Core Insights - Lattice Semiconductor (LSCC) reported third-quarter 2025 results that met Zacks Consensus Estimates for both revenue and net income, driven by growth in the AI server market and a focus on expanding its FPGA portfolio through innovation [1][8]. Financial Performance - The company reported a GAAP net income of $2.79 million or 2 cents per share, down from $7.19 million or 5 cents per share in the same quarter last year, primarily due to higher operating expenses [2]. - Non-GAAP net income for the quarter was $38.15 million or 28 cents per share, an increase from $32.54 million or 24 cents per share year-over-year, matching the Zacks Consensus Estimate [2]. Revenue Breakdown - Net sales increased to $133.34 million from $127.09 million in the prior-year quarter, supported by strong growth in the Communications & Computing segment, aligning with the consensus estimate of $133 million [3][8]. - Communications and Computing revenues rose to $74 million from $61 million, attributed to normalized inventory and robust demand in the AI server market [4]. - Revenues from the Industrial and Automotive segment decreased to $50.3 million from $54.2 million, impacted by higher channel inventory levels, while Consumer revenues fell to $9 million from $11.9 million [4]. Geographic Revenue Distribution - In Q3 2025, 65% of the company's revenue was generated from Asia, 19% from the Americas, and 16% from Europe and Africa [5]. Operational Metrics - Adjusted EBITDA increased to $47.4 million from $42.5 million year-over-year, while GAAP operating expenses rose to $92.1 million from $80.2 million [5]. Cash Flow and Outlook - For the first nine months of 2025, Lattice generated $117.5 million in cash from operating activities, up from $95.4 million in the prior-year period. As of September 27, 2025, the company had $117.9 million in cash and cash equivalents [6]. - The company anticipates Q4 2025 revenues in the range of $138-$148 million, with a non-GAAP gross margin expected between 68.5%-70.5% and non-GAAP net income projected at 30-34 cents per share [6][8].

Financial Performance - Lattice Semiconductor Corporation reported quarterly earnings of 28 cents per share, meeting analyst consensus estimates [1] - The company achieved quarterly sales of $133.349 million, surpassing the analyst consensus estimate of $133.028 million [1] Future Projections - For the fourth quarter, Lattice Semiconductor expects adjusted EPS to be between 30 cents and 34 cents, compared to market estimates of 32 cents [2] - The company projects sales in the range of $138.000 million to $148.000 million, against expectations of $141.918 million [2] Analyst Ratings and Price Targets - Benchmark analyst David Williams maintained a Buy rating on Lattice Semiconductor and raised the price target from $75 to $82 [6] - Stifel analyst Ruben Roy also maintained a Buy rating, increasing the price target from $60 to $80 [6] - Rosenblatt analyst Kevin Cassidy kept a Buy rating and boosted the price target from $72 to $80 [6]

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Core Insights - Lattice Semiconductor Corporation reported record revenue in the Communications and Computing segment for Q3 2025, with total revenue of $133.3 million, reflecting a 7.6% increase quarter-over-quarter and a 4.9% increase year-over-year [2][3][4] - The company anticipates a revenue growth of 22% year-over-year for Q4 2025, with expected revenue between $138 million and $148 million [12][4] - Non-GAAP net income for Q3 2025 was $38.2 million, translating to $0.28 per diluted share, marking a 17.1% increase from the previous quarter [3][4][5] Financial Performance - Q3 2025 GAAP gross margin was 67.9%, while non-GAAP gross margin was 69.5% [3][5] - Total operating expenses for Q3 2025 were $92.1 million, up 15% from Q2 2025 [5][4] - Adjusted EBITDA for Q3 2025 was $47.4 million, representing a 35.6% adjusted EBITDA margin [3][4] Business Outlook - The company expects total operating expenses for Q4 2025 to be between $54.5 million and $56.5 million on a non-GAAP basis [12][4] - The anticipated non-GAAP gross margin for Q4 2025 is projected to be 69.5% plus or minus 1% [12][4] - The expected non-GAAP income tax rate for Q4 2025 is between 3% and 5% [12][4] Recent Developments - Lattice launched the industry's first PQC-Ready FPGA, the MachXO5-NX TDQ family, enhancing security and reliability for various applications [6] - The company repurchased common stock valued at $85 million in the first nine months of 2025 [6] - Lattice was recognized as a 2025 Top Workplace in Oregon and Southwest Washington, highlighting its commitment to employee appreciation and wellbeing [6]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $133.3 million, representing a 7.6% increase from Q2 and a 4.9% increase year-over-year, marking the highest revenue in five quarters [6][11][12] - Q4 revenue guidance is set at $143 million at the midpoint, indicating a 22% year-on-year growth, the largest increase in nearly two years [7][16] - Gross margin expanded by 20 basis points quarter-over-quarter and 50 basis points year-over-year to 69.5% on a non-GAAP basis [11][12] - Non-GAAP EPS for Q3 was $0.28, reflecting a 17% growth both year-over-year and quarter-over-quarter [12][13] Business Line Data and Key Metrics Changes - Communications and computing revenue grew 21% year-over-year and 8% sequentially, driven by increased use cases in general-purpose and AI-optimized servers [7][11] - The industrial and automotive segment saw a 6% sequential increase, with growth tempered by strategic shipping to normalize channel inventory [7][8] Market Data and Key Metrics Changes - The communications and computing segment is expected to account for over 55% of total revenue in 2025, growing to about 60% in 2026 [21] - The company is experiencing strong growth in the China automotive market, while aerospace and defense applications are also performing well globally [24] Company Strategy and Development Direction - The company is focused on capitalizing on investments in AI and data center infrastructure, with a robust innovation pipeline and increasing design wins [5][6] - The strategy includes normalizing channel inventory by year-end 2025, positioning for renewed growth into 2026 [8][15] - The company aims to deliver above-average revenue growth, supported by expanding addressable markets and increasing average selling prices from new products [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, citing strong bookings and a favorable outlook for 2026 driven by the communications and computing segment [6][21] - The company noted that macroeconomic conditions could impact growth, but several factors are fueling confidence, including increased infrastructure capital expenditures [8][9] Other Important Information - The company remains debt-free and has repurchased approximately $15 million of common stock during the quarter, with a total of $86 million repurchased in the first nine months of 2025 [15] - The company expects to continue generating strong free cash flow while strategically investing in capital expenditures [13][15] Q&A Session Summary Question: Is the increased confidence in the outlook for 2026 contingent on the expected normalization in industrial and auto channel inventory? - Management indicated that the growth in communications and computing is expected to accelerate further into 2026, independent of industrial and automotive inventory normalization [21][23] Question: Can you discuss regional performance in the industrial and automotive segment? - Management noted strong performance in the China automotive market and increasing design wins in aerospace and defense globally [24] Question: What has changed in the last 90 days to increase confidence? - A successful Open Compute Summit led to increased activity and spending, with forecasts for hyperscalers being raised [28][29] Question: How is the Avant platform performing? - Both Nexus and Avant platforms are performing well, with expectations for significant growth in 2026 and 2027 [32][43] Question: What is the current view on the automotive market? - Management is seeing inventories come down and is optimistic about the automotive market's recovery [112]

REVENUE Q3'25 Earnings Highlights November 2025 NASDAQ: LSCC Q3 2025 Earnings Overview & Highlights GROSS MARGIN 7.6% Growth QoQ 69.5 $133.3M %* ADJUSTED EBITDA "We delivered a strong quarter, with broad-based growth across our end markets, and grew non-GAAP earnings 17% quarter over quarter. Our Communications and Computing business achieved record revenue, and we are expecting continued growth into the fourth quarter and beyond. We continue to drive operating leverage and expand profitability, with signif ...

Financial Performance - Revenue for Q3 2025 was $133.3 million, representing a 7.6% increase quarter-over-quarter and a 4.9% increase year-over-year[5] - Non-GAAP net income for Q3 2025 was $38.2 million, with diluted earnings per share of $0.28, reflecting a 17.1% increase quarter-over-quarter[7] - The company expects Q4 2025 revenue to be between $138 million and $148 million, indicating a year-over-year growth of approximately 22%[14] - Revenue for the three months ended September 27, 2025, was $133.349 million, an increase from $123.971 million in the previous quarter, representing a growth of 11.0%[22] - Net income for the three months ended September 27, 2025, was $2.794 million, slightly down from $2.913 million in the previous quarter[22] - GAAP net income for the three months ended September 27, 2025, was $2.794 million, compared to $2.913 million in the previous quarter and $7.190 million in the same quarter last year[36] - Non-GAAP net income for the same period was $38.157 million, up from $32.597 million in the previous quarter and $32.544 million year-over-year[36] Margins and Expenses - Non-GAAP gross margin for Q4 2025 is projected to be 69.5% plus or minus 1%[14] - The adjusted EBITDA margin for Q3 2025 was 35.6%, showing a 150 basis points improvement year-over-year[7] - Gross margin for the same period was $90.527 million, yielding a gross margin percentage of 67.9%, compared to 68.4% in the previous quarter[30] - Research and development expenses increased to $49.633 million, accounting for 37.2% of revenue, up from 35.1% in the previous quarter[30] - Non-GAAP total operating expenses for Q4 2025 are expected to be between $54 million and $55 million[14] - Non-GAAP income from operations margin increased to 29.0% in Q3 2025, compared to 27.5% in Q2 2025 and 26.6% in Q3 2024[33] Cash Flow and Stock Repurchase - Operating cash flow for Q3 2025 was $47.0 million, with a margin of 35.3%[5] - Cash flows from operating activities for the nine months ended September 27, 2025, were $117.523 million, compared to $95.455 million for the same period in 2024, reflecting a 23.1% increase[26] - The company repurchased common stock valued at $85 million during the first nine months of 2025, demonstrating disciplined capital allocation[9] - The company repurchased $85.855 million of common stock during the nine months ended September 27, 2025[26] - Free cash flow for the quarter was $34.026 million, with a free cash flow margin of 25.5%, compared to $31.301 million and 25.2% in the previous quarter[36] - GAAP net cash provided by operating activities was $47.100 million, representing an operating cash flow margin of 35.3%[36] Market and Product Developments - Lattice launched the industry's first PQC-Ready FPGA, the MachXO5™-NX TDQ family, enhancing security against quantum-enabled cyberattacks[9] - The Industrial and Automotive markets are recovering, with inventory levels expected to normalize by the end of 2025[6] Accounts Receivable and Tax - Accounts receivable days outstanding (DSO) increased to 65 days from 63 days in the previous quarter[28] - The company reported a GAAP income tax expense of $(3.748) million for the quarter, compared to $2.169 million in the previous quarter[36] - Stock-based compensation for the quarter amounted to $35.978 million, compared to $24.141 million in the previous quarter and $16.710 million in the same quarter last year[36] - Legal expenses incurred during the quarter were $6,000, down from $568,000 in the previous quarter[36]

Industry Overview - The global semiconductor market experienced a significant growth of 21.7% year-over-year in sales for August 2025, reaching $64.9 billion according to the Semiconductor Industry Association (SIA) [1][12] - Semiconductor companies are benefiting from robust sales growth across various products, including microprocessors, memory chips, and advanced driver assistance systems [2] Demand Drivers - The increase in microchip sales is primarily driven by heightened demand from hyperscalers, cloud service providers, telecom, artificial intelligence, and data center customers, who are investing heavily in more powerful chips [3] - Inventory normalization among industrial and automotive customers, particularly in the Chinese electric vehicle market, is expected to further drive sales [4] Earnings Expectations - Investors are anticipating earnings releases from key semiconductor players such as Lattice Semiconductor, Magnachip Semiconductor, Navitas Semiconductor, and ON Semiconductor, scheduled for November 3 [5][12] - Lattice Semiconductor's third-quarter 2025 revenue estimate is $132.9 million, reflecting a 4.63% increase year-over-year, with an expected earnings per share of 28 cents, indicating a 16.7% year-over-year increase [8] - Magnachip Semiconductor is projected to report revenues of $46 million, a decline of 30.8% from the previous year, with an expected loss of 8 cents per share, although this represents a 76.5% improvement year-over-year [10] - Navitas Semiconductor's revenue estimate is $10.1 million, indicating a 53.4% decline from the year-ago quarter, with an expected loss of 5 cents per share, narrowing from a loss of 6 cents [13] - ON Semiconductor's revenue estimate is $1.52 million, reflecting a 14% decrease year-over-year, with an expected earnings per share of 60 cents, suggesting a 39.4% year-over-year decrease [15]

Core Insights - Artisan Mid Cap Fund reported strong performance in Q3 2025, with returns of 8.80% for Investor Class and Advisor Class funds, and 8.83% for Institutional Class, significantly outperforming the Russell Midcap Growth Index's 2.78% return [1] Company Performance - Lattice Semiconductor Corporation (NASDAQ:LSCC) was highlighted as a top contributor to the Artisan Mid Cap Fund, with a one-month return of 6.10% and a 52-week gain of 42.91% [2][3] - As of October 14, 2025, Lattice's stock closed at $71.00 per share, with a market capitalization of $9.72 billion [2] Market Context - Lattice Semiconductor has faced challenges due to an inventory overhang among its industrial and automotive customers, which account for approximately 40% of its revenue [3] - New management is optimistic that the inventory destocking cycle will conclude by early 2026, positioning Lattice for growth in AI data centers and robotics applications [3] Investment Sentiment - Lattice Semiconductor is not among the top 30 most popular stocks among hedge funds, with 34 hedge fund portfolios holding the stock at the end of Q2 2025, down from 39 in the previous quarter [4] - While Lattice is recognized for its potential, some analysts suggest that certain AI stocks may offer greater upside potential with less downside risk [4]

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