Rambus (RMBS 0.87%) stock lost ground in Tuesday's trading on the heels of a mostly solid quarterly report. The company's share price fell 8.7% in a daily session that saw the S&P 500 (^GSPC +0.44%) rise 0.2% and the Nasdaq Composite (^IXIC +0.54%) jump 0.8%.
Rambus published its third-quarter results after the market closed yesterday, posting earnings that were in line with Wall Street's target and sales that beat expectations. Despite the sales beat, some investors appear to have been hoping for stronger earnings and forward guidance.
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Rambus stock sinks despite better-than-expected revenue
Rambus recorded non-GAAP (generally accepted accounting principles) adjusted earnings per share (EPS) of $0.63 on revenue of $178.5 million. While the company's adjusted profit was in line with the average analyst estimate, sales for the period came in ahead of Wall Street's call for sales of $176 million.
Using Rambus' adjusted revenue figure of $179.5 million, the performance beat for the period looked even stronger. Revenue was up approximately 22% year over year, thanks to strong momentum in the DDR5 memory solutions category, but it wasn't enough to impress investors.
NASDAQ: RMBS
Key Data Points
What's next for Rambus?
Rambus is guiding for fourth-quarter sales to come in between $184 million and $190 million and adjusted operating costs between $99 million and $103 million. Adjusted EPS for Q4 is projected to be between $0.64 and $0.71.
While the company's business has historically been subject to cyclical trends, investors aren't thrilled with the potential for growth deceleration in the current quarter. That doesn't necessarily mean that the business won't deliver strong performance over the long term, but the stock has still nearly doubled this year even after today's pullback -- and expectations have been raised.
