Lattice Semiconductor Corporation (NASDAQ: LSCC ) will be reporting Q2’25 earnings on August 4, 2025, after market close with relatively mixed expectations by analysts. Analysts have revised EPS estimates up 4x and down 2x in the last 90 days.Michael Del Monte is a buy-side equity analyst with over 5 years of industry experience. Prior to working in the investment management industry, Michael spent over a decade in professional services working across industries that include O&G, OFS, Midstream, Industrials ...

Core Insights - The FPGA market is projected to grow from $11.14 billion in 2025 to $18.76 billion by 2030, with a CAGR of 10.98% during this period [2] - AMD and Lattice Semiconductor (LSCC) are key players in this market, with AMD benefiting from its acquisition of Xilinx and LSCC focusing on low-power FPGA solutions [1][7] AMD Insights - AMD's acquisition of Xilinx has allowed it to expand into various embedded markets, including CPUs, GPUs, and FPGAs [3] - The latest VP1902 adaptive SoC from AMD features 18.5 million logic cells, doubling the programmable logic density compared to the previous generation [4] - In Q1 2025, AMD launched a high-performance 5G core powered by the Virtex UltraScale+ XCVU5P FPGA and completed initial shipments of cost-optimized Spartan UltraScale Plus FPGAs [5] - AMD is enhancing partnerships with major cloud providers like AWS, which launched FPGA-accelerated instances powered by AMD's EPYC processors and Xilinx Virtex FPGAs [6] LSCC Insights - LSCC is experiencing strong demand for its small and mid-range FPGA solutions, particularly with its Nexus and Avant product families [7] - The company is targeting high-growth applications such as AI, data centers, and advanced driver-assistance systems in automotive [8] - In February 2025, LSCC validated Everspin Technologies' MRAM for use across its FPGAs, enhancing suitability for mission-critical applications [9] Performance and Valuation - Year-to-date, AMD shares have decreased by 6.9%, while LSCC shares have fallen by 1.4% due to a challenging macroeconomic environment [10] - Both AMD and LSCC shares are currently considered overvalued, with AMD trading at a forward Price/Sales ratio of 5.41X and LSCC at 13.91X [13] - The Zacks Consensus Estimate for AMD's 2025 earnings is $4.09 per share, reflecting a 23.56% year-over-year increase, while LSCC's estimate is $1.05 per share, indicating a 16.67% increase [16] - AMD has consistently beaten earnings estimates, while LSCC has missed estimates in two of the last four quarters [17] Conclusion - AMD's portfolio expansion and partnerships position it for significant growth in the FPGA market, while LSCC's focus on low-power solutions captures emerging opportunities [18] - AMD is rated higher than LSCC, with a Zacks Rank of 3 (Hold) compared to LSCC's 4 (Sell) [18]

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]

Financial Data and Key Metrics Changes - The company reported revenue of $120.1 million for Q1 2025, reflecting a 2% increase compared to Q4 and a 15% decline year-over-year [15][8] - Non-GAAP gross margin was 69%, up 690 basis points from Q4, indicating resilience despite lower revenue levels [16][8] - Non-GAAP operating margin was 26.2%, and adjusted EBITDA margin was 33.4%, demonstrating financial discipline [17][8] - Free cash flow for Q1 was $23.3 million, with a free cash flow margin of 19.4% [17][8] 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 [9][10] - Revenue from new products continued to grow at a strong double-digit pace, both sequentially and year-on-year [10][12] Market Data and Key Metrics Changes - The company noted improvements in bookings across various end markets, particularly in cloud and AI-related sectors [33][34] - The industrial sector showed positive trends with PMI above 50 for the past four years, while automotive remained flat [34][35] Company Strategy and Development Direction - The company is focused on cost controls, operational efficiency, and delivering value to shareholders while navigating macroeconomic uncertainties [7][8] - There is a strong emphasis on expanding design win rates in small and mid-range FPGAs, with a goal of achieving high teens percentage of new product revenue for the full year 2025 [10][12] - The company is committed to driving innovation and expanding customer engagements, with a strong belief in sustainable growth [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the second half of 2025, closely monitoring the impact of tariffs and customer demand [13][20] - The company expects a U-shaped recovery in the long term, supported by improving demand signals and a strong backlog [12][13] - Management remains confident in the strength of their product portfolio and market position, despite potential macroeconomic challenges [12][34] Other Important Information - The company repurchased approximately $25 million of common stock during the quarter, reducing dilution by 4.6% [19][20] - The balance sheet remains strong, with no debt and ready access to capital for future growth investments [18][19] 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 [26] 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 communication businesses have shown growth [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 [34][35] Question: Design win momentum and growth drivers - Design win momentum remains strong, driven by differentiation in product attributes, with both unit recovery and ASP improvements contributing to growth [37] Question: Inventory levels and normalization - Channel inventory is expected to take longer to normalize than initially anticipated, but internal inventory has seen significant reductions [46][48] Question: Competitive landscape in low power, small size FPGAs - The company remains confident in its unique architecture and product advantages, despite increased competition from larger players [80] Question: New product growth expectations - New product growth is expected to accelerate, with contributions from Nexus and Avant products layering in over the next few years [108][110]

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]