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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 10-Q
_______________________________
(Mark One)
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 000-22339
_______________________________
RAMBUS INC.
(Exact name of registrant as specified in its charter)
_______________________________
Delaware 94-3112828
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
4453 North First Street
Suite 100
San Jose, California95134
(Address of principal executive offices)(ZIP Code)
Registrant’s telephone number, including area code:
(408462-8000
________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, $.001 Par ValueRMBSThe NASDAQ Stock Market LLC
(The NASDAQ Global Select Market)

Securities registered pursuant to Section 12(g) of the Act:
None
________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ☒ Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).  Yes   No 
The number of shares outstanding of the registrant’s Common Stock, par value $.001 per share, was 110,528,531 as of June 30, 2022.



RAMBUS INC.
TABLE OF CONTENTS
 
 PAGE
Item 6. Exhibits
3


NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include, without limitation, predictions regarding the following aspects of our future:
Success in the markets of our products and services or our customers’ products;
Sources of competition;
Research and development costs and improvements in technology;
Sources, amounts and concentration of revenue, including royalties;
Variation in patent and technology royalties in future periods;
Success in signing and renewing license agreements;
Success in adding and maintaining new customers;
Levels of variation in our customers’ reported shipment volumes;
Variation in contract and other revenue, based on varying revenue recognized from contract and other revenue;
Implications of a short-term increase in our research and development expenses;
Variation in our sales, general and administrative expenses;
Terms of our licenses and amounts owed under license agreements;
Technology product development;
Dispositions, acquisitions, mergers or strategic transactions and our related integration efforts;
Impairment of goodwill and long-lived assets;
Pricing policies of our customers;
Changes in our strategy and business model, including the expansion of our portfolio of inventions, products, software, services and solutions to address additional markets in memory, chip and security;
Deterioration of financial health of commercial counterparties and their ability to meet their obligations to us;
Effects of security breaches or failures in our or our customers’ products and services on our business;
Engineering, sales and general and administration expenses;
Contract revenue;
Operating results;
Continued product revenue growth, specifically in connection with the growth in sales of our memory interface chips;
International licenses, operations and expansion;
Effects of changes in the economy and credit market on our industry and business;
Impact of the ongoing COVID-19 pandemic, including its most recent variants, as well as other diseases such as monkeypox, on our business operations and financial results;
Ability to identify, attract, motivate and retain qualified personnel, especially in light of a hyper-competitive compensation environment;
Effects of government regulations on our industry and business;
Manufacturing, shipping and supply partners, supply chain availability and/or sale and distribution channels;
Growth in our business;
Methods, estimates and judgments in accounting policies;
Adoption of new accounting pronouncements;
Effective tax rates, including as a result of recent U.S. tax legislation;
Restructurings and plans of termination;
Realization of deferred tax assets/release of deferred tax valuation allowance;
Trading price of our common stock;
4


Internal control environment;
The level and terms of our outstanding debt and the repayment or financing of such debt;
Protection of intellectual property (“IP”);
Any changes in laws, agency actions and judicial rulings that may impact the ability to enforce our IP rights;
Indemnification and technical support obligations;
Equity repurchase programs;
Issuances of debt or equity securities, which could involve restrictive covenants or be dilutive to our existing stockholders;
Effects of fluctuations in interest rates and currency exchange rates;
Effects of a rising rate of inflation;
Management of supply chain risks; and
Outcome and effect of potential future IP litigation and other significant litigation.
You can identify these and other forward-looking statements by the use of words such as “may,” “future,” “shall,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continue,” “projecting” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements.
Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part II, Item 1A, “Risk Factors.” All forward-looking statements included in this document are based on our assessment of information available to us at this time. We assume no obligation to update any forward-looking statements.

5


PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
RAMBUS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 (In thousands, except shares and par value)June 30,
2022
December 31,
2021
ASSETS  
Current assets:  
Cash and cash equivalents$171,460 $107,891 
Marketable securities180,175 377,718 
Accounts receivable63,602 44,065 
Unbilled receivables146,692 135,608 
Inventories9,238 8,482 
Prepaids and other current assets9,979 10,600 
Total current assets581,146 684,364 
Intangible assets, net58,866 58,420 
Goodwill291,995 278,810 
Property, plant and equipment, net81,735 56,035 
Operating lease right-of-use assets26,343 23,712 
Deferred tax assets2,686 4,047 
Unbilled receivables65,211 123,018 
Other assets2,931 4,240 
Total assets$1,110,913 $1,232,646 
LIABILITIES & STOCKHOLDERS’ EQUITY
  
Current liabilities:  
Accounts payable$20,183 $11,279 
Accrued salaries and benefits20,689 20,945 
Convertible notes49,248 163,687 
Deferred revenue22,165 24,755 
Income taxes payable20,846 20,607 
Operating lease liabilities5,873 5,992 
Other current liabilities22,440 20,002 
Total current liabilities161,444 267,267 
Long-term operating lease liabilities31,219 29,099 
Long-term income taxes payable12,220 21,424 
Deferred tax liabilities25,159 23,985 
Other long-term liabilities42,713 28,475 
Total liabilities272,755 370,250 
Commitments and contingencies (Notes 9, 11 and 15)
Stockholders’ equity:  
Convertible preferred stock, $0.001 par value:
  
Authorized: 5,000,000 shares; Issued and outstanding: no shares at June 30, 2022 and December 31, 2021
  
Common stock, $0.001 par value:
  
Authorized: 500,000,000 shares; Issued and outstanding: 110,528,531 shares at June 30, 2022 and 109,292,235 shares at December 31, 2021
111 109 
Additional paid-in capital1,283,789 1,298,966 
Accumulated deficit(440,004)(435,227)
Accumulated other comprehensive loss(5,738)(1,452)
Total stockholders’ equity838,158 862,396 
Total liabilities and stockholders’ equity$1,110,913 $1,232,646 
Refer to Notes to Unaudited Condensed Consolidated Financial Statements
6


RAMBUS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) 
Three Months EndedSix Months Ended
 June 30,June 30,
(In thousands, except per share amounts)2022202120222021
Revenue:    
Product revenue$53,302 $31,170 $101,271 $61,951 
Royalties48,038 41,910 78,502 70,769 
Contract and other revenue19,792 11,779 40,409 22,521 
Total revenue121,132 84,859 220,182 155,241 
Cost of revenue:    
Cost of product revenue20,417 11,422 38,814 22,832 
Cost of contract and other revenue974 1,017 1,598 2,573 
Amortization of acquired intangible assets3,421 4,439 6,799 8,825 
Total cost of revenue24,812 16,878 47,211 34,230 
Gross profit96,320 67,981 172,971 121,011 
Operating expenses:
Research and development39,538 31,469 79,353 63,823 
Sales, general and administrative26,305 22,184 53,211 45,746 
Amortization of acquired intangible assets417 229 826 458 
Restructuring charges   368 
Change in fair value of earn-out liability(5,500) (4,300) 
Total operating expenses60,760 53,882 129,090 110,395 
Operating income35,560 14,099 43,881 10,616 
Interest income and other income (expense), net2,738 2,381 4,098 5,362 
Loss on extinguishment of debt  (66,497) 
Loss on fair value adjustment of derivatives, net  (8,283) 
Interest expense (348)(2,683)(953)(5,297)
Interest and other income (expense), net2,390 (302)(71,635)65 
Income (loss) before income taxes37,950 13,797 (27,754)10,681 
Provision for income taxes2,930 2,631 3,444 2,128 
Net income (loss)$35,020 $11,166 $(31,198)$8,553 
Net income (loss) per share:    
Basic$0.32 $0.10 $(0.28)$0.08 
Diluted$0.31 $0.10 $(0.28)$0.07 
Weighted-average shares used in per share calculation:    
Basic110,447 112,144 110,170 112,177 
Diluted112,715 114,931 110,170 115,358 
Refer to Notes to Unaudited Condensed Consolidated Financial Statements
7


RAMBUS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months EndedSix Months Ended
 June 30,June 30,
(In thousands)2022202120222021
Net income (loss)$35,020 $11,166 $(31,198)$8,553 
Other comprehensive income (loss):    
Foreign currency translation adjustment(676)4 (969)(17)
Unrealized loss on marketable securities, net of tax(749)(54)(3,317)(85)
Total comprehensive income (loss)$33,595 $11,116 $(35,484)$8,451 
Refer to Notes to Unaudited Condensed Consolidated Financial Statements
8


RAMBUS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

For the Three Months Ended June 30, 2022
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Loss
(In thousands)SharesAmountTotal
Balances at March 31, 2022110,235 $110 $1,272,353 $(475,024)$(4,313)$793,126 
Net income— — — 35,020 — 35,020 
Foreign currency translation adjustment— — — — (676)(676)
Unrealized loss on marketable securities, net of tax— — — — (749)(749)
Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan293 1 2,800 — — 2,801 
Stock-based compensation— — 8,636 — — 8,636 
Balances at June 30, 2022
110,528 $111 $1,283,789 $(440,004)$(5,738)$838,158 
For the Three Months Ended June 30, 2021
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Gain (Loss)
(In thousands)SharesAmountTotal
Balances at March 31, 2021112,505 $113 $1,269,790 $(360,364)$(133)$909,406 
Net income— — — 11,166 — 11,166 
Foreign currency translation adjustment— — — — 4 4 
Unrealized loss on marketable securities, net of tax— — — — (54)(54)
Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan407  2,836 — — 2,836 
Repurchase and retirement of common stock under repurchase program(4,015)(4)(22,849)(77,215)— (100,068)
Stock-based compensation— — 7,298 — — 7,298 
Balances at June 30, 2021
108,897 $109 $1,257,075 $(426,413)$(183)$830,588 
For the Six Months Ended June 30, 2022
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Loss
(In thousands)SharesAmountTotal
Balances at December 31, 2021
109,292 $109 $1,298,966 $(435,227)$(1,452)$862,396 
Net loss— — — (31,198)— (31,198)
Foreign currency translation adjustment— — — — (969)(969)
Unrealized loss on marketable securities, net of tax— — — — (3,317)(3,317)
Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan1,236 2 (12,701)— — (12,699)
Stock-based compensation— — 16,414 — — 16,414 
Retirement of convertible senior note hedges— — 62,011 — — 62,011 
Retirement of warrants— — (46,356)— — (46,356)
Cumulative effect adjustment from adoption of ASU 2020-06— — (34,545)26,421 — (8,124)
Balances at June 30, 2022
110,528 $111 $1,283,789 $(440,004)$(5,738)$838,158 
For the Six Months Ended June 30, 2021
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Loss
(In thousands)SharesAmountTotal
Balances at December 31, 2020
111,698 $112 $1,270,426 $(357,751)$(81)$912,706 
Net income— — — 8,553 — 8,553 
Foreign currency translation adjustment— — — — (17)(17)
Unrealized loss on marketable securities, net of tax— — — — (85)(85)
Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan1,214 1 (4,301)— — (4,300)
Repurchase and retirement of common stock under repurchase program(4,015)(4)(22,849)(77,215)— (100,068)
Stock-based compensation— — 13,799 — — 13,799 
Balances at June 30, 2021
108,897 $109 $1,257,075 $(426,413)$(183)$830,588 
Refer to Notes to Unaudited Condensed Consolidated Financial Statements
9


RAMBUS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) 
Six Months Ended
 June 30,
(In thousands)20222021
Cash flows from operating activities:  
Net income (loss)$(31,198)$8,553 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:  
Stock-based compensation16,414 13,799 
Depreciation14,889 12,753 
Amortization of intangible assets7,624 9,284 
Non-cash interest expense and amortization of convertible debt issuance costs151 3,775 
Loss on extinguishment of debt66,497  
Loss on fair value adjustment of derivatives, net8,283  
Deferred income taxes 1,210 1,317 
Loss on equity investment622 453 
Realized loss from sale of marketable securities688  
Change in fair value of earn-out liability(4,300) 
Gain on disposal of property, plant and equipment(9) 
Change in operating assets and liabilities, net of effects of acquisition:  
Accounts receivable(18,436)(10,827)
Unbilled receivables46,962 51,463 
Prepaids and other current assets2,850 4,688 
Inventories(756)6,414 
Accounts payable7,425 1,715 
Accrued salaries and benefits and other liabilities(2,973)(3,575)
Income taxes payable(10,267)(9,747)
Deferred revenue(3,263)2,190 
Operating lease liabilities(3,300)(1,203)
Net cash provided by operating activities99,113 91,052 
Cash flows from investing activities:  
Purchases of property, plant, and equipment(6,433)(5,267)
Acquisition of intangible assets(3,000) 
Acquisition of business, net of cash acquired(15,932) 
Purchases of marketable securities(56,661)(333,782)
Maturities of marketable securities45,324 260,924 
Proceeds from sales of marketable securities204,091 174,546 
Net cash provided by investing activities167,389 96,421 
Cash flows from financing activities:
Proceeds received from issuance of common stock under employee stock plans3,730 4,186 
Payments of taxes on restricted stock units(16,429)(8,486)
Payments under installment payment arrangements(7,343)(7,168)
Repurchase of convertible senior notes(199,111) 
Proceeds from retirement of convertible senior note hedges72,415  
Payments for retirement of warrants(55,148) 
Repurchase and retirement of common stock, including prepayment under accelerated
share repurchase program
 (100,068)
Net cash used in financing activities(201,886)(111,536)
Effect of exchange rate changes on cash and cash equivalents(1,054)(168)
Net increase in cash, cash equivalents and restricted cash63,562 75,769 
Cash, cash equivalents and restricted cash at beginning of period108,264 129,324 
Cash, cash equivalents and restricted cash at end of period$171,826 $205,093 
Non-cash operating, investing and financing activities:  
Property, plant and equipment received and accrued in accounts payable and other liabilities$37,896 $10,720 
Operating lease right-of-use assets obtained in exchange for operating lease obligations$5,301 $ 
Reconciliation of the cash, cash equivalents and restricted cash balances as of June 30, 2022 and December 31, 2021:
June 30,
2022
December 31,
2021
Cash and cash equivalents$171,460 $107,891 
Restricted cash366 373 
Cash, cash equivalents and restricted cash$171,826 $108,264 
Refer to Notes to Unaudited Condensed Consolidated Financial Statements
10


RAMBUS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Rambus Inc. (“Rambus” or the “Company”) and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the accompanying unaudited condensed consolidated financial statements.
In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring items) necessary to state fairly the financial position and results of operations for each interim period presented. Interim results are not necessarily indicative of results for a full year.
The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) applicable to interim financial information. Certain information and Note disclosures included in the financial statements prepared in accordance with generally accepted accounting principles have been omitted in these interim statements pursuant to such SEC rules and regulations. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto in Form 10-K for the year ended December 31, 2021.

2. Recent Accounting Pronouncements
Recent Accounting Pronouncements Adopted
In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) (“ASU 2020-06”).” The amendments in this ASU simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, the guidance removes the liability and equity separation models for convertible instruments. Instead, entities will account for convertible debt instruments wholly as debt unless convertible instruments contain features that require bifurcation as a derivative or that result in substantial premiums accounted for as paid-in capital. The guidance also requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. The guidance is effective for fiscal years beginning after December 15, 2021. The Company adopted this guidance on January 1, 2022 on a modified retrospective basis. Upon adoption, the Company reversed approximately $35.2 million of debt discount related to the Company’s 1.375% Convertible Senior Notes due 2023 (the “2023 Notes”) from additional paid-in capital, reversed approximately $8.3 million representing the unamortized debt discount from liabilities, and recorded the net impact of $26.9 million to accumulated deficit. The Company also removed approximately $0.7 million of debt issuance costs related to the 2023 Notes from additional paid-in capital and recorded approximately $0.5 million to accumulated deficit related to the amortization of debt issuance costs that were historically allocated to equity. The Company expects reported interest expense for its convertible notes to decrease in the future.
In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The amendments in this ASU improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistencies related to recognition of an acquired contract liability, and to payment terms and their effect on subsequent revenue recognized by the acquirer. Among other changes, this ASU requires that an acquirer account for acquired revenue contracts in accordance with Topic 606 as if it had originated the contracts. If the acquirer is unable to assess or rely on how the acquiree applied Topic 606, the acquirer should consider the terms of the acquired contracts as of the contract inception or contract modification date in applying Topic 606 to determine what should be recorded at the acquisition date. The amendments also provide certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a business combination. The guidance is effective for fiscal years beginning after December 15, 2022. The Company elected to early adopt this ASU on April 1, 2022. The adoption of this ASU did not have a material impact on the Company's condensed consolidated financial statements.

11


3. Revenue Recognition
Contract Balances
The contract assets are primarily related to the Company’s fixed fee IP licensing arrangements and rights to consideration for performance obligations delivered but not billed as of June 30, 2022.
The Company’s contract balances were as follows:
As of
(In thousands)June 30, 2022December 31, 2021
Unbilled receivables$211,903 $258,626 
Deferred revenue23,512 26,198 
During the six months ended June 30, 2022, the Company recognized $17.8 million of revenue that was included in the contract balances as of December 31, 2021. During the six months ended June 30, 2021, the Company recognized $8.3 million of revenue that was included in the contract balances as of December 31, 2020.
Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. Contracted but unsatisfied performance obligations were approximately $26.0 million as of June 30, 2022, which the Company primarily expects to recognize over the next 2 years.

4. Earnings (Loss) Per Share
Basic earnings (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the earnings by the weighted-average number of common shares and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of incremental common shares issuable upon exercise of stock options, employee stock purchases, restricted stock and restricted stock units and shares issuable upon the conversion of convertible notes. The dilutive effect of outstanding shares is reflected in diluted earnings per share by application of the treasury stock method. This method includes consideration of the amounts to be paid by the employees and the amount of unrecognized stock-based compensation related to future services. No potential dilutive common shares are included in the computation of any diluted per share amount when a net loss is reported.
The following table sets forth the computation of basic and diluted net income (loss) per share:
Three Months EndedSix Months Ended
 June 30,June 30,
(In thousands, except per share amounts)2022202120222021
Net income (loss) per share:
Numerator:  
Net income (loss)$35,020 $11,166 $(31,198)$8,553 
Denominator:
Weighted-average shares outstanding - basic110,447112,144110,170112,177
Effect of potential dilutive common shares2,268 2,787  3,181 
Weighted-average shares outstanding - diluted112,715114,931110,170115,358
Basic net income (loss) per share$0.32 $0.10 $(0.28)$0.08 
Diluted net income (loss) per share$0.31 $0.10 $(0.28)$0.07 
For the six months ended June 30, 2022, an additional 3.0 million shares were excluded from the weighted-average dilutive shares because there was a net loss position for the period. During the three months ended June 30, 2022, the Company’s stock price exceeded the 2023 Notes’ conversion price of $18.93 per share, therefore approximately 0.6 million shares for the three months ended June 30, 2022 were included in the weighted-average dilutive shares. During the three and six months ended June 30, 2021, the Company’s stock price exceeded the 2023 Notes’ conversion price of $18.93 per share, therefore approximately 0.5 million shares for each of the three and six months ended June 30, 2021, were included in the weighted-average dilutive shares.
12


As a result of the Company’s adoption of ASU No. 2020-06 on January 1, 2022, the dilutive impact of the 2023 Notes on the calculation of diluted net income (loss) per share is considered using the if-converted method. Furthermore, because the principal amount of the 2023 Notes must be settled in cash, the dilutive impact of applying the if-converted method is limited to the in-the-money portion, if any, of the 2023 Notes. For periods prior to the Company’s January 1, 2022 adoption of ASU No. 2020-06, the Company applied the treasury stock method to account for the dilutive impact of the 2023 Notes for diluted net income (loss) per share purposes. As noted in ASU No. 2020-06, for convertible instruments where the principal is required to be paid in cash, the results of applying the if-converted method are consistent with the results of applying the historical treasury stock method. Therefore, even though the Company is required to apply the if-converted method upon adoption of ASU No. 2020-06, there is no impact to its earnings per share calculation. Under the if-converted method, the cumulative dilutive effect of the 2023 Notes would be approximately 2.6 million shares. Refer to Note 10, “Convertible Notes,” for additional information.

5. Intangible Assets and Goodwill
Goodwill
The following tables present goodwill information for the six months ended June 30, 2022:
(In thousands)As of December 31, 2021
Addition to Goodwill (1)
Adjustments to Goodwill (2)
Effect of
Exchange Rates (3)
As of June 30, 2022
Total goodwill$278,810 $12,069 $965 $151 $291,995 
_________________________________________
(1)    In May 2022, the Company acquired Hardent, Inc. (“Hardent”), which resulted in the Company recognizing additional goodwill. Refer to Note 16, “Acquisition,” for additional information.
(2)    The adjustments to goodwill primarily include a correction of an immaterial error related to an understatement in other current liabilities that originated from the acquisition of AnalogX in 2021.
(3)    Effect of exchange rates relates to foreign currency translation adjustments for the period.
As of June 30, 2022
(In thousands)Gross Carrying AmountAccumulated Impairment LossesNet Carrying Amount
Total goodwill$313,765 $(21,770)$291,995 
Intangible Assets, Net
The components of the Company’s intangible assets as of June 30, 2022 and December 31, 2021 were as follows:
  As of June 30, 2022
(In thousands)Useful Life
Gross Carrying
 Amount (1) (2)
Accumulated
 Amortization (1) (2)
Net Carrying
 Amount
Existing technology
3 to 10 years
$299,925 $(254,404)$45,521 
Customer contracts and contractual relationships
0.5 to 10 years
37,996 (35,851)2,145 
Non-compete agreements and trademarks
3 years
300 (300) 
In-process research and development (“IPR&D”)Not applicable11,200 — 11,200 
Total intangible assets $349,421 $(290,555)$58,866 
_________________________________________
(1)    During the six months ended June 30, 2022, the Company acquired certain intangible assets for $3.0 million in cash. The assets were classified as existing technology and are being amortized over their expected useful life of five years. During the six months ended June 30, 2022, the amortization for the acquired assets was not material.
(2)    In May 2022, the Company acquired Hardent, which resulted in the Company recognizing additional intangible assets. Refer to Note 16, “Acquisition,” for additional information.
13



  As of December 31, 2021
(In thousands)Useful Life
Gross Carrying
 Amount
Accumulated
 Amortization
Net Carrying
 Amount
Existing technology
3 to 10 years
$292,058 $(247,422)$44,636 
Customer contracts and contractual relationships
0.5 to 10 years
37,793 (35,209)2,584 
Non-compete agreements and trademarks
3 years
300 (300) 
IPR&DNot applicable11,200 —