Rambus Inc. (RMBS) Q4 2020 Earnings Call Transcript

Rambus Inc.  (NASDAQ: RMBS) Q4 2020 earnings call dated Feb. 01, 2021

Corporate Participants:

Rahul Mathur — Senior Vice President and Chief Financial Officer

Luc Seraphin — President and Chief Executive Officer

Analysts:

Gary Mobley — Wells Fargo — Analyst

Sidney Ho — Deutsche Bank — Analyst

John Pitzer — Credit Suisse — Analyst

Suji Desilva — Roth Capital — Analyst

Presentation:

Operator

Welcome to the Rambus Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Rahul Mathur, Chief Financial Officer. You may begin your conference.

Rahul Mathur — Senior Vice President and Chief Financial Officer

Thank you, operator, and welcome to the Rambus fourth quarter 2020 results conference call. I’m Rahul Mathur, CFO, and on the call with me today is Luc Seraphin, our CEO. The press release for the results that we will be discussing today have been furnished to 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 3744169 when you hear the prompt. In addition, we are simultaneously webcasting this call and along with the audio we’re webcasting slides that we will reference during portions of today’s call. So even if you’re joining us via conference call, you may want to access the webcast with the slide presentation. A replay of this call can be accessed on our website beginning today at 5:00 PM Pacific Time.

Our discussion today will contain forward-looking statements, including our financial guidance for future periods, product and investment strategies, timing of expected product launches, demand for existing and newly-acquired technologies, the growth opportunities of the various markets we serve, the expected benefits of our merger, acquisition and divestiture activity, including the success of our integration efforts, risks and the potential adverse impacts related to or arising from the novel coronavirus or COVID-19 and the effects of ASC 606 on reported revenue amongst other things. These statements are subject to risks and uncertainties that are discussed during this 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’re under no obligation to update these statements.

In an effort to provide greater clarity in the financials we’re using both GAAP and non-GAAP financial presentations in both our press release and also on this call. A reconciliation of these non-GAAP financials to the most directly comparable GAAP measures has been included in our press release, in our slide presentation and on our website at rambus.com on the Investor Relations page under financial releases.

We’ve adopted ASC 606 in 2018 using the modified retrospective method, which did not restate prior periods, but rather ran the cumulative effect of the adoption through retained earnings as a beginning balance sheet adjustment. Any comparison between our results under ASC 606 and prior results under ASC 605 is not an accurate way to track our Company’s progress. We will continue to provide operational metrics such as licensing billings to give our investors better insight into our operational performance.

The order of our call today will be as follows. Luc will start with an overview of the business, I will discuss our financial results, including our guidance for future periods and then we will end with Q&A.

I’ll now turn the call over to Luc to provide an overview of the quarter. Luc?

Luc Seraphin — President and Chief Executive Officer

Thanks, Rahul and good afternoon everyone. 2020 was a very successful year for the Company. The ongoing shift to the cloud along with the widespread advancement of artificial intelligence across data center, 5G, automotive and IoT has led to an exponential growth in data usage and increasing demands on the 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.

As a provider of industry-leading chips and IP that enable critical performance improvements for data center and cloud, Rambus is ideally suited to address these challenges. With that, it is no surprise that the cloud continues to be the primary demand driver across all of our businesses. We see sustained investments from our customers in products and solutions that will help improve the performance and security of the global data infrastructure and expect this demand to continue to grow.

We had a strong finish to the year, demonstrating great execution across our business lines. In Q4, we delivered on revenue of $61.9 million in line with expectations and we exceeded our profitability targets. This brought the full year in ahead of 2020 guidance for revenue and earnings. Annual cash generation was up 44% with $185.5 million from operating activities. With tremendous cash generation fueling ongoing investment in our product roadmap, we are poised for continued profitable growth in 2021 and beyond.

Turning now to the businesses. This was another year of record growth for memory interface chips. Annual product revenue was up 56% year-over-year, finishing well above the guidance provided at our Analyst Day in 2019. This increase was driven by steady gains in DDR4 market share, allowing us to significantly outpace the growth in the overall market. As we mentioned previously, there was a short-term inventory correction in the third and fourth quarter following the buildup in the first half. We believe the bulk of these adjustments have been completed as consumption levels have begun returning to normal. This year, we expect our growth to continue with further gains in market share.

For DDR5 we are in the leading position for qualification with our memory customers and CPU partners. We are shipping early volumes with all of the major DRAM suppliers sampling DDR5 modules with our chips to data center and call customers. Looking forward, we continue to invest in the development of companion chips for DDR5 platforms to expand the value of our portfolio. Additionally, we are at the forefront of innovation for new architectures and memory subsystem and are actively being sourced by ecosystem leaders as a development partner.

In our silicon IP business, we continue to drive roadmap alignment with overall market trends and deliver the best-in-class solutions for demand in cloud and edge applications. 2020 was a strong year with annual revenue up 14% and continued design win momentum in data center, 5G and edge. This performance was supported by the successful integration of the former Northwest Logic and Verimatrix teams acquired in 2019 with both ending the year on the targeted run rates for revenue.

Lastly, we signed multiple new patent license agreements and renewals with DRAM and SoC manufacturers throughout the year. In addition to the DRAM license agreements with CXMT and Micron discussed in previous quarters, we also renewed our agreements with AMD for an additional five years. Supported by our growing patent portfolio, these agreements are great testament to the ongoing strength and relevance of our program. With these licensing agreements secured, we have solidified a foundation of sustained cash generation that allows us to fuel our product roadmap and invest in inorganic growth. Looking forward, the insatiable demands of performance-hungry applications in the data center and other growing markets drive our research and development. We continue to produce products and innovations that are critical to the memory industry and address the fundamental challenges of accelerating better.

As we begin 2021, I am very pleased with the steady progress the team has made over the last few years. We have strategically focused the business and continuously improved our operating performance. This has allowed us to better serve our customers and return capital to our shareholders.

In closing, I am proud of the Company’s performance and excited by the growing opportunities ahead of us.

With that, I turn the call over to Rahul to discuss the quarterly financial results. Rahul?

Rahul Mathur — Senior Vice President and Chief Financial Officer

Thanks, Luc. I would like to begin with our financial results for the fourth quarter and for 2020. Let me start with some highlights on Slide 5. As Luc mentioned, we delivered a solid quarter and are very pleased with the ongoing execution on our strategic initiatives. Once again in Q4 we delivered financial results in line with our revenue expectations and at the high end of our earnings expectations. We had great financial results in 2020 and ended the year very well positioned as we continued to make progress on our long-term growth strategy. This performance was coupled with continual improvement in our balance sheet. We ended the year with $502.6 million in cash and after implementing a $50 million share repurchase program in Q4. Our continued execution on our strategy and our operational discipline have yielded solid financial results and a strong balance sheet that affords us the flexibility to support our strategic initiatives. We are focused on the compelling data center and cloud market opportunity in front of us and are well positioned for profitable growth in 2021 and beyond.

Now let me talk you through some revenue details on Slide 6. Revenue for the fourth quarter was $61.9 million, in line with our expected range. Royalty revenue was $27.7 million, while licensing billings was $64.2 million. The difference between licensing billings and royalty revenue primarily relates to timing as we don’t always recognize revenue in the same quarter we bill our customers.

Going into additional detail our product revenue was $21.8 million, consisting primarily of our buffer chip business. Our contract and other revenue was $12.4 million, consisting primarily of our silicon IP business. For the year, there’s roughly $40 million of our silicon IP business that’s being reflected in our licensing billing. This is almost twice what we expected at our Analyst Day in 2019. Strength across our IP businesses enabled us to meet our revenue expectations in Q4. Multiple revenue streams enable us to offset quarterly variances in any particular business.

We had a strong fiscal year. We are pleased with our execution and saw our product revenue increase 56%, significantly outpacing the market as we continued to gain share. Notably, we made these gains while also improving our margins and generating cash.

Let me walk you through our non-GAAP income statement on Slide 7. We again exceeded our profitability targets as we have done consistently over the past many years. Total operating expenses, including COGS for the quarter, came in at $55.8 million. Operating expenses of $46.7 million were lower than our expectations due to our continued focus on operational efficiency.

We ended the quarter with headcount of 623, lower than 679 in the previous quarter as we continued to align our product programs with growth markets. Under ASC 606, we recorded $2.9 million of interest income related to the financing component of our fixed fee licensing arrangement for which we have recognized revenue, but not yet received payment. We incurred $0.6 million of interest expense primarily associated with our convertible notes. This was offset by incremental interest income related to the return on our cash and investment portfolio.

After adjusting for non-cash interest expense on our convertible notes, this resulted in non-GAAP interest and other income for the fourth quarter of $2.3 million. Excluding the interest income related to the significant financing component related to ASC 606, this would have been $0.6 million of interest and other expense. Using an assumed flat rate of 24% for non-GAAP pre-tax income, non-GAAP net income for the quarter was $6.4 million.

With continued focus on cost and disciplined execution, we delivered profit that was nicely above our expectations. Our financial results for 2020 are substantially better than what we expected at 2019 Analyst Day despite the unprecedented challenges presented by COVID-19. We are delighted by the continued execution from our team.

Now let me turn to the balance sheet details on Slide 8. Over the past several years, we’ve built a very strong balance sheet. Cash, cash equivalents and marketable securities totaled $502.6 million, down from the previous quarter of cash from operation of $42.1 million, was offset by the $50 million accelerated share repurchase program we announced in Q4. This brings the year-to-date cash from operations to $185.5 million, well above last year’s full-year total of $128.5 million. Even with the $23 million of capital expenditure related to our new headquarter facility, free cash flow of $142.5 million was well above last year’s total of $113.7 million. As we continued to deliver on the top line and execute on operational efficiency, we expect to continue to deliver strong cash from operations in the future.

At the end of Q4 we had contract assets worth $368 million, which reflects the net present value of unbilled AR related to the licensing arrangements for which the Company has no future performance obligations. I expect this number to continue to trend down as we bill and collect for these contracts. It’s important to note that this metric doesn’t represent the entire value of our existing licensing arrangement as several customers have royalty-based agreements that allow us to recognize revenue each quarter. As we sign new agreements and renew others, we endeavor to transition renewals and extensions to variable agreements that could allow us to take revenue over time as opposed to upfront.

As we announced previously, we were pleased to extend our existing licensing agreement with Micron in September at our existing financial terms. Including the agreement with CXMT announced in Q1, last year we announced two DRAM licensing agreement that extend beyond the next renewal dates for Samsung and SK Hynix. Our success in completing these contracts with both new and existing partners serves as a testament to the ongoing strength and relevance of our patent portfolio. Going forward we expect to recognize $10 million of revenue related to the Micron licensing extension on a quarterly basis starting in the first quarter of 2021. Between this extension and continued buffer chip growth, our revenue is poised for strong growth in 2021.

Fourth quarter capex was $13 million and depreciation was $6.8 million. We delivered $29.1 million of free cash flow in the quarter. Full year 2020 capex was $42.9 million, of which $23 million was related to our new headquarters building. Looking forward, I expect 2021 capex to be less than $5 million as our spend will be offset by the refund of a tenant improvement allowance related to our new headquarters. I also expect depreciation of roughly $20 million for the full year of 2021.

Now let me turn to our guidance for the first quarter on Slide 9. As a reminder, our forward-looking guidance reflects our current best estimates and our actual results could differ materially from what I’m about to review. In addition to the financial outlook under ASC 606, we’ve also been providing information on licensing billings, which is an operational metric that reflects amounts invoiced to our licensing customers during the period adjusted for certain differences. As you see in the supplemental information we provided on Slide 13 of our earnings deck, licensing billings closely correlate with what we have historically reported as royalty revenue under ASC 605.

Under ASC 606, we expect revenue in the first quarter between $63 million and $69 million. We expect royalty revenue between $23 million and $29 million. We also expect licensing billings between $60 million and $66 million. Our guidance reflects the contract terms of the patent licensing extension with Micron I mentioned previously as well as the expectation we will see the return to normal buffer chip inventory consumption levels in the spring with sequential growth projected thereafter.

We expect Q1 non-GAAP total operating costs and expenses, which include COGS to be between $61 million and $57 million as we continue to invest in programs. Under ASC 606, non-GAAP operating results for the first quarter is expected to be between $2 million and the $12 million profit. For non-GAAP interest and other income and expense, which excludes interest income related ASC 606, we expect this to be approximately $1 million of expense, which includes $0.6 million of interest expense related to the notes due in 2023.

We expect our pro forma tax rate to remain consistent at roughly 24%. The 24% is higher than the statutory rate of 21%, primarily due to higher tax rates in our foreign jurisdictions.

As a reminder we pay roughly $20 million of cash taxes each year driven primarily by our licensing agreements with our partners in Korea. We expect non-GAAP taxes to be between an expense of $0 million and $3 million in Q1. We expect our Q1 share count to be roughly 116 million basic and diluted shares outstanding. This leads you to between a non-GAAP profit per share of $0.01 and $0.07 for the quarter. With that said, while we don’t provide guidance beyond Q1 we are comfortable with the analyst consensus estimates at the top line and bottom line for each quarter of 2021. While the near-term macroeconomic conditions are difficult for any of us to predict, consensus estimates are currently in line with our long-term strategy and current assumptions reflecting our belief we will continue to gain share and that our product growth will continue to outpace broader semiconductor industry.

Let me finish with a summary on Slide 10. We are proud of the excellent performance by our team in this unpredictable macroeconomic environment. Over the past several years, we’ve made substantial progress strategically, operationally and financially. We realigned our portfolio to address data center and cloud opportunities and support our long-term growth strategy while consistently improving our balance sheet generating cash and delivering value to our shareholders. Our 2020 results represent the beginning of the absolute growth we expect to see in the coming years.

Before I open up the call to Q&A, I would once again like to thank our employees for their continued teamwork and executing resilience during these uncertain times. Everyone please stay safe and take care of yourself and your families.

With that, I’ll turn the call back to our operator to begin Q&A. Could we please have our first question?

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from Gary Mobley with Wells Fargo. You may ask your question.

Gary Mobley — Wells Fargo — Analyst

Hey, guys. Thanks for taking my question and congratulations on the strong execution throughout all of 2020. I wanted to first tackle the topic on the buffer chip sales in the outlook for the balance of 2021. If I am not mistaken Intel recently rolled out its Cascade Lake and that increased the memory channel count from six to eight. And I realize not every customer for that particular processor generation will utilize all the channels, but assuming a large portion of them do. How does that impact your growth and then as well related to that, what is your best estimates to the timing of mass shipments of DDR5? Thank you.

Luc Seraphin — President and Chief Executive Officer

Hi, Gary. Thanks for your question. Yeah. So I’ll start by saying that buffer on chips last year was a great year for us as well with the 50% growth on the product side and we expect to continue to grow on the basis of our continued improvement on design wins with our customers.

Cascade Lake, as you said, is going to be introduced this year. There’s going to be a transition between the current Skylake version and Cascade Lake. But because our footprint in Cascade Lake was better than what we had in Skylake we see that transition as being positive for us and we expect to continue to grow and grow share in that market.

When it comes to DDR5, as you remember we were the first ones to invest in DDR5 kits. We were the first ones to introduce those to market. We have received small orders from all customers who build modules that they ship to their customers and we expect DDR5 to start to ship in volume next year. We expect to get the first order towards the end of this year. The crossover between DDR4 and DDR5 in the markets is not going to happen before 2023. But that market is a good market for us and we expect to continue to gain share in 2021 following the trend that we established over the last few [Phonetic] years.

Gary Mobley — Wells Fargo — Analyst

Okay. Thanks, Luc. And related to buffer chip business, I can’t help but notice that the gross margin for that product category or that revenue category continues to trend up. If I am not mistaken, in the fourth quarter it was about 70% and crept up each and every quarter even in the high 60% in that proceeding [Phonetic] three quarters. And so maybe if you can share with us just a little more detail on what’s driving that stronger gross margin for those buffer chip sales?

Luc Seraphin — President and Chief Executive Officer

Yes, that’s a great question. This is operational discipline. We stressed that over the last few years. We’ve insisted on having high-quality products that drives to high yields. We continuously improve our cost base on the operations side and supply chain side and we have our pricing under control. So that’s really operational discipline that allows us to keep those margins, which as you say, are very good margins for these type of products in that market.

Rahul Mathur — Senior Vice President and Chief Financial Officer

Hey, Gary. It’s Rahul. Thanks first for your very kind words at the beginning recognizing just the performance over 2020. I think on a long-term basis I expect that we will maintain those gross margins kind of in that 60% range. Obviously margins shift from product to product, platform to platform where you are in the cycle as you ramp as well.

I think our strong margins also show the value that we’re bringing to our partners through a lot of the improvements that Luc mentioned in terms of performance, as well as quality. I think the other thing I’ve been very pleased with is what you’ve seen over the last year is that we’ve been able to grow our product business while also maintaining those high gross margins and dramatically improving operating margins as well. So we’ve been very pleased with that performance and you see it show up in our operating cash flow.

Operator

Your next question comes from the line of Sidney Ho with Deutsche Bank. Your line is now open.

Sidney Ho — Deutsche Bank — Analyst

Thanks and thanks for taking the questions and congrats on a good quarter. I know you don’t guide based on ASC 605. But the best way to follow ASC 605 replacing royalty revenue was licensing billings. It would suggest revenue of about $98 million and EPS of $0.28 for the Q4. Is that about right? And similarly for 1Q that would imply revenue of $103 million and EPS of $0.28. Just want to make sure that I’m in the ballpark.

Rahul Mathur — Senior Vice President and Chief Financial Officer

Hi, Sidney. Thanks very much for your question. No, obviously, we only provide the numbers under ASC 606. But if you were to substitute licensing billings from what we’ve historically reported as royalty revenue then I think you get numbers that are close to what we used to report under ASC 605. And if I were to do your math, I think I’ll get the same numbers that you do.

Sidney Ho — Deutsche Bank — Analyst

Okay. That’s good. Picking up [Phonetic]. My follow-up question is, at the last Analyst Day, you gave us a sense about revenue expectations for calendar 2020 with the range for each category and obviously you guys did much better than that. Are you in a position to give us an idea of what you’re thinking for 2021 by segment, maybe qualitatively, if not quantitatively? And maybe a follow-up to that question, specifically related to silicon IP business which you grow 14% year-over-year. One, how much of that is organic versus inorganic and two, how should we think about the growth rate of that business longer term? And what is the right base number to start off with in 2020? Thanks.

Rahul Mathur — Senior Vice President and Chief Financial Officer

Hi, Sidney. Lots of questions. Let me see if I can go through them one by one. One, in terms of annual numbers for 2021, as I mentioned in our prepared remarks we only provide guidance one quarter at a time. With that said, I’m comfortable with consensus estimates for each quarter on the top line and bottom line for 2021. If you were to look at consensus estimates, you would see some fairly nice growth over the course of 2021. I think predominantly that’s going to come again from our chip business. I think most analysts have our chip business growing from product revenue of $114 million in 2020 to something like $140 million or $145 million in 2021.

I think from a patent licensing perspective, what we’ve said consistently is that Q4 of 2020 represented the last of the significant structural step-downs that we saw in our licensing program. So in 2021 and for several years past, I expect that licensing to be roughly flat so that should be somewhere between $200 million and $220 million a year. So call it about $210 million a year at the midpoint. The reason there is a range is that we are perpetually in the process of renewing with our partners as well as signing new partners. And so just based on the timing and structure of those renewals there will be some quarterly variability, but I expect patent licensing to stay in that kind of $200 million to $220 million for several years.

As a reminder, as Luc mentioned, we signed with CXMT and Micron in 2020 and the Micron extension now pushes them through the end of 2024. So the next major renewal for us is just after 2023 and that’s why we have comfort in terms of what that number looks like. So then if you look at those pieces in terms of product revenue and patent licensing, the remainder then is the silicon IP business.

Now as I mentioned in our prepared remarks, in 2020 because of the structure of our agreements and because of, as you mentioned, the acquisitions that we closed in 2019, there is about $40 million related to our silicon IP business that really showed up in licensing billings. So if you take that $40 million and add it to what we reported for contract and other it certainly provides a silicon IP business that’s very much in the range of what we discussed at our 2019 Analyst Day. For the growth that we saw in 2020, certainly the inorganic benefit was there and that’s what represented the majority of the growth that we saw in 2020.

Going forward, I’d like to see this business continue to grow in the double-digit range. I think there is a great market opportunity for us and particularly as we narrow our focus both on memory and security into markets where we have grate differentiation, I think we can continue to support that growth.

So, Sidney, I hope I answered all the questions that you have there.

Sidney Ho — Deutsche Bank — Analyst

Yeah. Thank you, guys. Congrats again.

Rahul Mathur — Senior Vice President and Chief Financial Officer

Thank you again. I appreciate the support.

Operator

Your next question comes from the line of John Pitzer with Credit Suisse. You may ask your question.

John Pitzer — Credit Suisse — Analyst

Yeah. Good afternoon, guys. Thanks for letting me ask the question. Luc, Rahul congratulations on solid results. Luc, in your prepared comments you talked about the inventory correction in cloud being mostly Q3, Q4. And clearly with your product revenue guidance for March that’s playing out, I’m kind of curious how do we think about kind of growth from March relative to your ability to continue to capture share this year? And again there’s some Asian competition that’s heating up a little bit in the memory buffer side of the business. So we’re kind of curious as to how you think about competition over the next several years?

Luc Seraphin — President and Chief Executive Officer

Yeah. That’s a good question. So I think in the short run, as we said the inventory correction is behind us. We see consumption resuming. The first step for us is to use the introduction of Cascade Lake to the market where we have better design win shares we had on Skylake. So that’s going to grow the revenue beyond Q1. The second thing that is going to happen to us this year is that we are introducing new products in the DDR4 memory family, especially the DB product, which we are kicking in the second half of the year. And finally, the initial demands of DDR5 where the contents, the dollar contents on every module is higher than on DDR4 is going to kick in towards the end of the year. So we have a series of trigger points throughout the year that will allow us to continue to grow share quarter-over-quarter.

In terms of competition with gained share based on the quality of our products and our ability to ship without any disruptions on the current generations of products on the next generation of products we started development way early in that market. We have engaged with the ecosystem very, very early and the feedback we have from the ecosystem is that we are ahead in terms of performance for these new products. So that makes us feel comfortable.

What I would add to this is in the longer run, we see potential with new buffer chip architectures that are being driven by the cloud guys and we expect to play a key role there as well based on the focus we have, on the type of IP and the type of products that are required for these new markets. So we see the steps that we have to go through to generate that growth.

John Pitzer — Credit Suisse — Analyst

Perfect. And then as my follow-up for Rahul. You guys did a great job in the quarter on the ASR but you’ve got revenue growth accelerating. I think your capex requirements come down in ’21 versus ’20. How do we think about use of cash from here? The stock still looks relatively cheap. But I know you also have other sort of corporate goals around potential M&A. But just kind of frame that outflows for the balance of ’21.

Rahul Mathur — Senior Vice President and Chief Financial Officer

Sure, John, it’s a great question and great to hear from you. We’ve been very consistent in terms of our capital allocation. The first is to continue to support our organic growth. I’ve been very pleased with our ability to take cost out of the Company, specifically around infrastructure and you’ve seen that show up in our P&L and spend. What I’d like to do is to kind of maintain SG&A in 2021 at roughly a flat level but then continue to grow and invest in R&D, specifically for products that will help us continue to show very strong growth in the years to come in our product and IP businesses.

So the first goal from a capital allocation perspective is to continue to invest in that organic growth. And now that we have the step-downs from that licensing behind us, I’m really looking forward to seeing absolute growth, both on the top line as well as on the bottom line in the years to come.

The second thing that we look at from a capital allocation perspective is inorganic growth. We are very pleased with the transactions we did in 2019 specifically in terms of the acquisition of Verimatrix business and Northwest Logic. Those have supplemented and complemented our offerings very nicely and you’ve seen that in terms of customer engagement, you’ve seen it in terms of employee partner engagement as well. So we continue to be very active in terms of looking at different acquisition opportunity with the cash that we have on hand and relatively little leverage that we certainly have firepower that’s significantly bigger than you would expect for a company of our size. We will continue to be very thoughtful in terms of any transactions, but certainly have an ambition to do things that are larger and not just smaller as well. But of course, it depends on what’s there. But we will continue to look at that strategic operational and financial fit.

The third priority we have from a capital allocation perspective is return of capital to our shareholders. What we’ve talked about is returning 40% to 50% of our free cash flow back to our shareholders. If you look at our investor presentation, not the earnings deck that we have up now, but our investor presentation, what you see is a fantastic growth in cash from operations, free cash flow and free cash flow per share over the past several years. What you also see is that consistent commitment to returning capital.

So, as you noted, we announced a $20 million share repurchase program in Q4 as part of our results after announcing Q3. And then we also announced afterwards a $50 million accelerated share repurchase program in Q4. So continue to look at that as a consistent part of our capital allocation. So hopefully that is complete and hopefully not too complete in answering your question, John.

John Pitzer — Credit Suisse — Analyst

No. Perfect. Thank you, Rahul.

Operator

[Operator Instructions] Your next question comes from the line of Suji Desilva with Roth Capital. You may now ask your question.

Suji Desilva — Roth Capital — Analyst

Hi, Luc. Hi, Rahul. Congratulations on the strong end to the year. So in the — you’ve been asked questions about the cloud and the memory buffer business. I’m curious, Intel, talked about the digestion persisting till the second half of ’21 whereas your — you guy are feeling like it will come out earlier. Can you maybe kind of contrast the difference there? Maybe talk about your position, Intel versus AMD if that’s a helpful element here?

Luc Seraphin — President and Chief Executive Officer

Hey, Suji. Yeah, that’s a great question. We’re kind of agnostic to who ships these processors to the cloud guys. Some are strong in the cloud space, others are stronger with [Indecipherable] guys. We are engaged with all processor manufacturers. We have strong relationship with all of them. And as long as the market grows and we continue to grow share in that market, whether it’s Intel or AMD it’s kind of — we’re kind of immune to this, indifferent to this. So we are happy to see that Ice Lake is going to start ramping. We are happy to have our relationship with AMD as well. And I think between the two we’ll continue to gain share in 2021.

Suji Desilva — Roth Capital — Analyst

Okay. That’s helpful. And then I think Rahul you talked about opex and being able to redeploy R&D to some extent, the employee count coming down. Just I’m wondering what areas are you emphasizing the investment or redeployment into so we understand what your growth investments focuses are. And is there any further opportunity there, just to understand the opex trajectory?

Rahul Mathur — Senior Vice President and Chief Financial Officer

Sure. Absolutely. So in terms of where we’re spending more cash, it’s certainly in growth in our products business as well as our silicon IP. So on the products business, it continues to be in the buffer chip program as well as the companion chips related to DDR5. I think that’s an exciting opportunity for us in the years to come to really grow that business very nicely.

Does that help answer your question, Suji?

Suji Desilva — Roth Capital — Analyst

Yeah. No, I just want to understand if there was more opportunity in the redeployment or whether kind of you’re reaching a steady-state there?

Luc Seraphin — President and Chief Executive Officer

Hey, Suji. This is Luc. One thing that is working nicely for us, and we explained this at our Analyst Day in 2019, is that we have a very focused portfolio these days and that’s where we’re investing. And we are gaining share in attractive, high-growth markets, the markets of our customers are high-growth markets and you keep listening — hearing us saying about AI, 5G, IoT, auto, cloud, data centers. All of these markets use high speed interface technologies, a lot of them use high speed memory interface technology, all of them use security.

So as we focus our product portfolio, we focus also our market targets to these high-growth markets that have a great potential for us. And this has been really, really good for us. And the other thing that is happening in the background is that every activity we have is feeding the other. Our patent licensing activity feeds our IP development for those markets, our IP development feeds our product development and vice versa what we develop in products and IP feeds our patent portfolio. So we’ve gone into this virtuous cycle of focusing to high-growth market developing IP that have high demand for those markets and having a virtuous circle between all other activity to address those markets. And that explains the growth that we saw — we enjoyed last year and we continue to see the year coming.

Suji Desilva — Roth Capital — Analyst

Okay. Helpful. Thank you, Luc.

Rahul Mathur — Senior Vice President and Chief Financial Officer

Suji, what I was going to add is, I apologize, I think this is what you are calling for, is that on a longer-term basis and years out, what I’d expect is that we’ll try to keep SG&A roughly flat from a dollar perspective in 2021. You might see a small growth related to the normal small percentage increases every year and the years out. But you’ll continue to see a spend in R&D as we invest in new program. I think from a overall margin perspective as we continue to ship more products, we’ve been delighted with our product gross margin. But as we get more products, you might see gross margin tick down, but I would like to maintain the strong operating performance that you saw in 2020.

Suji Desilva — Roth Capital — Analyst

Okay. Thanks, Rahul. Thanks, guys.

Luc Seraphin — President and Chief Executive Officer

Thank you, Suji.

Operator

At this time there are no further questions. I’ll hand the call back to Luc for any closing remarks.

Luc Seraphin — President and Chief Executive Officer

Thank you everyone who has joined us today for your continued interest and time. We hope each of you stays safe and healthy in the new year and look forward to speaking with you again soon. Have a great day. Thank you.

Operator

[Operator Closing Remarks]