Executive Summary & Company Overview This section provides an overview of Lattice Semiconductor's Q2 2025 financial performance and strategic insights from management Q2 2025 Financial Highlights Lattice Semiconductor reported Q2 2025 financial results with GAAP revenue of $124 million and GAAP diluted net income per share of $0.02, alongside strong non-GAAP metrics | Metric | Amount (Million USD) | Ratio (%) | | :-------------------------------- | :------------------- | :-------- | | GAAP Financial Data: | | | | Revenue | 124.0 | | | Gross Margin | | 68.4 | | Diluted Net Income Per Share | 0.02 | | | Net Income | 2.9 | 2.3 | | Operating Cash Flow | 38.5 | 31.1 | | Free Cash Flow | 31.3 | 25.2 | | Non-GAAP Financial Data: | | | | Gross Margin | | 69.3 | | Diluted Net Income Per Share | 0.24 | | | Adjusted EBITDA | 42.2 | 34.1 | Management Commentary CEO Ford Tamer highlighted strong quarterly performance, broad-based growth, and record design wins, while CFO Lorenzo Flores emphasized sequential growth and commitment to product roadmap investments - CEO Ford Tamer stated the company achieved another strong quarter with broad-based growth in key financial metrics and record design wins. Communications and computing markets remain solid with channel inventory normalization, expected to continue strong into 2026. Industrial and automotive markets are recovering as anticipated, with channel inventory levels showing further improvement. Future growth will be driven by key design wins in cloud data centers, wired communications, industrial robotics, ADAS, and other far-edge AI applications, as well as AI accelerators4 - CFO Lorenzo Flores noted sequential growth in revenue, gross margin, and profitability, with adjusted EBITDA reaching 34.1%. The company remains focused on driving business growth and expanding shareholder value through disciplined investments in its product roadmap, revenue generation, and customer support4 Detailed Financial Performance (Q2 2025) This section provides a detailed breakdown of Lattice Semiconductor's GAAP and non-GAAP financial results for the second quarter of 2025 GAAP Financial Results Q2 2025 GAAP revenue was $124 million, showing sequential growth but a slight year-over-year decline, while operating expenses significantly increased, leading to a substantial drop in operating and net income year-over-year | Metric | Q2 2025 (Million USD) | Q1 2025 (Million USD) | Q2 2024 (Million USD) | Q/Q Change | Y/Y Change | | :----------------------- | :-------------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Revenue | 123.971 | 120.150 | 124.076 | 3.2% | (0.1)% | | Gross Margin % | 68.4% | 68.0% | 68.3% | 40 bps | 10 bps | | R&D Expenses % | 35.1% | 34.4% | 31.2% | 70 bps | 390 bps | | Sales, G&A Expenses % | 28.1% | 27.6% | 16.1% | 50 bps | 1200 bps | | Total Operating Expenses | 80.045 | 74.754 | 62.186 | 7.1% | 28.7% | | Operating Income | 4.706 | 6.974 | 22.565 | (32.5)% | (79.1)% | | Net Income | 2.913 | 5.022 | 22.631 | (42.0)% | (87.1)% | | Diluted Net Income Per Share | 0.02 | 0.04 | 0.16 | $(0.02) | $(0.14) | | Net Income Margin | 2.3% | 4.2% | 18.2% | (190) bps | (1590) bps | | Operating Cash Flow Margin | 31.1% | 26.5% | 17.7% | 460 bps | 1340 bps | Non-GAAP Financial Results Q2 2025 non-GAAP revenue aligned with GAAP, with gross margin and operating income showing sequential and year-over-year growth, alongside improved non-GAAP net income, diluted EPS, adjusted EBITDA margin, and free cash flow margin | Metric | Q2 2025 (Million USD) | Q1 2025 (Million USD) | Q2 2024 (Million USD) | Q/Q Change | Y/Y Change | | :----------------------- | :-------------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Revenue (GAAP) | 123.971 | 120.150 | 124.076 | 3.2% | (0.1)% | | Gross Margin % | 69.3% | 69.0% | 69.0% | 30 bps | 30 bps | | R&D Expenses % | 26.3% | 25.8% | 26.7% | 50 bps | (40) bps | | Sales, G&A Expenses % | 16.8% | 18.4% | 17.9% | (160) bps | (110) bps | | Total Operating Expenses | 51.834 | 51.408 | 54.030 | 0.8% | (4.1)% | | Operating Income | 34.084 | 31.539 | 31.526 | 8.1% | 8.1% | | Net Income | 32.597 | 30.746 | 31.432 | 6.0% | 3.7% | | Diluted Net Income Per Share | 0.24 | 0.22 | 0.23 | $0.02 | $0.01 | | Adjusted EBITDA Margin | 34.1% | 33.4% | 32.3% | 70 bps | 180 bps | | Free Cash Flow Margin | 25.2% | 19.4% | 11.9% | 580 bps | 1330 bps | Business Updates Lattice Semiconductor achieved several business milestones and industry recognitions in Q2 2025, including strategic partnerships, product portfolio expansion, and capital allocation initiatives Recent Highlights Lattice Semiconductor announced a partnership with Mitsubishi Electric, expanded its FPGA product portfolio, continued common stock repurchases, and received multiple industry awards - Partnered with Mitsubishi Electric to power next-generation factory automation with CertusPro™-NX FPGAs, enabling energy-efficient and reliable CNC solutions6 - Launched new high I/O density Lattice Certus™-NX and Lattice MachXO5™-NX FPGA devices, designed for power-constrained AI, industrial, communications, server, and automotive applications6 - Repurchased $71 million of common stock in the first six months of 2025, equivalent to 100% of its operating cash flow6 - Recognized as "AI Edge Solution of the Year" at the 2025 AI Breakthrough Awards and named to TIME's 2025 list of America's Best Midsize Companies6 Outlook This section outlines Lattice Semiconductor's financial guidance for Q3 2025 and provides an explanation of its non-GAAP financial measures Third Quarter 2025 Business Outlook The company projects Q3 2025 non-GAAP revenue between $128 million and $138 million, with a non-GAAP gross margin of approximately 69.5% ± 1%, total non-GAAP operating expenses between $52 million and $54 million, a non-GAAP income tax rate of 5% to 6%, and non-GAAP diluted net income per share between $0.26 and $0.30 | Metric | Q3 2025 Outlook (Non-GAAP) | | :----------------------- | :------------------------- | | Revenue | $128 million - $138 million | | Gross Margin % | 69.5% ± 1% | | Total Operating Expenses | $52 million - $54 million | | Income Tax Rate | 5% - 6% | | Net Income Per Share | $0.26 - $0.30 | Non-GAAP Financial Measures Explanation The company utilizes non-GAAP financial measures to supplement GAAP information, offering a more comprehensive understanding of performance by excluding specific non-recurring or non-cash items - Non-GAAP metrics exclude stock-based compensation and related payroll tax impacts, annual incentive plan accruals related to equity settlement, unusual legal fees, acquisition-related intangible asset amortization, restructuring and other charges, impairments, and the estimated tax impact of these items, non-cash changes in net deferred income taxes, tax law changes, and other tax adjustments; as well as depreciation and other amortization14 - Management believes non-GAAP financial measures provide additional useful perspectives, which, when combined with GAAP results, offer a more complete understanding of the various factors and trends affecting the company's ongoing financial performance and operating results15 Consolidated Financial Statements This section presents Lattice Semiconductor's consolidated statements of operations, balance sheets, and cash flows for the reported periods Consolidated Statements of Operations In Q2 2025, GAAP revenue was $124 million with a gross profit of $84.751 million, but total operating expenses of $80.045 million led to significantly reduced operating income of $4.706 million and net income of $2.913 million compared to the prior year | Metric (Thousand USD) | June 28, 2025 (3 Months) | March 29, 2025 (3 Months) | June 29, 2024 (3 Months) | June 28, 2025 (6 Months) | June 29, 2024 (6 Months) | | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Revenue | 123,971 | 120,150 | 124,076 | 244,121 | 264,891 | | Cost of Sales | 39,220 | 38,422 | 39,325 | 77,642 | 83,932 | | Gross Profit | 84,751 | 81,728 | 84,751 | 166,479 | 180,959 | | R&D Expenses | 43,530 | 41,387 | 38,733 | 84,917 | 79,324 | | Sales, G&A Expenses | 34,811 | 33,126 | 20,005 | 67,937 | 56,474 | | Total Operating Expenses | 80,045 | 74,754 | 62,186 | 154,799 | 141,820 | | Operating Income | 4,706 | 6,974 | 22,565 | 11,680 | 39,139 | | Net Income | 2,913 | 5,022 | 22,631 | 7,935 | 37,427 | | Diluted Net Income Per Share | 0.02 | 0.04 | 0.16 | 0.06 | 0.27 | Condensed Consolidated Balance Sheets As of June 28, 2025, total assets decreased to $808.552 million from $843.903 million at December 28, 2024, reflecting changes in cash, receivables, and inventory, with corresponding adjustments in total liabilities and shareholders' equity | Metric (Thousand USD) | June 28, 2025 | December 28, 2024 | | :----------------------- | :------------ | :---------------- | | Assets: | | | | Cash and Cash Equivalents | 107,156 | 136,291 | | Accounts Receivable, Net | 85,659 | 81,060 | | Inventories, Net | 93,832 | 103,410 | | Total Current Assets | 322,426 | 364,834 | | Property and Equipment, Net | 62,972 | 52,988 | | Goodwill | 315,358 | 315,358 | | Total Assets | 808,552 | 843,903 | | Liabilities and Stockholders' Equity: | | | | Accounts Payable | 33,805 | 36,828 | | Accrued Liabilities | 33,552 | 45,638 | | Total Current Liabilities | 86,882 | 99,622 | | Total Liabilities | 121,504 | 132,971 | | Stockholders' Equity | 687,048 | 710,932 | Condensed Consolidated Statements of Cash Flows For the six months ended June 28, 2025, net cash provided by operating activities increased to $70.423 million from $51.442 million in the prior year, while both investing and financing activities resulted in net cash outflows, primarily due to common stock repurchases | Metric (Thousand USD) | June 28, 2025 (6 Months) | June 29, 2024 (6 Months) | | :----------------------- | :----------------------- | :----------------------- | | Net Income | 7,935 | 37,427 | | Net Cash Provided by Operating Activities | 70,423 | 51,442 | | Net Cash Used in Investing Activities | (23,628) | (18,188) | | Net Cash Used in Financing Activities | (76,584) | (51,733) | | Net Increase (Decrease) in Cash and Cash Equivalents | (29,135) | (19,101) | | Cash and Cash Equivalents, End of Period | 107,156 | 109,216 | | Common Stock Repurchases | (70,855) | (29,999) | Supplemental Financial Data This section provides additional operational metrics and revenue segmentation details for Lattice Semiconductor Key Operational Metrics The company improved operational efficiency in Q2 2025, with decreases in Days Sales Outstanding (DSO) and Days Inventory Outstanding (DIO), indicating faster cash recovery and better inventory management | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----------------------- | :------ | :------ | :------ | | Days Sales Outstanding (DSO) | 63 | 64 | 76 | | Days Inventory Outstanding (DIO) | 218 | 225 | 236 | Revenue Segmentation In Q2 2025, Asia contributed 67% of revenue, with communications and computing emerging as the largest end market at 55% of revenue, and distribution remaining the primary sales channel | Revenue Percentage (by Geography) | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------- | :------ | :------ | :------ | | Asia | 67% | 65% | 67% | | Americas | 22% | 25% | 19% | | Europe (incl. Africa) | 11% | 10% | 14% | | Revenue Percentage (by End Market) | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------------ | :------ | :------ | :------ | | Communications and Computing | 55% | 48% | 44% | | Industrial and Automotive | 38% | 43% | 47% | | Consumer | 7% | 9% | 9% | | Revenue (Million USD, by End Market) | Q2 2025 | Q1 2025 | Q2 2024 | | :---------------------------- | :------ | :------ | :------ | | Communications and Computing | 68.7 | 57.4 | 54.6 | | Industrial and Automotive | 47.3 | 52.2 | 58.2 | | Consumer | 8.0 | 10.6 | 11.3 | | Revenue Percentage (by Channel) | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------- | :------ | :------ | :------ | | Distribution | 84% | 79% | 91% | | Direct | 16% | 21% | 9% | GAAP to Non-GAAP Reconciliations This section provides detailed reconciliations between GAAP and non-GAAP financial measures for various key performance indicators Gross Margin Reconciliation GAAP gross margin is adjusted to non-GAAP gross margin by excluding items such as stock-based compensation and equity-settled incentive compensation, resulting in a higher non-GAAP gross margin of 69.3% in Q2 2025 compared to GAAP's 68.4% | Metric (Thousand USD) | June 28, 2025 | March 29, 2025 | June 29, 2024 | | :----------------------- | :------------ | :------------- | :------------ | | GAAP Gross Profit | 84,751 | 81,728 | 84,751 | | Stock-Based Compensation - Gross Profit | 1,105 | 1,143 | 805 | | Equity-Settled Incentive Compensation - Gross Profit | 62 | 76 | — | | Non-GAAP Gross Profit | 85,918 | 82,947 | 85,556 | | GAAP Gross Margin % | 68.4% | 68.0% | 68.3% | | Non-GAAP Gross Margin % | 69.3% | 69.0% | 69.0% | Operating Expenses & Income from Operations Reconciliation Non-GAAP operating expenses are derived by excluding stock-based compensation, equity-settled incentive compensation, legal fees, acquisition-related intangible asset amortization, and restructuring and transformation charges from GAAP operating expenses, significantly elevating operating income to non-GAAP levels | Metric (Thousand USD) | June 28, 2025 | March 29, 2025 | June 29, 2024 | | :----------------------- | :------------ | :------------- | :------------ | | GAAP Operating Expenses | 80,045 | 74,754 | 62,186 | | Stock-Based Compensation - Operating | (23,036) | (19,413) | (2,343) | | Equity-Settled Incentive Compensation - Operating | (1,212) | (1,452) | — | | Legal Fees | (568) | (533) | (1,065) | | Acquisition-Related Intangible Asset Amortization | (13) | — | (869) | | Restructuring, Transformation & Other | (3,382) | (1,948) | (3,879) | | Non-GAAP Operating Expenses | 51,834 | 51,408 | 54,030 | | GAAP Income from Operations | 4,706 | 6,974 | 22,565 | | Non-GAAP Income from Operations | 34,084 | 31,539 | 31,526 | Income Tax & Net Income Reconciliation Non-GAAP income tax expense is calculated by adjusting GAAP income tax expense for the estimated tax impact of non-GAAP adjustments, non-cash changes in net deferred income taxes, and tax law changes, which also significantly impacts net income, making non-GAAP net income substantially higher than GAAP net income | Metric (Thousand USD) | June 28, 2025 | March 29, 2025 | June 29, 2024 | | :----------------------- | :------------ | :------------- | :------------ | | GAAP Income Tax Expense (Benefit) | 2,169 | 2,959 | 1,121 | | Estimated Tax Impact of Non-GAAP Adjustments | 2,158 | 2,086 | 5,649 | | Non-Cash Changes in Net Deferred Income Taxes | (1,723) | (2,307) | (1,090) | | Tax Law Changes | (741) | (938) | (4,399) | | Non-GAAP Income Tax Expense | 1,863 | 1,800 | 1,281 | | GAAP Net Income | 2,913 | 5,022 | 22,631 | | Non-GAAP Net Income | 32,597 | 30,746 | 31,432 | Net Income Per Share Reconciliation Non-GAAP diluted net income per share is derived by incorporating the cumulative impact of non-GAAP adjustments into GAAP diluted net income per share, resulting in $0.24 for Q2 2025, significantly higher than GAAP's $0.02 | Metric | June 28, 2025 | March 29, 2025 | June 29, 2024 | | :----------------------- | :------------ | :------------- | :------------ | | GAAP Diluted Net Income Per Share | 0.02 | 0.04 | 0.16 | | Cumulative Impact of Non-GAAP Adjustments | 0.22 | 0.18 | 0.07 | | Non-GAAP Diluted Net Income Per Share | 0.24 | 0.22 | 0.23 | Adjusted EBITDA Reconciliation Adjusted EBITDA is calculated by adding back interest, taxes, amortization, depreciation, stock-based compensation, equity-settled incentive compensation, legal fees, and restructuring and transformation charges to GAAP net income, reaching $42.226 million with a 34.1% margin in Q2 2025 | Metric (Thousand USD) | June 28, 2025 | March 29, 2025 | June 29, 2024 | | :----------------------- | :------------ | :------------- | :------------ | | GAAP Net Income | 2,913 | 5,022 | 22,631 | | Interest (Income) Expense, Net | (614) | (1,052) | (933) | | Income Tax Expense (Benefit) | 2,169 | 2,959 | 1,121 | | Acquisition-Related Intangible Asset Amortization | 13 | — | 869 | | Depreciation and Other Amortization | 8,380 | 8,586 | 8,239 | | Stock-Based Compensation | 24,141 | 20,556 | 3,148 | | Equity-Settled Incentive Compensation | 1,274 | 1,528 | — | | Legal Fees | 568 | 533 | 1,065 | | Restructuring, Transformation & Other | 3,382 | 1,948 | 3,879 | | Adjusted EBITDA | 42,226 | 40,080 | 40,019 | | Adjusted EBITDA Margin | 34.1% | 33.4% | 32.3% | Free Cash Flow Reconciliation Free cash flow is derived by subtracting capital expenditures from net cash provided by GAAP operating activities, reaching $31.301 million with a 25.2% margin in Q2 2025, a significant increase year-over-year | Metric (Thousand USD) | June 28, 2025 | March 29, 2025 | June 29, 2024 | | :----------------------- | :------------ | :------------- | :------------ | | Net Cash Provided by GAAP Operating Activities | 38,531 | 31,892 | 21,931 | | Operating Cash Flow Margin | 31.1% | 26.5% | 17.7% | | Capital Expenditures | (7,230) | (8,616) | (7,155) | | Free Cash Flow | 31,301 | 23,276 | 14,776 | | Free Cash Flow Margin | 25.2% | 19.4% | 11.9% | Corporate Information This section provides details on investor relations, forward-looking statements, and an overview of Lattice Semiconductor Corporation Investor Relations Lattice Semiconductor will host an investor conference call/webcast on Monday, August 4, 2025, at 5:00 PM ET to discuss Q2 2025 financial results and business outlook - The investor conference call/webcast will be held on Monday, August 4, 2025, at 5:00 PM ET8 - Dial-in numbers are 1-877-407-3982 or 1-201-493-6780, with conference ID 13754801. The webcast will be available on the company's investor relations website at www.latticesemi.com[8](index=8&type=chunk) Forward-Looking Statements Notice This press release contains forward-looking statements subject to risks and uncertainties, where actual results may differ materially from expectations - Forward-looking statements include, but are not limited to, those regarding revenue growth, continued strong financial performance in 2026, design win growth and drivers, market recovery and improvement, inventory levels, and statements under "Third Quarter 2025 Business Outlook"9 - Estimates of future revenue and other financial and operational results are inherently uncertain and subject to factors such as global economic conditions, semiconductor industry cyclicality, pricing and inflationary pressures, competitive actions, and international trade disputes and sanctions10 - The company does not intend to and undertakes no obligation to update or revise any forward-looking statements, whether as a result of events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events13 About Lattice Semiconductor Corporation Lattice Semiconductor (Nasdaq: LSCC) is a leader in low-power programmable solutions, addressing customer challenges from the edge to the cloud across communications, computing, industrial, automotive, and consumer markets - Lattice Semiconductor is a leader in low-power programmable solutions, dedicated to solving customer problems from the edge to the cloud in communications, computing, industrial, automotive, and consumer markets16 - The company empowers customers to quickly and easily unleash innovation, creating a smart, secure, and connected world through its technology, long-standing relationships, and world-class support16
Lattice Semiconductor(LSCC) - 2025 Q2 - Quarterly Results