, but now you're ASC 606 revenues above your adjusted revenue.
Maybe if you could just give us a sense of what's driving that seemingly $5 million a quarter of revenue pad that in the numbers now?

Desmond Lynch

Hi, Gary.
It stays in the quarter. We did see a small patent agreement that was renewed, which resulted in upfront revenue recognition from a sales perspective.
The billings from this contract will fall in later quarters will show up under licensing billings. And as you mentioned, I am really pleased to see it all major patent license contracts have been renewed long-term agreements under the variable structure, which results in a strong alignment between both GAAP and non-GAAP results.
We will continue to work on transitioning some of these smaller legacy contract revenue recognition assembly structure under ASC 606.
But overall, we're really pleased to see the convergence of our financials.

Gary Mobley

Thanks, Des.

Operator

Aaron Rakers, Wells Fargo.

Aaron Rakers

Thanks for taking the question, guys on a couple of again as well on.
So first of all, I just wanted to go back and I can appreciate the commentary that you offered on the tariff situation and the uncertainty involved in what is obviously very fluid boats.
But yes, look, I'm curious as you're at you're engaging with your customers, what if scenarios that they're thinking about as it relates to tariffs, have you seen any indications or signs of kind of inventory builds or buying ahead based on the fluidity of tariff? /
Any kind of context around what your dialogue that would be wouldn't be very helpful?

Desmond Lynch

Thanks for your question.
On the Firstly, I would say is that, you know, our business model, as I said in the opening remarks, is quite resilient. Our patent licensing is not going to be affected by the tariffs just because of the nature of these of these agreements.
We see a lack or less visibility into out of our SIP revenue because we don't know what the indirect impact of the tariffs. I'm going to be on the design starts of our customers, but we do expect to grow our revenue and silicon IP.
And with respect to our products business, I'll we build our products in Asia. The front-end is in Taiwan, back-end is in Taiwan and Korea, and we shipped to our customers in Asia. So from that standpoint, there's no direct impact of tariffs.
And what we're looking at with our customers and suppliers are the indirect impact on the flow space as depending on the situation, you know, some other customers from other companies may shift their production line to areas with no tariffs, and that could create some tension there on the supply chain.
Finally, when we look at our backlog at the inventory level on our side inventory level at our customer side, we don't see any pull at this point in time but we're monitoring the situation. But as far as we're concerned today, we do not see any pull-ins from our customers.

Aaron Rakers

That's very helpful. And then kind of more on the product shifts that grow 52% growth is pretty notable.
I'm curious, as we think about the diversity within that business, where we stand today with regard to our RCDs and kind of really what I'm trying to get out of the diversity toward the [P mix] and companion chips really starting to ramp in the second half of the year, how do we think about the mix of that business and the progression of that mix?
And then our slot in the final part of that is that MRDIMM just remind us real quickly on the timing of when that might be something that we should really start to consider in that product line?

Luc Seraphin

Thank you for sure.
At this point in time, the vast majority of our business is still on the RCD chip and the vast majority of that is on the term DDR5 RCD chips nursing. This is the result of the strategy we had put in place, which is to make sure that we have the right footprint in every generation of DDR5 that translates into the growth that we are seeing today.
With respect to new products, we introduced eight new products last year for them in in April, one in the one in July and the rest in October, what we're starting to see is, you know, some of the qualifications are percolating through the whole system.
We're starting to see modules that, you know, qualified with our Phoenix, are they on the high end of these modules, which is not a surprise because that's how we position our product line to gain share. So taking its time, but it's moving, you know, I think the contribution that I will let Des comment.
The contribution of these companion shipped during the first part of this year is probably single fiber, but we expect this to continue to grow towards the end of the year. We do see the momentum, the major products take more time with respect to margin.
We just sampled customers are either recently and that MRD market is going to ramp with a follow on generation of computing platforms is going to be revenue in the second half of 2026 to start with.

Operator

Blayne Curtis, Jefferies.

Blayne Curtis

Hey, good afternoon. Thanks for taking my question.
I just want to follow up on the tariff question.
Maybe you can just walk us through kind of how the linearity of the quarter and the first few weeks here in April? I mean, I guess you're probably businesses growing. I'm just kind of curious how you can kind of order momentum as ban.
And it sounds like it hasn't changed much, but if you could just kind of add a little color there would be great.

Desmond Lynch

Hi Blayne, and thanks for your question.
We're really pleased with what the numbers we were able to plan first, Q. one and also the cadence for Q2. If we look here or order sort of backlog, you know, we have high coverage going into the quarter. We're probably at least over 90% covered on the midpoint of the backlog from there.
And what we will see is the normal sort of shifting patterns may month, one month to month three and within the quarters, very pleased with how everything sort of playing out. As Luc mentioned earlier, we're not really seeing a pull forward of demand from our customers for that's something we continue to watch here and going forward.

Blayne Curtis

Perfect.
And then I'm just kind of curious, have you had a perspective, I know it's a really tough thing for me to ask you about the full year or the second half but I'm just kind of curious if that were, if you could maybe talk about your visibility into some of the new products from server platform then in terms of your visibility and continued growth for the product revenue?

Desmond Lynch

Yes, sure.
As we indicated earlier, you know, the different products, the eight different products that are introduced, the different stages of routes with our with our customers. We do see the first full modules using some of our products are rolling out rolling out in the second half of this year.
So you know, our view is that quarter over quarter, we will continue to see increased revenue from our companion chips. You know, with the caveats that, you know, we'll see how the tariff situation evolves over time.
And secondly, as for all of our products, we always dependent on the rollout of the platforms that use those products. So but that's the normal state of the business for us but assuming that, you know, the role of a plateau forms go the way we expect them to go.
We will see a continuous growth quarter over quarter on our companion chips and two and also in 2026.

Blayne Curtis

Thanks.
I just want to clarify, you're saying that companionship, but in terms of like RCD growth as well as there are some distinction you're making or you just have better visibility into Canadian off a low number?

Luc Seraphin

Our RCD chips that we are in very good position on the DDR5 generation of products.
We continue to monitor the mix between Gen 1, Gen 2, Gen 3, all the products are rolling out new or are you at this point in time? Is that if any platforms, you know, shift out, you know, from the processor vendors, then that demand is probably going to be covered by the prior-generation?
So, you know, we have on the RCD chip is that we will continue to maintain our market share last year. You know, we were a little short of giving a full 40% share, a little higher than 40% share below the prior year. We were a little short 40% share and we continue to have the goal of 40% to 50% share. And that does not depend on the rollout of the of the different platforms at this point in time.
The good news for Rambus is that DDR5 is in the market in earnest, and that's where our footprint in whatever the generations is much stronger than DDR4.

Blayne Curtis

Thanks for that.

Operator

Mehdi Hosseini, Susquehanna.

Mehdi Hosseini

Yes, good.
It's worth taking my question. Wanted to start off with the other revenue.
Was there a mix issue, the lead to sequential decline in the gross margin and just use the Q4 as the baseline, how should I think was progression of product revenue throughout the year? And I have a follow-up.

Desmond Lynch

Finally, it stays here.
So on it and product gross margins, they continue to operate in line with our long-term gross margin target in Q1, our gross margins and the chip side with around 60%. This was down slightly compared to Q4, which was driven by their price negotiations with our customers, which is effective at the start of the year.
These price reductions were in line with expectation and we saw mid-single-digit erosion on production parts from there. If we look at the back half of the year for, I would expect to see stronger gross margin performance compared to the first half.
This will be driven by a combination of product mix improvements as well as manufacturing cost savings that will continue to ramp through the year. We did see this dynamic in similar profile in 2024.
I think overall, when we look at an annual basis, we have a strong track record of delivering product gross margins in line with our long-term target through a disciplined approach to placing and the continued drive on the manufacturing cost savings side and from there.

Mehdi Hosseini

Okay. Thans for the detail a little one follow up on silicon IP.
Given the recent lows of the past month or so, it feels like HBM4 samples will be available later this year and maybe high volume manufacturing next year.
I'm not asking for specific guide, but given my assumption that you have higher content with HBM4 compared to prior generation, should we expect a material step up in incremental revenue?
Or how else could we think of the contribution, especially as it relates to silicon IP?

Desmond Lynch

Thank you, Mehdi.
The nature of the silicon IP business is that we typically sell our IP. 12 to 18 months before, you know, our customers rollout the chips into the market to our activity on the GM for started last year. It continues unit throughout this year that explains some of the good performance we had last year with unions total revenue of $120 million in the SIP side.
That businesses is a lumpy in nature because we get the revenue when executing our IP. So we independently or design starts, no new tape-outs in this kind of things for the HBM4 wave started in a month ago for us in preparation for chips that are going to roll out in the market.
And as we do with the rest of that, our IP or product, we continue to work on the follow on generation, which will generate revenue but again, we were pleased with the revenue last year of $120 million, but that was partially due to the HBM4 rollout last year.

Mehdi Hosseini

Coming as a quick follow up here.
I see the Q-code, there's a big step-up in silicon IP. So, with HBMs license agreement, it's nothing to do with customer diversification.
We have all utilizes and now the next step is we look at HBM4E, is that the licensing revenue. Yes, I understand that happens earlier, but is the product migration driven than it was a customer diversification or both.
But the dynamic between Q4 and Q1 of the silicon IP business unit has mostly to do with customer timing of all of these different type of these different products, more than a generational change because when you introduce a new technology like HBM4 an HBM4 E, it can be adopted at different times by our customers.
And every time one of our customers adopted, we see a spike in our revenue, but that can be a bit lumpy. So that, you know, Q4 to Q1, we just happened from a timing standpoint to have, you know, customers were actually included designs in Q4 being a little slower in Q1 that has more to do with timing than it has to do with the rollout of new technologies.
Okay.
Thanks for details thinking.

Operator

Natalia Winkler, Evercore.

Natalia Winkler

Hi, thanks for taking my question.
I was wondering if you could speak a little bit about what you're seeing from 10 point of [x86] and ARM CPU servers and specifically how you think of that on market share shift and maybe playing into your product portfolio.
I would you please kind of described, do you think that's the case of from the performance 10.4, the armed services are and if they're sort of additional benefit from the standpoint of them companion chip for you guys on or if it's actually, Rick?

Desmond Lynch

Thank you, Natasha.
The way the way we look at it is that you we are agnostic to that type of processor core that is being used, whether it's an eight x86 core based product, [AMD] or Intel or whether it's in our core base product. You know, the interface to the module remains the same.
So we are agnostic to the changes of the shift of share between Intel and AMD on the x86 side and between x86 and ARM processors at this point in time but that doesn't change the content on the module as well. So, what we have to do at Rambus is make sure that we are engaged with all of these customers, but the interface is exactly the same product lines and change for us. So, we kind of immune from a from a revenue ramp or design win standpoint.

Mehdi Hosseini

Thank you. That's very helpful.
And from the standpoint of the client product and look given reminding us like what the sort of time line for ramp of those client product, is there any different than server product?

Desmond Lynch

Sure.
So the idea on the client side is that some of the technologies that were necessary in the data center for performance reasons are going to be required on the high end of the client side.
And so the time is limited at this point in time because this is limited to the very high end of the market. And the first quarter that we're introducing or reintroducing last year is the client growth driver. We introduced that product in July of last year.
And it's going to is being sampled to customers is going to hit the market, you know, starting end of this year, beginning of next year, but in reasonably low volumes to be honest. But that's very important for us because if you look at this more strategically in the long run power integrity or signal integrity, which is the what the CKD will decline from [client] about that as having to be critical to the performance of client systems in the future.
So water falling the data center technologies into clients is important for us, CKDs, the first product and it's going to its sampling to customers with good reaction so far.

Natalia Winkler

Thank you.

Operator

Kevin Cassidy, Rosenblatt Securities.

Kevin Cassidy

Yes, thanks for taking my question and congratulations on the great results.
And going back to the silicon IP, I see if you did have a lumpiness or on the upside in the first quarter, but it looks like your guidance for the second quarter's up also expect that to continue through the second half.

Desmond Lynch

Hi, Kevin stays here.
We were pleased with the overall sort of results and silicon IP and the first quarter, which was in line with our expectations, what we did see is that we did sell more off-the-shelf IP, which explains the strength in licensing billings and royalty revenue in the quarter, which was offset by a more customizable sort of IP., which shows up under the contract.
And other sort of line from the here, why do you expect going into the second half after the silicon IP revenues to be relatively flat to Q1.We had a good expectation from there.
And as Luc mentioned, we did have a really strong fourth quarter of last year, which was really driven by the HBM4 results.
But overall, I think that business is performing in line with that expectation. We would expect to see the second quarter revenue being flat to sort of Q1 from there.

Kevin Cassidy

Okay, great.
And go into the MRDIMM, when you're talking to your customers know about BMR demo kind of adoption rate, are you expecting Is it fair to say if a CPU has 12 memory channels will all 12 only use the MRDIMM or will be just a certain percentage or is it just a certain percentage of CPUs?

Desmond Lynch

It's early to say, Kevin, to Europe, to be honest.
But what was driving the adoption of MRDIMM is the need for more capacity and sorry, more capacity and more bandwidth you what the market sees is that it's a nice bridge between the DDR5 five generations of modules and the DR. six generation of modules.
It kind of bridges, you know, those two generation of products in terms of capacity and bandwidth, it's going to be used in very high end system where those needs are required to fill in support of zero. Yes, deployment, for example, are going to be the first adopters of these types of the types of their margins.

Kevin Cassidy

Okay

Operator

Question is Tristan Gerra, Baird.

Tristan Gerra

A quick question.
You talked earlier about the gross margin for the rest of this year. Directionally, how should we look at operating margin that's going to be similar and really tied to what you described in gross margin? Or is there anything else that could act as a driver of operating margin and increasing on the licensing side?

Desmond Lynch

Hi, Tristan.
I stand here, and you guys had talked about earlier. I do expect the second half gross margin profile on the chip side and will improve as a result of a stronger product mix in the second half as well as manufacturing cost savings kicking in from there.
We've been really pleased with our overall model, you know, which is operating at the sort of mid 40% of income level and continues to generate really strong cash from operations was $77 million last quarter.
I think if you look at the progression of the business over the sort of last year, you can see the business continues to improve, both on the top and bottom line. And that's what we expect continued to see going forward.
We have a really Rambus business model, as was mentioned in his prepared remarks, and we continue to generate strong cash from operations as well. So we can see that continuing here going forward.

Tristan Gerra

Okay.
And then as far as the price renegotiation that you talked about in Q. one and the mid-single digit price adjustment, is there any is that typical of what you see every year? Or was there any specific factors this year that didn't happen in prior years?

Desmond Lynch

If you could maybe elaborate on what we should expect in terms of patterns from this and it's just normal pricing renegotiation or I know that you are not really impacted by supply demand dynamics, but I don't know how that compares with what we're seeing in prior years.
Hi, Tristan state again, what I would say is that the sort of mid-single digit price erosion is really in line with normal cycles. And from the this is our normal cadence at the start of the year that we will see the price down on the products and will be done in line with expectations and from there.
So nothing untoward on sort of play side. As you see a 10.0, we're not really tied into the deal on a casing sort of cycles and terms of the place from there.
So mid-single digit erosion is the right way to sort of think about ASP evolution of the business.

Tristan Gerra

Great. Thank you very much.

Operator

At this time, there are no further questions.
Concludes our question and answer session, and I'd like to turn the conference back over to Luc Seraphin to conclude.

Luc Seraphin

Thank you to everyone who has joined us today for your continued interest and time. We look forward to speaking with you again soon. Have a good day.
Thank you.

Operator

This now concludes today's conference.
Thanks

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