Summary of Lattice Semiconductor Conference Call Company Overview - **Company**: Lattice Semiconductor - **Industry**: FPGA (Field-Programmable Gate Array) market Key Points and Arguments 1. **FPGA Market Positioning**: Lattice operates in the FPGA market, positioned between ASICs (Application-Specific Integrated Circuits) and microcontrollers, offering higher performance than microcontrollers while being more flexible than ASICs [3][4][5] 2. **Market Size and Share**: The current FPGA market is approximately $7.5 billion, with Lattice holding a market share of about $500 million. Major competitors include Xilinx ($4.5 billion), Altera ($1.5 billion), and Microchip ($0.5 billion) [9][10] 3. **Growth Projections**: Lattice anticipates significant growth in the small and mid-range FPGA markets, with inflection points expected in 2026 for small FPGAs and 2027 for mid-range FPGAs [10][11] 4. **Revenue Breakdown**: Revenue is derived from four major markets: industrial and automotive (45%), communications and compute (45%), and consumer (9%) [11][12] 5. **Product Lines**: Key product lines include Nexus (small FPGA) and Avant (mid-range FPGA), with a focus on enhancing customer programming ease through silicon, tools, IP, and solutions [11][27] 6. **Software Strategy**: Lattice is investing in software solutions to enhance ease of use for customers, with six unique solutions aimed at various applications, including security and industrial automation [27][30] 7. **AI and Compute Market**: Lattice sees significant opportunities in AI servers, with an estimated content opportunity of $300 to $500 per rack, and has established partnerships with major players like NVIDIA [13][14] 8. **Supply Chain Management**: The company is diversifying its supply chain to mitigate risks associated with tariffs and geopolitical tensions, maintaining a non-China, non-Taiwan supply chain [39][42] 9. **Gross Margin Trends**: Lattice has maintained resilient gross margins, with a focus on balancing growth and margin improvement through disciplined investment in R&D and sales support [50][51] 10. **Market Recovery**: The company is experiencing a U-shaped recovery, with expectations for continued growth in the communications and compute sectors, while industrial and automotive markets are expected to regain strength [59][60] Additional Important Insights - **Motion Control Opportunities**: Lattice has identified motion control as a key area for growth, leveraging its FPGA technology for parallel processing advantages, which enhances performance and reduces latency [63][64] - **Management Team Alignment**: The CEO and CFO emphasize a shared vision for driving shareholder value and disciplined growth strategies, focusing on customer needs rather than competition [18][21][32] - **Inorganic Growth Opportunities**: Lattice is open to exploring inorganic growth opportunities in areas such as security, vision, and edge AI, while maintaining a disciplined approach to acquisitions [46][47] This summary encapsulates the essential insights from the conference call, highlighting Lattice Semiconductor's strategic positioning, market dynamics, and growth prospects within the FPGA industry.

Company Overview - Lattice Semiconductor Corporation (NASDAQ: LSCC) is positioned at the intersection of several rapidly growing trends in the semiconductor industry, including edge AI, 5G, robotics, industrial automation, and automotive applications [1]. Product Offering - The company offers an ultra-low power small FPGA (Field-Programmable Gate Array) portfolio that is well-suited for the aforementioned applications, highlighting its adaptability and relevance in the current market [1]. Market Trends - The demand for field-programmable chips is increasing due to their reconfigurability, which allows for flexibility in various technological applications [1].

Core Viewpoint - Lattice Semiconductor reported its first-quarter results, showing a mixed performance with earnings meeting expectations but revenue declining year-over-year, leading to a drop in stock price. Financial Performance - The company reported quarterly earnings of 22 cents per share, aligning with analyst consensus estimates [1] - Quarterly revenue was $120.15 million, down from $140.81 million year-over-year, but slightly beating the analyst consensus estimate of $120.13 million [1] - For the second quarter, adjusted earnings are expected to be between 22 cents and 26 cents per share, with revenue projected at $118.5 million to $128.5 million [1] Analyst Ratings - Following the quarterly report, Rosenblatt analyst Kevin Garrigan maintained a Buy rating on Lattice Semiconductor with a price forecast of $72 [2] Market Dynamics - Growth in Industrial & Automotive and Consumer end-markets contributed to a sequential revenue increase, while Communications & Computing saw a slight decline [3] - The adjusted gross margin was 69%, which is an increase of 700 basis points quarter-over-quarter but flat year-over-year, slightly below the consensus estimate of 70.1% [3] Management Insights - The company continues to ship below true demand in the near term but is encouraged by improvements in bookings and a decrease in channel inventory [4] - Management does not foresee any material impact from tariffs, although they are cautious about potential effects in the second half of 2025 [4] - Approximately 80% of Lattice's revenue comes from outside the US, supported by a diversified global supply chain [4] Future Outlook - Management anticipates continued recoveries in Industrial & Automotive markets and growth in Communications & Computing [5] - Garrigan projects second-quarter revenue of $123.5 million and earnings per share of $0.24 [5] - The stock closed lower by 12.7% at $45.82 following the earnings report [5]

Core Viewpoint - Lattice Semiconductor (LSCC) reported modest first-quarter 2025 results, with revenues and adjusted earnings meeting Zacks Consensus Estimates, despite year-over-year revenue contraction due to weak demand and macroeconomic challenges [1] Financial Performance - The company reported a GAAP net income of $5.02 million or 4 cents per share, down from $14.8 million or 11 cents per share in the prior year [2] - Non-GAAP net income was $30.7 million or 22 cents per share, compared to $40.3 million or 29 cents per share in the previous year, matching the Zacks Consensus Estimate [3] - Revenues declined to $120.1 million from $140.8 million year-over-year, but matched the consensus estimate of $120 million [3] Revenue Breakdown - Communications and Computing revenues grew year-over-year for the first time in two years, reaching $57.4 million [4] - Industrial and Automotive revenues fell to $52.2 million from $75.3 million in the prior year [4] - Total Consumer revenues were $10.6 million, a decrease of 2.83% year-over-year [4] Geographic Revenue Distribution - 65% of revenue was generated from Asia, while 25% came from the Americas, and Europe and Africa contributed 10% [5] Operational Metrics - Adjusted EBITDA decreased to $40.1 million from $50.3 million in the prior year [6] - GAAP operating expenses declined to $74.8 million from $79.6 million year-over-year [6] Cash Flow and Liquidity - The company generated $31.9 million in cash from operating activities, up from $29.5 million in the previous year [7] - As of March 29, 2025, Lattice had $127.6 million in cash and cash equivalents, with $21.1 million in other long-term liabilities [7] Outlook - For Q2 2025, Lattice expects revenues between $118.5 million and $128.5 million, with a non-GAAP gross margin anticipated to be between 68% and 70% [8] - Non-GAAP total operating expenses are projected to be between $50.5 million and $52.5 million, with a non-GAAP income tax rate expected between 5% and 6% [8] - Management forecasts non-GAAP net income to be between 22 and 26 cents per share [8] Zacks Rank - Lattice currently holds a Zacks Rank 3 (Hold) [9]

Core Insights - Lattice Semiconductor reported quarterly earnings of $0.22 per share, matching the Zacks Consensus Estimate, but down from $0.29 per share a year ago [1] - The company generated revenues of $120.15 million for the quarter ended March 2025, slightly exceeding the Zacks Consensus Estimate by 0.13%, but down from $140.82 million year-over-year [2] - Lattice shares have declined approximately 8.4% year-to-date, compared to a 3.3% decline in the S&P 500 [3] Earnings Performance - The company has not surpassed consensus EPS estimates in the last four quarters, with a previous quarter's earnings surprise of -21.05% [1][3] - Current consensus EPS estimate for the upcoming quarter is $0.24, with expected revenues of $122.66 million, and for the current fiscal year, the estimate is $1.09 on revenues of $520.5 million [7] Industry Context - The Electronics - Semiconductors industry ranks in the top 28% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8] - Empirical research suggests a strong correlation between near-term stock movements and earnings estimate revisions, which can impact Lattice's stock performance [5][6] Future Outlook - The company's earnings outlook will be influenced by management's commentary during the earnings call and any revisions to earnings estimates following the recent report [3][4] - Lattice currently holds a Zacks Rank 3 (Hold), suggesting it is expected to perform in line with the market in the near future [6]

Lattice Semiconductor (LSCC) Q1 2025 Earnings Call May 05, 2025 05:00 PM ET Company Participants Rick Muscha - Senior Director of Investor RelationsFord Tamer - CEO & DirectorLorenzo Flores - CFOMelissa Weathers - Vice President - Equity ResearchSrini Pajjuri - Managing DirectorRuben Roy - Managing Director - Equity ResearchJoshua Buchalter - Director - Equity ResearchEzra Weener - VP - Equity Research Conference Call Participants Christopher Rolland - Senior Equity AnalystDavid Williams - Equity Research A ...

May 2025 1 | Lattice Semiconductor (NASDAQ: LSCC) Click to edit Master title style Safe Harbor Statement Forward Looking Statements ▪ Click to edit Master text styles ▪ Second level ▪ Third level ▪ Fourth level ▪ Fifth level This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of ...

Financial Data and Key Metrics Changes - The company reported revenue of $120.1 million for Q1 2025, reflecting a 2% increase compared to Q4 2024 but a 15% decline year-over-year [13][14] - Non-GAAP gross margin was 69%, up 690 basis points from Q4 2024, demonstrating resilience despite lower revenue levels [14] - Non-GAAP operating margin was 26.2%, and adjusted EBITDA margin was 33.4%, indicating strong financial discipline [15] - Free cash flow for Q1 was $23.3 million, with a free cash flow margin of 19.4% [15] Business Line Data and Key Metrics Changes - The communications and computing segment experienced its first year-on-year growth in two years, while industrial and automotive grew 6% sequentially, marking its first quarter of sequential growth in six quarters [7][11] - Revenue from new products continued to grow at a strong double-digit pace, both sequentially and year-on-year, with expectations to achieve high teens percentage of new product revenue for the full year 2025 [9][21] Market Data and Key Metrics Changes - The company noted that approximately 80% of its revenue comes from outside the U.S., which may mitigate the potential direct impact of tariffs [18][19] - The industrial sector showed positive signs with PMI above 50 for the past four years, while automotive remained flat [32] Company Strategy and Development Direction - The company is focused on driving innovation, expanding customer engagements, and maintaining a strong product roadmap [12][21] - The management emphasized the importance of operational efficiency and cost controls to navigate macro uncertainties [5][16] - The company aims to strengthen its leadership in small and mid-range FPGA markets through targeted R&D and product innovation [17] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the second half of 2025, dependent on the resolution of tariff situations and customer demand [12][20] - The company expects a U-shaped recovery in the long term, supported by improving demand signals and a better book-to-bill ratio [11][25] Other Important Information - The company repurchased approximately $25 million of common stock during the quarter, reducing dilution by 4.6% [17] - The management highlighted the importance of maintaining a strong balance sheet, being debt-free, and having access to capital for future growth [16] Q&A Session Summary Question: Update on 2025 revenue outlook - Management sees no change in the 2025 revenue outlook, citing improving demand signals and a better book-to-bill ratio [25] Question: Differences in growth rates between segments - The decline in the communications and computing segment was primarily due to client revenue decline related to older platforms, while server and wireline applications showed strength [27][28] Question: Impact of tariffs on customer positioning - Management noted strong demand from cloud customers and improvements in industrial sectors, while remaining cautious about potential tariff impacts [31][32] Question: Design win momentum and its drivers - The design win momentum is driven by the company's strategic position in small and mid-range segments, with both unit recovery and ASP improvements contributing to growth [36] Question: Inventory levels and normalization - Channel inventory is expected to take a few more quarters to normalize, while internal inventory showed a significant drop [45][48] Question: Long-term gross margin targets - The company is confident in achieving long-term gross margin targets of low 70%, driven by product mix and cost reductions [74][76] Question: Competitive landscape in low power FPGA market - The company believes its unique architecture provides sustainable advantages over competitors, despite increased competition [78][80] Question: Revenue contribution from new products - New product growth is expected to accelerate, with contributions from Nexus and Avant products layering in over the next few years [105][107]

Revenue Performance - Revenue for Q1 2025 was $120.1 million, representing a 2.3% increase from Q4 2024 but a 14.7% decrease year-over-year[5]. - Revenue for the three months ended March 29, 2025, was $120.15 million, a 2% increase from $117.42 million in the previous quarter but a 15% decrease from $140.82 million year-over-year[19]. - Revenue by geography showed 65% from Asia, 25% from the Americas, and 10% from Europe, with a slight shift in the Americas' contribution compared to the previous quarter[25]. Profitability Metrics - GAAP gross margin for Q1 2025 was 68.0%, up 690 basis points from Q4 2024, while non-GAAP gross margin was 69.0%[3][5]. - Gross margin for the same period was $81.73 million, representing a gross margin percentage of 68.0%, compared to 61.1% in the previous quarter and 68.3% year-over-year[27]. - Net income for Q1 2025 was $5.0 million, a decline of 69.6% compared to Q4 2024, with a net income margin of 4.2%[5]. - Net income for Q1 2025 was $5.02 million, a significant decrease of 70% from $16.51 million in the previous quarter and a 66% decrease from $14.80 million year-over-year[19]. - Non-GAAP net income for the same period was $30,746,000, up from $20,181,000 in the previous quarter and down from $40,258,000 a year ago[30]. - GAAP net income margin for the three months ended March 29, 2025, was 4.2%, down from 14.1% in the previous quarter and 10.5% year-over-year[35]. Operating Expenses - Total operating expenses for Q2 2025 are projected to be between $50.5 million and $52.5 million on a non-GAAP basis[7]. - Operating expenses totaled $74.75 million, down from $83.96 million in the previous quarter, with R&D expenses increasing to $41.39 million from $38.58 million[19]. - R&D expenses as a percentage of revenue increased to 34.4% in Q1 2025, compared to 32.9% in Q4 2024[5]. - The company is maintaining disciplined control over operating expenses while focusing on execution and monitoring market conditions[4]. Cash Flow and Shareholder Returns - The company reported a GAAP net cash flow from operating activities of $31.9 million for Q1 2025, with a free cash flow of $23.3 million[3]. - Cash flows from operating activities were $31.89 million, an increase from $29.51 million in the previous year[23]. - The company repurchased $25 million in common stock during the quarter, compared to $20 million in the previous quarter[23]. - Free cash flow for the quarter was $23,276,000, down from $39,667,000 in the previous quarter and up from $26,085,000 year-over-year[35]. Adjusted Metrics - Adjusted EBITDA for Q1 2025 was $40.1 million, resulting in an adjusted EBITDA margin of 33.4%[3][5]. - Adjusted EBITDA for the three months ended March 29, 2025, was $40,080,000, compared to $29,116,000 for December 28, 2024, and $50,288,000 for March 30, 2024[35]. - Non-GAAP income from operations was $31.54 million, compared to $20.10 million in the previous quarter[27]. - Non-GAAP income from operations margin increased to 26.2% from 17.1% in the previous quarter and decreased from 30.0% year-over-year[30]. Market and Business Highlights - The company achieved a record level of design wins, driven by applications in generative AI, robotics, automotive, and security[4]. - The communications and computing segment accounted for 48% of total revenue, while industrial and automotive contributed 43%[25]. Share Performance - GAAP net income per share - basic was $0.04, compared to $0.12 for the previous quarter and $0.11 for the same quarter last year[35]. - Non-GAAP net income per share - basic increased to $0.22 from $0.15 in the previous quarter and decreased from $0.29 year-over-year[35]. Stock-Based Compensation - The cumulative effect of non-GAAP adjustments for stock-based compensation was $20,556,000 for the current quarter, compared to $14,855,000 in the previous quarter[35]. Inventory and Receivables - Accounts receivable days outstanding (DSO) remained stable at 64 days, while inventory days outstanding (DIO) increased to 225 days from 207 days in the previous quarter[25].

Group 1 - Lattice Semiconductor (LSCC) has recently reached a key level of support and has overtaken the 20-day moving average, indicating a short-term bullish trend [1] - The 20-day simple moving average is a popular trading tool that helps smooth out price fluctuations and provides trend reversal signals, with a price above this average considered positive [2] - LSCC shares have increased by 9.3% over the past four weeks, and the company holds a Zacks Rank 2 (Buy), suggesting potential for continued growth [3] Group 2 - Positive earnings estimate revisions for LSCC strengthen the bullish outlook, with no estimates decreasing in the past two months and four estimates increasing [3] - Investors are encouraged to consider adding LSCC to their watchlist due to the important technical indicators and favorable earnings revisions [4]